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A former financial adviser has been ordered to pay almost $3 million in damages after being taken to court for her tax advice.
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Bad tax advice leaves financial adviser with $3m damages bill
28 February 2018
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6 minute read
Marie Richardson, who traded under the name Mary Bermingham, was taken to the Supreme Court of Western Australia by her former client Phillip Lockyer over tax advice Ms Richardson had provided in relation to options exercised by Mr Lockyer’s wife.
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According to court documents, Ms Richardson told Mr Lockyer he had “a substantial liability to pay income tax” after his wife exercised 500,000 options on a mining company, and advised him throughout 2007 and 2008 to make a number of negatively geared investments to reduce this liability.
The court found the premise of this advice provided by Ms Richardson and her business Bepad (which held an AFSL and traded under the name Sovereign Bridge Capital Group) “was flawed”, and that Mr Lockyer incurred numerous losses as a result of the advice he received from Ms Richardson.
Justice Paul Allan Tottle ruled in favour of Mr Lockyer, finding that Ms Richardson and her company had “breached the duty of care owed to Mr Lockyer” and provided advice on a complex issue that fell outside her area of expertise.
“Although I have expressed the breach of duty in different terms from those pleaded by Mr Lockyer, I find that the breaches of duty alleged by him are established,” Justice Tottle said.
“I would add that in my view the misleading conduct that established the defendant's liability under the statute constituted a breach of duty.
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“Judgment should be entered in Mr Lockyer's favour in the sum of $2,900,853. I will hear the parties in relation to interest and costs.”
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