Westpac Banking Corporation v Jamieson & Ors

(2015) 104 ACSR 657; [2015] QCA 50

Queensland Court of Appeal

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Interrogate

Catchwords

1. Damages
2. › Assessment of damages
3. › Negligent and misleading investment advice
4. › Whether defendant responsible for total loss including losses attributable to general market decline
5. › Alternative investment to be brought into account in reduction of damages
6. › Whether alternative investment proven on evidence
1. Damages
2. › Assessment of damages
3. › Potts v Miller rule
4. › Whether date-of-transaction measure of loss applies
5. › No-transaction cases distinguished from successful-transaction cases
6. › Whether plaintiff would have entered transaction absent breach
1. Damages
2. › Incidence of taxation affecting damages
3. › Grossing-up of damages award
4. › Whether grossed-up component is assessable recoupment under s 20-20 Income Tax Assessment Act 1997 (Cth)
5. › Whether grossed-up amount must be further grossed-up ad infinitum
1. Corporations
2. › Financial services and markets
3. › Financial products
4. › Duty of financial adviser
5. › Adequacy of Statement of Advice
6. › Whether bank negligent in failing to disclose that more than 10 per cent of net wealth at risk
7. › Whether bank negligent in failing to adequately advise of detriments of borrowing for undeducted superannuation contributions
8. › Australian Securities and Investments Commission Act 2001 (Cth), s 12DA(1)

Quick Take

In 'no transaction' cases where negligent financial advice induced the plaintiff to enter a transaction they would not otherwise have entered, the appropriate measure of loss is the actual loss suffered, not the Potts v Miller date-of-transaction measure. The defendant may reduce damages by proving a specific alternative investment the plaintiff would have made, but must plead this with specificity and prove it rigorously. The grossed-up component of a damages award (compensating for future tax on the assessed loss) is not itself an 'assessable recoupment' under s 20-20 of the ITAA 1997 and does not need to be further grossed-up. A financial adviser who recommends borrowing to make undeducted superannuation contributions must consider and advise on the source of cash flow to repay the debt.