Accountant ordered to pay cost over Great Southern advice
A South Australian accountant's advice to invest in failed agriculture investment schemes has cost him more than $400,000.
The Supreme Court of South Australia ordered David Abram to pay damages of $412,242, plus costs, to a client after an appeal.
Abram's client, Gary Jackson, had initially been awarded damages of $288,240 and costs up until 4 July 2013, with Jackson being ordered to pay costs for the remainder of the proceedings up to 24 September 2014, on the grounds that he had failed to accept a filed offer from the respondents of 19 June 2013 to consent to judgment in the sum of $257,000 plus interest and costs.
Court documents revealed that Jackson made the following investments in schemes that were managed and promoted by the Great Southern Group:
- 2005 plantations project — $15,000;
- 2006 cattle project — $140,000;
- 2007 cattle project — $140,000;
- 2007 olive project and options — $48,000; and
- 2008 wine grape project — $102,200.
The Supreme Court found that the initial judge erred in not finding that that Abram was liable in damages to Jackson for a loss from his investment in the 2006 cattle project in the sum of $119,000, and for not finding Abram liable for the loss of the entire $140,000 invested by Mr Jackson in the 2007 cattle project.
The initial judge found that Abram was negligent in three ways:
- Because he failed to warn Jackson of the risk of having such a large proportion of his investment in Great Southern;
- Because he failed to advise Jackson to spread the risk; and
- Because he actively encouraged Jackson to place further investments with Great Southern after Jackson had expressed concern about "putting all his eggs in one basket"
Recommended for you
It can be extremely hard to realise the gains from financial advice M&A, according to Peloton Partners’ Rob Jones, and more could be gained from firms looking inward at their own practice.
With platforms reporting their quarterly results, there is a clear divide in the adviser markets they are targeting, according to platform specialist Recep Peker, and which would be right for your clients.
The Federal Court has imposed a $10 million penalty on Macquarie Bank for failing to prevent and control unauthorised fee transactions by third parties including financial advisers.
A financial advice firm has seen a weekly decline of 10 advisers, with all moving to a new licensee, while Centrepoint Alliance continues its “growth story”.
