Lockyer v Bermingham [No 3]

In the case of Lockyer v Bermingham [No 3], the plaintiff, Mr Lockyer, sought damages against the defendant, Mr Bermingham, a financial planner, for misleading or deceptive conduct in relation to tax advice provided. The case was heard by the Federal Court of Australia, which was required to determine whether the advice provided by Mr Bermingham was misleading or deceptive, and whether it contravened section 12DA of the Australian Securities and Investment Commission Act 2001 (Cth). The court also needed to determine the appropriate measure of damages under section 12GF of the same Act, considering the net gains and losses approach, and the rule in Potts v Miller. Additionally, the court examined whether there was any contributory negligence by the plaintiff or proportionate liability on the part of the defendant.

The court found that the advice provided by Mr Bermingham was indeed misleading or deceptive as it failed to accurately inform the plaintiff about the tax implications of exercising employee share options. The court held that Mr Bermingham was liable for the misleading conduct under section 12DA. In assessing the damages, the court applied the net gains and losses approach, finding that the plaintiff had suffered a loss of $375,000 due to the tax implications of exercising the options. The court rejected the argument for proportionate liability, finding that the plaintiff had not contributed to his loss and that there was no basis for apportioning the liability between the parties. The court also dismissed any notion of contributory negligence on the part of the plaintiff.

The final orders of the court included a declaration that Mr Bermingham had engaged in misleading or deceptive conduct, an award of damages to the plaintiff in the amount of $375,000, and a determination that there was no contributory negligence or proportionate liability on the part of the plaintiff. The case underscores the importance of accurate and clear advice in financial and tax matters, and the potential legal consequences for failing to provide such advice.