Westpac Banking Corporation v Jamieson

Westpac Banking Corporation sought to appeal against a finding of negligence in providing investment advice to a customer, Mr Jamieson, and the subsequent assessment of damages. The appeal raised issues concerning the bank’s responsibility for the full extent of the loss suffered by Mr Jamieson and the application of the rule in Potts v Miller to assess the loss. It was also questioned whether the primary judge had erred in considering what Mr Jamieson would have done had he not been induced to make the investment and associated loans, including whether he would have borrowed and invested in a tax minimising scheme and suffered a loss on that alternative investment.

The court considered the bank’s duty to disclose the risks associated with the investment, particularly that more than 10 per cent of Mr Jamieson’s wealth would be at risk if the investment performed poorly. The court concluded that the bank was indeed negligent in its advice and thus responsible for the total loss suffered by Mr Jamieson. The court found that the primary judge did not err in assessing damages by considering what Mr Jamieson would have done had he not been induced to make the investment. Regarding the “grossing up” of the damages to account for the tax treatment of the award, the court determined that the primary judge correctly assessed the amount of damages and the methodology used to account for the tax treatment was also correct. The court further held that the damages should not be “grossed-up” ad infinitum.

The appeal, cross-appeals, and the application for leave to appeal were dismissed, and the parties were granted leave to make submissions as to costs.