'Flawed' advice costs planner $3m

A former WA financial planner must pay a client almost $3 million in damages after her advice left him with "significant expenses" and an almost $2 million tax bill.

WA Supreme Court Justice Paul Tottle described Marie Richardson, who had previously been known as Mary Bermingham, as a "forceful personality with considerable confidence in her own ability". He said she could not accept her flaws and tried to blame others for her mistakes.

Richardson had provided advice "beyond her competence and expertise," Justice Tottle said.

The court was told retired company director Phillip Lockyer used Richardson's Perth firm Bepad Pty Ltd, trading as Sovereign Bridge Capital Group, for advice in 2007.

Richardson developed a share investment strategy to reduce tax in which Lockyer had a $850,000 margin loan. Rather than reducing his tax liabilities, Lockyer argued Richardson's advice had increased his expenses and left him with a $1.9 million tax liability. The Australian Taxation Office estimated his liability would have been only $127,800 had he not followed her advice.

Lockyer argued Richardson had breached her duty of care by providing misleading advice. Richardson denied liability, arguing her advice was "a guide and Lockyer should have sought expert taxation advice".

She blamed Lockyer's accountant, whom she argued was a "concurrent wrongdoer". If her company could be blamed, it rested with her staff who provided the advice, she said.

On February 26, Justice Tottle found Richardson's evidence had little credibility and rejected her arguments. He said her claims that staff were in all meetings to advise Lockyer were contradicted by her file notes and she could not be believed.

"As far as [Lockyer] was concerned, he was receiving tax advice directly from Richardson [whom] he considered competent," Justice Tottle said.
"It was reasonable for Lockyer to hold that view. Richardson owed [him] a duty not to provide advice on matters beyond her competence and expertise."

Justice Tottle rejected Richardson's attempts to blame others for her "flawed" advice. She was solely responsible and there was no evidence Lockyer's accountant was a "concurrent offender".

"As the person who engaged in the contravening conduct, Richardson is liable for damage suffered. But for [her] negligence, [Lockyer] would not have entered into the 2007 investments."

Justice Tottle said Richardson's evidence was "unreliable and I have the strong impression it was tailored to suit the defence being advanced".
He said the primary feature of Richardson's evidence that led him to consider it unreliable was that she gave detailed accounts of what was said in conversations from 2005 to 2008 and of what she understood and thought at the time, that were either not mentioned in her pleadings, her witness statement or contemporaneous file notes, or were inconsistent with accounts given in those documents.

Justice Tottle ordered Richardson to pay Lockyer $2,900,853 in damages.

Lockyer v Bermingham [No 3] [2018], WASC 61, 26/02/2018