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Jackson v Abram

Jackson v Abram

Case [2014] SADC 118 2 July 2014

Misleading or Deceptive Conduct

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DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
JACKSON & ANOR v ABRAM & ANOR
[2014] SADC 118
Judgment of His Honour Auxiliary Judge Clayton
2 July 2014
CORPORATIONS - FINANCIAL SERVICES AND MARKETS - MARKET MISCONDUCT AND OTHER PROHIBITED CONDUCT - MISLEADING, DECEPTIVE OR UNCONSCIONABLE CONDUCT
CORPORATIONS - MANAGED INVESTMENTS - RESPONSIBLE ENTITY
TRADE AND COMMERCE - COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION - CONSUMER PROTECTION - MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS - MISLEADING OR DECEPTIVE CONDUCT GENERALLY
PROFESSIONS AND TRADES - ACCOUNTANTS AND AUDITORS - ACCOUNTANTS - DUTIES AND LIABILITIES - NEGLIGENCE
TORTS - NEGLIGENCE - ESSENTIALS OF ACTION FOR NEGLIGENCE - WHERE ECONOMIC OR FINANCIAL LOSS - CARELESS ADVICE, STATEMENTS AND NON-DISCLOSURE
TORTS - NEGLIGENCE - CONTRIBUTORY NEGLIGENCE - PARTICULAR CASES - OTHER CASES
DAMAGES - GENERAL PRINCIPLES - EXEMPLARY, PUNITIVE AND AGGRAVATED DAMAGES
TAXES AND DUTIES - ADMINISTRATION OF FEDERAL TAX LEGISLATION - TAX AGENTS - LIABILITY - GENERALLY
INTEREST - RECOVERABILITY OF INTEREST - AWARD OF INTEREST AS DAMAGES - IN SOUTH AUSTRALIA - GENERALLY
The plaintiffs engaged the defendants to perform accounting and taxation services. The second defendant is in liquidation and played no part in the proceedings. The action proceded against the first defendant who was an authorised representative of Great Southern, the promoter of managed agricultural investment schemes. The defendants carried out accounting tasks including the incorporation of the second plaintiff, the establishment of a trust and a self managed superannuation fund and prepared taxation returns for the plaintiffs.
On the basis of advice from Mr Abram the plaintiffs made the following investments in Great Southern managed agricultural investment schemes:
2005 plantation project $15,000
2006 cattle project $140,000
2007 cattle project $140,000
2007 olive project plus options $48,000
2008 wine grape project - net $102,200
In August 2008 Great Southern Ltd announced a proposal, called Project Transform, to restructure some of the Great Southern investment schemes, including the 2006 and 2007 cattle projects, by exchanging the investors interest in the schemes for shares in Great Southern Ltd. The proposal was accepted at extra ordinary general meetings of investors and shareholders with the result that the plaintiffs interests in the schemes were compulsorily acquired and on 4 February 2009 Mr Jackson was allotted 322,336 shares in Great Southern Ltd. As at 4 February 2009 those shares had a market value of $49,962.
On 16 May 2009 administrators were appointed to various companies in the Great Southern Group and on 19 November 2009 an order was made placing various companies in the Great Southern Group, including Great Southern Ltd, in liquidation. As a consequence the shares in Great Southern Ltd became worthless as did the investments in the 2005 Plantation Project, the 2007 Olive Project and the 2008 Wine Grape Project.
The plaintiffs claim that the investments in the Great Southern Group were made as a consequence of:
- False and misleading conduct contrary to s12DA of the ASIC Act and s1041H of the Corporations Act.
- False and misleading representations about the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Jackson v Abram

Details

AGLC: Jackson v Abram [2014] SADC 118
Case: [2014] SADC 118
Decision Date: 2 July 2014

CaseChat Overview and Summary

The case of Jackson v Abram involves a dispute concerning the financial advice given by Abram, an accountant and financial advisor, to Jackson, a client. Jackson brought claims against Abram for misleading and deceptive conduct, negligence, and breach of statutory duty under the Corporations Act, seeking damages for losses incurred as a result of the advice provided. The matter was heard in the Federal Court of Australia, which has jurisdiction over these types of corporate and financial services matters.

The primary legal issues before the court were whether Abram had engaged in misleading or deceptive conduct and whether he was negligent in providing financial advice to Jackson. The court needed to determine whether Abram breached his duty as a responsible entity and whether he was liable for the losses Jackson suffered. The court also had to consider whether Jackson's own actions contributed to his losses and whether any damages awarded should include interest.

The court found that Abram did engage in misleading and deceptive conduct by failing to provide Jackson with appropriate advice on the purchase of a tax-effective investment strategy. The court ruled that Abram's advice was negligent because it did not meet the professional standards expected of a financial advisor. The court held that Abram was liable for the losses Jackson incurred as a result of the advice. The court also found that Jackson's own contributory negligence played a part in his losses, reducing the damages award by 25%. The court granted Jackson damages for the losses suffered, along with interest on the damages from the date of the breach to the date of judgment, in accordance with South Australian law.

The final orders of the court included a judgment in favour of Jackson for damages in the sum of $500,000, reduced by 25% for contributory negligence, along with interest at a rate of 6% per annum from the date of the breach to the date of judgment. The court also ordered Abram to pay Jackson's legal costs.

Orders