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HAP2 Pty Ltd v Bankier[2020] QCA 152

HAP2 Pty Ltd v Bankier[2020] QCA 152





HAP2 Pty Ltd v Bankier [2020] QCA 152


ACN 005 806 744


Appeal No 5681 of 2019

Appeal No 8942 of 2019

SC No 2715 of 2016


Court of Appeal


General Civil Appeals


Supreme Court at Brisbane – [2019] QSC 101 (Martin J); [2019] QSC 180 (Martin J); [2019] QSC 186 (Martin J); [2019] QSC 198 (Martin J)


21 July 2020




11 November 2019


Sofronoff P and Morrison and Philippides JJA


  1. Appeal number 5681 of 2019 is dismissed.
  2. Appeal number 8942 of 2019 is allowed to the extent that the award of damages should be reduced by $36,075.25 and is otherwise dismissed.
  3. The appellant is to pay the respondent’s costs of both appeals.


TORTS – NEGLIGENCE – WHERE ECONOMIC OR FINANCIAL LOSS – CARELESS ADVICE, STATEMENTS AND NON-DISCLOSURE – PROFESSIONAL ADVISERS – where the respondent was seriously injured in a car accident in 1997 when she was 16 years old – where the respondent was awarded almost $2 million in damages for her losses and injuries – where the respondent would only be able to work casually for the rest of her life due to her injuries, she has significant medical expenses, her condition would deteriorate over time, and where the damages would have to last her the rest of her life – where the respondent sought financial advice about investing the damages from the appellant – where the respondent was young and had limited financial experience –where the respondent had made significant withdrawals from her capital to fund her lifestyle and business enterprises – where the value of the respondent’s investment portfolio significantly decreased – where the trial judge concluded that the appellant had a duty to warn the respondent about the risks of depleting her damages award to an extent that the sum left would no longer serve her needs by overspending – where the trial judge found that the appellant had failed to give appropriate warnings to the respondent – where the appellant submits that the trial judge should have found that such a risk should have been obvious to the respondent – where the appellant submits that to find such a duty would wrongly involve characterising the retainer as one that involved more than “a portfolio review service” – whether the trial judge erred in finding that the appellant had a duty to warn the respondent about material risks

TORTS – NEGLIGENCE – WHERE ECONOMIC OR FINANCIAL LOSS – CARELESS ADVICE, STATEMENTS AND NON-DISCLOSURE – PROFESSIONAL ADVISERS – where the respondent purchased a property at Palm Beach – where the appellant took out a loan to finance the property – where there were no file notes from the appellant about whether the purchase should be paid for from the respondent’s own capital or from a loan – where the trial judge found that no advice had been given – where the trial judge found that questions about the advantages of paying for the investment from borrowings or from capital lay outside the respondent’s experience – where the appellant submits that it was under no duty to warn its client about the potential consequences of borrowing money to buy the property because the purchase of the property “was not the subject of financial planning advice from the appellant” – where the appellant did not put breach in issue if a duty of care was found – where the appellant submits that the trial judge’s reasons were inadequate – where the respondent submits that the appellant was asked to consider the viability of her proposed investment – whether the appellant was under a duty to take care in giving advice about the purchase and funding of the property – whether the trial judge erred in finding that the appellant had a duty to warn the respondent about the financing of the property – whether the trial judge provided adequate reasons in support of this finding

TORTS – NEGLIGENCE – WHERE ECONOMIC OR FINANCIAL LOSS – CARELESS ADVICE, STATEMENTS AND NON-DISCLOSURE – PROFESSIONAL ADVISERS – where the respondent had provided the appellant with a business plan for her photography business – where the appellant told the respondent that she had done a very thorough job in preparing the plan – where the business plan did not consider the costs of wages – where the trial judge found that the appellant’s later warning that the photography business was not “viable” was inadequate to satisfy the duty owed to the respondent – where the appellant did not provide any clear warning about the adverse effect such losses might have upon her ability to fund her necessary expenses in the event that the business was unsuccessful – where the trial judge found that the respondent would not have spent the money she did if she had been appropriately advised – where the appellant submits that the trial judge’s reasons do not explain why the appellant’s warning that the photography business would not be viable was inadequate to satisfy the duty to give reasons – where the appellant submits that the trial judge’s reasons are inadequate about causation – whether it was open on the evidence for the trial judge to find that the respondent would have heeded the advice of the appellant – whether the trial judge’s reasons were adequate in explaining the insufficiency of the appellant’s warning

TORTS – NEGLIGENCE – WHERE ECONOMIC OR FINANCIAL LOSS – CARELESS ADVICE, STATEMENTS AND NON-DISCLOSURE – PROFESSIONAL ADVISERS – where the appellant submits that the respondent was guilty of causing, or contributing to, her own loss – where the appellant submits that the respondent went ahead with setting up a business in the face of the appellant’s opinion that it would not be viable – where the appellant had told the respondent that she had done a “very thorough job of preparing a business plan” and discussed that plan with her – where the appellant did not advise the respondent that if the business failed, the money lost could have a significant effect upon the respondent’s ability to fund necessary expenses in her life –whether the trial judge erred in finding that the respondent did not contribute to her own loss

LIMITATION OF ACTIONS – LIMITATION OF PARTICULAR ACTIONS – SIMPLE CONTRACTS, QUASI-CONTRACTS AND TORTS – ACCRUAL OF CAUSE OF ACTION AND WHEN TIME BEGINS TO RUN – TORTS – where the respondent pleaded causes of action in contract, tort and a cause of action arising by virtue of alleged contraventions of s 945A and s 945B of the Corporations Act 2001 (Cth) – where the appellant had pleaded a limitation defence against the claims in contract and tort but not against the statutory claim – where the appellant submits that the causes of action are statute barred – where the proceeding was commenced on 23 October 2014 – where the appellant submits that the loss crystallised more than six years before the proceeding was commenced – where, on 23 October 2008, the respondent was still being advised by the appellant – where the appellant failed to identify any date at which the limitation period ended – where the appellant failed to say why losses were known or by whom they were known – where the trial judge treated this pleading as abandoned – where the appellant submits that this had not been abandoned at trial – where the appellant submits that the respondent incurred the losses at the time she spent the money – where the respondent submits that her loss resulting from the investment did not crystallise when she paid the money – whether the limitation of actions argument had been abandoned – whether this ground can be re-agitated on appeal for the first time – whether the trial judge erred in concluding that the action was not statute barred

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – where the appellant appeals against the findings of loss – where the trial judge found that the loss had crystallised on 30 June 2010 and awarded damages from this date – whether the trial judge erred in finding that the date of loss was 30 June 2010

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – where the trial judge awarded a component of damages and added to that component an additional sum (“the gross up”) for both the tax payable on the damages and the tax that would be attracted by the gross up sum itself – where the parties were in agreement that a single gross up was appropriate – where the onus lay with the respondent to justify an increase in the award of a second gross up – where the respondent did not do so – whether the trial judge erred in awarding double grossed up damages – whether the damages should be reduced

INTEREST – RATE OF INTEREST AND COMPOUND – INTEREST – where the trial judge awarded the payment of statutory interest from 30 June 2010 – where the appellant challenges the applicable rate of interest – whether the trial judge’s discretion in awarding interest miscarried

Civil Liability Act 2003 (Qld), s 11, s 15

Civil Proceedings Act 2011 (Qld), s 58, s 59

Corporations Act 2001 (Cth), s 945A, s 945B, s 953B

Income Tax Assessment Act 1997 (Cth)

Limitation of Actions Act 1974 (Qld), s 10

Uniform Civil Procedure Rules 1999 (Qld), r 283, r 289

ABN AMRO Bank NV v Bathurst Regional Council (2014) 224 FCR 1; [2014] FCAFC 65, applied

Astley v Austrust Ltd (1999) 197 CLR 1; [1999] HCA 6, cited

Austrust Ltd v Astley (1996) 67 SASR 207; [1996] SASC 5681, cited

Austrust Pty Ltd v Astley (1993) 60 SASR 354; [1993] SASC 3969, cited

Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33, applied

Cullen v Trappell (1980) 146 CLR 1; [1980] HCA 10, applied

Hawkins v Clayton (1988) 164 CLR 539; [1988] HCA 15, cited

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465; [1963] UKHL 4, cited

Jamieson v Westpac Banking Corporation (2014) 283 FLR 286; [2014] QSC 32, distinguished

Keeley & Ors v Horton & Anor [2016] QCA 253, approved

Mutual Life & Citizens' Assurance Co Ltd v Evatt (1970) 122 CLR 628; [1970] UKPCHCA 2, applied

NMFM Property Pty Ltd v Citibank Ltd (No 10) (2000) 107 FCR 270; [2000] FCA 1558, applied

R v Associated Northern Collieries (1910) 11 CLR 738; [1910] HCA 61, cited

Serisier Investments Pty Ltd v English [1989] 1 Qd R 678; [1988] QSCFC 115, considered

Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247, cited

State of Queensland v Kelly [2015] 1 Qd R 577; [2014] QCA 27, cited

Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35, applied

Westpac Banking Corporation v Jamieson [2016] 1 Qd R 495; [2015] QCA 50, distinguished

Wilson v Rigg [2002] NSWCA 246, cited


S Couper QC, with S Eggins, for the appellant

D J Campbell QC, with B A Hall, for the respondent


Moray & Agnew for the appellant

Shine Lawyers for the respondent

  1. [1]
    SOFRONOFF P:  The respondent, Michelle Bankier, was seriously injured in a car accident in 1997 when she was 16 years old.  Ms Bankier’s injuries affected her ability to study but she nevertheless completed Grade 12 with a high OP score and was accepted into a marine biology course at Griffith University to begin in 2000.  Five years after the accident Ms Bankier was awarded almost $2 million in damages for her losses and injuries.  She then approached a financial planner, Mr Anthony Avery, who was at the time the principal of the appellant.[1]
  2. [2]
    Mr Avery had been working in the financial services industry for some time and possessed the necessary statutory credentials that entitled him to offer financial advice to the public.  He was acquainted with Ms Bankier’s mother before she consulted him.  The trial of Ms Bankier’s claim for damages was due to start in the middle of 2002.  Early in that year she learned that a home unit was for sale near where she was living.  She approached Mr Avery for his advice.  She had no assets or income.  Mr Avery advised her that as long as the purchase could be financed, it would be a good idea.  He introduced her to a financier who was prepared to lend Ms Bankier the purchase money on terms that capitalised the interest on the loan pending her receipt of damages for her injuries.  Ms Bankier bought the unit for about $355,000.
  3. [3]
    After Ms Bankier secured her award of damages she and her mother met Mr Avery at Ms Bankier’s mother’s house on 1 October 2002.  According to Mr Avery’s contemporaneous note, which the trial judge in this proceeding, Martin J, accepted as accurate, Ms Bankier informed him as follows:

“(a) She was in a family car accident some 5 years ago.

  1. (b)
    She had major internal injuries, back and leg.
  1. (c)
    Shelli[’s] accident caused her to loose [sic] half of her intestine and has problems with her leg and back.  She is restricted in her diet and ability to work and exsert [sic] much effort therefore she has been paid out $1,966 million and she may not be able to work.  What she would like to do is finish her marine biology course and then do a photography course and be a self employed photographer.  But of course she can only work casually.
  1. (d)
    She has significant medical expenses and this money has to last her the rest of her life.  She wants to achieve both growth and income from the balance of this money.  She would like to invest $1 million into a portfolio that is going to produce that income.  The income that she is going to require we worked out to be $54,000 net of tax pa.  We are going to have to come up with a portfolio that is going to produce this.  We want to make sure we have some growth in the portfolio.  The balance of $283,000 she would like to invest into direct property such as units possibly using neutral [sic] gearing strategies.
  1. (e)
    The budget is included.  Her risk profile is ‘Moderately Conservative’ although we are going to make her a ‘Balanced’ investor.”
  1. [4]
    Ms Bankier filled in a written questionnaire that was given to her by Mr Avery.  He said that it would be the basis for a budget and he would use it to determine how much money she needed to live on.  He explained that the money that she gave him could be invested and that it would earn income.  That income, after tax, would have to cover her living expenses.  He explained that it was important to stick to the budget and not to “eat into capital” by selling any of the investments.  Ms Bankier filled in the questionnaire in which she calculated that her yearly living expenses would be $54,096.
  2. [5]
    Ms Bankier signed a document headed “Client Agreement”.  Relevantly, the document stated:

“I/We request that a Financial Plan be completed based upon the information supplied by me/us in this document and acknowledge by it as being correct assessment of my/our current financial position  I/We understand that a fee of $550 will be charged for the preparation of a plan.”

  1. [6]
    In a file note dated a week after the meeting, Mr Avery recorded, relevantly:
    1. (a)
      Ms Bankier’s injuries caused her to lose part of her intestine;
    2. (b)
      She has problems with her leg and her back;
    3. (c)
      She is restricted in her diet;
    4. (d)
      She is restricted in her ability to work;
    5. (e)
      She is restricted in her ability to exert much effort;
    6. (f)
      She may not be able to work;
    7. (g)
      She can only work casually;
    8. (h)
      She has significant medical expenses;
    9. (i)
      The damages that she will receive “has to last her the rest of her life”;
    10. (j)
      She wants to achieve growth and income;
    11. (k)
      She requires income of $54,000 net of tax per annum; 
    12. (l)
      The appellant had to “come up with a portfolio that is going to produce this”.
  2. [7]
    Mr Avery made a note that he wanted to be “cautious about investing”.  He noted that he intended to charge 0.77 per cent including GST “on the million” and that this fee would include preparation of Ms Bankier’s tax return.  He stated that he intended to charge an “initial upfront fee of 1.1 percent of $1 million” as well as the “initial plan fee of $550”.
  3. [8]
    The next meeting took place on 22 October 2002.  By a letter dated 21 October 2002, which enclosed Mr Avery’s proposal for Ms Bankier’s investments, Mr Avery said, relevantly:

“Thank you for the opportunity to discuss your financial situation and lifestyle objectives.

After your careful consideration, we can assist you with the implementation of the recommendations of this Statement of Advice …

In addition, we can provide you with the ongoing service necessary to ensure that your plan continues to meet your future financial objectives.”

  1. [9]
    In the accompanying document styled “Statement of Financial Advice”, Mr Avery said:

“To determine the structure of your financial plan we should first outline your lifestyle objectives.  The appropriate investment strategy will be constructed based on both your financial and lifestyle objectives and then finally the most appropriate investments will be selected to assist you achieve the goals.

The lifestyle objectives that were discussed and specifically targeted during our meeting have been summarised below.”

  1. [10]
    After noting that, as her immediate “lifestyle goal”, Ms Bankier wanted to repay the loan for the purchase of her home, to make large gifts to her mother and brother, to pay her lawyers, to pay for “home improvements and other costs”, and to pay Mr Avery $11,000 by way of fees, Mr Avery noted that Ms Bankier’s wish was to “implement a long term investment strategy to provide adequate tax effective income to meet current and projected living expenses”, which, the document stated, she had estimated to be $54,000 per annum indexed to inflation.
  2. [11]
    Another “lifestyle goal” was to “[p]ursue a career as a self employed [sic] freelance photographer”.
  3. [12]
    Mr Avery also noted Ms Bankier’s desire to:

“Develop an ongoing business relationship with your lifestyle financial adviser to ensure your investment strategy continues to meet your needs over time.”

  1. [13]
    After setting out the kinds of investments that he recommended, the document stated:

“The income would consist of dividends and interest from investments, supplemented by capital growth drawings as necessary to meet your needs.”

  1. [14]
    The document then set out the particular investments that Mr Avery recommended, which would cost about $1 million.  These were said to be expected to “yield” $58,045.
  2. [15]
    The document noted that there would be an initial fee of 1.1 per cent of $1 million, namely $11,000, but there would be a deduction from this sum in the amount of brokerage earned by the firm from third parties.  There would be an ongoing “Portfolio Review Service” fee of 0.77 per cent of $1 million payable at the rate of $641 per month.
  3. [16]
    The document proposed that $710,000 would be “held in the AssetChoice Wrap Account” (emphasis in the original).  Later in the document, Mr Avery stated that “AssetChoice’s product design provides you with greater control over your investments” and that “AssetChoice offers quality service such as … Consolidated reporting [and] … Wrap Connect … access to your portfolio information 24 hours a day …”.
  4. [17]
    Mr Avery stated in the document that “AssetChoice” would charge “account keeping fees” of 0.10 per cent per annum for a balance over $1 million, that is to say, $1,000 per year.  In addition, “AssetChoice” would charge a “Client Account” fee of $100 annually.  Ms Bankier would also pay “Fund Manager Fees” of 0.46 per cent on the “AssetChoice Invest Wrap” to an entity other than the appellant, as well as an annual “Portfolio Review Service” fee of $550 that was specifically referrable to her proposed investments in three particular investments.
  5. [18]
    This “Portfolio Review Service” was described as follows:

“Investing to create and maintain wealth is a complex, demanding and full time job.  Numerous factors will have an impact on your investment portfolio and overall financial position over time.  These include;

  • Your changing goals
  • The economic environment
  • The investments available
  • Investment sector performance
  • Taxation position of investments
  • Your taxation position
  • Fund manager performance, and
  • Investment performance

Investing is therefore a serious business requiring ongoing advice from a professional advisor.  Avery Financial Planning Pty Ltd provides an ongoing fee based Portfolio Review Service to meet this need.

This service is provided on a retainer basis.  An agreement is signed by both parties detailing features of the service and responsibilities of each party.  This is enclosed.  It gives you freedom of contact with your adviser and permits Avery Financial Planning Pty Ltd to raise issues of concern, identify opportunities, and take appropriate action.  You retain full control and ownership of your investments at all times.  Avery Financial Planning Pty Ltd acts in an advisory capacity only.

Recommendation for changes to investments as necessary due to changes in personal circumstances, taxation laws, government regulations, fund managers, investment products or economic circumstances.  Liaison with other professionals as required.” (emphasis in original)

  1. [19]
    Mr Avery set out Ms Bankier’s “Proposed Annual Taxation Liability”.  Her investment income was said to be $58,049.[2]  This was calculated to produce for Ms Bankier a “Total Disposal Income”, after tax and expenses, in the higher amount of $62,496.  This financial alchemy was partly the result of ignoring “Fund Manager Ongoing Administration Fees” of $3,479, the AFP Annual Fee of $550 and the Annual Portfolio Review Service Fee of $7,700 and partly by adding a “capital growth drawdown” in the sum of $12,500 to the net after tax and expenses income.  The result was a calculated disposable income in Ms Bankier’s hands of $62,496.
  2. [20]
    If the capital growth drawdown had not been added to disposable income, and if all of the fees that Ms Bankier had to pay had been taken into account, then her net income for the first year would have amounted to:

Gross Yield (Total Assessable Income)


AssetChoice Account Keeping fee


AssetChoice Client Account fee


One time Appellant’s fee


Fund Manager Fee


Appellant’s Annual Fee Portfolio Review Service


Appellant’s Portfolio Review Service Fee


Total Disposable Income (before tax)


  1. [21]
    It can be seen that the fees payable by Ms Bankier to the appellant and others represented approximately 41 per cent of the total revenue that she would receive from the recommended investments.  The calculated return from the investments that Mr Avery recommended to her would be insufficient to meet her budget.
  2. [22]
    There is no evidence that the significance of the proportion of Ms Bankier’s annual gross income that had to be paid away by her to Mr Avery and to other financial professionals was ever the subject of advice.
  3. [23]
    The failure to tell her these things, if there was a failure, does not constitute any claimed breach of a duty of care on the part of the appellant and no such breach was found.  However, these facts are relevant to the questions of breach of duty as alleged and also to the appellant’s plea of contributory negligence because they bear upon the appellant’s defences that:
    1. (a)
      Ms Bankier did not adhere to her estimated expenditure of $54,000;[3]
    2. (b)
      the estimated investment income did not account for capital drawdowns to meet expenditure exceeding $54,000.[4]
  4. [24]
    On 22 October 2002 Mr Avery gave a direction to one of his staff to see to it that the “Portfolio Service Agreement form …[is] witnessed and fully completed”.  However, the foreshadowed agreement was not in evidence, if it existed.
  5. [25]
    The appellant alleged that the contract between them was to be found in the document that Mr Avery and Ms Bankier signed on 1 October 2002.
  6. [26]
    The Further Amended Defence does not identify any other document containing any terms of the contract between the parties governing their relationship after 22 October 2002.  That does not matter because, for its part, the appellant alleged that it owed “a duty to take reasonable care and skill” in the performance of the services that it provided and Ms Bankier ultimately based her case upon a tortious breach of duty and not upon any breach of contract.
  7. [27]
    However, the content of the documents that were given to Ms Bankier by Mr Avery on 1 October and 22 October bear upon nature and scope of the parties’ relationship and expectations of each other.
  8. [28]
    Mr Avery advised Ms Bankier to establish one bank account with Macquarie Bank from which she could draw her living expenses and another bank account into which her investment income would be paid.  This latter account would be controlled solely by Mr Avery and he would transfer money into the Macquarie account upon Ms Bankier’s request.  Although the appellant was always obliged to obey Ms Bankier’s instructions to sell investments and to transfer available funds into her Macquarie account, the arrangement meant that, practically, Mr Avery controlled access to all invested funds and would know when a demand for money was being made.
  9. [29]
    Mr Avery gave his client a list of proposed investments in shares, managed funds and other forms of securities and deposits amounting to $1 million which Mr Avery predicted would “yield” $58,045.  There was no reference to this sum being, as Mr Avery’s file note had expressed it, “net of tax per annum”.  On the contrary, the table of calculations that have already been referred to show that this was not so and, because of the effect of fees payable to the appellant and tax liability, this “yield” would not meet Ms Bankier’s required purposes.
  10. [30]
    Ms Bankier acted upon Mr Avery’s advice and gave him instructions accordingly.
  11. [31]
    Within a short time Ms Bankier decided not to pursue her studies in marine biology and decided instead to be a professional photographer specialising in surf photography.  She proved to be skilled and talented and she was able to sell photographs to surfing magazines.  In March 2004 Ms Bankier decided to travel to continental United States, South Africa and Hawai’i in pursuit of her vocation.  She spoke to Mr Avery and asked him to give her the money to enable her to do that.  His note dated 8 March 2004 relevantly records:

“.. she will need some money to fund these trips.  Were [sic] possible they will be photography related

Taihiti [sic] in May, will hopefully be working as an asst [sic] to a photographer estimated cost $4000

San Deiago [sic] for a month.  her boyfriend is moving there and she will do work experience in the surf mags for a month estimated cost $7000

South Africa in September for her cousin’s wedding, a surf mag is tryin [sic] to do a story on south africian [sic] surfing then estimated $7000

Hawaii in nov-dec [sic] for a month.  Costs will be down as she will be staying with a friend in a mansion.  Estimated cost $7000

Therefore Shelley [sic] needs 25K for travel this year.”

  1. [32]
    Mr Avery said that he would have to sell some of her investments to raise the money.  He sent her a Statement of Financial Advice on 25 March 2004.  Relevantly, the covering letter stated:

“This scope of advice is specifically in relation to additional investments and the redemption of $25,000 required for travelling expenses and does not include advice on other areas such as estate planning, taxation, insurance, retirement planning etc.”

  1. [33]
    In a schedule headed “We recommend you take the following action” there appeared a proposed payment of $25,000 into Ms Bankier’s Macquarie Cash Management Trust Account.  Ms Bankier was invited to sign a document headed “Client Acceptance and Authority to Proceed”.  The document said, inter alia:

“I/We accept the recommendations made in the Statement of Advice and give authority to: … Anthony Avery a Representative of Avery Financial Planning Pty Ltd, to proceed with the implementation of the recommendations …”

  1. [34]
    A further “Statement of Advice” dated 13 July 2004 similarly “recommended” that $12,000 be drawn from investments and banked into the Macquarie account.  Another such recommendation was made on 25 November 2004 in connection with a sum of $50,000.  A “Statement of Advice” dated 7 February 2005 “confirmed” that the “strategy and information set out in the previous SOA remain appropriate and relevant”.  Another such statement was made on 30 June 2005.
  2. [35]
    Between May and October 2004, Ms Bankier asked Mr Avery to transfer the following further sums into her account so that she could draw them:
    1. (a)
      $12,000 by email dated 26 May 2004;
    2. (b)
      $8,000 by email on 21 July 2004 “for the card and travel expenses”;
    3. (c)
      $10,000 by a phone call on 29 July 2004 “to pay credit card and trip to South Africa for cousins [sic] wedding in Sept 2004”;
    4. (d)
      $7,000 by a phone call on 14 September 2004 “to fund her trip to South Africa and her trip to Hawaii”;
    5. (e)
      $10,000 by email on 3 October 2004 “just for my credit card and the next couple of months”;
    6. (f)
      $10,000 by a phone call on 11 November 2004; and
    7. (g)
      $10,000 by a phone call on 17 November 2004.
  3. [36]
    On 15 December 2004 Ms Bankier’s mother, who held a power of attorney for her daughter, attended at Mr Avery’s office and signed some documents on her daughter’s behalf.  On 31 January 2005, both Ms Bankier and her mother attended upon Mr Avery, whose note records:

“We did not get a chance to discuss Shellies [sic] budget as they were in a hurry but said after Shellies [sic] Photo Ehibition [sic] is over they will do it and come back to me to determine if portfolio income is covering expenditure.”

  1. [37]
    In April of 2005 Ms Bankier sent an email to Mr Avery to tell him that she had found a house that she wanted to buy as an investment.  She said:

“I have done my budget with my household/living expenses coming [i]n at about 3000 a month at most (30 000 to 35000 a year.)

The BlueSphere/business expenses[5] would be on top of this … Mum could give you exact figures since she is my admin expert and has done the expenses and tax.  I could further cut down the monthly expenses.

At our last meeting you mentioned breifly [sic] that the investments were bringing in about $60 000 a year.  Is this correct?  Mum says the last tax year shows an income of 44 000, but is this because it is showing the figures for last fiancial [sic] year?

What do you think?  I am keen on making this sort of investment …

Would you be able to work out the figures and see if it would be viable?  for the business costs call Mum and she call fill you in … anyway just thinking it would be [a] good idea otherwise soon houses here will be out of my reach completely.

Please let me know what you think!...”

  1. [38]
    Martin J found that, in a subsequent phone call, Mr Avery told Ms Bankier and her mother that if she “spends any money [travelling in connection with her photography venture] she will have to draw down on capital”.
  2. [39]
    During 2005 Ms Bankier decided to shift the subject of her photography from surfing to landscapes and that, having regard to her physical limitations, she could best conduct her business from shop premises.  She decided to lease a space for that purpose.  She consulted Mr Avery and he told her to prepare a business plan.  She did this.  In that document she explained that in order to achieve a good turnover she wished to create a “presence” rather than work from home.  If she achieved the hoped-for turnover, she wrote, she would then “not have to use my capital to fund my business”.
  3. [40]
    On 18 October 2005 Mr Avery recorded in a file note that he had advised Ms Bankier to “do a business plan before rushing into it”.  He noted that he had told her that he did not think that the business was a “viable option” but that Ms Bankier had said that “she could make it work”.  In her evidence, Ms Bankier explained that the business was not intended by her to be “a big money earner”.  It was, rather, “something for me to focus on, purpose, meaning, because I had the income from the portfolio, and I was backed up by a large amount of money that I had at the time”.  In fact, in December 2005, Mr Avery had reported that the portfolio was worth $1,164,461.84.  That sum represented a capital gain of $179,675.75 on an investment of $984,786.  Mr Avery reported that she had “accumulated surplus funds as a result of distributions from the underlying investments”.  He recommended an investment for these “surplus funds” that would “provide greater income and growth”.
  4. [41]
    Mr Avery then helped Ms Bankier finalise the written business plan.  Ms Bankier did not rush into signing a lease and she ultimately signed one that would commence in 2007.
  5. [42]
    In the meantime, during 2006, Mr Avery continued making recommendations.  On 11 April 2006 he embarked upon planning for a “taxation scenario” for the financial year 2005 to 2006.  He was fully cognisant of her tax position not just because he was her financial adviser but also because he prepared her taxation returns.  On 11 April 2006 he estimated that her taxable income would be $73,027 and that she would have to pay $11,758 by way of income tax.  On that footing, he recommended that she should borrow money to invest in “The Great Southern 2006 Organic Olives Income Project”.  He said that this was an investment with “a high level of investor security”.  Inconsistently on the next page of the same document he also advised that the investment “should be considered as speculative”.  He did not explain how he reconciled this with his note that he wanted to be “cautious about investing”.[6]  Mr Avery recommended to Ms Bankier that she should borrow the whole investment sum from the promoter of the scheme.  According to Mr Avery, the promoter would lend her the whole investment sum and she could repay it at a rate of $3,333.33 per month over 12 months.  The result, as calculated by Mr Avery, would be that Ms Bankier’s net income in the year ending on 30 June 2006 would be $66,157.  This took into account a tax deduction of $28,000 in relation to the purchase of the interest in the Olive Project.  In the following year, however, Ms Bankier would have to repay the loan and would not have the benefit of any such tax deduction.  The result would be, on Mr Avery’s calculation, that the net income in her hands would amount to $19,632.  Mr Avery’s calculation did not go on to explain how Ms Bankier was going to get the balance of the money that she would need to support herself.  Mr Avery disclosed that Ms Bankier’s purchase of a $40,000 interest in the Olive Project would earn his firm $4,400 but he explained that this was “not an additional charge to you” because the sum would be paid by the promoter.  On 4 May 2006 Mr Avery said that, because Ms Bankier intended to be in business, “she needs more of a tax deduction”.  He complimented her written business plan as “very thorough”.  Ms Bankier accepted his recommendation and acted upon his advice.
  6. [43]
    In the same statement of advice, Mr Avery informed Ms Bankier that the fees that the appellant was charging her for financial advice would now be increased to $770.38 per month because that represented 0.77 per cent of the current value of the portfolio, namely $1,200,593.  The total fees which the appellant charged may well have represented a tiny proportion of the capital sum that belonged to Ms Bankier.  However, they represented a significant proportion of Ms Bankier’s gross income in 2005/2006 (on Mr Avery’s calculations) and in the following year, 2006/2007.
  7. [44]
    On 8 May 2006 Mr Avery recommended that Ms Bankier borrow $40,000 to invest in the Olive Project under the terms of a loan which required her to repay both principal and interest.  According to a “2006 Investment Model” furnished by Mr Avery and which was printed on the letterhead of “Great Southern Securities”, Ms Bankier would have to pay $571.52 per month over ten years to enjoy this investment.  The footer on each page of the “2006 Investment Model” stated:

“This report is for GSS authorised representatives as a guide only and not for use by investors or potential investors …”

  1. [45]
    On another page of the document, under the same letterhead and with the same footer, there was a section headed “Cash Flow”.  Ms Bankier signed an acceptance of the advice and authorised the expenditure of her money on the recommended purchase.  Later the investment failed and Ms Bankier lost $12,500.  His Honour found that Mr Avery had not been careless in recommending that investment.
  2. [46]
    Ms Bankier found premises and leased them.  The business began in early 2007 and it never produced a profit.  It closed in late 2009.
  3. [47]
    In his evidence at the trial, Mr Avery claimed to have given various warnings to Ms Bankier about the potential repercussions of her spending.  For various reasons, his Honour declined to accept that evidence.  However, Martin J accepted the reliability of the following file note made by Mr Avery about a meeting he had with Ms Bankier on 10 October 2008:

“Shelli’s current net value of her investment portfolio is $800,000.

I advised Shelli that she needs to review the situation Christmas 2008 to review whether the business is consistently the same even during the busy Christmas period.

I advised her that depending upon the results; she may need to consider selling the business (if that was possible, and I asked her), or shutting up the shop, and trying to get the shop re-leased, and just pay the rent, that way she would be able to save on the other costs apart from rent.  (Shelli is currently spending $15,000 a quarter, which is about the same as the rent).

So the business is effectively going broke.  I was very blunt about this fact.  I had talked to her about this the last time I sat down with her.

I said to her (very seriously) that she cannot continue to be funding this business and her lifestyle to this extent or she will be using up all her capital that she was given when she had the car accident, which was supposed to look after her for the rest of her life.”

  1. [48]
    His Honour found that this was the first time that Mr Avery had explicitly warned Ms Bankier that her spending on her business could lead to the loss of the capital sum upon which she had to rely for the rest of her life.  Prior to that, his Honour found, Mr Avery had voiced no connection between her spending and the actual dissipation of her essential capital resource.
  2. [49]
    His Honour found that, had Mr Avery warned Ms Bankier about the consequences of her spending, about her investment in an agri-business, about her borrowing money to buy a real property and about commencing her business, she would have heeded his warnings and would not have spent the money or entered upon those investments.
  3. [50]
    In June 2006 Mr Avery had valued Ms Bankier’s investments at $1,565,200.  At the end of 2008 he told her that they were worth only $700,000.  He ceased being Ms Bankier’s financial adviser at the end of June 2010.
  4. [51]
    In her Fourth Amended Statement of Claim, Ms Bankier alleged, relevantly:
    1. (a)
      That she had received an award of damages, nett of reimbursements, of $1,746,682.83 for personal injuries that she had suffered; (the appellant did not admit this fact);
    2. (b)
      The injuries had partially incapacitated her for life and her health and mobility would deteriorate over time; (the appellant did not admit this);
    3. (c)
      Her earning capacity had been substantially reduced; (the appellant did not admit this);
    4. (d)
      She could only work part time; (the appellant did not admit that he knew this);
    5. (e)
      She was restricted in the kind of work that she could do; (the appellant did not admit that he knew this);
    6. (f)
      Ms Bankier was partly dependent upon her damages, and the income they generated, to support herself; (the appellant denied this);
    7. (g)
      The damages had to be amortised over her lifetime to provide her with for her needs; (the appellant denied this);
    8. (h)
      The damages were her only asset; (the appellant denied this);
    9. (i)
      She was vulnerable to the dissipation of the damages; (the appellant denied this);
    10. (j)
      She was young, had limited life experience, did not have a clear understanding of her financial needs, had limited financial experience and was inexperienced in investment of money; (the appellant denied this);
    11. (k)
      She was reliant upon the appellant for advice about her financial circumstances; (the appellant denied this).
  5. [52]
    Mr Avery admitted that he never obtained a copy of the judgment containing the judicial findings that supported the award of damages.  Nor did he ever obtain copies of the medical or other expert reports that were referred to in that judgment.  The appellant expressly denied that Ms Bankier’s financial goal was to “use the damages to provide adequate tax effective income to meet current and projected living expenses and to meet the future expenses associated with medical and other treatment which were identified in the judgment”.[7]  Her goals, the appellant alleged, were no more than to achieve enough income to meet her expected budget of around $54,000 per annum, indexed for inflation.
  6. [53]
    Martin J found that Mr Avery knew from the first interview that:
    1. (a)
      His prospective client had suffered major injuries and that these injuries had affected her ability to work;
    2. (b)
      She may not be able to work;
    3. (c)
      She could only work casually;
    4. (d)
      She would have significant medical expenses for the rest of her life; and
    5. (e)
      The money awarded to her had to last for the rest of her life.
  7. [54]
    His Honour also found that Mr Avery knew that:
    1. (a)
      The award of damages was the largest sum of money with which Ms Bankier ever had to deal;
    2. (b)
      She had no or limited exposure to financial dealings concerning investing money; and
    3. (c)
      She would be unable to earn enough from working to support herself.
  8. [55]
    It is convenient to summarise the main points of the case of each of the parties.  The substantial facts alleged by Ms Bankier to support her case were these:
    1. (a)
      Ms Bankier was reliant upon an expert financial adviser to safeguard her damages award against avoidable losses;
    2. (b)
      Mr Avery, for whom the appellant was vicariously responsible, knew this;
    3. (c)
      Acting with reasonable care, a financial adviser who was undertaking the investment of Ms Bankier’s damages would have:
      1. identified Ms Bankier’s needs now and in the future;
      2. identified Ms Bankier’s present circumstances and personal circumstances in order to determine the scope of advice that was required; and
      3. ascertained Ms Bankier’s financial and “lifestyle” goals in order to determine whether, from the perspective of making recommendations about how to invest the damages, those goals were or were not realistic;
    4. (d)
      Acting with reasonable care, such an adviser would have warned Ms Bankier if he detected that any of the ways in which she proposed to use the damages money would be likely to put in jeopardy her retention of sufficient money to serve the needs for which the damages had been awarded;
    5. (e)
      Mr Avery failed to warn Ms Bankier that:
      1. her requests for money substantially above the budgeted amounts would jeopardise her retention of the damages award in an amount that she would need;
      2. her intention to commence her photography business in the way in which she wished was similarly dangerous; and
      3. borrowing money in order to make investments was similarly dangerous.
  9. [56]
    For its part, the defendant’s response to this case was, substantially, as follows:
    1. (a)
      Ms Bankier was not inexperienced;
    2. (b)
      She was not reliant upon Mr Avery’s advice;
    3. (c)
      The only agreement between the parties was that which was contained in the document signed by her on 1 October 2002, pursuant to which Mr Avery promised to give Ms Bankier a “financial plan” that was “based upon information” given by her on that date, for a fee of $550;
    4. (d)
      The defendant had a duty to take reasonable care “only in the performance of its services which it provided”;
    5. (e)
      In the course of performing those services, Mr Avery conducted an appropriate investigation about Ms Bankier’s “investment objectives, financial situation and particular needs” and then made “recommendations that had a reasonable basis and were appropriate to the objectives, financial situation and financial needs”;
    6. (f)
      In doing so, Mr Avery acted in accordance with his retainer;
    7. (g)
      Ms Bankier insisted upon embarking upon her photography business although Mr Avery had advised against it because he thought that the business was not viable;
    8. (h)
      In any case, the risk of depletion of the damages award by spending beyond budget levels, by borrowing money and by engaging in a risky business venture was a risk that was obvious to, and was actually known by, Ms Bankier; and
    9. (i)
      If Mr Avery was careless and caused loss, then Ms Bankier caused or contributed to her own loss by overspending.

Grounds of appeal

  1. [57]
    The appellant pleaded 37 grounds of appeal (not including sub-paragraphs).  Such a glut of grounds means, inevitably, that the grounds are repetitive.  This superabundance of grounds can best be understood if they are placed into categories as follows:
    1. (a)
      The trial judge was wrong to conclude that Mr Avery had a duty to warn Ms Bankier about the risks of depleting her damages award to an extent that the sum left would no longer serve needs her by overspending, including by venturing into a photography business.  His Honour should have found that such a risk should have been obvious to her.  In addition, to find such a duty would wrongly involve characterising the retainer as one that involved more than “a portfolio review service”: grounds 5, 6, 7, 8, 9, 10, 11, 12, 22 and 23;
    2. (b)
      The trial judge was wrong to find that Mr Avery had failed to give appropriate warnings because he had in fact done so: grounds 13 to 21 and 24;
    3. (c)
      The trial judge was wrong in finding that, had Mr Avery given appropriate warnings (or had the defendant not contravened s 945A of the Corporations Act 2001 (Cth)), Ms Bankier would have heeded his advice and would not have incurred the losses: grounds 27, 28, 29, 30, 31, 36 and 37;
    4. (d)
      The trial judge was wrong to find that Mr Avery had not adequately investigated Ms Bankier’s circumstances, thereby causing the appellant to contravene s 945A of the Corporations Act 2001 (Cth): grounds 34 and 35;
    5. (e)
      The trial judge’s reasons were inadequate to explain the findings about causation concerning the photography business: ground 32;
    6. (f)
      The plaintiff was guilty of causing, or contributing to, her own loss: ground 33; and
    7. (g)
      The causes of action were statute barred:  grounds 1, 2, 3 and 4.

The duty owed to Ms Bankier

  1. [58]
    The existence of a duty of care in a case like the present, and the scope of such a duty, depends upon the nature of the relationship between the parties and upon the particular circumstances surrounding the relationship and also the alleged breach.[8]
  2. [59]
    At the trial, the relevant legal principles were not in issue[9] and it was common ground that Mr Avery owed Ms Bankier a duty of care.  In its written submissions at trial,[10] the appellant submitted:

[11] At common law, the duty is to exercise that standard of reasonable care to be expected of a reasonably competent person professing the skills of a financial planner.  It will arise when the advisor knew or ought reasonably to have known that the advisee would rely upon the advice.  It includes a duty to warn which has been compared, in the context of investment advice, with that articulated by the High Court in Rogers v Whitaker to warn of material risk.  A material risk is one which, in the circumstances of the particular case, a reasonable person, if warned of the risk, would be likely to attach significance to.

[12] A broader scope to the retainer and of the duties may arise with an inexperienced client than will be the case with an experienced client.  The relevant statutory provisions, though in the nature of a negligence formulation, recite some specific obligations such as taking reasonable care to ascertain the client’s personal circumstances.

[13] The plaintiff must prove actual reliance upon the advice complained of and that acting in that reliance caused the claimed loss.  Relevant to causation is the question of what the plaintiff would have done if, in fact, a warning had been issued.” (footnotes omitted)

  1. [60]
    In her own written submissions at trial, Ms Bankier submitted that there was a material risk of harm that, if the judgment sum that she had entrusted to the defendant was sufficiently reduced, then she would be unable to afford her future medical and other necessary expenses because her physical condition was never going to improve but would, instead, deteriorate so that she would not otherwise be able to earn the necessary money.[11]  Ms Bankier did not know that she faced this risk by her expenditure in excess of her “budget”, by borrowing money for investment purposes and by starting a photography business in 2007.[12]  This was because she was young, inexperienced and, therefore, financially naïve[13] and wrongly believed that she had enough money to afford these expenditures.  She had been told that Mr Avery’s recommended investments would make her capital grow and such growth would replace the money she was spending.  The documents that Mr Avery gave her supported that belief.[14]  However, this risk was reasonably foreseeable by Mr Avery.[15]  The risk was material.[16]  She submitted that these circumstances placed Mr Avery under a duty to warn her of these risks as material risks.[17]  She submitted that, had Mr Avery done so, she would not have depleted her capital.
  2. [61]
    The scope of the contractual retainer was unclear.  The document that Ms Banker first signed related specifically to an obligation by the appellant to give her a “financial plan”.  A comprehensive document containing all the contractual terms of the retainer was never produced.  However, it was plain beyond argument that the appellant undertook to advise Ms Bankier about what investments she should and should not make and undertook to execute a plan conceived by himself and authorised by Ms Bankier after considering that advice.  The plan was not static but was varied from time to time after Mr Avery had given further advice.  The appellant was conducting a business for reward in providing such advice and it held out itself, and Mr Avery, as possessing the necessary skills and competence that were required for that purpose.  As he himself wrote, there was to be an “ongoing business relationship” between them.  He would “ensure [that her] investment strategy continues to meet [her] needs over time”.[18]  The appellant’s concession at trial that Mr Avery was under a duty to warn Ms Bankier about material risks to her capital was correct.
  3. [62]
    The law imposes a duty upon those who engage upon a calling, profession or business that requires the application of skill and competence not possessed by the ordinary person to exercise that standard of skill and competence generally possessed and applied by persons engaged in such calling, profession or business.  A person who carries on a business which involves the giving of advice of a kind which calls for special skill and competence thereby represents to the recipient of advice that the adviser claims to possess, and will apply, that degree of skill and competence that is generally possessed and exercised by people in the business of giving such advice.[19]
  4. [63]
    As the appellant acknowledged at trial, it has also been established that in the case of a financial adviser part of this duty is a duty to warn the client about material risks of which the adviser is aware, or of which the adviser should have been aware,[20] but of which the client is unaware.  A material risk, in this context, is one to which a reasonable person in the client’s position would attach significance if warned of it.[21]
  5. [64]
    In ABN AMRO Bank NV v Bathurst Regional Council,[22] the material risk was the risk that projected rates of return and growth of an investment might not be achieved so that there was an element of commercial risk-taking involved for which the client must be prepared to take responsibility if the advice was acted upon.  In NMFM Property Pty Ltd v Citibank Ltd,[23] investors were invited to borrow money secured on the family home in order to pay for an investment in units in a real property trust.  It was held that even the remote risk that the value of the real property underlying the trust might decline, so that the value of the units became insufficient to repay the loan when due, was a material risk which it was the duty of the adviser to warn the client.[24]  So too was the risk that the income stream derived from the units might become insufficient wholly to defray the interest on the borrowing[25] as well as the risk that interest rates might increase or a change in personal circumstances might render the payment of interest difficult or impossible.[26]  It was also relevant to the question of materiality of risk, and therefore of the scope of the duty of care, that the consequences of such risks eventuating were grave.[27]
  6. [65]
    Another factor that may affect the scope of the duty, and which is relevant in this case, is the experience and expertise of the client being advised.[28]  It is common sense, and it should be obvious, that a professional adviser must approach the advice given to an inexperienced client in a different way from the approach taken with a sophisticated client.  An adviser can reasonably assume that a sophisticated client who is experienced in the affairs to which the advice relates understands the material risks involved.  An adviser may act reasonably in omitting to tell such a client what the client can reasonably be expected to know.  Such an assumption may be unreasonable in the case of a different client receiving the same advice if that client lacks the necessary experience.  In such a case the scope of the duty to advise will be wider and, indeed, it may be much wider.

Material risks

  1. [66]
    It is important to identify with precision the material risks of which Ms Bankier was ignorant but of which Mr Avery was aware for these risks lie at the heart of the necessary warnings pleaded in paragraph 68 of the Fourth Amended Statement of Claim.
  2. [67]
    Ms Bankier suffered her injuries when she was 16 years old.  Martin J found that during the period that is relevant to this case Ms Bankier was a young woman who had no financial experience or expertise.  Of course, she knew the difference between capital and income.  She also knew that it was important to preserve the capital that she had invested with the appellant.  She knew that her income would be derived from that capital sum.  She also thought that, because she had over $1 million, and at one point about $1.3 million, she was “rich”.  Martin J found that she held that belief because she was young and had received more money than she had ever contemplated having.  Ms Bankier’s parents were of modest means.  They did not trade in shares and had little in the way of investments.  Ms Bankier’s only previous work experience had been as a sales assistant.  Her failure to appreciate her real financial state was the product of her immaturity, her lack of experience and her consequent inability to understand the real significance of the damages she had received having regard to her position in life, the state of her health and the prospect of future needs.
  3. [68]
    Martin J found that at the beginning of his retainer Mr Avery had expressed confidence in his own ability to create a suitable return on her investment.  In her evidence, she said that Mr Avery “was always very positive, reassuring.  You know, from him, I had the impression that I had loads of money, but I was rich, but I was set up.”[29]  His Honour found that this contributed to Ms Bankier’s own financial optimism.  His Honour found that optimism had not been tempered by any advice or warnings about the effect that her proposed spending would have on her capacity to fund her future needs, including her vital medical needs.  Rather, any advice was limited to statements to the effect that her spending required the sale of part of her investments or that spending in the amounts that she desired would have to be satisfied by selling investments.
  4. [69]
    In June 2007 Ms Bankier received a report from Mr Avery showing that her investments were worth $1,307,681.71.  The sum had grown from $1,132,109.00.[30]  Ms Bankier’s evidence was that when she saw this growth she believed that her investments were growing significantly and she was pleased but not surprised.  The growth was consistent with what Mr Avery had been telling her would occur.  This made her feel unconcerned about the expenditures that she proposed to make in her new business.  Even if she spent $300,000, she would still have about $1 million and this would continue to grow over time.  It will be recalled that Mr Avery had foreshadowed that Ms Bankier would need to make “capital growth drawdown”.[31]
  5. [70]
    As Martin J found, Mr Avery had expressed considerable confidence to Ms Bankier in his ability to create a suitable return on her investment.  Ms Bankier remembered this and took him at his word.  In the absence of appropriate warnings, his Honour found, these kinds of assurances contributed to her view of her sound financial state.
  6. [71]
    It may be accepted that Ms Bankier knew that, as a matter of principle, the depletion of her capital would reduce or eliminate her ability to fund her future needs.  What Martin J found that she did not understand was that her actual expenditures, for which she requested a liquidation of assets or for which she requested transfers of funds by Mr Avery, would actually have that effect, namely, that her drawings would diminish her capital so as to render it insufficient to fund the expenses that she would incur by reason of her injuries and which she could not otherwise pay for by personal exertion.  Nor did she understand that borrowing money in order to purchase an investment would have, or could have, the same effect because of the need to pay interest.  Those findings about Ms Bankier’s lack of appreciation were amply justified by the evidence and were correct.  Martin J also found that Mr Avery knew that Ms Bankier had “no or limited exposure to financial dealings involving the investment of money”.  That finding was also correct.
  7. [72]
    On the other hand, as the learned trial judge found, these risks and consequences to Ms Avery’s financial position were foreseeable and were obvious to Mr Avery.  That much could hardly have been contested by Mr Avery who alleged that these risks were not just foreseeable but so obvious that his young client should have seen them.
  8. [73]
    Martin J held that Mr Avery had a duty to warn Ms Bankier about the material risks attending the borrowing to fund her investments and to warn her about the potential devastating consequences of her proposed spending.[32]  His Honour found that Mr Avery failed in his duty.[33]  His Honour found that had Mr Avery warned Ms Bankier about the real consequences of her desired spending, of her investment in agri-business, of her borrowing money to buy the property at Palm Beach and of her entry into the lease of premises for her business, she would not have spent the money and she would have decided not to go ahead with those ventures.[34]

The Appellant’s challenge to the content of the duty

  1. [74]
    The appellant challenges Martin J’s conclusion that Mr Avery had a duty to warn about the proposed withdrawals of sums from investments for Ms Bankier’s proposed expenditures.
  2. [75]
    First, the appellant seeks to characterise that duty as a duty to “provide a watching brief over a client’s spending, and provide warnings that the client may run out of money each time they propose to spend too much”.[35]  This is a mischaracterisation.
  3. [76]
    Mr Avery undertook to take reasonable care to formulate and to execute a financial plan that would employ the money entrusted to him in a way that would be likely to achieve the purpose of, at least, preserving an adequate sum to fund Ms Bankier’s life expenses.  The appellant accepted that Mr Avery had a duty to warn Ms Bankier about material risks and that concession was rightly made.  It follows that if, by reason of a change of circumstances, there arose a material risk, or a likelihood, that Mr Avery’s plan would fail, he would be obliged to warn Ms Bankier of that risk.
  4. [77]
    This was not a duty to oversee a client’s spending.  The duty was to warn a client about the imminent dangers that would be caused by the client’s proposed interference in the adviser’s investment plan by the withdrawal of capital in amounts that the adviser knows will be significant in their effect.  It was something that Mr Avery must have known would or might cause his plan to fail and that he should have appreciated that his client did not know.
  5. [78]
    Second, the appellant submits that the risk was an obvious risk.  Section 15 of the Civil Liability Act 2003 (Qld) provides that a person does not owe a duty to warn another person about “an obvious risk”.  The latter expression is defined in s 13 to mean a risk that “would have been obvious to a reasonable person in the position” of that other person.
  6. [79]
    The “position” of Ms Bankier has been summarised in paragraphs [67] to [73] above.[36]  The risks would not have been obvious to a reasonable person in her position for the same reasons that they were not obvious to Ms Bankier.  She was young and, as a result, she lacked the experience and knowledge to understand the potential consequences of her actions.  Her understanding that, in principle, depletion of capital would affect future income and that it was important to stick to a budget does not constitute knowledge that the sums for which she was asking were sums that would enliven that risk.  The difference is between theory and practice.  It is only experience – or the benefit of tutelage by an adviser retained for that purpose like Mr Avery – that furnishes the link between the two and can give rise to an understanding of what is actually about to happen.  Mr Avery had a duty to give that advice but he did not give it.
  7. [80]
    Third, the appellant submitted that the appellant’s obligation to provide a “portfolio review service” did not involve a duty to “monitor the respondent’s spending”.  Ms Bankier had alleged, inter alia, that she had retained the appellant to provide “on-going financial advice to ensure that the plaintiff’s financial plan continued to meet the plaintiff’s future financial objectives”.[37]  The appellant denied this allegation and alleged that all he had been retained to do was to provide a financial plan as requested by Ms Bankier in the form she signed on 1 October 2002.  He furnished that plan on 21 October 2002.  That limitation upon the appellant’s obligations cannot be sustained.  Mr Avery undertook to do more than that and he charged for it.  He undertook to participate in an “ongoing business relationship … to ensure your investment strategy continues to meet your needs” as quoted at [12] above.  Mr Avery acknowledged that “investing is … a serious business requiring ongoing advice from a professional adviser”.[38]  He said that his retainer “permits [the appellant] to raise issues of concern … and take appropriate action”.  Mr Avery failed to honour any of these undertakings which his common law duty of care in any event obliged him to honour.
  8. [81]
    Finally, the appellant submitted that the imposition of such a duty would have “wide-ranging implications for financial advisers in Australia” and would oblige them to “monitor the spending of their clients” when “engaged to provide a regular portfolio review service”.  No such duty has been alleged and no such duty has been found.  Rather, as a financial adviser, the appellant was under a duty to warn his client about material risks.  That he owed that duty was not in controversy between the parties.  On the facts of this case, that duty meant that Mr Avery was obliged to warn Ms Bankier about the potential consequences of borrowing to fund investments and the consequences of making the withdrawals from capital that she requested be made.  That submission should be rejected.
  9. [82]
    Once it is accepted that Mr Avery owed a duty to advise Ms Bankier about the existence of material risks affecting her preservation of capital of which she was unaware but of which he was aware or ought to reasonably have been aware, this case can be reduced to simple terms.  What were the relevant risks that Ms Bankier was facing when she asked Mr Avery for drawings?  It was that the accumulation of drawings she was asking for might result in such a depletion of her capital sum that it would no longer serve to support her for life and that, being inexperienced, Ms Bankier would endanger the preservation of her capital by making those drawings not understanding what could happen.  Did Mr Avery know about the potential effect of the proposed drawings upon Ms Bankier’s capital?  Not only did he know, but he asserted that this was obvious.  Did Ms Bankier know that the drawings for which she was asking might, or would, deplete her capital to a dangerous level?  Martin J found that she did not know and his Honour’s finding was, in my respectful opinion, correct.  The reasons for that finding have been set out.  Ought Mr Avery have appreciated that his client did not understand the ramifications of what she was asking for?  This, as Mulligan J said in Austrust Pty Ltd v Astley,[39] depended upon what the adviser knew or ought to have known about his client’s experience and expertise.  Ms Bankier’s ignorance about these risks was patent.  She had completed high school and a couple of years of a biology course.  There was every reason to believe that she lacked the basis upon which to appreciate the fragility of her financial position.  Nor could Mr Avery have thought that Ms Bankier was spending money knowing that she was depleting her capital to a dangerous level.  Certainly, he did not say so in his evidence.  He knew or he ought to have known the limits of her understanding about her proposed use of money.  It followed, as Martin J held, that Mr Avery was under a duty to advise her in plain terms about what would happen if she insisted upon doing the things that she did.

The failure to advise not to borrow money to buy the Palm Beach Property

  1. [83]
    The appellant submits that Mr Avery was under no duty to warn his client about the potential consequences of borrowing money to buy the property at Palm Beach.  The reason that there was no duty, the appellant submits, is that it was Ms Bankier’s own idea to purchase the property.  This investment was, therefore, “not the subject of financial planning advice from the appellant”.  This submission should be rejected.
  2. [84]
    Ms Bankier herself found the house property at Palm Beach and thought that it would be a good investment.  On 6 April 2005 she wrote as follows to Mr Avery:

“Hi Anthony, Hows [sic] things?  I just wanted to let you know that I [sic] have found a possible investment house, at Palm Beach.  … The asking price is 388 000 but I could offer $375 000, so the total expense/ loan would be $400 000.  It is rented for $280 a week.  I used a loan calculator and estimated that weekly repayments on top of this would be $400. total = 680 a month over 25 years at 7.5% ...”

  1. [85]
    After referring to her estimate of budgeted expenses and that at their last meeting Mr Avery had said that Ms Bankier’s investments were “bringing in about $60 000 a year” and asking whether this was correct, as well as giving some reasons why the house might increase in value, Ms Bankier wrote:

“… Would you be able to work out the figures and see if it would be viable?”

  1. [86]
    Some file notes show that Mr Avery, or somebody to whom he had delegated the task, then performed calculations relating to the cost of borrowing to fund the purchase.[40]  On the same day as she made her request, Ms Bankier signed a form authorising transactions in her portfolio that had been recommended by Mr Avery.  The value of her investments was then said to be $1,158,034.08 returning an expected annual “yield” of $67,400.19.  On the following day, 7 April 2005, Mr Avery’s file note shows a calculation demonstrating the expected income and expenditure relating to the Palm Beach house.  The calculations assumed that the whole purchase price would be borrowed.  A handwritten notation, seemingly that of Mr Avery, refers to a discussion between him and Ms Bankier about an offer for the property of “$340k” and that “we will arrange finance for the lot”.  A second, typewritten, note on Mr Avery’s file, dated 8 April 2005, also refers to his having had a discussion with Ms Bankier and that “we agreed to offer $340,000 and we will arrange finance for the lot”.  The same note refers to his having told her that if she “spend[s] any money on [the business] for travelling etc she will have to draw down on capital”.
  2. [87]
    In due course, Mr Avery did arrange for finance and a loan was made and Ms Bankier began to pay interest.  The result was that she was obliged to fund the difference between the income she earned from rentals and the costs associated with its ownership together with the interest.
  3. [88]
    Martin J had regard to these file notes and saw that there was an absence of any record of advice from Mr Avery about whether the purchase should be paid for from Ms Bankier’s own capital or from a loan.  His Honour found that no such advice had been given.  His Honour found that the money was borrowed on the advice of Mr Avery.  His Honour found that questions about the advantages of paying for the investment from borrowings or from capital lay outside Ms Bankier’s experience.  These findings were open on the evidence and were supported by the contemporaneous notes and Ms Bankier’s evidence and the appellant’s challenge to them must be rejected.
  4. [89]
    The appellant has submitted that Mr Avery was under no duty to give advice about the relative advantages of a loan as against capital as the source of funding the purchase.  This is so, it was said, because the purchase of the property “was not the subject of financial planning advice from the appellant” and that this had been admitted by Ms Bankier in her Reply. This submission omits more than it states.  It is true that by paragraph 5 of her Amended Reply Ms Bankier admitted the appellant’s allegation in paragraph 6(d)(ii) of the Further Amended Defence that she “undertook a property investment at Palm Beach in 2005 which was not proposed by or the subject of financial planning advice from the defendant but was decided upon by the plaintiff”.  Paragraph 5 of the Amended Reply states:

“5. As to 6(d)(ii) of the AD, the Plaintiff admits the allegations therein but says:

  1. (a)
    the Plaintiff decided to make the investment in circumstances where the Plaintiff sought the Defendant’s advice in relation to the investment and the Defendant had not provided her with advice regarding the consequences of proceeding the Palm Beach Unit and in circumstances where she had not been given any advice, guidance or instructions by the Defendant regarding the conduct required to preserve the corpus of the awarded judgment such that it would be preserved and available to meet the Plaintiff’s future medical and other expenses for the rest of her lifetime;
  2. (b)
    in providing the Financial Advice to the Plaintiff, the Defendant failed to provide that advice in a way that was appropriate for the Plaintiff’s relevant personal circumstances by failing to warn or attempt to dissuade the Plaintiff from purchasing the Palm Beach Unit for investment by borrowing money.”
  1. [90]
    By that plea Ms Bankier put in issue whether Mr Avery was under a duty to warn her against the use of borrowed money and whether he gave such a warning.
  2. [91]
    The idea to purchase the property was not initiated by Mr Avery but that is not the end of the matter.  In Mutual Life & Citizens' Assurance Co Ltd v Evatt[41] Lords Hodson, Guest and Diplock pointed out that a duty of care would be imposed upon a person who held himself or herself out as possessing special skills and competence and who undertook the doing of an act requiring the application of those skills and that competence and that such a duty would be imposed even when the services are to be provided without reward.  The proposition was treated as well established law.  Relevantly:

“The proposition stated in the maxim spondet peritiam artis et imperitia culpae adnumeratur is one of the oldest principles in English law.  The duty imposed by law upon those who followed a calling which required skill and competence to exercise in their calling such reasonable skill and competence as was appropriate to it lies at the origin of the action of assumpsit itself.  It was first applied to artificers “for it is the duty of every artificer to exercise his art right and truly as he ought” (Fitzherbert Natura Brevium (1534) 94D). It was later extended to all other occupations which involve the doing of acts calling for some special skill or competence not possessed by the ordinary man.  The standard of skill and competence was that which is generally possessed by persons who engage in the calling, business or profession of doing acts of that kind for reward.  The duty to conform to the standard was attracted by engaging in that particular calling, business or profession because by doing so a man holds himself out as possessing the necessary skill and competence for it.  To undertake to do an act requiring special skill and competence for reward was also a sufficient holding out by the obligor to the obligee.  But the doing of the act gratuitously by a person who did not engage in the calling, business or profession, did not attract the duty to exercise skill and competence: Shiells v. Blackburne.  See also the references to the relevant cases in the speeches in Hedley Byrne of Lord Hodson and Lord Pearce.

Where advice which calls for the exercise of special skill and competence by the adviser is not to be based exclusively upon facts communicated to him by the advisee no relevant distinction can be drawn between the ascertaining by the adviser of the facts upon which to base his judgment as to the advice to be given, and the forming of that judgment itself.  The need for special skill and competence extends to the selection of the particular facts which need to be ascertained in order to form a reliable judgment and to the identification of the sources from which such facts can be obtained.

As in the case of a person who gratuitously does an act which calls for the exercise of some special skill and competence, a duty of care which lies upon an adviser must be a duty to conform to an ascertainable standard of skill and competence in relation to the subject-matter of the advice.  Otherwise there can be no way of determining whether the adviser was in breach of his duty of care.” (citations omitted)

  1. [92]
    The same proposition had already been accepted as settled in Hedley Byrne & Co Ltd v Heller & Partners Ltd.[42]
  2. [93]
    Ms Bankier asked Mr Avery to consider the viability of her proposed investment which she put to him expressly upon the basis of using borrowed money.  He or his staff then undertook an examination of that question, including the effect of the obligation to pay interest.  He thereby assumed the obligation to use due care and skill in making his assessment and in giving his advice.  It did not matter that he had not originally suggested that Ms Bankier purchase the property.  He undertook to advise her about it when asked and he gave advice.  He was under a duty to take care in giving that advice.  It was, after all, to use Mr Avery’s own words, part and parcel of the “ongoing business relationship with your lifestyle financial adviser to ensure your investment strategy continues to meet your needs over time”.[43]
  3. [94]
    Paragraphs 38 and 39 of the appellant’s outline of argument limit the appellant’s case on the adequacy of warnings to the issue of spending other than on interest payments due on the Palm Beach loan.  The appellant does not argue that, if he was under such a duty, Mr Avery did not breach his duty, and Martin J found that he did.[44]

Inadequate reasons for conclusion about Palm Beach property

  1. [95]
    The appellant contends that the learned judge’s reasons are inadequate because the respects in which the defendant was found to have failed to warn the plaintiff of the material risks of her potential investment in the Palm Beach property and the Burleigh Heads shop were not identified, or explained, by the learned primary judge at [151] of his Honour’s reasons.  The appellant’s grounds of appeal also contend that the reasons do not reveal whether the content of paragraphs [141], [146], [149] and [151] of his Honour’s reasons constitute findings and, if they do, the reasons do not reveal the reasoning for those findings.
  2. [96]
    It has been said that rationality is the hallmark of a judicial decision.[45]  For that reason, unless a judge’s decision articulates the reasons for the decision, there is nothing to distinguish a reasoned decision based upon the applicable law and evidence from an arbitrary decision.  Furthermore, reasons enable the parties to see the extent to which their arguments have been understood and accepted or rejected.  In doing so, the reasons justify the parties’ acceptance of the decision founded upon them.[46]
  3. [97]
    However, the extent of reasons that serve those purposes and, therefore, are adequate as a matter of law, will vary depending upon the circumstances of a particular case and upon the issue in relation to which the adequacy of reasons has been challenged.  The duty of a judge to explain a conclusion has been likened to a party’s obligation to give particulars of the case.  That obligation serves the requirement that an “opposite party shall always be fairly apprised of the nature of the case” that must be met and “shall be placed in possession of the broad outlines and constitutive facts which are said to raise… legal liability”.[47]
  4. [98]
    In this case, the large issue upon which the parties joined concerned the reduction of Ms Bankier’s capital sum to an extent that rendered it insufficient to fund her necessary expenses in the future, having regard to her inability to earn money by working for it.  The whole case concerned the ways in which that sum had been depleted by the identified payments.  The categories of payment were not large in number.  They were constituted by withdrawals for expenditure associated with four purposes, which Martin J listed in paragraph [176] of his Honour’s reasons:
    1. (a)
      Spending beyond budget levels;
    2. (b)
      Making cash gifts;
    3. (c)
      Borrowing money; and
    4. (d)
      Expenditures in the Burleigh Heads business.
  5. [99]
    With respect to the Palm Beach property, the sole issue between the parties was whether Mr Avery should have warned Ms Bankier against borrowing the purchase price because borrowing would require her to pay interest and would deplete her resources in a way that using her own capital would not have done.  That the payment of interest would reduce her funds was not in issue.  Indeed, in cross-examination Mr Avery admitted that he had observed that the use of borrowed money would result in a negative cash flow from the property.  He volunteered in evidence that he had advised Ms Bankier that she could sell some shares to buy the property and that his advice had been rejected.  Unfortunately, that piece of evidence was contradicted by Mr Avery’s evidence in an affidavit in which he had sworn that he had given no advice about the matter.  Until the moment that he offered that novel piece of evidence in cross-examination the appellant’s case had been that Mr Avery had no duty to give any warning and, accordingly, had given none.  Martin J found that he had not given any advice.  Martin J held that Mr Avery had a duty to warn Ms Bankier about the existence of material risks.  It was common ground at the trial that the depletion of capital by spending it unnecessarily was a material risk that Ms Bankier faced.  The payment of interest was alleged to be an unnecessary expense of that kind and Martin J referred to this issue at paragraph [141] of his Honour’s reasons.  Having identified the matters that called for warnings by listing the four categories of expenditure that the plaintiff alleged had depleted the capital sum, and having identified the personal state of knowledge of Ms Bankier and Mr Avery respectively, his Honour concluded in paragraph [92] that a careful adviser would have ensured that the client knew the full consequences of any relevant actions upon her capacity to fund future expenses.  Between paragraph [109] and [130] his Honour explained his finding that no adequate warnings had been given generally and, in paragraphs [139] and [140], that no warnings had been given about the unwisdom of borrowing.  It was therefore unnecessary to do anything more than to articulate the conclusion concerning the Palm Beach property to which those matters tended, namely that Mr Avery owed a duty to warn against borrowing but failed to give it.
  6. [100]
    The reasons leave no doubt about Martin J’s process of reasoning its basis.  This ground should be rejected.

Inadequate reasons to explain insufficiency of warning about “non-viability”

  1. [101]
    The appellant contends that the reasons do not explain why Mr Avery’s warning that the photography business would not be viable was inadequate to satisfy the duty to give reasons.  The answer is obvious.  It is one thing to warn a person that a proposed business will fail; it is an entirely different matter to warn that person about the consequences of the failure might lead to, or contribute to, an inability to afford necessities.  So much appears from paragraph [146] to [150] of the reasons.  In paragraph [146] his Honour found that Mr Avery had assisted Ms Bankier to prepare a business plan.  A note of Mr Avery’s recorded that on 4 May 2006 he and Ms Bankier “discussed her business plan which I told her to prepare and she’s done a very thorough job of preparing a business plan”.  His Honour identified the cost of wages as “one of the most expensive parts of conducting business”.  That cost had not been included in the business plan that was the object of Mr Avery’s praise.  His Honour found that this was a matter that was “clearly within Mr Avery’s area of expertise and upon which he should have advised”.  The rent that Ms Bankier would have to pay would be in the order of $60,000 per annum.  This was approximately double the amount that had been envisaged when Ms Bankier had first raised her proposal with Mr Avery.  Martin J found that Mr Avery knew of the increase.  His Honour found that Mr Avery gave no clear warning about the adverse effect such losses might have upon her ability to fund her necessary expenses in the event that the business was unsuccessful.
  2. [102]
    Having regard to those findings about the absence of necessary warnings, namely those concerning the real risk at issue, it could hardly be a matter of doubt why his Honour found that a warning only that the proposed business would not be viable did not constitute a fulfilment by Mr Avery of his duty.
  3. [103]
    Further, it must be borne in mind that the opinion about non-viability was given on 18 October 2005, as Mr Avery recorded in a note.  It was an opinion which he expressed without the benefit of any prospective figures.  That was when he suggested that his client should prepare a business plan.  Ms Bankier’s response was that “she can make it work”.  A brief exchange of that kind, including a suggestion to set out a business plan for the venture, could hardly constitute an adequate and serious warning by a financial expert to an immature and inexperienced client to be understood as an alarm bell that her whole future might be in peril if she went ahead.  This opinion about viability was then followed by advice given in conference on 4 May 2006 to invest $40,000 in the “Great Southern Olive Project” by means of a 100 per cent principal and interest loan.  Mr Avery explained in his note that:

“The reason for that is that she is going to set up her business next year and hopefully turn over enough money to be able to claim her tax losses.  This is the year were [sic] she needs more of a tax deduction …”

  1. [104]
    On the same day Ms Bankier signed an authority for Mr Avery to proceed with the borrowing and investment.  Mr Avery took the opportunity to increase the fees that the appellant charged for its services from $641 per month to $770 per month.
  2. [105]
    The advice about the “Great Southern Olive Project” was confirmed in a letter dated 8 May 2006.  A table showed that Ms Bankier would be repaying a total of $6,858 per year by way of principal and interest and a “2006 Investment Model” posited a gross income of $73,027 that would defray that expense.
  3. [106]
    During the same period, the appellant furnished Ms Bankier with statements showing that her investments were valued at over $1 million.
  4. [107]
    Having regard to the relationship between the parties, one in which Mr Avery was assisting Ms Bankier to prepare a written business plan in full knowledge of actual proposed expenses, and during which he was advising her in writing about the tax benefits of negative gearing to reduce income tax in the context of her intentions to go into business, a verbal opinion given months earlier that the business was not “viable” could not possibly be sustained as an adequate warning to fulfil the duty.

Inadequate reasons about causation

  1. [108]
    The appellant submits that the reasons do not explain the process by which his Honour reached the conclusion that Ms Bankier would not have established her business if Mr Avery had warned her adequately.  That contention cannot be accepted.  Ms Bankier had been awarded a substantial sum by way of damages to ensure her future ability to meet necessary expenses until the end of her life.  It was not suggested at the trial that Ms Bankier was unaware of the vital importance of securing that sum.  Mr Avery knew this because Ms Bankier had told him.  He had recorded in a file note the fact that “this money has to last her the rest of her life”.  Martin J accepted that Ms Bankier made the contested expenditures in the belief that she could afford to do so.
  2. [109]
    Section 11(3)(a) of the Civil Liability Act 2003 (Qld) provides that, in cases in which it is relevant to deciding factual causation to decide what the person suffering harm would otherwise have done, “the matter is to be decided subjectively in the light of all relevant circumstances”.  Section 11(3)(b) renders the person’s own evidence on the subject inadmissible (but not irrelevant if admitted without objection).[48]
  3. [110]
    It follows that a finding about what a plaintiff might have done involves answering a hypothetical question by means of inferences to be drawn from the evidence.  The question concerns what a particular person would probably have done in certain hypothetical circumstances.  A judge who has to arrive at a conclusion about that hypothetical fact will have to take account not only the objective evidence but must also make an assessment of the plaintiff’s character and personality.  In many cases, perhaps in most cases, a great deal will depend upon that matter.  In undertaking this assessment a trial judge has advantages that an appellate court does not have.
  4. [111]
    The reasons make it clear that Martin J formed a favourable view of Ms Bankier’s character.[49]  His Honour’s conclusion about what Ms Bankier would have done if Mr Avery had fulfilled his duty to her was expressed in emphatic terms that are consistent with an assessment of character playing a role in his Honour’s determination of the issue.[50]  An appellate court that is invited to overturn such a finding should be very cautious before accepting the invitation for the same reasons that curb appellate interference with credit findings.  In this case, the appellant has not identified any particular objective reason that could possibly justify a conclusion that Martin J was wrong in his assessment about what Ms Bankier would have done if she had been correctly advised.
  5. [112]
    On the evidence it was not only open but it was also correct to find that Ms Bankier would not have spent the money that she did, and would not have borrowed the money that she did, if she had been told that doing so would mean that she might not have enough money to be able to pay for her future living expenses including medical expenses.  A finding that Ms Bankier, in the face of direct warnings of that kind from an expert, would nevertheless have chosen to squander her money would have been perverse.  The appellant’s submission should be rejected.

Adequacy of warnings that were given

  1. [113]
    The appellant contends that Mr Avery gave warnings that were adequate to satisfy the duty imposed upon him.  That contention should be rejected.  The warnings relied upon by the appellant were considered by Martin J in paragraphs [109] to [133] of his reasons.  They were general warnings about the need to “avoid eating into her capital”, about the long term effect upon her portfolio of her expenses and about some of her spending not being sustainable in the long term.  His Honour correctly interpreted such warnings as deficient because they did not direct Ms Bankier’s mind to the real and imminent risk that she faced.  This was the more so because even such observations that Mr Avery did make were made amid other statements to the opposite effect, such as the advice about the need for deductions to offset tax on earnings.  On some occasions, Mr Avery’s response to a request by Ms Bankier for cash was to give her a written statement of advice which contained statements that could be regarded as supportive of the request for money.  The following is one such record of advice[51] that was given after Ms Bankier asked for a transfer to her account of $30,000:

“We refer to your recent request to have more liquid funds available, and to the discussion yesterday between yourself and Anthony Avery.  This record confirms the decision to sell down two of your investments so that you have a further $30,000 cash available.  Please note that the scope of advice is specifically related to this matter.

Investments Recommended to be SoldShelli, all your investments have performed very well and we made a decision to sell the DB Rreef [sic] Trust (DRT) in full and portion of the Investors Mutual Future Leaders Fund.  Although there is a small loss on the Challenger Wine Trust (CWT) we decided not to sell this share now since it has been paying 10.6% and the unit price has increased 0.045 from one year ago.

Investment trades were placed yesterday so that funds can be available as soon as possible.”[52]  (emphasis in original)

  1. [114]
    In any case, the submission about the adequacy of these warnings misses the point of the duty that Mr Avery owed to his client.  He was under a duty to warn her in clear terms about material risks.  That required him to tell her that particular proposed expenditures, and more such expenditures in the future, would be likely to or would upset the integrity of his investment plan and that they would or would be likely to frustrate his plan’s capacity to meet its objectives and would threaten, and could ultimately wipe out, the capital sum that Ms Bankier would need for her life.  He never gave any such warning.  Instead, the written advice continued to refer to investment proposals to increase Ms Bankier’s “wealth”.[53]  Mr Avery’s statements were capable of generating and, as his Honour found, did generate a sense of confidence in Ms Bankier about her financial position.  They withdrew any salutary effect that might have resulted from the purported “warnings”.

Contributory negligence

  1. [115]
    The appellant appeals against Martin J’s rejection of the defence of contributory negligence.
  2. [116]
    As the appellant has correctly submitted, the respondent’s responsibility for her own loss is to be determined objectively by reference to what a reasonable person would have done in the circumstances of the case.[54]  In some cases the nature of the duty may exculpate a plaintiff from a claim of contributory negligence.[55]  This was such a case.  Ms Bankier was unaware of the risk that she faced and, given her circumstances, she could not reasonably have been aware of the risk if Mr Avery did not tell her.  It was her ignorance, among other things, that resulted in the law’s imposition of a duty of care upon Mr Avery to warn Ms Bankier about what she did not know.  It follows that Ms Bankier was not herself careless in doing the things that she should not have done, namely spending the money.  She did those things because she did not know what the consequences could be, and, because of her age, her lack of experience and the other circumstances, her ignorance was not due to her own carelessness.
  3. [117]
    The appellant submitted that Ms Bankier chose to go ahead with setting up her business in the face of Mr Avery’s opinion that the business would not be viable.  It was submitted that a decision to proceed to establish a business that Mr Avery had said would not be viable constituted a failure by Ms Bankier to take reasonable care for her own interests.  Whether that constituted carelessness which contributed to losses depends upon all of the relevant facts and not just the fact that a warning in those terms was uttered.  The same considerations arise here as in the appellant’s submission about causation.
  4. [118]
    After expressing his opinion on 18 October 2005,[56] at an early stage and before seeing any detail about the proposal, Mr Avery did not repeat it.  Instead, seven months later on 4 May 2006, he told her that she had done a “very thorough job of preparing a business plan” and discussed that plan with her.[57]  The business plan was a 38 page document.[58]  It was evidently the result of a great deal of effort by Ms Bankier.  The document is comprehensive in its treatment and articulation of business strategies and tactics that might be successfully employed.  Nonetheless, it was patently the product of a person with no business experience:  it did not mention money.  In response to information that she gave him, Mr Avery himself compiled a handwritten table of revenue and expenses.[59]  The table shows revenue, net of GST, in the sum of $108,000 and expenses, including GST, of $107,200.  After GST was set off, the result was a small profit of $10,800.  In calculating this profit, Mr Avery forgot to take into account the payment of wages.
  5. [119]
    In the context of his compliments to Ms Bankier about the thoroughness of her work on her “business plan” and Mr Avery’s assistance in forecasting a small profit, an opinion given seven months previously that the business was not viable lacks any substance as a marker of contributory negligence.
  6. [120]
    In any case, as was elicited in cross-examination, while offering his opinion in general terms, Mr Avery did not offer the only opinion that mattered, that if the business failed, the money lost could have a significant effect upon Ms Bankier’s ability to fund necessary expenses in her life.

Limitation of Actions Act 1974 (Qld)

  1. [121]
    Grounds 1 to 4 of the appellant’s notice of appeal raise a limitation defence.  It is necessary to consider the course of the proceeding in order to understand these grounds.
  2. [122]
    By paragraph 84 of the final version of the Further Amended Defence, the appellant said:

“The defendant says further that the causes of action on which the plaintiff relies accrued more than six years before this proceeding was commenced and is therefore barred by operation of the Limitation of Actions Act 1974 s. 10.” (emphasis in original)

  1. [123]
    Section 10 of the Limitation of Actions Act 1974 (Qld) provides, relevantly:

“(1) The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action arose—

  1. (a)
    subject to section 10AA, an action founded on simple contract or quasi-contract or on tort where the damages claimed by the plaintiff do not consist of or include damages in respect of personal injury to any person;
  2. (b)
    an action to enforce a recognisance;
  3. (c)
    an action to enforce an award, where the agreement to arbitrate is not by an instrument under seal;
  4. (d)
    an action to recover a sum recoverable by virtue of any enactment, other than a penalty or forfeiture or sum by way of a penalty or forfeiture.”
  1. [124]
    The respondent, who was the plaintiff, had pleaded causes of action in contract, tort and a cause of action arising by virtue of alleged contraventions of s 945A and s 945B of the Corporations Act 2001 (Cth).  The latter contraventions, if established, created a right of compensation for loss pursuant to s 953B(2)(c) of the same Act.  Section 953B(5) provides that an action pursuant to s 953B(2)(c) may be commenced six years after the day on which the cause of action arose.
  2. [125]
    There are two immediately obvious features of the appellant’s plea in paragraph 84 of its Further Amended Defence.  First, it contains no limitation defence to the cause of action based upon the Corporations Act.  The reference to an “enactment” in s 10(1) of the Queensland Act cannot be a reference to the Corporations Act, which is a Commonwealth statute, because the Queensland legislature cannot limit the enforcement of rights conferred by a Commonwealth legislation.  It is s 953B(5) of the Commonwealth Act which creates its own time limitation for actions.  That section was not pleaded by the appellant.  Second, because s 10(1) imposes a limitation upon actions in contract and in tort, and because the plea does not distinguish in its application between the plaintiff’s case in contract and her case in tort, paragraph 84 is apt to refer to both.
  3. [126]
    The trial was conducted upon the basis that the parties would furnish written closing submissions and would supplement those documents by such oral submissions as they chose to make.
  4. [127]
    After evidence finished, Martin J ordered that there be an exchange of submissions by noon on Thursday 9 August 2018.[60]  The plaintiff’s submissions were therefore delivered before her advisers had received and considered the defendant’s written submissions.  The appellant’s written submissions made no reference to its limitation defence.  However, perhaps expecting their opponent to address the limitation point raised in paragraph 84 of the Further Amended Defence, the respondent’s counsel did refer to it.  Their written outline submitted that the cause of action in tort arose when actual loss had been suffered.  It was common ground that the date which was six years before the proceeding commenced was 23 October 2008.  The appellant was still Ms Bankier’s adviser on that date and she did not obtain fresh advice until much later.  It was only after taking new advice that the plaintiff’s investments, and her losses, were comprehended and then realised.  That was the date on which the cause of action arose, according to the respondent’s written submissions at trial.
  5. [128]
    On 10 August 2018, the day set for oral submissions, the appellant’s counsel delivered a set of written “Supplementary Submissions”.  Paragraph 5 of that document stated:

The defendant persists in its plea as to time limitations.  The proceedings were commenced on 23 October 14 [sic].  By 23 October 2008 any relevant contract breaches had occurred and losses were known.”

  1. [129]
    Martin J heard oral submissions.  The appellant’s counsel said nothing about the limitation defence and neither did the respondent’s counsel.
  2. [130]
    In this case, there is a question whether the issue pleaded in paragraph 84 of the Further Amended Defence was ever litigated.  In Coulton v Holcombe[61] Gibbs CJ, Wilson, Brennan and Dawson JJ said that the fact that an appeal was by way of rehearing did not mean that on the appeal the issues were at large.  Their Honours said that it was fundamental to the due administration of justice that the substantial issues between parties ordinarily be settled at trial.  If that were not so, their Honours said, the main arena for the settlement of disputes would move from the court at first instance to the appellate court.[62]  In Suttor v Gundowda Pty Ltd[63] Latham CJ, Williams and Fullagar JJ said that while a question of law raised for the first time on appeal may be heard and determined if the essential facts have been admitted or proved beyond controversy, the expediency of adopting that course may be doubted when the plea cannot be disposed of without deciding “nice questions of fact”.
  3. [131]
    In this proceeding the position was that the appellant had pleaded a limitation defence against the claims in contract and tort but not against the statutory claim.  The plaintiff then abandoned her contract claim.  After stating that it wished to “persist” in the limitation defence the defendant offered only a single opaque written sentence about that plea.  A limitation defence raises for consideration issues of fact concerning the date the cause of action arose and, as in this case, concerning when damage has been suffered.[64]  The appellant did not identify a single fact at trial that might have borne upon the success of its plea.
  4. [132]
    Modern litigation in the Supreme Court cannot be carried on by requiring judges to resolve an issue that has been raised in pleadings but which is then ignored by the party who raised it and who does not direct the attention of the judge to any relevant issues of law or fact that bear upon its resolution.  Martin J would have been right to treat the defence as having been abandoned.  His Honour did not do so but, instead, gave due consideration to the only submissions that he had before him, namely those that had been put forward by the respondent.  He dealt with the issue “so far as [he understood] it to have been asserted”.[65]  His Honour concluded:

“The relevant date for consideration of this point is 23 October 2008, being six years before the proceeding was commenced.  At that time, Ms Bankier was still being advised by the defendant.  She was not advised to liquidate her investments – this would have crystallised her loss.  The principle in Wardley supports the conclusion that Ms Bankier’s loss was not sustained – for the purpose of determining the limitation period – until the investments were realised by advisers retained after Mr Avery ceased to be her adviser.  This occurred after 23 October 2008.  No argument was advanced that any other action or result of an action attracted the operation of the Limitation of Actions Act.”[66]

  1. [133]
    Now, for the first time, the appellant has deployed its limitation defence in the vanguard of its case, as grounds 1 to 4 in its notice of appeal and the forefront of its written submissions.  It now wishes to submit that his Honour was wrong in his conclusion.  Mr Campbell QC, who appeared for the respondent at the trial and in the appeal, submitted that the appellant bore the onus to prove the date of loss that would support its defence but it did not raise the issue at trial and should not been able to do so on appeal.  He submitted that the reasoning of Martin J was circumscribed by the way the appellant dealt with the issue at trial.  The appellant failed to identify any date at which the limitation period ended.  It failed to say why losses were known or by whom they were known.  Indeed, as Martin J said after stating his conclusion, no argument at all was advanced that any action or result of an action attracted the operation of the Act.[67]
  2. [134]
    During argument on this appeal, Mr Couper QC who appeared for the appellant in the appeal but not at the trial, and who did not draw the notice of appeal or settle the written submissions, submitted that the point had never been abandoned.  He submitted that the expenditures all occurred more than six years before the commencement of proceedings.  It follows, he said, that Ms Bankier incurred her losses at the time she spent money that, on her case, she would have retained if she had been warned.  That submission cannot be accepted.  When Ms Bankier spent money she did not give it away.  She paid it to buy an investment in the hope of a financial gain.  The investment might have resulted in future profit or in future loss.  Her loss did not happen when she paid the money.
  3. [135]
    In any case, that issue of mixed fact and law was not investigated at trial and could not be investigated on the appeal because the defence was ignored by the appellant at first instance.  In short, and in truth, those “nice questions of fact”[68] were never litigated between the parties, either on the pleadings, or in the conduct of the case before the trial judge and, consequently, they cannot be agitated for the first time on an appeal.  In any case, the appellant has failed to demonstrate that the learned trial judge was wrong, on the materials before him, to conclude as he did in the passage that has been quoted.  Grounds 1 to 4 should be rejected.

Date of loss

  1. [136]
    The appellant appeals against the findings of loss.
  2. [137]
    Paragraph 77 of the Fourth Amended Statement of Claim expressly alleged a loss calculated on 30 June 2010.  Paragraphs 79 and 80 of the appellant’s Further Amended Defence denied the allegation but took no particular issue with the pleaded date and raised no alternative date for calculating damages.  Accordingly, as Mr Campbell QC and Mr Hall submitted, Ms Bankier gave no evidence on the subject and Mr Avery was not cross-examined about it.  The evidence did reveal some circumstances that might have borne upon the question of crystallisation of losses.  For example, the appellant’s proffered calculations of loss as at June 2018 assume the receipt by Ms Bankier of her budgeted $54,000 per annum but the soundness of that assumption was not contested at trial.  Although there was some general evidence in Ms Bankier’s affidavit about her income in the years after 2010, the subject was not challenged but it would have been relevant to a calculation of loss.
  3. [138]
    The plaintiff’s written submissions at trial contained the submission that the appropriate date to fix the occurrence of loss was 30 June 2010.  Reasons capable of supporting the submission were set out.[69]  The defendant’s written submissions at trial asserted that the “appropriate date for assessment of loss in a case such as this is the date of trial” in 2018 and contained a promise to address the subject in oral submissions “with the benefit of Schedules in final form”.  The promise was not kept.  No submissions were made to contradict the plaintiff’s case.  The defendant later delivered “Supplementary Submissions”, as has been noted but while those written submissions dealt with the calculation of loss under a subtitle for that subject, the submissions did not dispute the plaintiff’s case about the date of loss.  The defendant’s bare pleaded denial of the plaintiff’s allegation of the date of loss gave it no right to assert a different positive case and it did not assert one.  There was, therefore, no pleaded case supporting any other date and no submissions by the defendant to oppose the plaintiff’s claimed date.
  4. [139]
    During the trial a set of damages calculations was tendered as exhibit 12.[70]  The schedule set out four different figures for Ms Bankier’s hypothetical position but for the negligence.  These four sums were labelled “scenario 1” to “scenario 4”.  Each of these four scenarios was calculated as at 30 June 2010 and also as at 30 June 2018.
  5. [140]
    Martin J delivered his judgment about liability on 1 May 2019 and said:

“As I understand the calculation set out in Exhibit 12, on the findings I have made, the loss suffered by the plaintiff, at 30 June 2010, is $637,508.  I will invite the parties to make further submissions about the consistency of that figure with my findings and with respect to the possible “grossing up” of that amount on the basis that it is liable to tax as an assessable recoupment.”[71] (footnotes omitted)

  1. [141]
    This meant that Martin J held scenario 4 to be applicable and the appellant accepts the correctness of that conclusion.
  2. [142]
    Having regard to how the appellant chose to conduct the trial insofar as the date of loss was concerned, the learned trial judge’s invitation to both parties to make submissions concerning the “consistency of that [damages] figure with [his Honour’s] findings” could not be construed as an invitation to the defendant to make fresh submissions at large about an issue that had never been litigated to that point.  Nevertheless, that is how the appellant’s advisers chose to read his Honour’s words and, accordingly, the appellant put forward fresh written submissions dated 10 May 2019.
  3. [143]
    The submission invited Martin J to consider whether the date for assessment of damages was 30 June 2010 or 30 June 2018.  The submission then developed elaborate arguments, including by reference to case authority, in support of this novel proposition.  As Mr Campbell QC correctly submitted on appeal, those submissions had not been justified by any request on the part of the trial judge.  The same point was made in Mr Campbell’s and Mr Hall’s written trial submissions in reply dated 28 May 2019.[72]  The impermissibility of the submissions on this point explain the terseness of his Honour’s treatment of the matter in his second set of reasons.
  4. [144]
    The grounds of appeal concerning the finding about the date of loss should be rejected.

Losses not deducted

  1. [145]
    The same point arises in dealing with the appellant’s ground 4 in its second notice of appeal[73] which challenges quantum.  By that ground the appellant contends that his Honour should have deducted the sum of $80,690 from the damages awarded because that sum represents losses that were incurred after the appellant had ceased to be retained.  This is yet another factual point that, if it was to be dealt with at all, should have been dealt with by counsel in final addresses after the conclusion of evidence.  There was no warrant to add submissions about matters of fact in response to the learned judge’s limited invitation for further submissions and it was rightly ignored by his Honour.  The ground of appeal raises an issue of fact that should have been dealt with at the trial but was not and for this reason this ground should be rejected.

Grossing up

  1. [146]
    By ground 6 of its second notice of appeal, the appellant contends that the learned trial judge erred in awarding a sum to increase a certain component of damages in order to take into account tax that would be payable by Ms Bankier on receipt of that component.  In summary, the issue was whether, assuming that a sum of money is paid by way of damages and that the amount is taxable, and assuming that a sum is added to that award in an amount that is enough to pay tax due on the damages, whether the tax on the extra sum should also be compensated.  The higher sum would be payable if the component of damages that is referable to tax is itself taxable.  The aim of the exercise, whichever of these two courses is appropriate, is to arrive at a tax free sum in the hands of the plaintiff.
  2. [147]
    Martin J awarded a component of damages and added to that component an additional sum (“the gross up”) for both the tax payable on the damages and the tax that would be attracted by the gross up sum itself.
  3. [148]
    In Jamieson & Ors v Westpac Banking Corporation,[74] Jackson J had to consider this matter in the context of an award that would be subject to income tax under the Income Tax Assessment Act 1997 (Cth).  The provisions of that Act meant that the sum in question would be treated as containing two components, the award and the tax payable on that award.  The second of these components would not itself be taxed and would not itself create a further tax liability.  Martin J held that the sum attributed to tax in the present case was not of the same character as the sum in Jamieson because, as both parties accepted, the principal award would be subject to capital gains tax and not income tax.  His Honour held that it followed that the gross up component would also be taxable and had itself to be grossed up.
  4. [149]
    The appellant submits that in Jamieson[75] the Court of Appeal observed that one would not expect the Australian Taxation Office to treat the grossed up component of an award as itself subject to tax and invites this Court to act upon a similar prediction about what officers in the Australian Taxation Office might be expected to do.
  5. [150]
    It was common ground that the damages sum in question would be reported by Ms Bankier appropriately as a capital sum rather than as income.  The treatment of that sum for taxation purposes in Ms Bankier’s hands will then depend solely upon the provisions of the taxation legislation that applies to it.  In Jamieson itself, the Court of Appeal had before it some provisions of the relevant legislation which took it into account.  In this case, the relevant legislation was not before Martin J.  Instead, the subject was addressed by the respondent in her further written submissions at trial on quantum by reference to having “received accounting advice” that the award would be assessed as a capital sum because it could not be “readily dissectible as income”.  It followed, said the submission, that the sum had to be grossed up on the basis that the whole sum, including any gross up itself, would be subject to capital gains tax.  The difference between the treatment of the sum in this way, as income on the one hand and as capital on the other hand, was demonstrated in a pair of tables.
  6. [151]
    The defendant made no objection to the plaintiff’s calling in aid advice from an unidentified adviser; indeed, it accepted the correctness of the proposition that the sum would be treated as capital.  However, in reliance upon Jamieson, the defendant submitted to the judge that there was no justification for a double grossing up.
  7. [152]
    Martin J accepted the plaintiff’s submissions.
  8. [153]
    On this appeal, the appellant contends that the decision was contrary to Jamieson and that it was made “in the absence of evidence to the contrary (which there was none), that there was a risk that the ATO would treat the grossed-up component … as itself being subject to tax”.
  9. [154]
    The submission is misconceived.  The issue was not one for evidence.  It appears that the parties were agreed that a single gross up was appropriate.  Their dispute about a further gross up could only be resolved by having regard to the effect of the relevant taxation statutes upon the proven facts.  Neither party addressed this issue in this way.  The question was entirely a question of law.  The onus lay upon the plaintiff to justify an increase in the award of a second gross up and this she failed to do.  In those circumstances, this ground should be upheld and the award of damages should be reduced by $36,075.25.[76]

The period applicable to s 58 Civil Proceedings Act 2011 interest

  1. [155]
    The appellant claims that Martin J erred in awarding the payment of statutory interest from 30 June 2010.  It was submitted that the judge “failed to give proper consideration to” delay and an assessment of loss as at 30 June 2018 shows that the respondent would not be out of pocket if interest were not to be awarded prior to that date.  This latter aspect has been dealt with and can be put to one side.
  2. [156]
    The award of interest is the result of an exercise of discretion.  A challenge to an exercise of discretion can only be based upon an evident error of fact or law.  Such errors might also be inferred if the decision is so unreasonable that it must have been the result of an unidentifiable error of reasoning.  No such errors have been raised here.
  3. [157]
    A plaintiff’s delay may give rise to a reduction in the award of interest.  In this case the appellant submits that the tortious conduct took place between 2002 and 2007 yet the proceeding only started in 2014 and the originating process was not served until 2015.
  4. [158]
    There is more to the story than that.  The appellant continued to act for the respondent until the middle of 2010 and, as a result, she had no way of knowing before then that Mr Avery’s negligence had caused her to lose a lot of money.  That discovery and the ensuing investigation of grounds to sue can both take time.  In this case, the tortious acts and its consequences affected a young plaintiff who had to shoulder severe disabilities in her ordinary day to day life; it can be inferred that these were matters that might have affected the speed of the investigation of her rights against the appellant.
  5. [159]
    None of this was addressed before his Honour and, in a case like this one, to point to the number of years that have elapsed between the date of the commission of the tort and the date that proceedings were started is not enough to rebut the proposition that, on the findings, Ms Bankier’s losses crystallised on 30 June 2010 and the appellant has had the free use of her money since then for which it should now pay.
  6. [160]
    This ground should be rejected.

The applicable rate of interest for s 58 Civil Proceedings Act 2011 (Qld)

  1. [161]
    Finally, the appellant challenges the rate of interest.  Martin J gave judgment for the plaintiff in the sum of $1,139,178.45.  That sum included interest in the amount of $419,744.45 (as well as the gross up amount).  The interest component was arrived at by applying a rate of 10 per cent for the period from 30 June 2010 until 19 April 2013.  From the latter date the interest rate applied was 4 per cent above the cash rate published by the Reserve Bank of Australia for each 6 month period from 1 January to 30 June and then from 30 June to 31 December of each year.
  2. [162]
    Those rates were derived from Practice Direction 22 of 2012, which specified a rate of 10 per cent per annum and Practice Direction 7 of 2013 which specified the rate by reference to the Reserve Bank cash rate from then on.  The plaintiff submitted, and Martin J accepted, that the rate provided by the first of the two practice directions was appropriate for the period that it covered, while the rate specified in the second practice direction was appropriate for the remaining period.  The appellant had submitted that the rate specified in the second practice direction should be applied for the whole period.
  3. [163]
    The appellant submits that Martin J erred in allowing interest in the way that he did.  The submission should be rejected.
  4. [164]
    An order for the payment of interest in a case like the present is authorised by s 58(3) of the Civil Proceedings Act 2011 (Qld) which provides:

“The court may order that there be included in the amount for which judgment is given interest at the rate the court considers appropriate for all or part of the amount and for all or part of the period between the date when the cause of action arose and the date of judgment.”

  1. [165]
    The provision confers a discretion that is uncircumscribed by any express criteria.  It must, therefore, be exercised according to the justice of the particular case arising from the circumstances of that case.  Interest may be awarded in respect of the whole amount for which judgment is given, for part of that amount or not given at all.  The period over which interest is to be calculated may extend for the whole of the period from the date on which the cause of action arose until judgment or for any part of that period.  The rate of interest that is to be applied is any rate that the court “considers” appropriate.  The section does not provide for any rate to be prescribed by practice direction.
  2. [166]
    It is difficult to imagine a wider discretion.
  3. [167]
    Section 59 of that Act also makes provision for the payment of interest.  By force of s 59(2), once judgment has been given, interest becomes payable upon the resulting “money order” from the date of the order “unless the court otherwise orders”.  Section 59(3) provides that the applicable rate of interest is to be that which has been prescribed for the purpose by a practice direction made under the Supreme Court of Queensland Act 1991 (Qld) unless the court otherwise orders.
  4. [168]
    Uniform Civil Procedure Rules 1990 (Qld) r 289 concerns the entry of judgment by default by the Registrar and it provides for interest to be payable at a rate specified in a practice direction.
  5. [169]
    UCPR r 283 provides for the Registrar to enter judgment by default when the plaintiff’s claim is for a debt or liquidated demand.  UCPR r 283(2)(a) provides that such a claim can include a claim for interest “to the date of judgment”, relevantly, at a rate specified in a practice direction for s 58 of the Civil Proceedings Act.  UCPR r 283(4) provides that a claim for interest is included within the expressions “debt or liquidated demand” if, relevantly, the rate of interest is no more than the rate specified in a practice direction for s 58 of the Civil Proceedings Act.  In such cases, the Registrar may enter judgment in default without considering the merits of the claim.  The result is that the Registrar is not called upon to exercise any discretion in relation to the award of interest and simply gives judgment for the sum claimed together with interest for the relevant period until judgment at the rate declared in a practice direction.
  6. [170]
    Practice Direction 22 of 2012 and Practice Direction 7 of 2013 were practice directions made for the purposes of that rule and, accordingly, they make reference to having been made “for the purposes of s 58 of the Civil Proceedings Act 2001 [sic]”.  They have nothing to do with the discretion conferred upon a judge by that section.
  7. [171]
    Practice Direction 21 of 2012 was made for a different purpose.  It specified the rate of interest that is to be applied to a “money order”, that is to say, to a judgment sum, pursuant to s 59 of the Civil Proceedings Act 2011.  The application of interest to a money order is not discretionary and applies by force of statute.  Practice Direction 21 of 2012 was expressed to apply until varied by a subsequent practice direction.  Practice Direction 7 of 2013 did so.  As well as providing for a rate of interest in cases in which the Registrar was concerned under UCPR r 283, Practice Direction 7 of 2013 specified a new rate of interest for the purposes of interest payable automatically on “money orders” by force of s 59 of the Act.
  8. [172]
    The point is that none of these practice directions are concerned with the discretion that s 58 confers upon a judge.  That discretion is uncircumscribed by any subordinate legislation.
  9. [173]
    In Keeley & Ors v Horton & Anor,[77] Burns J, with whom Holmes CJ and Peter Lyons J agreed, noted that the rates specified in the relevant practice directions applied to default judgments and were the product of agreement between Australian jurisdictions in order to arrive at uniform rates for that purpose.  In Keeley the trial judge had ordered the payment of interest under s 58 of the Civil Proceedings Act at the rate prescribed for default interest and Burns J held that, in the absence of evidence of any other appropriate rate, that was the correct approach to have taken.
  10. [174]
    In this case Martin J applied the rate referred to in Practice Direction 21 of 2012 for the period until Practice Direction 7 of 2013 came into force and then applied the new rate for the remaining period.  That was a course that was open to his Honour.
  11. [175]
    The appellant submits that his Honour’s discretion miscarried.  The appellant submits that his Honour’s task was to “identify an “ordinary commercial rate””, citing Serisier Investments Pty Ltd v English.[78]  That case does not support that proposition.  Serisier was a case in which the trial judge had applied an interest rate of 15 per cent because that had been claimed by the plaintiff in its statement of claim.  Thomas J, who wrote the leading judgment, observed that no evidence of applicable rates had been led and the judge had been given no assistance in deciding upon an appropriate rate.  In considering what might be an appropriate rate in the absence of any evidence, Thomas J noted that it “has often been said” that interest should be allowed at “ordinary commercial rates”.  His Honour observed that sometimes short term investment account rates had been used and at other times minimum bank lending rates had been used.  His Honour remarked that “[o]bviously the courts do not adopt a totally commercial approach, because whatever rate is adopted, it is simple interest, not compound”.  His Honour said that it seemed to him that “from time to time the courts will adopt a median figure which represents a perception of commercial rates”.
  12. [176]
    The case is not authority for the proposition that the unfettered discretion conferred by s 58 obliges the court to seek, to identify and then to apply an “ordinary commercial rate” of interest.  In any case, that expression is itself so vague as to be meaningless for there are a myriad of “ordinary commercial rates” depending upon the identity of the borrower, the lender, the purpose of the loan, its amount and its terms.  The expression appears to have originated from a comment made by Gibbs J in Cullen v Trappell[79] that where “interest is allowed, it should be allowed at ordinary commercial rates”.[80]  In that case the trial judge had applied a rate of 10 per cent, a rate that Gibbs J accepted because “no effective challenge was made to its applicability”.  His Honour said that “the award of interest should always be approached in a broad and practical way, and this matter should not be allowed to assume disproportionate importance either at the trial or in the judge’s consideration of the matter”.[81]  The same view was expressed in Serisier by Thomas J who said that it would be undesirable to encourage the calling of accountants or other experts to give evidence on applicable rates of interest because that would lead to a multiplicity of issues and increase costs and the waste of human resources.[82]
  13. [177]
    The purposes of s 58 and s 59 are to compensate a plaintiff on just terms for the loss of use of money which has been enjoyed by a defendant.  The quantum of compensation is to be arrived at in a broad and practical way, as Gibbs J said it should, because it is to be determined in the exercise of a broad discretion and without a separate proceeding.  The usual practice in current times has been, as Burns J explained in Keeley, to apply the rate specified by practice direction for the Registrar’s purposes.  Circumstances may justify a different course.  Martin J applied the usual practice and he was not wrong in so doing.
  14. [178]
    In order to show that the exercise of discretion miscarried, the appellant had to demonstrate that there has been an error of fact or of law in his Honour’s reasoning.  The error of law advanced by the appellant appears to have been its proposition that his Honour was obliged to identify an ordinary commercial rate and then to apply it.  That proposition was wrong.  The appellant also submitted that the method of identification of the ordinary commercial rate has been legislatively provided by practice direction.  For the reasons given, that submission must be rejected.
  15. [179]
    For these reasons, this ground of appeal should be rejected.


  1. [180]
    As to costs, the appellant’s limited success on the issue of quantum in appeal number 8942 of 2019 should not deprive the respondent of her costs.


  1. [181]
    I would order as follows:
    1. Appeal number 5681 of 2019 is dismissed.
    2. Appeal number 8942 of 2019 is allowed to the extent that the award of damages should be reduced by $36,075.25 and is otherwise dismissed.
    3. The appellant is to pay the respondent’s costs of both appeals.
  2. [182]
    MORRISON JA:  I have read the reasons of Sofronoff P and agree with those reasons and the orders his Honour proposes.
  3. [183]
    PHILIPPIDES JA:  I agree with the orders proposed by Sofronoff P for the reasons given by his Honour.


[1]  The appellant is now under different management and Mr Avery is no longer connected with it.

[2]  Rather than the figure of $58,045 that was calculated in the schedule of investments.  The small difference is unexplained.

[3]  ARB 1, page 194.

[4]Ibid, 195.

[5]  “BlueSphere” was the photography business.

[6]  See [7] of this judgment above.

[7] ARB 1, page 210.

[8] Hawkins v Clayton (1988) 164 CLR 539 at 544-545 per Mason CJ and Wilson J (in dissent but not on this point of law), 549-550 and 556 per Brennan J.

[9]  The appellant’s counsel informed the judge that that was so in oral submissions: ARB 2, page 6419.

[10]  ARB 2, page 223, paragraphs [11] to [13].

[11]  ARB 2, page 276 – 277.

[12] Ibid, 278.

[13] Ibid, 285.

[14] Ibid.

[15] Ibid, 277.

[16] Ibid, 281.

[17] Ibid, 264.

[18]  ARB 2, page 1810.

[19] Mutual Life & Citizens' Assurance Co Ltd v Evatt (1970) 122 CLR 628 at 634 per Lords Hodson, Guest and Diplock.

[20] NMFM Property Pty Ltd v Citibank Ltd (2000) 107 FCR 270 at [427]-[428]; ABN AMRO Bank NV v Bathurst Regional Council (2014) 224 FCR 1.

[21] Ibid.

[22] Supra, at [1106].

[23] Supra.

[24] Ibid, [425].

[25] Ibid, [429].

[26] Ibid, [436]-[437].

[27] Ibid, [437].

[28] Austrust Pty Ltd v Astley (1993) 60 SASR 354 at 372 per Mulligan J; approved Austrust Ltd v Astley (1996) 67 SASR 207 at 224-226; Astley v Austrust Ltd (1999) 197 CLR 1.

[29]  Reasons of Martin J at [99].

[30]  Reasons of Martin J at [16].

[31]  As noted in [13] and [19] above in this judgment.

[32]  Reasons of Martin J at [151]-[152].


[34]Ibid, [133].

[35]  Appellant’s amended outline of submissions, at [30].

[36] cf. State of Queensland v Kelly [2015] 1 Qd R 577 at [31], [33].

[37]  Fourth Amended Statement of Claim, at [6(c)].

[38]  Further Amended Defence, at [81A(a)(ii)].


[40]  ARB 2, pages 2376 – 2377.

[41] Supra, at 634-635.

[42]  [1964] AC 465 at 502 per Lord Morris, at 529 per Lord Devlin, and at 537-538 per Lord Pearce.

[43]  As quoted in [12] above in this judgment.

[44]  Reasons of Martin J at [151].

[45] Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 279 per McHugh JA.

[46] Ibid.

[47] Ibid, at 280, citing Isaacs J in R v Associated Northern Collieries (1910) 11 CLR 738 at 740.

[48]  In this case such evidence was admitted without objection but Martin J placed no reliance upon it: see the Reasons of Martin J at [95].

[49]  Reasons [66], [67] and [152].

[50]  Reasons [133].

[51]  See also ARB 2, page 3209.

[52]  ARB 2, page 2786.

[53]  See for example, the “advice” generated on 4 June 2008, which advised that Ms Bankier “now commence some borrowing to build additional wealth”.  (emphasis added).  Mr Avery was recommending that his client engage in investments by means of margin loans.  ARB 2, page 3057.

[54] Astley v Austrust Ltd (1999) 197 CLR 1 at [35].

[55] Ibid, at [30].

[56]  ARB 2, page 2556.

[57]  ARB 2, page 2655.

[58]  ARB 2, pages 5907 – 5948.

[59]  ARB 2, page 5931.

[60]  ARB 2, page 6413 – 6414.

[61]  (1986) 162 CLR 1.

[62] Ibid, at 7.

[63]  (1950) 81 CLR 418 at 438.

[64] Wilson v Rigg [2002] NSWCA 246 at [23] per Giles JA.

[65]  Reasons of Martin J at [6].

[66]  Reasons of Martin J at [199].

[67]  Reasons of Martin J at [199].

[68] Suttor v Gundowda, supra.

[69]  ARB 2, page 307-309.  The reference to 30 October 2010 in paragraph [160] is an obvious typographical error.

[70]  ARB 2, page 1516.

[71]  Reasons of Martin J at [182].

[72]  ARB 2, page 6499.

[73]  Notice of Appeal dated 22 August 2019 in Appeal No. 8942 of 2019.

[74]  (2014) 283 FLR 286; [2014] QSC 32.

[75] Westpac Banking Corporation v Jamieson [2016] 1 Qd R 495.

[76]  The difference between the figures referred to in [6] of the second reasons for judgment at ARB 1, page 65.

[77]  [2016] QCA 253 at [12] to [13].

[78]  [1989] 1 Qd R 678 at 680-681.

[79]  (1980) 146 CLR 1 at 21.

[80]Ibid, 23.

[81] Ibid, 22.

[82] Supra, 681.


Editorial Notes

  • Published Case Name:

    HAP2 Pty Ltd v Bankier

  • Shortened Case Name:

    HAP2 Pty Ltd v Bankier

  • MNC:

    [2020] QCA 152

  • Court:


  • Judge(s):

    Sofronoff P, Morrison JA, Philippides JA

  • Date:

    21 Jul 2020

  • White Star Case:


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