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Tomasetti v Brailey

Tomasetti v Brailey

Case [2013] NSWSC 1282 9 September 2013

Misleading or Deceptive Conduct

Unconscionable Conduct

Reliance

Compensatory Damages

Consumer Law

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Supreme Court

New South Wales

Medium Neutral Citation: Tomasetti v Brailey [2013] NSWSC 1282
Hearing dates: On the papers
Decision date: 09 September 2013
Before: R A Hulme J
Decision:
First and fourth defendants to pay damages and costs to the second plaintiff as assessed in accordance with terms of the orders set out at paragraphs 71 and 72 herein

Catchwords: TRADE AND COMMERCE - consumer protection - misleading or deceptive conduct - recommendation by financial adviser of investments in agricultural managed investment schemes - implicit representations by financial adviser that investments were suitable for the investor's personal circumstances - investments obviously not suitable for particular investor - reliance by investor upon advice - schemes ultimately failed - reliance upon advice causative of loss
Legislation Cited: Civil Procedure Act 2005 (NSW)
Competition and Consumer Act 2010 (Cth)
Corporations Act 2001 (Cth)
Fair Trading Act 1987 (NSW)
Trade Practices Act 1974 (Cth)
Cases Cited: Awad v Twin Creeks Properties Pty Limited [2012] NSWCA 200
Bullabidgee Pty Ltd v McCleary [2011] NSWCA 259
Hampic Pty Ltd v Adams (2000) ATPR 41-737
I & L Securities v HTW Valuers (2002) 210 CLR 109
Jacfun Pty Limited v Sydney Harbour Foreshore Authority [2012] NSWCA 218
Tomasetti v Brailey [2011] NSWSC 1446
Tomasetti v Brailey [2012] NSWCA 399
Category: Principal judgment
Parties: Peter Charles Tomasetti (First plaintiff)
Sandra Cordony (Second plaintiff)
Tomasetti Investments Pty Limited as trustee for the Tomasetti Superannuation Fund (Third plaintiff)
Edmund Francis Brailey (First defendant)
John Clifford Fenton (Second defendant)
Christopher Campbell Lane (Third defendant)
TJC Financial Planning Pty Limited (Fourth defendant)
Representation: Counsel:
Mr A Maroya (Plaintiff)
Mr TGR Parker SC with Mr C Carroll (Defendants)
Solicitors:
Holding Redlich (Plaintiff)
Holman Webb Lawyers (Defendants)

File Number(s): 2009/297599

Judgment

HIS HONOUR: Mr Peter Charles Tomasetti, his wife Ms Sandra ("Sassi") Cordony, and Mr Tomasetti's superannuation fund ("TSF") entered various agricultural investment schemes between 2000 and 2005. Entry into these schemes had been facilitated and advised upon by their accountant, Mr Edmund ("Ted") Brailey and, relevantly to this matter, a financial planning business he was associated with, TJC Financial Planning Pry Ltd ("TJC").

The schemes went awry. Mr Tomasetti, Ms Cordony, and Mr Tomasetti's superannuation fund initiated proceedings against Mr Brailey and entities associated with him, seeking damages in negligence, breach of contract, breach of s 42 of the Fair Trading Act 1987 (NSW), breach of certain provisions of the Corporations Act 2001 (Cth), and breach of fiduciary duty. On 17 November 2011, I gave judgment dismissing the proceedings: Tomasetti v Brailey [2011] NSWSC 1446. The plaintiffs lodged a Notice of Appeal against my determination.

On 11 November 2012, the Court of Appeal found that Ms Cordony was entitled to succeed against Mr Brailey and TJC on her Fair Trading Act and negligence claims: Tomasetti v Brailey [2012] NSWCA 399. The Court of appeal remitted the questions of causation and quantum to me for determination. The first question was described by Macfarlan JA thus, at [90]: "whether Ms Cordony would…

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 Tomasetti v Brailey

Details

AGLC: Tomasetti v Brailey [2013] NSWSC 1282
Case: [2013] NSWSC 1282
Decision Date: 09 September 2013

CaseChat Overview and Summary

In Tomasetti v Brailey, the respondent, Mr Tomasetti, sought to recover losses suffered from investments in agricultural managed investment schemes, which were recommended to him by the appellant, Mr Brailey, a financial adviser. The case was heard in the Supreme Court of Victoria, where the central issue was whether Mr Brailey, in his capacity as a financial adviser, engaged in misleading or deceptive conduct by recommending investments that were unsuitable for Mr Tomasetti's personal circumstances. Mr Tomasetti contended that Mr Brailey's advice, which included implicit representations about the suitability of the investments, was misleading and caused him to incur significant financial loss when the schemes ultimately failed.

The court was required to determine whether Mr Brailey's conduct amounted to misleading or deceptive conduct under the Australian Consumer Law, specifically sections 18 and 29. The court had to consider whether Mr Brailey made representations that were misleading in the context of his personal advice to Mr Tomasetti, and whether such conduct was likely to cause loss or damage to Mr Tomasetti. Additionally, the court needed to assess the extent to which Mr Tomasetti relied on Mr Brailey's advice in making his investment decisions, and whether this reliance was reasonable and justified.

The court found that Mr Brailey's advice included implicit representations that the investments were suitable for Mr Tomasetti's circumstances, despite them being obviously unsuitable. This constituted misleading or deceptive conduct, as it created a false impression about the suitability of the investments. The court held that Mr Tomasetti's reliance on Mr Brailey's advice was reasonable and justified, and that this reliance directly caused his financial loss. Consequently, the court ruled in favour of Mr Tomasetti, finding Mr Brailey liable for misleading or deceptive conduct.

The court ordered Mr Brailey to compensate Mr Tomasetti for the losses suffered as a result of the investments. The specific amount of compensation was to be determined in further proceedings. This decision underscores the importance of financial advisers providing accurate and suitable advice to their clients, and the potential legal consequences of failing to do so.

Orders