Gilmour v Decisionmakers (Waikato) Ltd - [2012] NZHC 298

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2011-419-001358 [2012] NZHC 298

BETWEEN KENNETH GILMOUR Appellant

ANDDECISIONMAKERS (WAIKATO) LIMITED
First Respondent

ANDRODNEY JOHN HARTLES Second Respondent

Hearing: 27 February 2012

Counsel: M Wolff for Appellant
D M O'Neill for First and Second Respondents

Judgment: 8 August 2012

RESERVED JUDGMENT OF WOOLFORD J

This judgment was delivered by me on Wednesday, 8 August 2012 at 11:00 am pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Mr M Wolff, Grimshaw & Co., Auckland.
D M O’Neill, Barrister, Hamilton.

GILMOUR V DECISIONMAKERS (WAIKATO) LIMITED & OR HC HAM CIV-2011-419-001358 [8 August
2012]

Introduction

[1] This appeal is all about the duties of a financial adviser to a client who has made investments through the adviser in finance companies which have subsequently collapsed – in this case, Bridgecorp Ltd (Bridgecorp) and Property Finance Securities Ltd (Property Finance).

[2] In the District Court, Judge Spiller ordered that Decisionmakers (Waikato) Limited (Decisionmakers) pay Mr Gilmour $72,700. Decisionmakers has subsequently been put into liquidation without paying the judgment sum. Mr Gilmour appeals against the Judge’s finding that Mr Rodney Hartles, the sole director and employee of Decisionmakers, was not personally liable for the judgment sum. He also appeals against the Judge’s ruling that two deductions totalling
$27,300 should be taken from Mr Gilmour’s losses of $100,000.

[3] Decisionmakers cross appeals against the Judge’s order that it pay

Mr Gilmour $72,700.

Factual background

[4] Mr Gilmour is a former pharmacist, who was in partnership in an Auckland pharmacy. When he retired from the partnership in about 2000, he received a lump sum of $100,000. He initially invested this in a managed fund through Forsyth Barr but later cancelled the investment because it was making a loss.

[5] Mr Gilmour’s mother died about the time he retired from the partnership. Her estate included a sum of money in an AMP managed fund. The investment was left to Mr Gilmour. Mr Gilmour contacted an AMP representative, Mr Alan Hartles, to discuss the investment. He visited Mr Alan Hartles on 10 May 2000 and
9 June 2000. Mr Gilmour is able to be specific about those dates because of diary notes he made at the time.

[6] Following discussions with Mr Alan Hartles in which Mr Gilmour told

Mr Alan Hartles that he did not wish to invest in another managed fund because of

the losses he had made, Mr Alan Hartles referred Mr Gilmour to his brother, Mr Rodney Hartles, to discuss alternative investments. During the course of his discussions with Mr Alan Hartles, Mr Alan Hartles gave Mr Gilmour an application form for an investment in secured debenture stock offered by Strategic Finance Ltd (Strategic Finance). The application form contained a stamp bearing Mr Rodney Hartles’ name and contact details.

[7] Without consulting Mr Rodney Hartles (Mr Hartles), on 21 June 2000, Mr Gilmour invested a total of $28,000 with Strategic Finance for two years at a rate of 9.15% per annum.

[8] Mr…

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.

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Details

Case: [2012] NZHC 298
Decision Date: 22 February 2012

CaseChat Overview and Summary

In Gilmour v Decisionmakers (Waikato) Ltd, the High Court was called upon to determine the liability of a financial adviser and his employer for the losses incurred by a client after investing his retirement savings in finance companies that subsequently collapsed. Mr Gilmour, the client, sought advice from Mr Rodney Hartles, a financial adviser employed by Decisionmakers (Waikato) Ltd. Following Mr Hartles' advice, Mr Gilmour invested his retirement savings in various finance companies, all of which later failed, resulting in significant financial loss. The District Court had previously found that Mr Hartles was negligent in his advice to Mr Gilmour and that Decisionmakers was liable for the losses. Mr Gilmour appealed against the District Court's decision not to hold Mr Hartles personally liable, while Decisionmakers cross-appealed the liability decision. The High Court allowed Mr Gilmour's appeal in part, holding that Mr Hartles was personally liable under the Fair Trading Act for misleading or deceptive conduct. The Court also adjusted the quantum of damages to be paid by Decisionmakers, ruling that the correct amount was $90,000, and dismissed Decisionmakers' cross-appeal. The Court emphasised the importance of financial advisers adhering to professional standards and thoroughly understanding their clients' needs and risk profiles before providing investment advice.

Orders