FEDERAL COURT OF AUSTRALIA Dennis v Chambers Investment Planners Pty Ltd (Administrators Appointed) (No 3) [2014] FCA 648 Citation: Dennis v Chambers Investment Planners Pty Ltd (Administrators Appointed) (No 3) [2014] FCA 648 Parties: JOHN STRICKLAND DENNIS v CHAMBERS INVESTMENT PLANNERS PTY LTD (ACN 009 294 606) (ADMINISTRATORS APPOINTED) and GEORGE KAMEL TAKLA File number: WAD 292 of 2010 Judge: BARKER J Date of judgment: 20 June 2014 Catchwords: CORPORATIONS – claim for breach of duties under financial services legislation as it applied at material times – whether respondents had reasonable basis for financial advice given – whether respondents made representations concerning appropriateness of advice or accuracy of finance applications that were misleading or deceptive or likely to mislead or deceive CONTRACTS – whether respondents breached contractual duty to exercise reasonable care and skill in provision of financial advice – whether respondents owed duty to provide advice "as to the most suitable financial investments" NEGLIGENCE – whether respondents breached duty to exercise reasonable care and skill in provision of financial advice EQUITY – whether respondents obtained unauthorised benefit from financial advice relationship – whether respondents breached any contractual, tortious or equitable duty in connection with advice given or involvement in applicant's purchase of property EVIDENCE – expert opinion evidence – whether financial planner qualified to give expert evidence concerning duty of care issues and loss – relevance of expert evidence to matters in issue DAMAGES – whether applicant is entitled to damages – extent to which any claimed loss and damages are attributable to respondents' conduct – loss of opportunity claim – whether some claimed losses are outside statutory limitation period or otherwise affected by Civil Liability Act 2002 (WA) Legislation: Australian Securities and Investments Commission Act 1989 (Cth) Australian Securities and Investments Commission Act 2001 (Cth) Corporations Act 1989 (Cth) s 851, s 851(1) Corporations Act 2001 (Cth) s 440D(1)(a), s 945A, s 945A(1), s 945B, s 946A Evidence Act 1995 (Cth) s 76, s 79, s 135 Civil Liability Act 2002 (WA) s 3A, s 4A, s 5A(1), s 5B, s 5C, s 5C(1)(b), s 5C(3), s 5C(4), s 5D, s 5N Cases cited: Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 6) (1996) 64 FCR 79 Australian Securities and Investments Commission v Vines [2003] NSWSC 1095; (2003) 48 ACSR 291 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Dasreef Pty Ltd v Hawchar [2011] HCA 21; (2011) 243 CLR 588 Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705 Maronis Holdings Ltd v Nippon Credit Australia Ltd [2001] NSWSC 448; (2001) 38 ACSR 404 Morellini v Adams [2011] WASCA 84 O'Brien v Gillespie (1997) 41 NSWLR 549 Polkinghorne v Holland [1934] HCA 28; (1934) 51 CLR 143 Reardon Smith Line Limited v Yngvar Hansen-Tangen [1976] 1 WLR 989 Strong v Woolworths Ltd [2012] HCA 5; (2012) 246 CLR 182 Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; (2011) 86 ALJR 1 Date of hearing: 29, 30, 31 January 2013; 1, 4, 5, 6, 7, 8 February 2013; 12 July 2013 Date of last submissions: 27 August 2013 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 823 Counsel for the Applicant: Mr C Slater Solicitor for the Applicant: Kott Gunning Counsel for the Respondents: Dr JT Schoombee, Ms C Horwood Solicitor for the Respondents: HWL Ebsworth Lawyers IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 292 of 2010 BETWEEN: JOHN STRICKLAND DENNIS Applicant AND: CHAMBERS INVESTMENT PLANNERS PTY LTD (ACN 009 294 606) (ADMINISTRATORS APPOINTED) First Respondent GEORGE KAMEL TAKLA Second Respondent JUDGE: BARKER J DATE OF ORDER: 20 JUNE 2014 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. Parties to bring forward a minute reflecting the Court's judgment and on costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 292 of 2010 BETWEEN: JOHN STRICKLAND DENNIS Applicant AND: CHAMBERS INVESTMENT PLANNERS PTY LTD (ACN 009 294 606) (ADMINISTRATORS APPOINTED) First Respondent GEORGE KAMEL TAKLA Second Respondent JUDGE: BARKER J DATE: 20 JUNE 2014 PLACE: PERTH REASONS FOR JUDGMENT 1 On 30 March 1999, Mr Dennis consulted Mr Takla of Chambers Investment Planners Pty Ltd for financial planning advice. 2 Following an initial consultation with Mr Takla on that date and his filling out of a Fact Find document, Mr Dennis received a written wealth creation program or initial plan from Chambers under cover of a letter dated 2 June 1999. 3 From that point until the time of the global financial crisis (GFC), triggered by the collapse of Lehmann Brothers Holding Inc investment bank in the United States in September 2008, Mr Dennis, on the advice of Chambers and Mr Takla, made a number of investments that were substantially financed by debt. The principal investments were made in managed investments schemes (MISs) of an agribusiness nature, as well as in general equity investments (GEIs). Mr Dennis also says that a residential unit in South Perth purchased by him in late 2007 (South Perth unit), was purchased on Mr Takla's recommendation in the course of his professional relationship with Chambers, something the respondents deny. 4 Following the GFC, Mr Dennis suffered investment losses. In this proceeding, Mr Dennis claims that Chambers and Mr Takla are liable to him for them. The primary questions are whether the respondents are so liable and, if they are, the extent to which the loss and damage claimed by Mr Dennis is attributable to the respondents' conduct or is otherwise claimable. 5 Mr Dennis puts his case this way. He says Chambers and Mr Takla agreed to provide financial advice to him; that Mr Takla took instructions on his objectives and his tolerance to taking risks to achieve those objectives; that he gave instructions to Chambers and Mr Takla to build an investment portfolio to supplement his retirement resources in a way that reasonably preserved the investments, but also provided growth for them; however, that did not occur by reason of breaches of contractual and other duties owed to him by Chambers and Mr Takla. 6 So far as loss and damage is concerned, Mr Dennis, relying on an analysis provided at trial by Mr David Barber, an expert witness called by him, submits that damages should be assessed in the sum of $1,338,284.66, calculated on the following basis: (1) That he, Mr Dennis, sought advice to manage medium and long term needs. (2) The approach of a reasonable financial planner would be to manage long term needs. In those circumstances his position at the time of trial, if that approach had been followed and the opportunity had not been lost, would have resulted in a net positive position of $437,118. (3) The sum at trial, to put him in the position he would have been in if the contract had been performed, to compensate him for the breaches suffered, would require payment of the sum of: (a) his current debt on key investments referred to in the following paragraph, of: $745,615.40 (b) the net lost opportunity claim referred to in sub-paragraph (2) above: $437,118.00 (c) the return of fees and other payments made on the investments that should not have been made, of: $105,157.00 (d) break costs on ending the GEI investments he made: $50,394.26 7 As to the claimed debt on key investments of $745,615.40, Mr Dennis presents the following loss table: 1999, AGL timber project 2 1999: investment cost $100,000, fully borrowed, last balance $123,349.33 2000, Australian Blue Gums 2000: investment cost $82,400, fully borrowed, last balance: Nil 2001, AGL timber project 4 Plan B 2001: investment cost $22,000, fully borrowed, last balance: Nil 2003, AGL timber project 4 Plan C 2002: investment cost $25,000, fully borrowed, last balance: Nil 2003, Sylvatech 2003: investment cost $20,000, fully borrowed, last balance: Nil 2005, Great Southern Plantations 2005: investment cost $99,000, fully borrowed, last balance: $83,485.54 2006, Great Southern Beef 2006: investment cost $65,000, fully borrowed, last balance: $27,563.34 2006, Great Southern Olives 2006: investment cost $72,000, fully borrowed, last balance: $90,384.21 2006, Great Southern Vineyards 2006: investment cost $66,300, fully borrowed, last balance: $79,421.04 2007, Great Southern Olives 2007: investment cost $72,000, fully borrowed, last balance: $99,398.06 2007, Great Southern Vineyards 2007: investment cost $62,400, fully borrowed, last balance: $84,382.51 2008, Gunns Plantation 2008: investment cost $62,000, fully borrowed, last balance: $57,140.93 2008, Willmotts 2008: investment cost $74,100, fully borrowed, last balance: $95,446.24 National Australia Bank, investment (buffer) account, last balance: $242,696.78 National Australia Bank, South Perth residential unit loan, last balance: $184,717.60 Mr Takla, loan: last balance: $178,118.58 $1,346,104.16 Credit 70% of $800,000 value of the South Perth residential unit: $560,000.00 Credit return paid on Australian Blue Gums: $40,488.76 TOTAL: $745,615.40 8 It will be noticed that nine MISs figure predominantly in the loss table as productive of loss, as well as an investment or buffer account maintained with the National Australia Bank (NAB) and the South Perth unit. 9 Mr Dennis pleads that Chambers and Mr Takla are liable to him for the loss and damage claimed on the following bases: (1) Breach of a duty owed under the contract of advice between them, but also at common law and equity, to provide advice "as to the most suitable financial investments". (2) Alternatively, breach of a duty to exercise due care and skill throughout in the provision of financial services advice that arose under the contract and at law and equity. (3) Alternatively, or additionally, breach of a number of similar duties owed under financial services legislation as it applied at material times, both before and after the financial services reform period (FSR period) introduced by amendments to the Corporations Act 2001 (Cth) in 2002. (4) Misleading or deceptive conduct in that: (a) the advice they gave him at various times conveyed the representations that his position was appropriately considered and the advice or recommendations made were rational and reasonable for him, which he relied upon, and which were not so; and (b) they misrepresented to him that various applications for finance made on his behalf were correct when in fact they were not. (5) Breach of a fiduciary duty owed by Mr Takla to him as a result of which Chambers and Mr Takla received benefits from Mr Dennis entering into investments; and also in relation to the investment made in the South Perth unit. 10 The alleged breaches in sub-paragraphs (2), (3) and (4)(a) of the preceding paragraph overlap. 11 So far as the particulars of loss and damage pleaded in the statement of claim are concerned, Mr Dennis provided particulars of debt and interest obligations he had incurred, particulars of lost value of investments that he alleged, particulars of Macquarie Bank GEI break costs incurred, particulars of fees and commissions paid to the respondents, and particulars of lost opportunity to invest and receive returns. 12 In his particulars of lost value of investments, Mr Dennis stated that he had acquired investments – particularly those in MISs – which "are either worthless, near worthless or illiquid meaning that they could not be realised at all or realised in sufficient time to meet the requirements of the financiers for repayment as to capital or interest on borrowed funds for those investments or management fees or costs related to the projects". 13 The defence of Chambers and Mr Takla is essentially that: (1) They owed Mr Dennis a duty to exercise reasonable care and skill in the provision of financial services advice under the contract and at common law, but no more. Thus, they deny that there was any contractual, tortious or equitable duty to provide advice "as to the most suitable financial investments". (2) They deny any breach of a contractual or tortious duty to exercise reasonable care and skill in the provision of financial services advice and say that they discharged their duty by providing the advice which included, in the pre-FSR period, letters of advice, and in the post-FSR period, statements of advice (SOAs) and statements of additional advice (SOAAs), including: (a) advices as to the relevant risks of investing in recommended products; and (b) recommending Mr Dennis seek further advice where appropriate, for example, with respect to taxation implications of the advice. (3) With respect to the applications for finance, they say they completed the applications in accordance with Mr Dennis' instructions, or using information provided by him and further that he checked the applications and signed off on them before they were sent off. (4) They also say that any loss or damage suffered by Mr Dennis is due to a number of factors outside any relevant sphere of responsibility that they had, including: (a) incorrect information provided to them by Mr Dennis; (b) Mr Dennis' failure to make regular payments towards his investments, as he was required to do, and as he had expressly agreed to do, prior to Chambers or Mr Takla implementing the advice; (c) third parties who provided research and information to Chambers and Mr Takla when they conducted due diligence on the suitability of the products generally – if it were to be found that any recommended product was defective or unsuitable, which they deny and in respect of which Mr Dennis has produced no evidence; (d) the advent of unforeseeable events and consequences, notably: (i) the GFC and the resultant unprecedented unfavourable market conditions and a high Australian dollar; and (ii) the compulsory conversion by Great Southern of Mr Dennis' investment in Great Southern Beef into shares in Great Southern Pty Ltd after the commencement of Mr Dennis' investment. 14 Chambers and Mr Takla further deny Mr Dennis' allegations that: (1) He did not rely upon or have regard to a number of warnings and qualifications set out in the advices, namely: (a) the express requirement that he inform Chambers and Mr Takla if he believed that they had misinterpreted or overlooked relevant information; (b) the warnings given by Chambers and Mr Takla to seek independent advice on the taxation implications of investments; and (c) the delivery of the product disclosure statement (PDS) documents provided to him by them, as (d) the warnings were given to him in the body of lengthy documents, and Mr Dennis' attention was not drawn to those sections containing the warnings and discussing the risks. The respondents say that does not avail Mr Dennis in law even if established in fact, which is also denied; (e) the PDS documents were provided some time after Mr Dennis had already agreed to implement the advice, which the respondents say is simply incorrect; and (2) The GFC was a reasonably contemplated event, which the respondents ought to have considered when providing each of the advices – contrary to the evidence of Mr Dennis' own expert, Mr Barber. 15 The issues in the proceeding may therefore be stated as follows: (1) Whether Chambers was required to provide financial advice to Mr Dennis "as to the most suitable financial investments" under the contract between them or at common law or equity; and if so, whether the duty was breached; (2) Whether Chambers breached its duty under the contract or at common law to exercise reasonable care and skill in providing financial advice to Mr Dennis; (3) Whether Chambers breached s 851 of the Corporations Law, in the pre-FSR period, or s 945A and s 945B of the Corporations Act 2001 (Cth), in the relevant post-FSR period, by giving advice to Mr Dennis that, in short, did not have a reasonable basis; (4) Whether Chambers made representations to Mr Dennis concerning: (a) the appropriateness of the advice given and recommendations made, and (b) the accuracy of finance applications that were misleading or deceptive or likely to mislead or deceive; and if so, whether Mr Dennis suffered any loss as a result; (5) Whether Mr Takla owed Mr Dennis a fiduciary duty to the effect that he would not obtain any unauthorised benefit from his relationship with Mr Dennis; and, if so, whether the duty was breached; (6) Whether Chambers and Mr Takla provided advice in relation to the purchase of the South Perth unit in the course of the professional relationship and, if so, whether any contractual, tortious or equitable duty was breached; (7) If there is any relevant breach, whether Mr Dennis has suffered any relevant loss by reason of that breach; including whether some claimed losses are outside the statutory limitation period. precis of dealings, advice and Investments 16 Before considering the issues, it is useful to provide a prÉcis of the principal dealings between the parties and the advice given and investments made by Mr Dennis between 1999 and 2008, and the fate of some of those investments after 2008. This will serve not only to provide some general context in relation to the nature of the relationship between Mr Dennis and Mr Takla, but also to identify the specific context in which Mr Dennis alleges the recommendations to invest in the MIS products, in particular, were inappropriate and in which losses were suffered. 17 In the financial year ending 30 June 1999, on 30 March 1999, Mr Dennis and his then wife visited Mr Takla at the offices of Chambers where each completed a Fact Find or needs analysis questionnaire form and had an initial consultation with Mr Takla, who was then an employee of Chambers. 18 On 2 June 1999, Chambers, by Mr Takla, provided a letter of advice to Mr Dennis (and a separate one to Mrs Dennis, who later chose not to proceed with Chambers) enclosing the initial plan. In particular, as part of a plan to purchase a home, Chambers recommended that Mr Dennis invest $200,000 in a Macquarie Bank GEI by the purchase of shares financed with a Macquarie Bank GEI investment loan. 19 In June 1999, following the issuing of a prospectus in about the middle of that month, Chambers held an investment seminar in relation to Plantation Hardwood Project No 2, a MIS (which was later renamed and is referred to in Mr Dennis' loss table above, and elsewhere in these reasons as AGL timber project 2 1999). 20 On 24 June 1999, Mr Dennis signed a client authority and acknowledgement for AGL timber project 2 1999, completed an application to purchase a $100,000 interest in it and soon after applied for finance in respect of the project. On 30 June 1999, he was accepted into the project. 21 In the financial year ending 30 June 2000, in late July 1999 Mr Dennis applied to NAB for a loan of $90,000 to partly fund the purchase of the interest in the first MIS project, AGL timber project 2 1999. 22 On 8 September 1999, Chambers wrote to Mr Dennis confirming documents provided to him prior to his entering into the investment in AGL timber project 2 1999. 23 In September/October 1999, Mr Dennis and his then wife completed the purchase of the Ardross home, as joint tenants. 24 On 11 October 1999, Mr Dennis signed instructions to proceed in accordance with the initial plan and covering letter of advice dated 2 June 1999. 25 Also in October 1999, Mr Dennis applied to Macquarie Bank in order to fund a $200,000 investment in the initial GEI – GEI No 1. Later in 1999 the investment was purchased. 26 Also late in 1999, the investment in AGL timber project 2 1999 was placed in part. 27 In February 2000, Mr Takla was appointed as a director of Chambers, when he and his wife became part owners of the business. 28 In March 2000, Mr Dennis applied to invest $10,000 in shares in Australian Plantation Resources Limited. 29 In April 2000, Mr Dennis attended an investment seminar at the invitation of Chambers regarding Australian Blue Gums 2000 (as it is referred to in the above loss table) and signed a disclosure statement for that investment and applied for finance of $82,400 to partly fund investments of $82,500 in Australian Blue Gums 2000 and $2,250 in related Norgard Clohessy Equity Options. 30 In May 2000, Mr Dennis obtained the shares in Australian Plantation Resources and signed a disclosure statement and an investor's declaration regarding that investment. A share certificate was issued in about August 2000. 31 In the financial year ending 30 June 2001, in about May 2001 Mr Dennis signed a disclosure statement in respect of an investment in woodlots managed by AGL Eucalyptus Timber and AGL Radiata Pine (collectively referred to as AGL timber project 4 Plan B 2001 in the above loss table). 32 Mr Dennis applied at about that time to Australian Growth Finance for a loan of $20,000 to fund the investments in AGL timber project 4 Plan B 2001. 33 In June 2001, Mr Dennis applied to NAB for a loan restructure of $160,000. 34 In June 2001, he was accepted into AGL timber project 4 Plan B 2001. 35 In the financial year ending 30 June 2002, the Australian Securities and Investments Commission Act 1989 (Cth) was repealed and the Australian Securities and Investments Commission Act 2001 (Cth) was enacted. 36 In December 2001, Mr Dennis and Mr Takla met to discuss Mr Dennis' financial planning needs at a six-monthly review. 37 In March 2002, significant amendments were also made to the Corporations Act, ending the pre-FSR period of the Corporations Act's operation (which subsequently affected Chambers directly when it obtained an Australian Financial Services Licence (AFSL) under the Corporations Act on 10 March 2004). 38 In May 2002, Mr Dennis and Mr Takla met again to discuss financial planning needs, at which time Mr Dennis was advised about the availability of woodlots managed in accordance with AGL timber project 4 Plan C 2002, as it is referred to in the above loss table. He then signed a disclosure statement in respect of that MIS and applied to Australia Growth Finance for a loan of $25,000 to partly fund an investment of $30,000 in it. 39 In May 2002, Mr Dennis discharged his proportion of the mortgage securing his home loan over the Ardross home that was jointly owned with his then wife. 40 Also in May 2002, on 31 May, Chambers wrote to Mr Dennis regarding documents provided to him prior to his investment in AGL timber project 4 Plan C 2002. 41 In June 2002, Mr Dennis applied to Macquarie Bank to fund $100,000 of investments in a second Macquarie Bank GEI – GEI No 2. 42 The GEI No 2 recommendation was recorded in a letter of advice from Chambers dated 10 July 2002. The investment was subsequently made when the loan was drawn down. 43 In the financial year ending 30 June 2003, on 17 June 2003 Mr Dennis and Mr Takla met to discuss financial planning needs at which time Mr Takla advised on the availability of woodlots managed by Sylvatech Tropical Timbers, referred to as Sylvatech 2003 in the above loss table. At that time Mr Dennis signed a disclosure statement in respect of this investment and applied to United Pacific Finance for a loan of $20,000 to partly fund its purchase, which investment was subsequently made. 44 In the financial year ending 30 June 2004, Mr Dennis and Mr Takla met to discuss Mr Dennis' investments on 14 December 2003 and again in relation to financial planning matters on 18 February 2004. 45 On 10 March 2004, Chambers commenced holding an AFSL under the post-FSR regulatory regime. 46 In the financial year ending 30 June 2005, on 30 September 2004 Mr Dennis applied to Macquarie Bank to fund a $200,000 investment in a third Macquarie GEI – GEI No 3. 47 In October 2004, GEI No 1 was partially unwound. 48 On 6 October 2004, Chambers recorded its recommendations under cover of a SOA concerning GEI No 3 and soon after Mr Dennis signed an agreement to proceed with the recommendations in it. Not long after that the loan for GEI No 3 was drawn down. 49 In November 2004, Chambers provided an SOAA to Mr Dennis concerning its recommendations that he invest $200,000 in shares in Equinox, financed by Macquarie Bank, $200,000 in the Fusion Fund, financed by Macquarie Bank, and $200,000 in Rubicon, financed by Rubicon Capital. 50 Also in November 2004, Mr Dennis signed an agreement to proceed with recommendations contained in the SOAA and Mr Dennis applied to Macquarie Bank for a loan of $200,000 for investment in Equinox, and soon after in November for a loan of $200,000 for investment in Fusion. He also applied to Macquarie Bank for a loan of $200,000 for investment in Rubicon. 51 In December 2004, GEI No 1 was partially unwound. 52 On 16 February 2005, Mr Dennis and Mr Takla met again to discuss financial planning needs. Mr Takla recommended amongst other things an investment in Great Southern Plantations 2005 – as it is referred to in the above loss table, to be financed by Great Southern Finance in the sum of $99,000. The loan was applied for and later granted. 53 On 6 March 2005, Chambers recorded its recommendation in an SOAA that Mr Dennis invest in Great Southern Plantations 2005. 54 On 22 April 2005, Mr Dennis and Mr Takla met again at Mr Dennis' request, to discuss how Mr Dennis could restructure his finances to accommodate his upcoming divorce and financial settlement with his then wife. 55 In May 2005, Mr Dennis and his then wife met with Mr Takla to discuss financial obligations arising from the settlement between Mr and Mrs Dennis. 56 In the financial year ending 30 June 2006, in July 2005 Mr Dennis was advised by State West Credit Society that his Australian Blue Gums 2000 investment loan had been paid out. 57 Around this same time Mr Dennis accepted a voluntary redundancy in relation to his employment by Woodside and commenced a private consultancy business whereafter he was employed by his wholly owned company, Gigajoule Pty Ltd, and also commenced project management consultancy work on engineering projects. 58 On 27 February 2006, Mr Dennis and Mr Takla met to discuss financial planning needs. 59 In May 2006, they met again to discuss financial planning needs. 60 On 14 June 2006, Mr Dennis and Mr Takla met again and Mr Takla recommended investment in the MISs of Great Southern Beef 2006, Great Southern Vineyards 2006 and Great Southern Olives 2006, as each is referred to in the above loss table, and Mr Dennis applied to invest in each of these. 61 On 20 June 2006, Chambers recorded its recommendations in that regard in an SOAA whereby $65,000 was to be invested in Great Southern Beef 2006, $66,300 in Great Southern Wine 2006 and $72,000 in Great Southern Olives 2006. 62 In the financial year ending 30 June 2007, in August 2006 the Rubicon investment was unwound. 63 In March 2007, Mr Dennis and Mr Takla met for an annual review concerning financial planning needs. At that time Mr Dennis applied to Great Southern Finance for a loan of $130,000 to fund further investments including a loan of $79,200 to fund an investment in Great Southern Olives 2007, as it is referred to in the above loss table. 64 On 23 April 2007, Chambers recorded its recommendations in that regard in an SOAA concerning investments of $72,000 in Great Southern Olives 2007, $62,400 in Great Southern Vineyards 2007 (as it is referred to in the above loss table), the selling of the Fusion investment and the selling of GEI No 2. 65 In June 2007, the Fusion investment was unwound and Mr Dennis signed an authority to proceed to implement the investment set out in the SOAA of 23 April 2007. Soon after the investment in GEI No 2 was unwound. 66 In the financial year ending 30 June 2008, in early September 2007 Mr Dennis and his then wife completed a financial settlement that included Mr Dennis transferring his share of the jointly owned Ardross home to his former wife, unencumbered, together with about $100,000 cash. 67 In December 2007, Mr Dennis met with Mr Takla, following which Mr Dennis applied to NAB for a loan of $550,000 to partly fund the purchase of the South Perth unit in Mr Dennis' name and for his use. 68 Soon after, Mr Dennis also applied to Macquarie Bank for a loan of $500,000 to fund a fourth Macquarie Bank GEI, as recommended by Chambers – GEI No 4. The application to Macquarie Bank was not actually sent until 31 January 2008. Macquarie Bank confirmed the loan approval for GEI No 4 in March 2008, which was then taken up. 69 On 20 March 2008, Mr Dennis and Mr Takla met to discuss financial planning needs, at which time Mr Takla recommended an investment of $88,660 in woodlots managed by Gunns Limited and a $500,000 investment in a further Macquarie GEI. On 9 April 2008, Chambers recorded its recommendations in a SOAA. In the event, this SOAA was not acted upon and these two further recommended investments were not made. 70 On 28 May 2008, Mr Dennis and Mr Takla met to discuss changes to tax deductibility of capital protected investments, such as the GEIs. 71 On 11 June 2008, Chambers recorded its recommendations concerning a $200,000 investment in another GEI with Macquarie Bank – GEI No 5, $68,200 in Gunns Plantation (referred to in the above loss table as Gunns Plantation 2008) and $74,100 in Willmott Premium Forestry Blend (referred to in the above loss table as Willmotts 2008). 72 On 6 July 2008, Mr Dennis signed an agreement to proceed with the recommendations in the SOAA of 11 June 2008. 73 In the financial year ending 30 June 2009, from 10 July 2008 GEI No 4 was partially drawn down. 74 On 10 September 2008, Mr Dennis and Mr Takla met to discuss Mr Dennis' investments. 75 On 15 September 2008, Lehmann Brothers sought bankruptcy protection in the United States of America, an event the parties agree marked a sharp drop in the All Ordinaries Index on the Australian Stock Exchange. 76 Soon after, on 18 September 2008, the remainder of GEI No 4 was drawn down. 77 On 12 December 2008, Mr Dennis and Mr Takla again met to discuss financial planning needs. 78 On 16 February 2009, Chambers recorded its recommendation in a SOAA that Mr Dennis sell some shares in the Macquarie GEI portfolios. 79 On 30 March 2009, Mr Dennis and Mr Takla again met to discuss investments. 80 On 3 April 2009, Mr Dennis' existing GEI No 3 and GEI No 4 were completely unwound, at his request. 81 On 14 July 2009, a Form 507 Notice of Affairs regarding Great Southern Ltd (Administrators Appointed) (Receivers and Managers Appointed) was filed with the Australian Securities and Investment Commission (ASIC). 82 In the financial year ending 30 June 2010, on 28 November 2009 Mr Takla sent Mr Dennis an email concerning the South Perth unit, to which Mr Dennis replied on 9 December 2009. 83 On 9 December 2009, Mr Dennis and Mr Takla met for coffee. 84 In the financial year ending 30 June 2011, on 5 October 2010 a Form 507 Statement of Affairs was filed with ASIC concerning Willmott Forests Limited. 85 The next day, 6 October 2010, Mr Dennis commenced proceedings which became this proceeding, WAD 292 of 2010. 86 In the financial year ending 30 June 2012, following the cessation of the relationship between the parties, on 20 June 2012 Willmott Forests Limited (in liquidation) advised distributions from sale of assets by liquidators was not expected before 2013. 87 In the financial year ending 30 June 2013, on 28 August 2012 Mr Dennis received an interim return of $41,237.03 less outstanding fees for the Australian Blue Gums 2000 investment. 88 On 25 September 2012, administrators were appointed to Gunns Limited. 89 On 29 November 2012, the growers in AGL timber project 4 voted to terminate the project, as did growers in AGL timber project 2 1999. 90 In December 2012, a Form 507 Notice of Affairs was filed with ASIC in relation to Gunns Limited. 91 The parties thus agree that the status of the following MISs as at the end of January 2013 and before trial was that: (1) the Great Southern Group, including subsidiaries is in liquidation and is subject to litigation; (2) Willmott Forests Limited is in liquidation; (3) Gunns Limited is in administration; (4) part of the Australian Growth Limited project No 4, being plan B of Scheme 4 was terminated by grower vote on 29 November 2012. Was Chambers required to provide financial advice "as to the most suitable financial investments"? 92 It is common ground between the parties that the contract by which Chambers provided financial services advice to Mr Dennis at material times contained a term that Chambers would exercise reasonable care and skill throughout the period of the relationship in the provision of that advice. It is also common ground between the parties that Chambers owed Mr Dennis a similar duty not to be negligent in that regard at common law. 93 It is not agreed by the respondents, however, that any such duty was owed in equity. I doubt that any such duty was owed in equity and counsel for Mr Dennis was unable to provide any analysis or identify any authority that supported the proposition. The question of such a duty in equity may therefore be put to one side. In any event, it is not suggested on behalf of Mr Dennis that breach of any such equitable duty would add anything to the claims based on the agreed contractual and tortious duties of care. 94 Mr Dennis further contends, however, that it was an implied term of the contract that in providing advice Chambers would advise him not just as to suitable investments for him, but "as to the most suitable financial investments" (emphasis added). 95 As to the implied term contended for, Mr Dennis submits it may be drawn from the evidence as to the negotiation of the contract, having regard to the factual matrix and discussions between the parties leading up to the conclusion of the contract. By reference to Reardon Smith Line Limited v Yngvar Hansen-Tangen [1976] 1 WLR 989 at 997, he submits evidence of the surrounding commercial circumstances may be relied on to give context to the agreement and that, despite the suggestion that evidence is only admissible where there is ambiguity, that requirement is a flexible concept in practice when one has regard to Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 (Codelfa). I should say, at the outset, that in light of what was said by members of the High Court on the special leave application considered in Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; (2011) 86 ALJR 1 at [1]-[5], the last proposition must be seriously doubted. 96 More directly, Mr Dennis says that the term of the contract contended for may be considered to arise from the following: The Fact Find document completed by Mr Dennis on 30 March 1999, which identified that he sought comprehensive advice which would arise from a process of collection and analysis of client information, identification of problems, identification of goals, objectives and priorities, written report with recommendations and solutions and implementation and periodic review. The information actually sought in the Fact Find. The goals and objectives and strategies sought for the immediate term, 1-3 years and in the longer term. The terms of the client statement/authorisation in the Fact Find. The initial plan dated 2 June 1999 by references to "wealth creation", provision of a "comprehensive and all-embracing report" and providing "well founded advice" taking into account Mr Dennis' risk/return profile. The initial plan incorporating the obligations of the Corporations Law, as it then applied, and the need for the advice to have a reasonable basis. The initial plan incorporating the obligation on Chambers and Mr Takla to observe the Code of Ethics of the Financial Planning Association of Australia Limited. The final report of Mr Barber, dated 29 February 2012, containing a copy of the Code of Ethics of that Association applicable from 1 May 1997 and the Code adopted in November 2008, the latter stating as Principle 1, the requirement to place the client's interests first. The initial plan incorporating the obligation on Chambers and Mr Takla to put the interests of Mr Dennis above their own. The initial plan incorporating the obligation on Chambers and Mr Takla to address the full scope of Chambers' specialised areas which included retirement planning and superannuation. The initial plan incorporating the obligation on Chambers and Mr Takla to consider the resources available to them which the initial plan indicated were "two of Australia's leading research houses" and to access the "top quality research and technical support". The initial plan incorporating the knowledge that Chambers and Mr Takla were creating a plan that was a "comprehensive personal financial plan for [Mr Dennis'] immediate and long-term future" and to "accumulate wealth to supplement any superannuation entitlements on retirement". 97 Mr Dennis also relies on what his counsel describes as an admission made by Mr Takla in cross-examination at trial, that he was required as a professional to apply the best of his ability to the tasks required; and the evidence of Mr Barber that a reasonable financial planner would ensure plans created for Mr Dennis provided "the greatest probability of reaching [his] needs and objectives with the lowest amount of risk" (see exhibit 8 at [77b]). 98 I am not satisfied, however, having regard to Codelfa, that there is any need to imply into the contract an implied term of the kind contended for, for reasons of business efficacy. Nor is such a term by any means "obvious". Nothing in the materials relied on suggests that any term, other than the duty implied as a legal incident of this class of contract, to exercise due care and skill when advising, is required to make the contract effectual. 99 Indeed, the way in which Mr Dennis finally advances his case for the implication of the pleaded term suggests that he is not in fact pressing for the implication of a term to that effect, but is contending that, upon a proper construction of statements made in the initial plan that forms part of the contractual documentation and related documents, such a term arises. I am equally not satisfied that that is so. All the statements relied upon support the view that the respondents understood they were required under the contract to exercise due care and skill throughout the provision of financial services and advice. They also reflect the obligations, imposed by the relevant financial services regulation at material times, to have a reasonable basis for advice given. In that regard, they reflected the "Know your client/know your product" rule that was widely espoused in the financial planning industry at material times, and to which the respondents subscribed. To suggest there was an additional obligation to advise as to the most suitable financial investments, among suitable investments, adds a level of obligation not evident in the materials relied upon by Mr Dennis. I do not consider there was any such contractual duty. Nor, for the sake of completeness, do I consider any such duty arose in tort or equity so far as dealings between Mr Dennis and either Chambers or Mr Takla are concerned. 100 When opening Mr Dennis' case counsel was pressed by the Court to explain whether the pleaded expression, "the most suitable investments", was a synonym for "appropriate investments". While counsel did not accede to that proposition, he suggested that the expression meant that in practice the respondents would provide "the best of Mr Takla's and his firm's work". When further pressed, counsel said there might be a range of suitable investments and the pleading was intended to encapsulate the duty to do more than recommend what was merely "just suitable". He added that it was the "professionalism" of the respondents that was in issue – that they would help Mr Dennis "to the best of their abilities" and in that sense to give him the most suitable for him of the investments. 101 When put this way, it is difficult to see how what Mr Dennis intended to encapsulate in the pleaded phrase, "the most suitable investments", would produce, in the circumstances, any different requirement from that otherwise acknowledged by the respondents, to exercise due care and skill in the provision of financial advice throughout the relationship. The concept of "professionalism" does not, in my view, at least in the circumstances of this case, create some higher duty than the agreed duty to exercise due care and skill. 102 In light of this finding, the question of breach of the pleaded term does not arise for consideration. Did Chambers and Mr Takla breach their duty to exercise reasonable care and skill? 103 Mr Dennis' primary breach allegations: Mr Dennis claims that, in substance, the duty to exercise reasonable care and skill when providing financial services and advice was breached by reason of the following primary failures of the respondents: (1) The failure to complete a sufficient Fact Find: (a) that enabled an accurate assessment of Mr Dennis' personal expenses, as they encroached on the ability of Mr Dennis to fund investments; (b) to enable a comprehensive view of Mr Dennis' goals and objectives. (2) The failure to note and bear in mind or address Mr Dennis' circumstances, goals and objectives when making recommendations, particularly in light of his stated and repeated goals to retire debt and to provide for retirement by supplementing superannuation. (3) The failure to consider Mr Dennis' cashflow obligations by always recommending that investments be acquired by finance, without considering the impact of the accumulation of debt at material times. (4) The failure to consider the concentration of investment recommendations in MISs which, by their inflexible nature, could not be sold prior to the completion of the subject project, and in the interim would not provide returns that helped to pay the debt associated with that investment, or any other investment. (5) The failure to address the risk to Mr Dennis in holding the investments recommended, in the light of his circumstances, and how having to hold that investment would (or was reasonably likely to) have an impact on the goals and objectives of Mr Dennis. Mr Dennis says this is a failure to address the structure of a MIS, a scheme which is not capable of being sold if needed to retire debt. There was also no analysis of the expected returns from that or any sort of investment. The only outcome canvassed was linear growth but not, as was required and reasonable, the range of outcomes. Some of those outcomes would be adverse to the goals and objectives of Mr Dennis, but he was never advised of them. (6) The failure to consider the goal of capital protection, as offered by the scheme financed by Macquarie Bank as a GEI. Mr Dennis says this was materially different to the MISs, which offered no capital protection. Chambers and Mr Takla failed to state how the absence of that protection (which was an objective of Mr Dennis) was nonetheless consistent with the overall objectives. 104 While Mr Dennis complains about the adequacy of most, if not all, of the investment advice he received, he particularly complains, as may be seen, about the advice to invest in MISs. In closing oral submissions, counsel for Mr Dennis put the case relating to the MIS investments succinctly. He said Mr Dennis was concerned not with whether advice to invest in MISs disclosed there were agribusiness risks in doing so, but that the advice was inappropriate because it continually recommended the purchase of assets which Mr Dennis could not sell. Accordingly, Mr Dennis argues that it is not enough that he was warned about the risks in the prospectuses and product disclosure information (PDI) for these investments, but that such investments did not meet his goals concerning retirement, superannuation, debt retirement, flexibility and capital protection. This contention is central to Mr Dennis' case. 105 Respondents' position: In response to the allegations set out in [103] above, the respondents say: (1) There was no contractual, tortious or statutory requirement for them to complete a Fact Find form as asserted in point (1). Instead, the respondents had a duty to ensure that they had sufficient relevant information from Mr Dennis in order to allow them to make appropriate recommendations to him, which duty they discharged on each occasion on which advice was given; (2) As to point (2), Mr Dennis has not established through evidence that his goals were as there set out. His evidence was in fact quite to the contrary: he did not want to salary sacrifice and plan for his retirement, and was not interested in retiring debt to the sacrifice of his lifestyle and ability to purchase lifestyle assets. Mr Dennis did not give evidence as to his goals throughout the investment period or how they differed from the goals which he discussed with Mr Takla from time to time. The respondents say, however, that they did take into consideration Mr Dennis' circumstances, goals and objectives as advised to them when making recommendations to him: for example, the invitation to enter into the first MIS in AGL timber project 2 1999, which provided him with a tax refund to use as a deposit on the home later jointly purchased with his then wife; and the SOAA dated 23 April 2007, which provided a way in which Mr Dennis could meet the financial obligations arising from his divorce settlement; (3) In relation to point (3), Mr Dennis' cashflow would have been managed by his making the agreed monthly payments into his buffer account, which he manifestly failed to do throughout the period of the investment, and most particularly following his separation from his former wife; (4) In relation to point (4), the respondents say they did consider the entry by Mr Dennis into MIS investments in comparison to his overall portfolio, referring to the relative proportions of both set out in written submissions upon opening to the effect that Mr Dennis' total investments placed through the respondents over nine years totalled almost $2.45 million, of which $1.6 million of the investment capital (or 65%) was protected at maturity and approximately $850,000 was not. They say that of the amount which was not protected at maturity, Mr Dennis' exposure to capital loss was reduced by the amount of $370,000 by the immediate obtaining of a taxation refund (or reduced liability to pay tax in 2008). Taking these immediate returns into consideration Mr Dennis' exposure to capital loss was $480,000 or 19.5% of his total portfolio. Further, the respondents say Mr Dennis was expressly advised on numerous occasions of the illiquid and the non-transferable nature of the MIS investments prior to his entry into them. Finally, interim returns, some immediately, were expected, in one respect, on all of the MISs, through a sizeable tax refund, which Mr Dennis could have put towards his investments. A good example, they submit, is the first 1999 MIS, and the important tax benefit received in respect of that tax year – which was used by Mr Dennis to buy the Ardross house jointly with his then wife. In addition, distributions (including interim distributions) were expected on most of the MISs from the year 2007 on; (5) As to point (5), the respondents say this has been addressed above. In addition, they say the effect of any failure of the investments to meet growth expectations was obvious: Mr Dennis would be unable to achieve the anticipated returns and still be required to meet the debt obligations. There was no need to warn of risks which were obvious. But as pointed out above, they say the risks associated with the investments were explained and the PDSs relating to the MISs all contained detailed and explicit warnings about the risk of these types of investments. In fact, some of the risks warned of in the documents came to eventuate, for example, a high Australian dollar which undermined the export market to which the plantation schemes were directed; and (6) As to point (6), the respondents say Mr Dennis did not adduce evidence (which he could easily have led if available) of the prior existence and expression, during material times, of his now asserted goal of capital protection with respect to all of his investments – referred to in (6) of [103]. Nor was Mr Takla cross-examined on why this goal was not incorporated in all of the advices given from time to time. The respondents say the goal of capital protection is inconsistent with Mr Dennis' margin lending account held through ABN AMRO Morgans, his continued investment in MISs, and his apparent failure to take out adequate insurances to protect his income in case of sickness. It is further contradicted by Mr Dennis' loss of opportunity claim, the first statement of which revolved around further investment in a margin lending share market investment, and the alternative investment posited by Mr Barber. This "goal", the respondents say, is nothing more than a later construct by Mr Dennis and ought to be seen as such and disregarded. 106 Focussing on the nine MIS investments identified in the above loss table as productive of loss, the respondents submit that essentially three points are raised against them: (1) that the MIS investments were contrary to the goal of "flexibility" identified for Mr Dennis as an investment goal; (2) that Mr Takla advised Mr Dennis to buy into the MISs without a proper assessment of his overall risk exposure and financial ability to keep paying interest and administration fees; and (3) that some purported 5% - 10% industry standard cap on that type of investment as part of an investment portfolio was exceeded. 107 Thus, the respondents consider that a further element of the case put by Mr Dennis is that the advice given by the respondents led him to an over-exposure to interest and administration costs associated with the investments; in other words, that Mr Takla had not properly considered Mr Dennis' financial exposure and risks (such as loss of employment) in giving the investment advice from time to time. The respondents note that this resulted, in accordance with the argument put, in Mr Dennis reaching some point or points in time after June 2008, the date when he received the last advice from the respondents, where he could not keep up with the payments due on the nine MISs. Such defaults, it is said, caused him to be liable for the total debt, including capital and very heavy penalty interest rates which have applied since he stopped paying. 108 As to the first of the three MIS points, the respondents by way of general response submit that "flexibility" of investment was never a material investment "goal" for Mr Dennis. They note the original Fact Find records that he was "slightly concerned" with the flexibility of investments (or with "current income" from the investments). He wanted to invest for five years or longer and was prepared to borrow funds to do this. The respondents say that the alternative investment strategy suggested by Mr Barber in his expert evidence would also lack "flexibility" in the same way as an investment in a long-term MIS. 109 The respondents say the initial plan agreed to by Mr Dennis dealt specifically with a Macquarie GEI, and the acquisition of a home for the applicant and his then wife, and recorded (as was true) that the plan involving a GEI was flexible and that its term was flexible, with illustrative figures supplied in the initial plan. 110 As to the second of the three MIS points, the respondents note the AGL timber project 2 1999 MIS was only released onto the market on 18 June 1999 and it provided an opportunity suited to the needs of the applicant to get a tax benefit in that tax year and so supply the deposit for the required home. 111 As to MIS investments more generally, the respondents say Mr Dennis laboured under a false impression at material times about an alleged secondary market for MIS products, something they did not induce. They say, however, that in regard to Mr Dennis' evidence that, when he initially started taking advice from the respondents, he read all documents carefully, it should be inferred that he knew from the outset that there was no secondary market. 112 The respondents also submit that on the evidence the risk in making these investments was explained to Mr Dennis by Mr Takla both orally and in writing and was contained in the various prospectuses and PDSs, to which the applications for investments were attached. 113 The respondents further submit that Mr Dennis was advised by the respondents at material times to take precautions such as taking out adequate insurance, income protection insurance and the like. 114 The respondents say there was no duty to "record", in writing, the considerations that led to recommendations being made. They say the rules of the Financial Planning Association, to which the respondents belonged, setting out best practice guidelines do not constitute legally binding standards. They say there was no requirement that their inquiries should take the form of a Fact Find document, and that the position at common law in respect of negligence must be the same. Thus, it comes down to what in fact Mr Takla did as to whether he had a reasonable basis for advice given, given Mr Dennis' investor type and his goals and objectives. 115 The respondents (correctly) note that s 945A of the Corporations Act, as it applied at material times, while introduced in the post-FSR period only applied to Chambers when it became the holder of an AFSL on 10 March 2004. Section 945A, the respondents submit, only required that an adviser must make reasonable enquiries of a client of relevant personal circumstances in relation to giving of advice – not to conduct some "investigation", as Mr Dennis would have it; and any enquiry which must be conducted related to products which are sought to be recommended. 116 The respondents say that Mr Takla's evidence was that he made sure he knew and took into account Mr Dennis' financial position and obligations every time he gave advice. They say it was never put to Mr Takla that he did not have adequate information to advise Mr Dennis. He obtained information from and through Mr Dennis and reasonably relied upon such information. 117 The respondents say Mr Takla knew exactly what investments Mr Dennis had in the portfolio in respect of which he advised him and that any omission or mistake in recording any such investment does not translate to a lack of a reasonable basis. Further, Mr Takla cannot be found responsible for any advice based on Mr Dennis' disclosed circumstances if those were ultimately untrue (for example, income estimates provided by Mr Dennis versus the actual income set out in his tax returns). 118 In so far as the third of the three MIS points is concerned, the respondents contend there is or was no industry standard that can translate to some legal norm that MIS investments should only constitute up to 5% - 10% of an overall portfolio. The respondents (while maintaining a primary objection to Mr Barber's qualifications to give expert evidence) say Mr Barber was required in cross-examination to admit that this "rule" was given to him by groups he had worked for and he gave no evidence of its application in the industry more generally. In any event, they submit any such rule would be inherently uncertain and completely unworkable. They submit that the first or series of first investments could never be MISs, on this basis, because they would then form 100% of an investment portfolio. They submit the rule of thumb contended for cannot sensibly be applied across the board without reference to an investor's risk profile and risk appetite. 119 They also note that Mr Manoj Pillai, the expert called by them, rejected the suggested rule of thumb and that the issue was highlighted by the disagreement between the experts regarding the investments which should be considered in the context of weighting Mr Dennis' investment "portfolio". 120 The respondents say it should be noted that the final advice given to Mr Dennis on 7 June 2008 provided him with a detailed cashflow projection and that, while the experts were uncertain where the investment cost of $276,231 for the year 2009 was taken from, they did not suggest it was wrong. It showed a high cost for Mr Dennis, so was conservative advice. The respondents say Mr Takla conceded that the other projection on page 3583 of the Trial Book was nonsensical, but he was never cross-examined to the effect that there was anything wrong with the projection. They also say Mr Dennis did not give any evidence of having been misled by the errors or any specific reliance on that projection and Mr Barber dropped his concerns about negative cashflow for 2009 once his attention was drawn to the explanatory footnote on the same page. 121 The respondents further submit that the submissions made by Mr Dennis in relation to the earlier 9 April 2008 SOA is largely irrelevant given that he did not proceed with the recommendations recorded in the advice, but it does however contain an accurate cashflow. 122 The respondents observe that Mr Dennis did not consult Mr Takla before stopping his payments. They say he admitted during cross-examination that he only expected the respondents to handle his portfolio and not to manage all of his financial affairs. They point to Mr Takla's evidence that, if Mr Dennis had consulted him, he would have assisted him to restructure his affairs, as he had done for a number of other clients, but that is not what Mr Dennis wanted. 123 Objections to expert evidence of Mr Barber: Before proceeding further I should deal with the objection taken by the respondents to Mr Barber's qualifications to give expert opinion evidence in this proceeding. Chambers and Mr Takla object to the reception into evidence of Mr Barber's opinions on the grounds that he is not qualified to give opinion evidence concerning breach and loss in the proceeding at all, as well as on grounds concerning the relevance of his opinions to matters in issue if he is so qualified. 124 While evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion is expressed, as provided for by s 76 of the Evidence Act 1995 (Cth), there are a number of exceptions including, under s 79, where an opinion is based on specialised knowledge. Section 79 provides that if a person has specialised knowledge based on the person's training, study or experience, the opinion rule does not apply to evidence of an opinion of that person (often called "the expert") that is wholly or substantially based on that knowledge. 125 In that regard, it is understood that under s 79 it is not necessary for an expert witness to be formally qualified and relevant experience will suffice. Nor is there any requirement that the knowledge upon which expert opinion evidence is based must relate to a "recognised field of expertise". In that regard, the relevance discretion in s 135 is considered appropriate to enable courts to exclude expert opinion evidence where its probative value is substantially outweighed by the danger that it might misleading or confusing. 126 There is no dispute in this case that the questions relating to the relevant duty of care and its alleged breach are ones in respect of which specialised knowledge may be relevant. The objection raised by the respondents is that a person who is merely an adviser working for an AFSL holder in the area of financial planning does not necessarily have the special expertise to be able critically to comment on the standards applicable to advisers in various hypothetical situations. 127 The respondents contend there are serious issues concerning the relevant expertise of Mr Barber, particularly in relation to his treatment of MISs and the way he has sought to give evidence about the applicable standards for financial advisers in that at all times he has really operated with a list of permissible investments provided to him by the dealer group (AFSL holder) he was working with from time to time and, unlike both Mr Takla and Mr Pillai, has never been involved in the overview and selection of investments. Also, his view is very much skewed towards superannuation, obviously one of his areas of interest and expertise. 128 This submission is made against an understanding that not every apparent expert will have relevant specialised knowledge. For example, a securities lawyer has been held to lack sufficient expertise to give evidence of investor behaviour (Allstate Life Insurance Co v Australia and New Zealand Banking Group Limited (No 6) (1996) 64 FCR 79 at 85). Similarly a solicitor with no more than usual experience in litigation and conveyancing was not considered to have the requisite specialised knowledge called for to express an opinion about the conduct of another solicitor in that area (O'Brien v Gillespie (1997) 41 NSWLR 549 at 551). But evidence of the content of general practices by competent professionals in particular fields and in particular circumstances, and of what a reasonably competent careful professional would do, has been accepted as admissible (Maronis Holdings Limited v Nippon Credit Australia Limited [2001] NSWSC 448; (2001) 38 ACSR 404 at [380]). However, it has also been accepted that such a witness could not give evidence of what the witness personally would do (Australian Securities and Investments Commission v Vines [2003] NSWSC 1095; (2003) 48 ACSR 291 at [31]). 129 This latter point is tied to the requirement that the opinion expressed must be wholly or substantially based on specialised knowledge. Accordingly, it is usually said that there must be evidence explaining how the opinion stated is said to rest on the specialised knowledge of the witness and how the specialised knowledge is based, wholly or substantially, on the witness' training or study or experience (Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705 at [85]; Dasreef Pty Ltd v Hawchar [2011] HCA 21; (2011) 243 CLR 588 at [30]-[43] and [128]-[130]). 130 Mr Barber is a sole director of a company engaged in the business of providing financial planning and investment advice to members of the public. He is a certified financial planner and an authorised representative and credit representative of a company and licensed to provide advice. He has extensive experience with a Diploma of Financial Planning, an authorisation and authorised representative certificates. He has been engaged in the financial planning industry since 1997. More generally Mr Barber has in the past been engaged by the Financial Planning Association to mark financial plans prepared by financial students from around Australia completing their final unit in a Diploma of Financial Planning. He has also presented course material to the superannuation planning module of the Securities Institute course in Western Australia. He has acted as an expert witness in litigation relating to financial planning as well as litigation support in relation to family dispute resolution. Prior to becoming a financial adviser he was an insolvency practitioner employed by a number of larger chartered accounting practices. 131 In the circumstances, and having regard to the evidence of his training, study and experience, I am satisfied that Mr Barber is a person who has specialised knowledge based on his training, study and experience in relation to financial planning and able to address the duty of care issues that arise in this proceeding. That he may recommend products from a list of permissible investment products does not, in the circumstances of this case and having regard to his relevant background, remove his capacity to express opinions on relevant matters in issue. Whether or not particular aspects of his opinion evidence may be said to fall into the impermissible area of expressing an opinion based on what he would personally do or have done, rather than at a more analytical level as to what professional standards required, is an issue that should be borne in mind when his detailed evidence is considered, but is not something that should immediately disqualify Mr Barber from giving opinion evidence in the proceeding. That he may have a bias or inclination or expertise pertaining to one area of investment, such as superannuation, is a matter for evidence and submission, not, in the circumstances, his qualification to express an expert opinion. In these circumstances, and in light of the findings made in the proceeding, I need not rule on each of the objections made to specific paragraphs of Mr Barber's documentary evidence tendered at trial. 132 Expert conferral, agreed issues, and issues not agreed: Following a meeting of the experts before the trial, Mr Barber and Mr Pillai recorded points of agreement and disagreement as follows: That the Fact Find completed by Mr Takla dated 30 March 1999 did not identify Mr Dennis' retirement needs in relation to income. The classification of Mr Dennis as a "balanced investor" set out in the financial plan dated 2 June 1999 was appropriate. The strategy recommended in the plan was, however, more appropriate for a "growth-orientated" investor. The reasons for recommending a growth-orientated strategy to Mr Dennis and why it was appropriate for his situation are not documented in the plan. The classification of Mr Dennis in the plan of being a "balanced investor" was inconsistent with the strategy recommended in the plan. There was a heavier weighting to MIS products at all relevant times during the course of the advisory relationship. Mr Takla was not aware of the composition of the other investment portfolios Mr Dennis had, including Mr Dennis' superannuation. Mr Pillai had not been asked to comment on the accumulation of debt during the course of the advisory relationship. The capital gain set out in the schedule at para [269.2] in annexure 4 of Mr Pillai's report was incorrect for the year ended 30 June 2009 and should have been recorded as a loss of $44,989. 133 Mr Pillai later made an affidavit that was received into evidence without objection in which he sought to clarify some aspects of the record of their conferral. He explained, and I accept, that he had signed the earlier statement of matters agreed when he was under some personal stress and had been experiencing some serious health issues. 134 As to the stated agreement that the financial plan classified Mr Dennis as a "balanced investor", Mr Pillai said that the experts also agreed that Mr Dennis was not in fact a balanced investor as classified in the plan, but was a "growth investor". 135 As to the agreement concerning the heavier weighting to MIS products, Mr Pillai said that Mr Barber's and his agreement was restricted to the investments under Chambers' advice and without reference to Mr Dennis' entire investment portfolio, inclusion of which may result in a different weighting. They agreed that investments outside of Chambers' advice existed including other investment portfolios and superannuation. 136 Mr Pillai added that products can be classified into one or more "investment sectors", depending on the underlying assets. For example, an investment in a diversified management fund product which has underlying assets in international equities, Australian equities, bonds and property, although there is only one investment. This was the case for a number of investments recommended by Chambers to Mr Dennis. However, MIS products are generally only classified into one "MIS investment sector", even though the underlying assets may be in cattle, vineyards, olives and trees. 137 He said that Mr Barber and he agreed that there was a heavier weighting to the MIS investment sector than to any other single asset class within Mr Dennis' investments under Chambers' advice, because of the potential for non-MIS products to be diversified into a number of asset classes. 138 Mr Pillai also noted that, in relation to the Fact Find, he and Mr Barber agreed that at the start of the advice relationship in 1999, Mr Dennis did not own a home and had minimal savings. However, he had work-related superannuation and a stable job. One of his objectives was to acquire a family home. However, he had no deposit to contribute towards the purchase of the home. 139 Further, Mr Barber was not aware of a further Fact Find completed at the commencement of the advice relationship in relation to Mr Dennis' then wife which disclosed household and other expenses and her income. 140 Additionally, neither of the experts was aware of the composition of Mr Dennis' external portfolios. 141 In relation to investment, Mr Pillai noted that Mr Barber in his report stated that protected equity loans (PELs) were appropriate for Mr Dennis. During conferral they each agreed that GEIs were also an appropriate product for Mr Dennis as he had no initial capital to invest. 142 However, the experts disagreed on whether external portfolios ought to be taken into consideration when considering the appropriateness of advice. Mr Pillai considered the matter was relevant but Mr Barber disagreed. 143 Further, Mr Barber said that the initial MIS placement made in 1999 was not appropriate for Mr Dennis as the placement was not consistent with the initial plan because it was not documented as being part of the strategy; nor was there a document setting out why the investment was suitable to his overall financial plan. 144 Mr Pillai said he agreed there was not any written document providing a basis for the placement of the first MIS product, however he did not agree with Mr Barber that the placement of this product was not appropriate for Mr Dennis. In his view, the placement was consistent with the stated objective of buying a house, as it then provided him with the funding to contribute towards the deposit for the purchase of the family home. 145 Mr Pillai noted that he and Mr Barber disagreed about the suitability and purpose of further MIS products during the course of the relationship. He was of the view, consistent with his earlier express report, that MIS products were generally suitable for recommendation, though Mr Barber disagreed. 146 Further, the experts disagreed with respect to the appropriateness of investments made in Fusion and Rubicon – although I would at this point note that those investments are not directly put in issue by Mr Dennis when it comes to the assessment of loss and damages in the above loss table. 147 Finally, Mr Pillai said that he and Mr Barber disagreed about the relevance of cashflow management to Mr Dennis' position over the relationship period. He was of the view that Mr Dennis' overall position would have been substantially better if he had exercised overall cashflow management and applied available surplus funds to reducing his overall debt. On his brief calculations, a substantial amount of funds were generated through tax refunds and investment returns likely to amount to about $700,000. In addition, Mr Dennis received a substantial inheritance of several hundreds of thousands dollars towards the end of the relationship period and they were not reflected in his overall financial position. Mr Barber indicated it was not part of his brief to review the actual cashflow over the period of the relationship. Instead, he referred to a cashflow estimate he had prepared based on a portfolio that he may have recommended, as set out in his report. 148 I generally accept Mr Pillai's evidence concerning the qualifications of the record of the matters agreed and disagreed at the experts' conference. Mr Barber did not suggest to the contrary. 149 General observations about the duties of a financial planner: The experts, Mr Barber and Mr Pillai, generally speaking, shared a common outlook on the role and responsibilities and duties of an adviser at material times in both the pre-FSR and post-FSR periods with which I generally adopt. 150 To some extent at least, Mr Pillai considered that the duties imposed on an adviser in the post-FSR were higher than in the pre-FSR period. In the result, any difference of opinion in that regard is of no moment as the relevant provisions, discussed below, speak for themselves and must be applied according to their terms. 151 The experts accepted that the statutory duty was reflected in a well understood industry rule for an adviser to "Know your client, know your product". The intent behind that rule, as the experts explained, was that an adviser should always recommend to a client a financial product that suits their circumstances and goals and objectives. 152 It was also explained by the experts that in order to know the client an adviser needs to be possessed of all relevant information concerning the client's financial circumstances and their goals and objectives; and that these circumstances, goals and objectives may change over the course of a professional advisory relationship. 153 To that end, it was agreed that, at all material times, a Fact Find document (or needs questionnaire) was and has been widely used in the industry. A Fact Find was not at material times required by legislation, but was recognised as a convenient way of acquiring the usual sort of primary information that an adviser needs to get to know the client and then to recommend a product suitable to their circumstances, goals and objectives. 154 The evidence of the experts also confirmed that voluntary professional associations, such as the Financial Planning Association and the Association of Financial Advisers by their rules have sought to lay down best practices for licensees and advisers within the financial planning industry. 155 Not surprisingly, given the primary duty of an adviser to make recommendations having a reasonable basis for doing so, the standards of the Financial Planning Association and to which Mr Barber in particular referred, encouraged, if not required, members of the Association to fully document advice given, if not the reasons for doing so. 156 Perhaps the biggest change in the post-FSR period, for present purposes, was the duty imposed on an adviser to give an SOA or an SOAA in relation to advice which outlined the circumstances in which a particular recommendation was made. 157 In this proceeding, a feature of the advice given by the respondents, particularly in the pre-FSR period, before Chambers obtained an AFSL in March 2004, was the apparent lack of detailed accompanying documentation when compared with that provided later in the post-FSR period in an SOA or SOAA. That may be considered, however, a by-product of the differing legislative requirements at material times. 158 At all times in the course of the professional relationship between the parties, Mr Takla was in the habit of meeting with his client, Mr Dennis, usually twice a year – roughly speaking at a six monthly review and then at an annual review – during which he wrote proposed or actual recommendations on a whiteboard, explained their purpose, intent and the outcome they would produce, and then print out the notes and keep them on his file for future reference. 159 One of the complaints made on behalf of Mr Dennis by Mr Barber is that the whiteboard notes do not set out why particular recommendations made or foreshadowed were or were likely to suit Mr Dennis' circumstances, goals and objectives. 160 As a general proposition it might be said that this complaint is a little unfair as an adviser is no doubt entitled to engage with his or her client and generally to represent what they have in mind. A whiteboard presentation may well provide a convenient means of communicating to a client the substance of the advice or proposed advice and what may be complex financial planning ideas. 161 Nonetheless, in the pre-FSR period it was incumbent on an adviser to have a reasonable basis for any recommendations made. While legislation then did not require that the advice be reduced to writing, one can understand that good practice would suggest that that be done, so that through the exercise of doing so the adviser ensures that they take into account the circumstances of the client and go through the mental process of confirming in their own mind that the recommendation will meet the client's goals and objectives. Put another way, a failure to give detailed written advice or to keep detailed notes in relation to recommendations made may support a later suggestion that the adviser did not properly turn his or her mind to the question whether a product recommended actually suited the client. 162 While the rules of the Financial Planners Association at material times, to which Mr Barber referred, may be said to have been reflective of best practice in relation to note keeping and advices, the question falling for determination is not whether those rules were complied with, but whether the statutory reasonable basis requirement and the general duty requirements were met. 163 As noted, here complaint is made about the record keeping habits of Mr Takla. There is some basis for that as his personal notes were not extensive and the records generally constituted the whiteboard notes, bank account information requested by him, emails between the respondents and Mr Dennis requesting information and the like. Letters of advice in the pre-FSR period and SOAs and SOAAs in the post-FSR period constituted the formal account of written advice given to Mr Dennis at material times. 164 In response to the complaint that he did not have a reasonable basis for advice given because he could not point to detailed documentation, apart from such letters of advice, SOAs and SOAAs, Mr Takla said that he not only acquired information of the type just referred to, but also, at the six monthly and annual meetings, discussed with Mr Dennis his financial affairs (and indeed relevant personal matters) so that he was apprised of additional information to what appears in the written record and was able to make judgements as he went along concerning Mr Dennis' current circumstances, goals and objectives. 165 Mr Takla, for example, points to the fact that in 2007 (about the time Mr Dennis was considering a financial settlement with his then wife) he reclassified his assessment of Mr Dennis in the initial plan as a balanced investor to that of a more aggressive investor. (I should interpolate here to say that the experts agreed, as noted above, that, from the outset, on the basis of the strategy recommended in the initial plan, Mr Dennis was properly to be described as a growth-orientated investor – not merely a balanced investor, as Mr Takla initially assessed him to be.) 166 The experts agreed that a primary task for an adviser is to make a proper assessment of the tolerance for risk of a client (whether they are a balanced investor or a more aggressive investor or one or other category usually recognised by a financial planner) and then to ensure that financial products recommended are apt to achieve the goals and objectives of the client from time to time. 167 The experts also agreed that judgement needs to be exercised in the recommendation of products and that there is no single product that a reasonably competent adviser will necessarily recommend; in other words, one adviser acting reasonably and competently might make a recommendation that would differ from the recommendation that another adviser, also acting reasonably and competently, might make in relation to such a client. 168 A primary issue in this case, as noted above, is whether the MIS investments that Mr Takla recommended to Mr Dennis, starting with the first MIS of an agribusiness nature in 1999 was beyond the range of any suitable investment for a growth-orientated investor in Mr Dennis' circumstances. Mr Barber says these particular investment recommendations should never have been made. 169 Mr Barber attacked the MIS recommendations on two fronts: first, that Mr Dennis should not have been put into MISs of an agribusiness nature at all; and, secondly, that having been put into the first MIS, he should never have been put into further MISs because of the concentration such unprotected capital investments represented in his portfolio under Chambers' advice. 170 The experts agreed that it is appropriate when recommendations are made in the course of a professional relationship, that the adviser consider the current financial circumstances of the client at material times, their income, their ability to carry the expenses they personally have and carry in relation to investments and assess whether their cashflow capacity is satisfactory for the liabilities recommended. 171 Similarly, it was agreed by the experts that when recommendations are made, proper consideration is given to how a particular investment suits the then goals and objectives, what the options might be and what the possible risks are. 172 In this case, some of the written advice given, particularly in tables attached to SOAs and SOAAs, was not always complete or accurate. Questions are raised by Mr Barber, for example, as to whether errors in modellings are such that, if not made, there would or should never have been a recommendation made at all. Questions are also asked by Mr Barber as to the currency of Mr Takla's knowledge of his client's personal expenses at material times, especially following Mr Dennis' divorce in 2007. The question of cashflow was thus put in issue by Mr Barber in relation to a number of recommendations. 173 As the trial proceeded, and in the written and oral closing submissions of Mr Dennis, the key submission made by Mr Dennis was that Mr Takla allowed him to invest in too many MISs of an agribusiness nature such that the concentration of MIS investments within his investment portfolio presented a risk too great for an investor with his level of tolerance. 174 In that regard, Mr Barber said that, at material times, at least some licensees operated on the basis that a balanced investor client should not be permitted to have more than a particular percentage, say 5%-10%, of their investment portfolio in MISs. Mr Pillai, on the other hand, while accepting that caution was required, considered that there was no such inflexible industry percentage rule, but that an adviser must endeavour to keep an appropriate balance of MIS investment in an investment portfolio, recognising the unprotected capital nature of MIS investments and exercise judgement in that regard. Mr Pillai's opinion I took to apply in the case of either a balanced or growth-oriented investor. I now turn to the MIS investment cap issue. 175 Duty of adviser in relation to MIS investment recommendations: Mr Barber was of the firm view, in relation to the first MIS investment in AGL timber project 2 1999, and each of the subsequent MIS investments, that any recommendation to invest in an MIS should have been approached with a considerable degree of caution. His opinion (exhibit 8 [96 and following]) was not that MIS investments are, of themselves, inappropriate, but that balanced investors should invest only 5%-10% of portfolio capital in MISs. Mr Barber supported that opinion by reference to a 2003 article concerning agribusiness schemes which set out risks associated with MIS projects, and a report known as ASIC Report 17. In the 2003 article, the statement was made that "most analysts agree that only around 5% to 10% of a portfolio should be allocated to this sector". It was also suggested that investors "should demand a return of 20% to 30% above small cap shares, to compensate for the lack of liquidity and inherent agricultural risk" – that is to say, their unprotected capital nature. 176 Mr Barber expressed the view that "this assessment" was consistent with his experience of competent financial advice in 1999 and consistent with the approach of his own dealer group at material times for recommending entry into agribusiness investments, which restricted the total investment into agricultural investments to 10% of a client's investment portfolio. Mr Barber thereby relied principally on his own experience at material times for structuring the agribusiness MIS component of an investment portfolio for a balanced investor, something he acknowledged in cross-examination. 177 Mr Pillai considered it was difficult to say what a particular growth-orientated investor might appropriately be advised to invest in, in relation to an agribusiness MIS. He said there is a "dynamic quality" to advice given in relation to MIS investments. He did not accept that there were hard and fast rules about the percentage or proportion of investments in agricultural investment although he accepted some licensees had their own guidelines that did not depend on the risk category of the client. 178 Mr Pillai generally noted the tax effective nature of an MIS investment, reducing the level of taxation payable in a given financial year, resulting in a tax refund, if tax was otherwise paid on a PAYG (pay as you go) basis. He said, (something not rejected by Mr Barber) that the underlying investment had the potential to deliver cashflow from the schemes progressively or at the end of the term. This was particularly so where the product has an Australian Taxation Office (ATO) ruling validating the tax deductibility in a given year, as each of the MIS investments made by Mr Dennis had. 179 Mr Pillai said that many of these schemes had lifespans of three to 30 year terms and were generally illiquid, with limited or no secondary markets so far as sale of the investment was concerned. (I should, at this point, note in passing that while Mr Dennis gave some evidence of a belief that there may have been a secondary market for MIS he invested in, any such belief was not attributable to the respondents and I otherwise ignore that evidence as irrelevant.) He also acknowledged that potential returns varied, based on the nature of the underlying asset – in these cases, agribusinesses. Mr Pillai explained that a client investing in an MIS was generally seeking to reduce the level of tax (by increasing cashflow in a given year) linked with an asset/investment that could potentially deliver returns in the medium to longer term. 180 Tax deductions, he explained, were generally two-fold: an up front deduction on the investment amount, or ongoing deductions based on contributions towards lease and management fees. Mr Pillai thus provided an example of a cashflow model for an MIS (including the impact of inflation) which illustrated the net cashflow requirement on an investment of $100,000 is approximately $4,400.50 per annum. 181 Mr Pillai considered that clients such as Mr Dennis, with a high marginal tax rate, seeking tax efficiencies, with an appetite for long term investments and associated risk, had a tendency to select the tax efficient gearing a MIS investment offers. 182 He considered that, given Mr Dennis' financial position, income, stated risk tolerance and desired outcomes as stated, investment in an MIS of an agribusiness type "had the potential to meet his objectives and outcomes". He added that as Mr Dennis had no funds to contribute towards such investments, particularly early on, gearing helped facilitate placement of investments to deliver him short, medium and longer term outcomes. 183 Thus, Mr Pillai expressly considered the first MIS product, and indeed, subsequent MIS investments, were appropriate to the strategy to deliver those outcomes and objectives. The tax savings in the case of the first MIS were, in his view, to be applied to reduce the Ardross home loan, utilising the equity to invest further. Mr Pillai said that this strategy, including the appropriate use of the buffer account, could potentially clear debt by using tax savings and progressively improve the client's equity position, facilitating accumulation of overall wealth outside of superannuation to complement lifestyle and ultimately retirement needs. 184 It followed, in Mr Pillai's view, that having regard to the identification of the risks involved, which he understood from the documentation Mr Dennis was advised of, and then accepted, there was no difficulty in the first MIS product, and indeed each subsequent MIS investment, being recommended and accepted by Mr Dennis. 185 In his initial report that went into evidence Mr Pillai was not asked specifically to address the question of whether the reasonably competent adviser would make a recommendation to keep investing in agribusiness MISs where the proportion of such investments in relation to the whole of the investment portfolio represented a particular percentage of the investment portfolio. However, at the expert conferral and during the experts' concurrent evidence session at trial, he did so. In concurrent evidence Mr Pillai expressed the view that asset delegation and concentration of assets is a "dynamic thing" and moves from year to year, depending on investor markets "and where the client is". He said, for example, that if a client had $400,000 to invest, one could deliver the ideal portfolio on day one, based on a spread of assets between equities, property, fixed interest and so on. He said the starting position may have a concentration of certain assets which is then diluted along the way as the position improves and the market improves or declines. Thus, it varies. 186 Mr Pillai said that, in relation to the concentration of MIS assets in the example just given, at day one there was a concentration of MIS products. He considered that over a period of a relationship, "and that this is where schools of thought differ", one needs to take into consideration all assets the client has to actually balance out what component belongs to MIS and what component belongs to equities, properties and so on. Here I understood Mr Pillai to be referring to the different "schools of thought" between himself and Mr Barber as to whether assets not under Chambers' advice should be taken into account in exercising this judgement. He was of the opinion they should be; Mr Barber considered they should not. I favour and adopt Mr Pillai's opinion (at least to the extent the adviser is aware of the client's external investments). 187 In Mr Pillai's view, the financial planner has an obligation "to be sure that that (the investment portfolio) is balanced along the way". He said that sometimes, even with the skills of a planner, it may not be balanced "because markets go against you or markets go with you, where it means that the concentration of a particular class of investor might actually move up". (Transcript 515.) Mr Pillai added that when the stock market rallied, everybody's portfolio was higher in equities, based on where they were and it is natural for an adviser to actually bring it back or balance it out or take some profits over a period to balance things up. 188 In the course of cross-examination (transcript 561), Mr Pillai was asked about the need for an adviser to take account of changing financial circumstances of the client over the period of the relationship. Mr Pillai accepted that in best practice it would be necessary to look at debt, consider cashflow so far as interest on debt was concerned, and in particular to account for annual contributions made, for example, under MIS schemes. 189 Mr Pillai was then asked whether the competent adviser would also look at the question of concentrating investments in the category of illiquid investments. He indicated that: It depends because you have asset allocation structures which – you might have a concentration of a certain asset category due to certain circumstances which will naturally change or dilute if other asset categories are brought in such as GEIs to reduce the exposure of any one particular category. 190 When asked whether, if the adviser were accumulating an exposure in investments which were difficult to sell, that would be a relevant consideration in any review of the developing circumstances of the client, Mr Pillai responded: In relation to liquidity, yes, it would. 191 He added that it depends on the structures and the vesting dates of the investments, or possible vesting dates of the investments coming to fruition. If somebody takes a scheme over ten years, for example, one expects a certain cashflow to come either before that or over that period. He agreed that a financial planner would take that consideration into account. 192 Counsel for the respondents asked Mr Pillai to address the question whether there was a 10% rule that would, in the circumstances, apply to Mr Dennis' investments in MIS investments. Mr Pillai said (at transcript 647): It's a pretty broad arrangement in relation to where this sits because it also comes down to what is applied by various licensees in their own businesses. It is also very hard to quantify because at certain stages, as I expressed earlier, you may have a client exports to a certain asset structure in a much higher fashion than you would want to and therefore there is no rule of thumb which says, you know, it's got to be between 9 and 10% or 9 and 15%. It is just an opinion. 193 When counsel for the respondents pressed Mr Pillai to say whether he disagreed that there was an "accepted rule", Mr Pillai said "Yes", and then added: There's – I mean, there has been a lot of research which has been put out of the varying research houses saying what – what an ideal position could be… But they all vary from zero to whatever the percentage is. 194 When Mr Barber was cross-examined about his evidence concerning such a rule of thumb, he accepted (at transcript 652) that the sources upon which he relied could not establish any criteria applicable in 1999, given that the literature he relied on for such a rule post-dated 1999 by some years. Mr Barber indicated he relied on his experience as an adviser with four different dealer groups, as to industry practice in that regard at material times. 195 Mr Barber, in cross-examination (transcript 639), rejected the proposition that an MIS investment could, in effect, always be justified if it was providing taxation benefits. He said that the adviser must consider the investment in terms of the client's long term needs and objectives. 196 In the result, I do not accept that at material times there was an accepted 10% rule along the lines suggested by Mr Barber (whether for a balanced investor or a growth-orientated investor) that was generally applied in the financial planning industry by reasonably competent advisers. I do accept, however, having regard to Mr Pillai's and Mr Barber's evidence, that such advisers were or should have been aware at material times of the need for such illiquid assets as MISs to comprise an appropriate weighting or balance within an investment portfolio and to exercise judgement in this regard as to the spread of investments when making relevant recommendations. 197 The Fact Find: I now turn to each of the events or recommendations identified by Mr Dennis in his closing submissions as involving breach of duty. The first is the Fact Find. A Fact Find document, such as that used here, was designed to assist an adviser in gaining a reasonable basis to give advice in the pre-FSR period (and indeed in the post-FSR period). As noted above, it was regularly used in the financial planning industry at material times, although, as the respondents say, it was not required by statute. Both expert witnesses, Mr Barber, called by Mr Dennis, and Mr Pillai, called by the respondents, recognised the Fact Find document used by the respondents as conforming to the type regularly used by financial planners at material times. 198 Mr Dennis' complains, among other things, that the Fact Find obtained by Mr Takla failed to articulate his household expenses adequately and also failed adequately to record his goals and objectives. Consequently, it is said the respondents never had a reasonable basis on which to advise either early on in the relationship, or later. 199 As observed above, a properly completed Fact Find might be very useful to an adviser. By contrast, a Fact Find that seemed obviously deficient, for instance because it was not completed or was only partially completed, and so lacked key information, may well not permit an adviser to give considered advice if the Fact Find information was all they had to rely on. The obligation of an adviser to enquire further and make further investigations may then arise in order to give content to the statutory, contractual or tortious duty in effect to have a reasonable basis for a recommendation made. 200 In this regard, at material times in 1999 during the pre-FSR period when the Fact Find was completed, s 851(1) of the Corporations Law provided that a securities adviser (such as Mr Takla) would contravene the section when making a securities recommendation to a person who may reasonably be expected to rely on it (such as Mr Dennis) and "does not have a reasonable basis for making the recommendation to the person". Subsection (2) provided that the adviser does not have a reasonable basis unless the recommendation is appropriate having regard to the information the adviser has about the person's investment objectives, financial situation and particular needs and has given consideration to "and conducted such investigation of, the subject matter of the recommendation as is reasonable in all the circumstances". The recommendation was also required to be based on that consideration and investigation. 201 In my view, at material times in the pre-FSR period, the duty to exercise care and skill in a case such as the present was synonymous, at least, with the s 851 requirement. 202 The Fact Find that was largely filled in by Mr Dennis as of 30 March 1999 and completed by Mr Takla in some areas either then or later, occurred in circumstances where Mr Dennis and his then wife had attended upon Mr Takla for the purpose of initiating the provision of financial planning advice. To that point Mr Dennis, who was then 45 years of age, felt that he had not made sufficient financial provision for the future. He had previously been married and had two children from his earlier marriage. He had only relatively recently been married again to his then wife. He had a well paid position as an engineer in a large resources company, and had previously been employed by another. He had employer-funded superannuation and a relatively small share portfolio. He had an interest in gliding and owned a glider which needed repairs estimated in the sum of $8,500. Most importantly, upon seeing Mr Takla, Mr Dennis and his then wife conveyed they were anxious to cease renting and to purchase a home in their joint names, each contributing equally to the purchase price and loan repayments. All of this was disclosed in the Fact Find and was, I infer from the evidence of Mr Dennis and Mr Takla and the terms of the initial plan prepared later the subject of discussion at the initial consultation. 203 Mr Dennis notes that the Fact Find asked for responses as to goals other than those for the immediate future, but they were not completed. He says Mr Barber in his evidence considered that preparation of a plan without a clearer statement of goals was flawed and that a reasonable adviser would have made inquiries to ascertain the client's goals to give definition to the intended outcomes in the long term. 204 He also says the Fact Find sought information on expenses including household expenses that on its face the Fact Find was not completed. Mr Dennis says that, in evidence, Mr Takla suggested it was not necessary for him to inquire into those expenses and he refused to acknowledge the effect of personal expenses on Mr Dennis' ability to finance investments. Mr Dennis relies on Mr Barber's evidence that the failure to get sufficient information on personal expenses resulted in the preparation of a plan that was flawed. 205 Mr Dennis also identifies that part of the Fact Find sought answers to questions about capacity for financial risk taking. He says Mr Takla agreed that this part of the form was completed by him in the light of discussions he had with Mr Dennis and that the responses were based on responses given during discussion. 206 Mr Dennis says that that information, together with the answers to questions about investment preferences that were completed by Mr Takla, were dealt with at a very high level without regard to any specific investment – thereby suggesting another flaw in the information gathering process. 207 Finally, Mr Dennis complains the Fact Find was signed by Mr Dennis acknowledging the recommendations were to be based on information supplied and not, as could have been done, with a form of words that indicated that the advice to be provided would be limited, and without undertaking an investigation of the client's circumstances. 208 It is accepted by Mr Dennis, however, that Mr Takla did have available to him at and after the initial consultation a Fact Find completed by Mr Dennis' then wife, who was present at the initial consultation, and which included household expenses; and that there was a discussion and notes were made on an electronic whiteboard and were later printed and kept on Mr Takla's client file. 209 Mr Dennis submits, however, that the printout of the whiteboard notes, consistent with a number of other such whiteboard notes from later meetings, discloses high level explanations of the way dividends and tax returns from investments could be directed to pay mortgage obligations and do not assist the respondents in showing that they gathered sufficient and adequate information to provide the initial plan and subsequent recommendations. 210 In my view, Mr Dennis' goals and objectives and the financial situation particular to his needs were reasonably conveyed by the Fact Find form. As noted above, I infer from the evidence of Mr Dennis and Mr Takla that the objectives of Mr Dennis were also discussed at the initial consultation and not confined to what appears in the Fact Find or on the whiteboard notes of that first meeting. 211 There is nothing in the evidence or the challenges to the Fact Find or information gathered by Mr Takla at the initial consultation to suggest that he did not have a reasonable basis on which to give advice and to make recommendations of appropriate products to meet the goals or objectives expressed by Mr Dennis in the Fact Find and at the consultation. 212 The immediate goal stated in the Fact Find was to "purchase home 250-300k" and "repair glider $8,500". As discussed below, the purchase of the home was his immediate objective and was directly addressed in the initial plan sent to Mr Dennis under cover of Chambers' letter, dated 2 June 1999. 213 I have no doubt that Chambers, through Mr Takla, understood exactly what Mr Dennis' immediate, and mid-term and longer term objectives were following the initial consultation, even if the Fact Find form lacked some responses or detailed responses to some questions in that regard. I infer subsequent discussion at the first meeting supplied that information, and when Mr Takla completed those parts of the Fact Find he did so on his understanding of such information so conveyed. They were, as discussed further below, to make appropriate investments, not necessarily in superannuation funds, to provide for his later retirement. 214 In my view, properly understood, nothing in the evidence of the expert witnesses should lead to a finding that the deficiencies in the Fact Find complained of by Mr Dennis meant that the respondents lacked a reasonable basis for advancing the initial plan. The experts noted that the assessment in the Fact Find of Mr Dennis as a "Balanced investor" at that point, when one has regard to the risk assessments made and particularly the strategy recommended in the later initial plan, was not appropriate. They considered he should have been assessed as a growth-orientated investor from the start. I accept their opinion. 215 The experts did not criticise the fact that Mr Takla completed certain parts of the Fact Find. Their evidence suggests Mr Takla did what was expected of an adviser, namely, he assessed the investor type and recorded his assessment. I accept their opinion in this regard. 216 The experts agreed that Mr Dennis' retirement needs in relation to income were not set out in any way, however they noted the objective of retirement wealth to supplement any superannuation was plainly referred to. So too was the immediate goal of purchasing a home and repairing a glider. I accept this was so. 217 I do not consider the failure to state retirement needs in a formal way is material in the circumstances, as Mr Takla, in my view, had a realistic understanding of what Mr Dennis was wanting to achieve, by reference to his current means and assets, as disclosed in the subsequent initial plan. The experts did not seriously suggest otherwise. 218 As to the attack made by Mr Dennis on the failure of Mr Takla to quiz him about personal expenses in relation to which he supplied information in the Fact Find form, I find that alleged failure lacks substance. I consider that, taken with the information he obtained from Mrs Dennis, sufficient information was obtained about household expenses, that Mr Takla was entitled to assume that what information he was given was broadly accurate and nothing of significance was not disclosed and that, in the circumstances, no obligation arose to investigate the topic of his expenses any further. 219 I do not doubt that some advisers in 1999 may well have insisted on the provision of a more detailed Fact Find response than Mr Dennis gave in this case, but I do not consider that in the circumstances there was any statutory obligation or contractual or common law duty that required Mr Takla on behalf of the Chambers to make any more inquiries or investigations than he did through the medium of the Fact Find and the discussion he had with Mr Dennis and his then wife at the initial consultation about goals and objectives. He did enough, in my view, to have a reasonable basis to proceed to advise Mr Dennis in this early part of the relationship. 220 In the result, I do not consider Mr Dennis has shown there was anything in the process of obtaining initial information from him that should result in a finding that, from the outset, the respondents were in breach of their duty to have a reasonable basis to advise or to exercise due care and skill in the acquisition of information necessary for the provision of subsequent financial planning advice. 221 This part of Mr Dennis' claim fails. 222 The initial plan: The initial plan has already been touched on. It addressed the immediate goal of Mr Dennis to purchase a home jointly with his then wife, rather than rent. Chambers' covering letter of advice of 2 June 1999, with which the initial plan was enclosed, stated that the program was designed "to achieve early repayment of your home loan and embark upon a Wealth Creation program". I consider it reasonable to infer from that, and from the objectives stated in the Fact Find and what was then explained in more detail in the initial plan (which in fact was described as a "Mortgage Escape & Wealth Creation Program"), that Mr Takla was in no doubt about Mr Dennis' immediate, as well as mid- and longer term investment objectives. All this was made express in the first paragraph of the covering letter: namely, that, based upon information within the financial plan, "we estimate your new borrowings as a home loan can be fully repaid in a shorter period of time and your Wealth Creation Program continued as per the schedule contained in this report" (emphasis in original). 223 Also, the covering letter made clear, in accordance with the more detailed advice set out in the initial plan (and consistent with what was said at the initial consultation about how wealth creation might occur) that Chambers had arranged for Macquarie Bank Limited to provide recommendations in relation to the Macquarie "Geared Equities Investment" (or GEI). Chambers made it clear in the covering letter, however, that those recommendations from Macquarie were provided on the basis that Chambers "has not made any direct share recommendations" (as in original). That statement, in bold type, stood out from other text in the letter. 224 The covering letter also made it clear that Chambers' aim was to provide "professional well founded advice based not only on the financial parameters given but also taking into account your stated Risk/Return profile". The "client profile" provided in the initial plan identified Mr Dennis as a "Balanced" investor type, as did the Fact Find, meaning that he was seeking moderate growth on the capital invested, moderate income stream and moderate level of capital volatility. This was all based on the revealed attitude to investment risk and the client's concerns in the areas of inflation, taxation, safety, liquidity, current income, ease of management and estate planning. 225 In their evidence, as noted above, the expert witnesses, both financial planners, questioned the accuracy of the investor type, given their shared view that the proposed strategy in the plan was in fact for a growth-orientated investor, which indeed they considered Mr Dennis to be from the outset and I accept, for the purpose of this proceeding, he was. 226 Mr Dennis' objectives were stated in the initial plan as follows: (1) To achieve an accelerated repayment of your home mortgage, rationalise borrowing and to build a tax effective wealth creation program at or about net cash commitments of $800 per month. (2) To commence a Direct Share Investment Portfolio via Macquarie Bank Limited. (3) To establish a comprehensive personal financial plan for your immediate and longer term future. (4) To create a cash reserve for emergencies. (5) To create some taxation relief during the current and future financial years. (6) To accumulate wealth to supplement any superannuation entitlements on retirement. 227 While, on the one hand, Mr Dennis complains of a failure to ascertain specified goals in the Fact Find (which I do not accept, as found above), on the other hand he notes that, in the initial plan, these goals and objectives were set out and he seeks to rely on them in the proceeding on the basis they controlled the advice to be given by Chambers at every stage, and were effectively ignored. 228 In his view these goals and objectives were a "comprehensive personal financial plan", including the "repayment" of loans and to "rationalise" borrowings, "accumulate wealth", and "supplement superannuation" for retirement. Mr Dennis says the assessment of the initial plan, and subsequent plans, against those goals lies at the heart of his case. 229 He also says the initial plan identified its major advantage as being its "complete flexibility", which was consistent with his stated goals and with good risk management practice. 230 The stated objectives, it should be said, are stated at a certain level of generality. In this regard, there is, it should also be said, a danger in reading the objectives too narrowly. Take, for example, the objectives in (3) and (6) mentioning a comprehensive financial plan and superannuation. The objective in (3) is "to establish" a comprehensive financial plan – which is not the same thing as saying the initial plan constituted such a plan. Objective (6) is not simply "to supplement superannuation", as Mr Dennis abbreviates it in many of his submissions, but rather is "to accumulate wealth to supplement any superannuation entitlements on retirement" (emphasis added). "Wealth creation" is the primary objective by way of supplementing any superannuation Mr Dennis has on retirement. This is important, as I do not accept a suggestion made on Mr Dennis' behalf that the initial plan – and subsequent recommendations – were necessarily faulty because they did focus on or take greater account of possible superannuation investments. The objectives did not, in my view, exclude such investments but did not emphasise them as a primary means of wealth creation. To the extent that Mr Barber's evidence suggests that more attention could have been given to investment in superannuation funds, I do not consider his evidence necessarily invalidates the investment recommendations made. Rather, the challenged recommendations, particularly those relating to MISs, must be considered individually as to their reasonable basis. 231 Risk management was addressed in the initial plan and it was stated that an integral part of financial plans is to protect the principal source of income against sickness and accident to 75% of usual income. Adequate comprehensive insurance cover was also recommended. Private health cover was recommended, along with current wills and enduring powers of attorney. 232 The strategy recommended in the initial plan was that through a suitable lender Chambers would arrange a line of credit in Mr Dennis' name, secured by a mortgage against his new property which would see the "new position" as follows: Property value $125,000 Line of credit $100,000 Home loan – new balance (No 1 account) $85,000 Balance available $15,000 New Investment Loan (No 2 account) $10,000 Reserve $5,000 233 The strategy was that the No 2 account (or buffer account) would have fees and charges built into the balance as shown above and in later reports. 234 The reserve amount would serve to cover contingencies. 235 It was further stated that it was essential that tax savings generated by the plan be directed back into the system to maximise benefits, with surplus credits applied in reduction of the housing loan content of the line of credit. 236 The initial plan further stated that the packaging of loans and investments in this way, through the use of modern loan facilities available, enables Chambers to concentrate loan repayments, taxation savings and additional repayments from time to time to reducing the home loan content. It also said that as the home loan section is reduced, funds may be redirected via the No 2 account loan facility, redrawn and added to an investment portfolio created. 237 Ultimately, the wealth creation stage was explained in the initial plan as follows: "Once the home loan component is fully repaid the plan enables you to continue as a purely negatively geared investment arrangement to build up savings for later retirement years" (emphasis added). At that time, it was stated, it may also be necessary to actually increase borrowing to maximise taxation efficiencies. However: This decision must be left for later reviews and constructed around your then applicable objectives and needs. 238 It should be noted here that later reviews to check on objectives and needs from time to time was explicitly flagged, such a practice according with that of a reasonably competent financial planner, as both experts agreed. As the experts explained in their evidence, during the concurrent evidence session, objectives can develop, as may needs and so too might the tolerance of a client to risk and so the investor type assessment of the client. 239 It was then stated: The plan's major advantage is its complete flexibility. (Emphasis in original.) 240 This having been stated, the initial plan then made it clear that loans were to be arranged on an interest only repayment basis and repayment volunteered would ensure capital reduction occurs annually. 241 The calculation was made that, at an interest of 7.5% per annum, $9,600 per annum would service borrowings of $128,000, which was stated to be more than enough to cover the facilities proposed after allowing for taxation savings. 242 Thus, it was stated that borrowing will approximate: Line of credit – No 1 account $85,000 – No 2 account $10,000 Macquarie $200,000 Total $295,000 243 It was stated that income generated by the investment program, even at a conservative rate of 3.5% per annum, would be approximately $578 per month and that that income, with tax savings, would be used to cover the interest costs of the geared investment loan (with Macquarie Bank). 244 The initial plan further explained the strategy: The new investment and geared loan facility will operate as a self contained unit within the program. In the initial years loan interest may be greater than investment income produced and this may necessitate drawing of a small amount of invested capital to cover. However early in the program, as surplus tax savings etc are added to investment capital this anomaly will be reversed and surplus investment income produced will be added to the investment portfolio. 245 A summary of the plan indicated a continuation of payments at $800 per month which, it was stated, would achieve the following improvements in Mr Dennis' financial position: Unwinding at the end of year 6. Debt owing under home loan structure $55,194 Value of investments - $305,763 Less line of credit debts - $295,000 $10,763 Improvement in position $65,957 246 It was indicated that a continuation of the wealth creation program could achieve benefits, culminating at age 65 in the sum of $848,384. 247 As it transpires, the immediate strategy under the initial plan of obtaining a home loan and purchasing a home and investing in a Macquarie GEI did not occur immediately. Rather, in June 1999, soon after he received the initial plan, Mr Dennis was invited by the respondents to attend a client seminar in relation to what became his first investment – Forestry Hardwood Project No 2 (or AGL timber project 2 1999), a MIS. This is the first investment in time in respect of which Mr Dennis claims he has suffered loss and damage as set out in the above loss table. 248 Before turning to that first MIS investment, however, Mr Dennis complains that the initial plan, in furtherance of the information provided in the Fact Find and at the initial consultation, recommended a strategy without having a reasonable basis. 249 Mr Dennis acknowledges that the expert witnesses agree that more accurate assessment of Mr Dennis' profile from the Fact Find and especially the initial plan, was as a growth investor rather than as a balanced investor, and they proceeded to assess the plan as expert witnesses on that basis. They, and it seems Mr Dennis in this proceeding, accepts that he was at material times to be more properly described as a growth-orientated investor. Mr Dennis notes, however, that the experts agree that there was a lack of documentation in the initial plan by way of specification of the basis for recommending a growth strategy. 250 It should be noted, however, that there was no statutory requirement at material times to provide a written account of the process by which an adviser concluded that he or she should make a particular recommendation, even if doing so accorded with best practice, as the experts said it would. The only requirement was that they have a reasonable basis when so recommending. 251 The experts also readily agreed, as indeed was the case, that in the post-FSR period record keeping requirements, including for advice given, changed and indeed were then required and more demanding than before. Formal SOAs and SOAAs were then required by statute. 252 Even so, as both experts explained, if "time critical" advice were required, even in in the post-FSR period, advice could initially be given orally and then be confirmed later in a letter of advice or an SOA or SOAA, as the case may be. 253 Mr Dennis says that the initial plan identified possible benefits of the plan, that all money was to be invested in Australia shares and projections on the value of the shares assuming certain growth rates. He says the projections selected a single average income rate and an average capital growth rate. He says that by selecting a single growth rate, Mr Takla agreed in his evidence that the projections only portrayed growth and did not show a range of potential outcomes. Mr Dennis says having selected one growth rate it was not possible to ascertain from the initial plan the effect that less than average growth would have on the initial plan, projected outcomes and consequently the effect on his overall goals. 254 He says that while the initial plan acknowledged that a difficult or adverse economic environment can cause income and capital growth yields to diminish, resulting in lower returns, or in some cases loss of capital, the absence of figures which took into account adverse circumstances meant that the initial plan did not assess the effect that would have on Mr Dennis' stated objectives. Thus, the respondents had no reasonable basis for concluding that the investments would achieve the stated objectives. 255 He also complains that the initial plan provided some calculations based on some assumptions, for example, a comparison of debt proposed with a proposal simply to borrow money to purchase a home. 256 Mr Dennis submits the comparisons show the possibility of paying down the home within four years, but at the same time not paying the loan for the shares at all so that the loan for the shares would remain well after retirement age. The projected value columns assumed a constant growth rate and did not assess the effect of a variable return on the shares or what impact that variable return would have on his debt position and goals. 257 He says of the strategy summary provided that the cashflow analysis compared anticipated income and expenses by Mr Dennis if he did not follow the plan, against what they would be if he did follow the plan. The cashflow projected steadily increasing income and steadily increasing expenses, but a fixed repayment of the proposed home loan. By comparison, if he followed the plan the projections showed steadily increasing income and expenses (other than the bank debt) but the income was supplemented by dividends received from investment in shares. Mr Dennis says Mr Takla agreed in cross-examination that the second cashflow under the plan did not include the cost of borrowed funds to buy the shares that would produce the dividends. He says that without assessing the returns from dividends against the cost of borrowed funds, the initial plan did not provide a rationale explaining the recommendations in light of the circumstances of Mr Dennis, his goals and objectives. 258 He submits the failure of the cashflow projections to allow for the possibility of adverse events means there was no explanation of how Mr Dennis' position would be affected by those events and he was not advised of those risks and he was in no position to consider them. 259 Mr Dennis says that, save to show how a home loan would be paid out if he did not adopt the initial plan, the cashflow projections did not address how the loan to purchase the investment would be repaid. Nor did it address how reasonably expected variations in returns would impact on his goals of repayment, rationalising borrowings, accumulating wealth, supplementing superannuation for retirement or being guided by a comprehensive personal financial plan. 260 Mr Dennis says the initial plan did not address retirement planning or strategies to build retirement income, something a reasonable financial planner would have addressed. 261 In my view, as in the case of the completion of the Fact Find discussed above, I have little doubt that other financial planners in 1999 may well have prepared and presented to a client an initial wealth creation program that provided more detail or analysis than that provided in the initial plan presented to Mr Dennis. That is not the test, however, as to whether or not the initial plan in this case was adequate and as to whether or not there was a reasonable basis for the recommended strategy presented. In my view, as noted above, Mr Takla was possessed of sufficient and adequate information as to the financial circumstances and goals and objectives of Mr Dennis to present the recommended strategy. I also consider the strategy proposed was appropriate to a growth investor such as Mr Dennis at that time. While the strategy selected, and the explanations provided as to how it might work out, could perhaps have addressed more scenarios than they did, does not, in my view, suggest a breach of the duty to advise with care. 262 So far as the Macquarie GEI proposal was concerned, while Mr Barber expressed the view that if one were recommending a balanced portfolio one would not only have Australian shares and international shares in it, but also have cash, fixed interest and bonds, that form of investment nonetheless had a capital protection feature to it, there is nothing in the recommendation to invest in the GEI that suggests it was not an appropriate product for Mr Dennis at that time. Mr Pillai did not suggest otherwise. 263 While there was discussion by the experts as to the split loan strategy in relation to the financing and repayment of the loan for the home purchase, the evidence of the experts concerning reducing the non-deductible debt as efficiently as possible and therefore paying out the loan, and then rechanneling those funds into other investments, was considered an acceptable strategy in the circumstances for a growth investor. 264 As to whether or not there was some primary deficiency in the growth rates represented in the strategies proposed, the evidence discloses, as Mr Pillai observed, that there is always risk in investing in equities. I do not consider it appropriate to accept the effective submission made on behalf of Mr Dennis, that he needed to be told, chapter and verse, that investing in shares might result in a capital loss. It may be taken from all the information he did receive and the fact that he was the holder of a share portfolio at material times, that he was aware that there may be a variation in the value of such shares and that growth was not guaranteed. The indications as to potential growth provided in the strategy summary and other parts of the initial plan were, as Mr Pillai said, merely indications of what might be achieved, it reasonably being understood that growth was not inevitable. The recommendation in relation to GEI No 1 is discussed further below. For the reasons given now and later, I consider there was a reasonable basis for it in the circumstances. 265 In the result, the complaints made about the initial plan in substance are about how it could have been more detailed than it was. The strategy proposed was, however, reasonable to achieve the broadly stated objectives of Mr Dennis as a growth-orientated investor. Mr Dennis has not shown that the initial plan lacked a reasonable basis or that, in preparing it, the respondents breached their duties to him. 266 This part of Mr Dennis' claim fails. 267 AGL timber project 2 1999: The initial plan did not include a recommendation to invest in an MIS, which was in fact the first type of investment Mr Dennis made in June 1999 under Chambers' advice. As noted above, it is the investment in this and subsequent MISs that is central to Mr Dennis' claims. 268 The prospectus for AGL timber project 2 1999 was issued on 18 June 1999. I accept it was typical for agribusiness schemes of its type at the time. In this case it provided that each investor would become a grower, responsible commercially for carrying on a business of tree farming. Under the scheme each investor would pay $5,000 for each woodlot of one hectare and agree to enter a licence to carry on the business of tree farming on that lot, subject to a management agreement that required the care and development of woodlots to be done by the project manager. The project manager would pool the product with like product of all the other woodlots at the conclusion of the project. The product would be sold and after harvest and other fees the process would be divided amongst the investors in proportion to the number of their woodlots compared with the total. In addition to initial fees there were annual management fees and a fee to the manager at the end, calculated on the value of the harvest. The cost of woodlots would be financed; interest would be payable on the finance over the life of the loan. There would be no return in respect of the woodlots until the trees were at sufficient maturity to be harvested. The project was an 8-12 year term project and was subject to risks generally associated with commercial plantation forestry. The licence limited the use of the land to the timber specified in the project and compelled the use of a project manager and the pooling of the harvest. Investment in the project entitled the investor to an immediate tax deduction for the whole of the investment made. 269 The prospectus made it plain that investors could not withdraw from the project or require redemption of the woodlots from the project manager. There was no market for the sale of interest in the project. If the project failed or the trees grew but the project manager was unable to harvest them or complete the project, there was no practical means for an individual investor to complete the project or sell the harvest separately from other investors or outside a co-operative scheme. Having acquired the woodlot the investor was committed to hold the investment to completion and in the meantime to meet the interim fees and costs. 270 General agricultural risks for tree farming were set out in the prospectus. Mr Dennis submits, however, the prospectus did not set out the risks relevant to him, for his goals and objectives while holding and being unable to sell an investment in the project. He says the inability to sell did not meet the goals of "repayment" of loans or "rationalise" borrowings or supplement superannuation in the period prior to completion of the project, as stated in the initial plan. 271 On 24 June 1999, Mr Dennis signed an application to participate as an investor in 20 woodlots. He wrote cheques totalling $10,500 relating to the scheme and signed an acknowledgement to Chambers that he was aware it would receive 10% of the total investments by way of fees. On 28 June 1999, a promissory note issued relating to the finance for Mr Dennis to participate in the scheme and on 30 June 1999, the investment was confirmed. Around 5 July 1999, he made an application to NAB for finance to acquire the interest in the project. 272 On 27 July 1999, Mr Dennis sent an email to Mr Takla asking questions about the initial plan. He noted the borrowing mentioned did not include borrowing contemplated by the investment in the MIS in which he had recently invested. No written response to that email appears to have been made. 273 The next correspondence was of 8 September 1999 when Mr Takla for Chambers wrote to Mr Dennis, noting the absence of written advice in connection with AGL timber project 2 1999. He stated that the "advice to invest into this project was only in regard to providing an efficient investment that provided good prospects of a future return. The tax deductibility of the program was assured…". 274 In essence, Mr Dennis now suggests he did not receive any relevant advice about the appropriateness of the first MIS investment to his circumstances and objectives. He says the September letter did not provide any further analysis of any change in circumstance that made investment in a MIS consistent with his circumstances, goals and objectives as expressed in the Fact Find or the initial plan. Mr Dennis relies on the opinion expressed by Mr Barber that the project recommendation was at odds with the flexible investment proposed in the initial plan and no rationale was given as to why it was suitable for the goals and objectives stated in the plan. 275 Mr Barber's view of the first MIS was that, as of 8 September 1999 when Chambers sent the letter confirming that investment, the investment represented 33% of the recommended portfolio. Indeed, he added, because the Macquarie GEI No 1 was not actually taken out until December 1999, the first MIS investment actually represented 100% of the portfolio at the outset. 276 But even on the basis of an allocation of 33%, Mr Barber considered the recommendation was outside generally accepted industry practice and would not have been recommended by a reasonably competent financial adviser at that material time in June 1999. 277 Mr Barber considered the AGL timber project 2 1999 investment was a long-term commitment to an agricultural product and converted Mr Dennis from being an investor, effectively to becoming a partial primary agricultural producer with the ability to claim tax deductions. He considered that Mr Takla should have put the recommended product into a new statement of advice explaining the reasons why he thought it was appropriate and what were the features and the long term benefits to Mr Dennis. He considered that while there was an upfront taxation deduction, there were long term legacy issues. 278 Mr Pillai noted that he was relying on the documents he had seen and was not privy to any discussions that may have passed between the parties. He considered it looked like an investment made to facilitate the purchase of the home, with a benefit of returns in the long term. He noted that the Fact Find focussed on the desire to purchase a home, which was in fact later purchased in September 1999. 279 Mr Barber, however, was reluctant to accept that the first MIS investment was connected to the strategy to purchase the home. He observed (transcript 510) that the plan incorporated a property being acquired and there would be a buffer of some description and a new investment loan. He considered the introduction of the MIS, however, brought with it a "new paradigm" and, whilst it brought with it the acceleration of the cashflow, there were risks associated with it. If the project failed, Mr Dennis would be responsible not only for the debt that he acquired under the strategy but also the debt he incurred under the MIS project. 280 Mr Pillai agreed that the placement was not captured as part of the strategy but noted that what was done was actually done prior to implementation of the strategy articulated in the plan to purchase a home. Mr Pillai considered that a financial planner at that time could hypothetically discuss a situation and effectually, if the need was there to implement a strategy, then place the product and follow it up with written advice, saying that he had done so based on the circumstances. Mr Pillai said there were several instances where, if there is "time critical advice", this might be done. He added that once the FSR period arrived, from 2002, then an SOA was a fundamental document and any SOAA could also be provided; but it was still possible to give earlier verbal advice in appropriate circumstances. 281 Mr Barber considered what Mr Pillai said in this regard to be correct, but added that in the pre-FSR period the rules of professional conduct of the Financial Planning Association required that any verbal recommendations be documented in writing and that these rules for professional conduct were in force at material times in 1999. 282 In my view, taking account of the overall assessment made by the experts and the evidence of Mr Dennis and Mr Takla, the advice given in relation to investment in AGL timber project 2 1999 did not constitute a breach of the respondents' duty to have a reasonable basis or to exercise due care and skill when providing financial planning advice. While the recommendation to go into that first MIS was made orally in conjunction with the provision of the prospectus and related documents, and only confirmed as a matter of fact by the September 1999 letter, the evidence, fairly weighed, confirms that the investment was placed not only as a tax efficient investment with longer term prospects, but also to create cashflow to assist with the provision of a deposit for the purchase of a home as proposed in the initial plan. 283 Mr Takla said he judged the investment to be suitable for Mr Dennis due to the advantages it offered investors compared to other agri-business product issuers in the market at the time which included a much cheaper unit cost per hectare, access to better land and the cost of insurance was to be paid by the product issuer. Also, Mr Dennis would receive any harvest proceeds from the investment while in his mid-50s and still actively working. Finally, the initial 100% tax deduction would provide him with the much needed deposit to purchase his home and hence achieve his major objective. 284 Mr Takla says he did not provide Mr Dennis with a letter of advice concerning the investment. Rather, Mr Dennis was provided with all the information and documents and he decided to proceed. 285 Mr Dennis accepts that, after attending a seminar given by Chambers about the AGL timber project 2 1999, he in fact completed the necessary documents to apply for and obtain financing for the investment. 286 To the extent that Mr Dennis suggested in his evidence in chief that he did not have a proper understanding of the financial commitment he had made or the nature of the investment that he was making, I am not satisfied that that was the case. Mr Dennis plainly closely read the prospectus. In the event, on 24 June 1999 he signed a client authority and acknowledgement in which he authorised Mr Takla as an authorised representative of Chambers to implement an investment of $100,000 in the project. He acknowledged that he had been advised of the brokerage to be received by Chambers of 10%. He also made an express acknowledgement in the following terms: I acknowledge that I have read the Brief Summary and Financial Overview of the Project and understand that the project is speculative in nature and is exposed to risks as outlined in the Summary and the prospectus. 287 I do not accept that Mr Dennis was not aware of the speculative nature of the project and indeed the lack of capital protection in the project. In cross-examination Mr Dennis in fact indicated (transcript 95(40)) that in the early years he took prospectuses home and studied them and asked lots of questions. He said that over time it became "pretty clear to me that my questions were naÏve and George (Mr Takla) was right and I was wrong. So I desisted". 288 Mr Dennis confirmed that he read the material relating to MISs, but at some point stopped reading them. While he could not recall the exact date he stopped, he suggested it was in the early 2000s. He explained that at that later point Mr Takla would have the prospectus on his desk, he would explain it to Mr Dennis and then he would go to the page where the applications were and he (Mr Dennis) would then proceed to sign them. 289 Mr Dennis said that he had the opportunity to read these documents but on these later occasions his experience was that he got a better understanding from discussing the documents with Mr Takla than by reading them himself and that he relied on Mr Takla's advice about what was in the documents. 290 All of this goes to confirm that at the time of the first MIS, Mr Dennis in fact read the prospectus and all the accompanying papers and understood the nature of the investment. The fact that in July 1999 Mr Dennis also sent an email to Mr Takla querying a range of things in the initial plan confirms that he was prepared to read materials given to him and did so and understood what he read. 291 I accept that Mr Dennis received all the relevant information concerning the investment including the prospectus before he entered into the investment and appreciated, from his discussions with Mr Takla, it would assist the objective in the initial plan of purchasing a home jointly with his then wife, as well as representing a worthwhile investment in the longer term in its own right. In that regard, he understood the advice was designed to advance the specific house purchase objective and the general "growth" objectives of the initial plan. 292 In those circumstances, even though the investment in the MIS product comprised either 100% or 33% of the investment portfolio respectively at or soon after the time it was placed (on Mr Barber's calculations), I do not consider that in recommending the AGL timber project 2 1999 investment the respondents did not have a reasonable basis or that he failed to exercise reasonable judgement by not considering Mr Dennis' current financial circumstances, income, ability to carry the associated expenses and cashflow capacity, or as to the soundness of the investment. 293 This part of Mr Dennis' claim fails. 294 GEI No 1: Mr Barber was of the view that the recommendation to invest $100,000 in the first MIS and to finance the investment 100% by borrowings, when viewed in conjunction with the recommendation in the initial plan to invest $200,000 in a Macquarie GEI, again using 100% finance, moved the recommended strategy from a growth-orientated one to an aggressive investment strategy. He said this because he considered the level of borrowings recommended for the investment were outside the debt limits recommended in the initial plan, being a total debt commitment of $295,000 comprised, as set out above, of $85,000 private debt (loan account 1), $10,000 (loan account 2), and the Macquarie GEI loan of $200,000. 295 Of course, the investment in AGL timber project 2 1999 actually occurred before the GEI No 1 investment was made. When it came to the establishment of GEI No 1, the purchase of the home jointly by Mr and Mrs Dennis was also in train. A question of the establishment of the split loan facility with NAB resulted in NAB advising that $800 would have to be dropped from one of the loans. Mr Dennis contacted Mr Takla to indicate that "he needed extra money to settle his property" and he asked if he could use some money from the buffer account that had been set up for business investment until he received his tax return. This enquiry was made as of 26 October 1999. 296 A number of observations might be made about the sequence of events. First, it confirms that Mr Dennis well understood the advice he had already received from Mr Takla that it was important to exercise discipline in relation to the operation of the buffer account and could not use it for discretionary expenditure or expenditure not immediately related to the financing of the other agreed investments. It was not anticipated, for example, that it would be needed to supplement the home purchase. Secondly, Mr Dennis understood the MIS investment would produce a sizeable tax refund. 297 In Mr Barber's view, the request from Mr Dennis to use the buffer account to allow settlement of the home to proceed would indicate to a reasonably competent financial adviser that Mr Dennis' disclosed expenses were not accurate. Indeed, Mr Barber considered that, although the cashflow forecasts Mr Takla had made anticipated receipt of a tax refund prior to settlement, in his view a more considered view of Mr Dennis' financial situation should have led a reasonably competent financial adviser to review the initial Fact Find cost of living estimates on the basis that they were probably understated in the initial plan. In these circumstances, Mr Barber considered that a reasonably competent financial adviser would have revisited the forecasts in the initial plan and the cost of living projections before implementing GEI No 1. 298 Against that consideration, it should be said, as Mr Barber acknowledges, and as Mr Dennis understood at the time, that the financial shortfall he was experiencing was intended to be alleviated by a tax refund due imminently. 299 In my view, taking into account the financial planning that had then been engaged in, the fact that a tax refund was expected and would alleviate cashflow issues, and that the amount to be drawn from the buffer account was relatively small, I do not consider that the circumstances were such that the reasonably competent planner necessarily needed to call Mr Dennis in to reconsider his cost of living expenses and either to suspend the recommendation for investment in the GEI or to recommend that there be no such investment made at that time. 300 On behalf of Mr Dennis, it was also contended (although not a submission pressed very far in closing, if at all) that this investment was not appropriate at all. As discussed above, I do not consider the evidence supports a finding to this effect. 301 Mr Takla explained in his evidence that he requested a cashflow analysis from Macquarie in order to allow him to consider how much a $200,000 investment in a GEI was likely to cost Mr Dennis to service, after dividends and tax. He said (exhibit 6([104]) that the cashflow analysis provided by Macquarie was attached to the advice which he subsequently provided to Mr Dennis, so that he could see what his out of pocket expenses on the investment were likely to be and whether they could afford it. 302 Mr Takla added that, having regard to the fact Mr Dennis' income was significantly higher than Mrs Dennis', he recommended a $200,000 investment in a Macquarie GEI. He said he also noted under the heading "Insurance planning" in the initial plan the importance of insurance. 303 He also said that in the initial plan he classified Mr Dennis as being a balanced investor although the plan was suitable for someone with a balanced risk profile, notwithstanding that an investment in shares is more usually considered appropriate with a risk profile of a "growth" investor. This is because the capital protection structure of the GEI makes the investment suitable for someone with a balanced or conservative risk profile. 304 When it was put to him that only one growth rate was provided to Mr Dennis as part of the recommendation, Mr Takla accepted the point and explained that the calculations made were based on the tables used at the time and that they were part of the computer software available to him. 305 In my view, while Mr Barber was critical of the recommendation to invest in GEI No 1 as set out above in relation to the initial plan, he recognised the GEI was a relatively conservative product in that it had the same sort of capital protection features he saw in a product he considered more appropriate, such as a PEL. 306 Indeed, it became clear during the concurrent evidence session at trial that Mr Barber did not seriously challenge the type of investments recommended in the initial plan and the strategy proposed. He may have preferred investment in a PEL to the Macquarie GEI, but in my view that was a matter of detail and more to do with the view he had that insufficient explanation was given in the initial plan as to the exposure to risk that an investor would have in a GEI. 307 As noted above in relation to the criticisms made of the initial plan, Mr Barber considered that the investments selected were probably appropriate for Mr Dennis' circumstances at the time. For him, it was the introduction of other investments later on that, in his view, changed the strategy recommended quite significantly. 308 To the extent it is put that Mr Takla and Chambers were negligent by not telling Mr Dennis that adverse circumstances could affect the value of equities and lead to a reduced profit compared with that indicated in the materials supplied with the initial plan, as noted above there were clear warnings in the initial plan that projected growth was not guaranteed. In my view, the evidence of Mr Pillai to the effect that the projections would reasonably be read as clear indications of what was possible, should be accepted. 309 The fact that Mr Dennis understood what was represented to him is made out in any event, by the fact that he was a little disbelieving of the growth rates indicated in the initial plan and took his own separate advice from an experienced stockbroker he knew. 310 The information provided in the product disclosure information provided to Mr Dennis, so far as GEI No 1 was concerned, also made the "no guarantee" point one would otherwise consider to be obvious and not require any particular explanation by the respondents. 311 I find the respondents did not lack a reasonable basis or breach their duty in relation to the recommendation of GEI No 1, including at the point the first MIS investment recommendation had been made and acted upon. 312 This part of Mr Dennis' claim fails. 313 Australian Blue Gum 2000: This is the second MIS investment made by Mr Dennis. Mr Dennis says the MIS scheme for this project was broadly consistent with that for AGL timber project 2 1999. He says that a "review of position" conducted by Mr Takla and him on 17 April 2000 broadly considered his income and expenses but did not consider either assets or the amounts of debt he had by then assumed, and did not consider his personal expenses, only expenses relating to investments. Mr Takla, nonetheless, considered he should be invited to the product seminar on 17 April. Mr Dennis then signed documents to enter into the investment in woodlots offered. 314 Mr Dennis says that a letter from Mr Takla of 19 April 2000 answered two questions which had arisen at the seminar, and invited further questions, but the letter did not say on what basis Mr Takla had recommended the investment. 315 Mr Dennis notes that he also signed a disclosure statement concerning a commission of 6% that Chambers would receive on the making of the investment. 316 The complaint made by Mr Dennis is that the MIS investment so made was not consistent with the goal of "flexibility" set out in the initial plan and in the absence of any income from the project before harvest it was not consistent with the goals of "repayment" of loans or the objective to "rationalise" borrowings. 317 Further, he says, there was no explanation on the impact of the goal to "accumulate wealth", or "supplement superannuation" for retirement. He says the recommendation was not consistent with the provision of a "comprehensive personal financial plan". 318 Mr Barber's opinion (exhibit 8 [104]) was that, as in the case of AGL timber project 2 1999, he (Mr Barber) was not shown any advice in relation to the investment to indicate how the recommendation was appropriate to the client's circumstances in accordance with s 851 or how the advice complemented the advice in the initial plan. Thus, he was of the view that the recommendation did not satisfy the requirement of having a reasonable basis. 319 Additionally, and in my view more significantly, Mr Barber considered that in recommending Mr Dennis invest a further $84,750 in another MIS project at this point, the allocation of capital in MIS projects came to represent 59% of his portfolio under Chambers' advice, an "extremely aggressive asset allocation" which he considered a reasonably competent financial adviser would not have advised. 320 In this regard, Mr Dennis relies on the opinion of Mr Barber, discussed above, that investments in MISs in a proportion that exceeded 5%-10% of the total portfolio of a balanced investor were not consistent with the advice of a reasonable financial adviser, given Mr Dennis' goals and objectives. As noted above, I do not accept there was such a rule at material times, but do accept that such an adviser was required to exercise judgement in relation to the spread or concentration of MIS products in the overall investment portfolio. 321 In relation to the proposition that Mr Dennis appeared to have read the relevant prospectus, the product disclosure information and signed the application form and applied for finance and whether this weighed in the assessment to be made of the appropriateness of the advice given, Mr Barber said that it still did not show why the recommendation was appropriate to Mr Dennis' circumstances. He said there may have been an argument that it was appropriate in the short term because it provided an up-front tax deduction, but that was only one consideration in the context of the strategy that had been developed by Mr Takla for Mr Dennis, not the implications for Mr Dennis should the project fail. 322 In their opening written submissions, the respondents say that in each instance the respondents outlined the nature of the investment recommended and why it was appropriate to achieve Mr Dennis' goals and objectives, the risks associated with the investment, the forecast returns (if appropriate), the associated fees, and the commissions which they would receive if the investments were implemented. 323 I accept on the evidence that, in the case of this second recommended MIS, as in the case of the first, Mr Dennis closely read the product disclosure information and was fully aware of the nature of the investment recommended to him. On Mr Dennis' own evidence, referred to earlier, he was in the practice of closely reading such information in the early years and only later relied on Mr Takla's exposition of the nature of the scheme to him. I infer he closely read the information supplied about this product. 324 I also accept that Mr Dennis was aware of the risks associated with this, as the first MIS investment, the forecast returns, the associated fees and commissions that the respondents would receive (directly or indirectly) as a result of the investment made. 325 The respondents' submission is that Mr Takla not only advised Mr Dennis of the nature of the investment recommended but also why it was appropriate to achieve his goals and objectives. In this regard, there was discussion about how the MIS investment would be tax efficient and a good longer term investment. The question is whether there are material facts upon which an inference to that effect can be drawn reasonably to the effect that Mr Takla exercised judgement in relation to the balance of MIS investments of an agribusiness nature in the growing portfolio if this investment were made. 326 Mr Takla sought to outline in his evidence how the advice relationship worked after placement of the very first investments. He said that the typical sequence of events was first a meeting to discuss Mr Dennis' financial position and for him to make recommendations about the investment. He then gave Mr Dennis a written advice and advised him to read it carefully. If Mr Dennis wished to proceed he signed the authority to proceed and the relevant associated documents. 327 He said that in some circumstances Mr Dennis signed application forms for entry into investments on the same day as meeting with him to discuss the advice. This was typically when there was some urgency in having the investment implemented, for example due to the need to submit an investment application before the end of the financial year or before it became fully subscribed. 328 He also said that, in the case of MIS investments, Mr Dennis was able to withdraw his application at any time up until 14 days after the investment was purchased. 329 Mr Takla gave additional evidence concerning NAB limit printouts. He said part of his ongoing service to clients included ensuring that they had enough liquidity to continue servicing their investments and to achieve this he asked the bank of a client to provide the limits and balances when he conducted annual or six monthly reviews of their position and investments under Chambers' advice. In Mr Dennis' case he asked NAB to provide him with that information. 330 Mr Takla added that he did not generally provide a copy of these reports to Mr Dennis as they only provided a summary of his NAB loan balances, something of which he should have been aware through receiving bank statements directly from NAB on a periodic basis. 331 He said, however, that he did discuss the information revealed from the NAB limit statements with Mr Dennis from time to time. He said the discussions with Mr Dennis typically centred around Mr Dennis' account management, the liquidity available in his buffer account and whether any of his loan facilities needed to be adjusted for any reason. 332 In relation to the Australian Blue Gum 2000 project, Mr Takla noted that Mr Dennis was invited to attend the seminar on 17 April 2000, and believes he did attend the seminar, although he did not have a specific recollection of him doing so. Mr Takla recalls making a whiteboard presentation at the seminar and confirmed he would have answered questions. 333 He made the point that the investment was offered by Norgard Clohessy (and was later managed by TimberCorp, following the collapse of Norgard Clohessy) and was similar in nature to the Australian Plantation project – the first MIS. He said that in addition to its relatively cheaper costs compared to other available products, it offered investors the opportunity to acquire options that could be converted into shares in the company at a later date for a cheap cost. 334 He added that Australian Blue Gums 2000's underlying investment was also in bluegum trees, however, as it was managed by a different operator he considered it would diversify Mr Dennis' investment within the industry sector. 335 Mr Takla added that he recalled that, at the same time, AGL (Australian Growth Limited), which was partly owned by the Chambers group, had a similar product in the market place, but he decided at the time "that the Australian Bluegum project was more suitable for Mr Dennis". 336 He said finance was available through Australian Agribusiness Finance which was part of the Norgard Clohessy Equity Group. 337 Mr Takla then says, that as a result of attending the seminar, Mr Dennis "decided to subscribe for 15 woodlots" in Australian Blue Gums, thereby implying Mr Dennis was not guided by a recommendation from Mr Takla. As to the latter proposition, there can be no doubt that Mr Dennis relied on Mr Takla's recommendation in making the investment, even if it be so, as I consider it was, that Mr Dennis was influenced by what he heard at the seminar and cast his own eye over the PDI materials. None of that, however, suggests that Mr Dennis thereby assumed the sole obligation to consider whether investing in the MIS product was appropriate for him. 338 Mr Takla says nothing specifically on the question of the concentration of MIS agribusiness investments that Mr Dennis would have as a result of investing in Australian Blue Gums 2000. He simply notes, as set out above, that he recalls that he decided at the time that the Australian Blue Gum 2000 project was "more suitable for Mr Dennis". 339 In cross-examination, however, Mr Takla said that investment in the second MIS was supposed to follow the pattern of the first MIS investment in that the tax refund expected of $35,000 was to have been paid in reduction of the home loan, but as it transpires, according to him, was not. 340 It should be added that, at the time of this recommendation, the Ardross home had been purchased (jointly with debt finance), the first MIS ($100,000) had been placed and GEI No 1 ($100,000) had also been made. 341 I infer from all the evidence that Mr Takla recommended the second MIS investment on the basis that it was tax efficient and a sound longer term investment, and that it continued to serve the early paydown of the home finance. 342 I also consider the evidence shows that Mr Takla took into account Mr Dennis' current financial circumstances, income, ability to carry the expenses associated with the MIS investment and cashflow, when making the recommendation. 343 In these circumstances, I do not consider Mr Dennis has shown Mr Takla's recommendation lacked a reasonable basis or that he failed to exercise reasonable judgement when making it. 344 I note in passing that no loss is claimed in respect of this investment in the above loss table. 345 This part of Mr Dennis' claim fails. 346 Australian Plantation Resources Limited: On 29 March 2000, Mr Dennis invested $10,000 in the acquisition of 25,000 shares in Australian Plantation Resources Limited. The investment was funded by a loan. 347 Mr Dennis relies on the opinion of Mr Barber to the effect that a recommendation to so invest was not consistent with the approach of a financial adviser who had properly addressed Mr Dennis' circumstances, goals and objectives. 348 Mr Barber noted in his expert report (exhibit 8 [106-111]) that he had not been provided with any advisory documentation supporting the investment and did not have any document disclosing to Mr Dennis the interest that Mr Takla had in the company. 349 Further, he had not seen any documents setting out why the recommendation was made. 350 Consequently, he was of the opinion that there was no reasonable basis for the advice to invest. Without evidence of analysis of the appropriateness of the investment to needs and objectives, Mr Barber expressed the view that no reasonably competent financial adviser would make the recommendation. 351 He also said that he had not seen any cashflow analysis as to what impact the loan would have on Mr Dennis' cashflow and so how the recommendation complemented the original investment strategy set out in the initial plan. 352 The respondents note that in his evidence Mr Dennis said he did not recall any conversations in which advice concerning the investment was provided by Mr Takla. 353 Mr Takla's evidence, however, included a print out of various slides in relation to the investment in Australian Plantation Resources Limited in conjunction with Chambers Investment Planners relating to a "year 2000 roll out". 354 Mr Takla identified the share application, a handwritten note from Mrs Dennis on the stationery of Mr and Mrs Dennis enclosing a cheque for $10,000 apparently signed by Mr Dennis. He also produced a disclosure statement signed by Mr Dennis, dated 8 May 2000, acknowledging the disclosure of Chambers' commission and a conflict of interest disclosure regarding the investment in the unlisted shares. 355 He also produced a document entitled "Investors declaration" signed by Mr Dennis. 356 I am not satisfied on the evidence that, in this case, just because there is an absence of documentation recording how, from the respondents' point of view, the investment in the shares related to the circumstances, goals and objectives of Mr Dennis, there was no reasonable basis for giving of the advice or that the recommendation to so invest was in breach of the relevant duty to exercise reasonable care. 357 Mr Dennis was fully aware of the nature of the investment, the inherent risks in buying shares and made the investor's declaration about it. The recommendation was made at a time when the objectives set out in the initial plan were still plainly operative. There is no reason to infer that at this point Mr Takla was not mindful of them or that the relatively small investment in equities did not serve the generally stated objectives in the initial plan. 358 Nor is there any reason to conclude Mr Takla did not continue to be fully cognisant of his client's current financial circumstances when making the recommendation to so invest. 359 In these circumstances, Mr Dennis has not shown the recommendation to invest in Australian Plantation Resources Limited shares as of 29 March 2000 lacked a reasonable basis or was in breach of the duties owed. 360 This part of Mr Dennis' claim fails. 361 AGL timber project 4 plan B 2001: The third MIS investment made by Mr Dennis on the recommendation of the respondents was in the financial year ending 30 June 2001. 362 As a result of the recommendation of the respondents in late May 2001, Mr Dennis applied to invest in AGL timber project 4 plan B 2001 (as it is referred to in the above loss table). The MIS was, in my view not dissimilar to AGL timber project 2 1999. The prospectus for it was issued on or about 14 December 2000. 363 On 26 May 2001, Mr Dennis provided the cheques to pay for the investment and his application was stamped 31 May 2001. The disclosure statement indicated that Chambers would receive a fee of 6% of the value of the investment. 364 On 14 December 2001, Mr Dennis met with Mr Takla who again recorded the elements of the discussion on his whiteboard, the notes of which were later printed out. 365 Mr Dennis makes a number of complaints about the recommendation made including that the finance application incorrectly ascribed the whole of the value of the Ardross home jointly owned by Mr Dennis and his then wife, as belonging to Mr Dennis. Mr Takla admitted this mistake, something that was repeated in a number of subsequent finance application forms and SOAs. In the event, I ascribe no great moment to this error in this instance. It is not relied upon to show a cause of loss claimed. It seems to be relied upon by Mr Dennis to suggest a lack of proper attention generally by Mr Takla in the provision of investment advice to Mr Dennis and, in that respect, it is of some relevance. 366 More significantly, Mr Dennis complains, based on Mr Barber's opinion, that: the whiteboard notes, consistent with other printed whiteboard notes, contain no reference to the reasons for the investment or the suitability of the investments to Mr Dennis' circumstances; the notes did address income and investment related expenses, but not in order to show how Mr Dennis' debts could be repaid or how his investments would supplement his superannuation for retirement; the respondents did not provide Mr Dennis with a cashflow projection as a result of taking on this loan; the advice did not warn him of the risks of the investment or the risks of him being unable to achieve his goals when taking out a loan to finance an investment that could not be sold until the end of the scheme; the approach was not consistent with that of a reasonable financial planner and there was nothing that reasonably linked the recommended investment to his goals and objectives. 367 The complaints made about the AGL timber project 4 plan B 2001 are, in substance, the same as those set out above in relation to the Australian Blue Gums 2000 investment made in the preceding financial year. 368 Mr Takla was cross-examined at length concerning his reasonable basis for this recommendation and the accuracy of information in the finance application to fund the $20,000 investment in AGL timber project 4 Plan B 2001. 369 The same question arises, as considered above in relation to the first and second MIS, whether at this point the respondents in recommending this additional $22,000 MIS agribusiness investment, the weighting or balance of MIS of an agribusiness nature as a proportion of the investment portfolio as a whole was considered appropriate. 370 The facts are that, consistent with the usual practice of Mr Takla, Chambers wrote to Mr Dennis by letter dated 27 November 2000 regarding his annual review and requesting copies of information including recent income tax returns and the previous six months' bank statements. 371 Later, by letter dated 28 May 2001, Mr Dennis provided Mr Takla with Telstra share certificates, his 2000 group certificate, superannuation statement, shire rates for the Ardross home, a home loan statement and also cheques for Australian Growth Managers and Australian Growth Finance. The letter also confirmed that he had requested the sale of Woodside shares to realise approximately $20,000, which was to be used to pay down the further mortgage over the Ardross home. 372 All of this in my judgement serves to amplify the nature of the relationship and the degree of information that was requested and supplied and, I infer, considered by Mr Takla in the course of providing the relevant recommendations in that financial year (as indeed in other financial years) to Mr Dennis. It also emphasises the extent to which the goal in the initial plan, of purchasing and quickly paying down the loan on the home finance, was still being pursued. 373 On 9 June 2001, Chambers requested Mr Dennis, in relation to his six monthly review, to provide recent financial information referred to in the previous review letters. 374 While on behalf of Mr Dennis complaint is made that very detailed personal expenses and the like were not requested and considered by Mr Takla at these material times, I do not consider there was any particular reason why he should have made more inquiries than he did at the time of making the recommendation in respect of this third MIS. 375 The question remains, however, whether the concentration of MIS investments of an agribusiness nature in the portfolio was regarded by Mr Takla when making the recommendation to invest in this third MIS investment. 376 In my view, as in the case of the Australian Blue Gums 2000 MIS investment, it may reasonably be inferred from the evidence that Mr Takla exercised judgement and considered this third MIS investment would be tax efficient and worthwhile as a longer term investment, at a time when the short term house purchase and loan repayment objective of the initial plan was being pursued. 377 The evidence also shows, in my view, that Mr Takla did consider his client's current financial circumstances, his income, ability to carry the associated expenses and cashflow capacity. 378 In my view, in these circumstances, Mr Dennis has failed to show that Mr Takla did not have a reasonable basis for the recommendation to invest in this third MIS investment or failed to exercise reasonable judgement when doing so. 379 I again note in passing that, as in the case of the second MIS, no loss is claimed in respect of this investment in the above loss table. 380 This part of Mr Dennis' claim fails. 381 AGL timber project 4 plan C 2002: This fourth MIS investment of an agribusiness nature in the sum of $25,000 fully financed, was made by Mr Dennis in the financial year ending 30 June 2002. 382 Mr Dennis met with Mr Takla on 17 May 2002 and again a record of the meeting appears in a printout from the whiteboard. On the same day, Mr Dennis signed an application for lots in AGL timber project 4 plan C 2002 (as it is referred to in the above loss table) and provided a cheque in part payment for the investment and also signed a disclosure statement acknowledging Chambers would receive up to 13% of the investment value as its fee. 383 On the same day he also signed an application for finance to Australian Growth Managers Limited, which was prepared in part by Mr Takla and his employees. 384 Mr Dennis makes a number of complaints similar to those concerning the preceding MIS investments including: the notes of the 17 May 2002 meeting contained no reference to the reasons for the investment or the suitability of the investment to his circumstances and did not address the need to retire debt or supplement superannuation; there was an error in the value he had in the house jointly owned with his then wife in Ardross in the finance application; nor did the application record the debt on investments in other agribusiness MISs, although the value was noted; that, on 31 May 2002, when Chambers wrote to Mr Dennis concerning the investment no mention was made of the basis of the recommendation to invest or the suitability of the investment to Mr Dennis' financial circumstances, goals and objectives. 385 I make the same findings in respect of the complaints about the error in the finance application as made above and do not in the circumstances consider it material. 386 In this case, Mr Takla received a range of information from Mr Dennis all relating to his financial position, including the print out from NAB dated 4 October 2001 showing his NAB limits. 387 On 30 November 2001, Chambers requested Mr Dennis to update financial information and invited him to meet Mr Takla for his six monthly review. 388 Mr Takla received from NAB a document showing NAB limits, which was dated 13 December 2001. 389 The meeting for the six monthly review occurred on 14 December 2001. The whiteboard presentation, according to Mr Takla, was aimed at projecting Mr Dennis' cashflow for that year and list of investments to date, as well as anticipated income from the GEI and investment costs, which were $64,000. It then showed how Mr Dennis would be paying for those costs. 390 Mr Takla says he also considered Mr Dennis' banking position which confirmed that the buffer account had more than $50,000 in liquidity and indicated Mr Dennis' ability to meet his future investment costs. 391 I accept that, while there are no detailed notes or statements made in letters of advice at this point, Mr Takla nonetheless on this occasion considered Mr Dennis' general financial circumstances and ability to accommodate further expenses. 392 Then on 17 May 2002, the recommendation to invest in AGL timber project 4 plan C 2002 was made, and acted upon. 393 As in the case of the previous, third MIS investment, this recommendation appears to have been driven mainly by the up-front tax deduction and the longer term benefits of the investment, but at a time when the home purchase and loan repayment objective of the initial plan was about to be, or had just been satisfied. To the extent it was no longer relevant, the objective of creating cashflow for other investments was then achieved, in accordance with the strategy of the initial plan following pay out of the home loan. 394 At this point, in June 2002, Mr Dennis placed a further investment of $100,000 in a Macquarie GEI. 395 In all these circumstances, I do not consider that Mr Dennis has shown that Mr Takla did not have a reasonable basis for the recommendation to invest in this fourth MIS or that he failed to exercise reasonable judgement when doing so. 396 I again note in passing that, as in the case of the second and third MISs, no loss is claimed in respect of this fourth MIS investment in the above loss table. 397 I also consider on the basis of Mr Takla's evidence, that Mr Takla did consider his client's financial circumstances, income, personal ability to carry the expenses associated with the investment and his cashflow capacity. 398 This part of Mr Dennis' claim fails. 399 Macquarie GEI 2: As just mentioned, in June 2002, Mr Dennis also completed an application for a further $100,000 finance to acquire further shares under a Macquarie GEI, similar to that previously made. Mr Takla confirmed the recommendation by letter dated 10 July 2002, disclosing the fees that would be paid to Chambers including a trailing fee. 400 The letter enclosed a "strategy summary" in terms not dissimilar to the summary provided with the initial plan in June 1999. 401 Mr Dennis, based on Mr Barber's opinion, makes a number of complaints about the recommendation and matters related to it including: the application for finance included a statement suggesting Mr Dennis' circumstances had not changed, which was not correct given the further debts he had incurred in MISs; the table which was part of a strategy summary, which was headed "Investment and borrowing against equity analysis" incorrectly suggested that annual capital gains could be used to pay the debt each year but did not then deduct that used gain from the total value of the investment listed in the table for the following year; the growth shown in the investment column showed a linear improvement over the years and did not contemplate the possibility of adverse events; further the table did not consider the repayment of the NAB debt associated with the initial AGL timber project 2 1999 or the debt on the other MIS schemes; the documents provided no rationale for the further investment and its associated debt and there was no explanation of how the investment fitted with the initial plan and any amendment to it; in particular, there was no explanation of risk to Mr Dennis' goals and objectives and what would happen if the investment failed to perform as predicted; the table that followed was a "tax and cashflow analysis" which, like the initial table compared income and expenses if Mr Dennis did not make the recommended investment, with the position if he did make the recommended investment and was not complete in that it did not address the debt associated with MISs. Nor were adverse events taken into account. Without that information Mr Dennis said it was not possible for the respondents to demonstrate the risks to his goals and objectives in the event of reasonably expected adverse circumstances; that the recommendation was not consistent with the approach of a reasonable financial planner. 402 As noted above, in May 2002, just before this advice was given, Mr Dennis had paid out the loan on his share of the Ardross home facility with NAB. He was then, on the face of it, in a position to consider fresh investment commitments in accordance with the strategy described in the initial plan. 403 So far as the GEI recommendation was concerned, Mr Takla points out that he provided with it a Macquarie GEI information booklet entitled "The zero capital risk share market investment" dated about 2002. 404 Mr Takla says this was the second GEI recommendation he made to Mr Dennis and was made to assist him to achieve his main objectives of creating wealth and tax planning. He points out that Mr Dennis signed the agreement to proceed with GEI No 2 on 15 July 2002. It may be noted in passing that GEI No 2 remained in place until instructions were given to unwind the investment in July 2007. 405 While I accept that more may possibly have been done to represent all investment expenses and indeed personal expenses that Mr Dennis had at that time, nothing is identified in the evidence to suggest that these deficiencies in relation to the advice given were material or causative of any loss suffered. Mr Takla's record keeping may be described as sub-optimal, but this does not cause me to consider he did not have a reasonable appreciation of Mr Dennis' overall expenses. 406 Ultimately, I accept the evidence given by Mr Pillai, that Macquarie GEI No 2 was a fundamentally sound product backed up by good research ratings and recognised operators in the sector and that generally, clients with high marginal tax rates seeking tax efficiencies, with an appetite for long term investments and associated risk, have a tendency to suit tax efficient gearing. 407 Mr Pillai considered, contrary to the view of Mr Barber, that the recommendation to invest in GEI No 2 was appropriate, as the benefits favoured Mr Dennis with high marginal tax rates and seeking medium to longer term diversified equity investment with a potential for sound capital returns and protection of downside risk with minimal initial capital investment, as Macquarie provided the credit facility. 408 I also accept Mr Pillai's assessment that this investment would have placed minimal demand in relation to cashflow, particularly having regard to the amount recommended to be invested and given the Ardross home loan had just been cleared. 409 Mr Takla in cross-examination, in the face of criticisms about what was not disclosed in the strategy summary, explained that the document only disclosed part of the investment position because the computer software he was using at that time could not include the plantation investments, which were handled separately. In the post-FSR period the software enabled inclusion of such debts. 410 When challenged that Mr Dennis, reading the strategy summary, "would not be informed about his debt position" on those plantation investments, Mr Takla, reasonably in my view, said that Mr Dennis was at that point a "three year old client with me". He pointed out, evidence which I accept, that, Mr Dennis was a client who took extensive notes and received answers to many questions. He said that the only two times in the previous 13 years that he had seen Mr Dennis without his notebook, was at a dinner that he took him to with his family to celebrate his coming out of his difficulties (following the matrimonial settlement) and at the trial in this proceeding in the courtroom. Mr Takla added that Mr Dennis was an experienced project manager who handled huge projects and was a consultant in his own right. Mr Dennis understood, Mr Takla asserted: that he will be referring to the effect in his National Bank account, how his debts will pan out there and his capital protected investments. But he also aware of his other obligations being discussed and being put on the presentations. (Transcript 345.) 411 I generally accept the evidence given by Mr Takla in the course of cross-examination about Mr Dennis' financial position at this time and the information that he received in the course of meetings and discussions about it. 412 In my view, Mr Dennis has not shown that in making the recommendation to invest in GEI No 2, Mr Takla lacked a reasonable basis or breached his duties. 413 This part of Mr Dennis' claim fails. 414 Sylvatech 2003: The recommendation to invest in this further, fifth MIS arose out of a meeting between Mr Takla and Mr Dennis on 17 June 2003. That meeting followed Chambers' letter of 29 May 2003 requesting information from Mr Dennis to prepare a review (a similar request having been made by email the same day). Mr Dennis responded by referring to information provided at an earlier meeting of 23 April 2003. 415 On 3 June 2003, Mr Takla replied with some questions including about investments Mr Dennis held under advice from others. Mr Dennis confirmed Mr Takla's understanding and noted also that his income was declining, which would have an impact on his ability to make monthly payments as required by the initial plan. 416 The email from Mr Dennis of 3 June 2003, noted that at this point monthly repayments of $2,500 were being made by him into a buffer account (indeed he had "reinstated" them and also paid in a lump sum of $14,000). It might be observed, this evidence confirms discussion and earlier agreement about the level of commitment to outgoings on investments Mr Dennis had undertaken, and also Mr Takla's appreciation of those issues. 417 That was the background to the 17 June 2003 meeting where whiteboard notes again recorded elements of the discussion and the further MIS investment made in Sylvatech. 418 Mr Dennis makes the following complaints in connection with the subsequent Sylvatech 2003 investment recommendation: the notes of the 17 June 2003 meeting, while noting the discussion about income and dividends in rounded estimates, and also about interest and other costs, was not associated with a further Fact Find or a detailed analysis of cashflow or personal expenses; Mr Barber considered that the reference in the earlier email to cashflow difficulties should have prompted a reasonable adviser to review more carefully the cashflow before advising on further investments to be acquired by further debt; the application for finance did not provide information on Mr Dennis' total liabilities, total assets or net assets and the basis for values ascribed to various MISs was not disclosed; the recommendation to invest was not explained and it is not possible to say it was posed on reasonable grounds and there was no consideration given to Mr Dennis' goals and objectives and how they would be affected by reasonably foreseeable adverse circumstances; the notes relating to the investment do not show any discussion of the general risks of tree farming or the risks to goals and objectives by borrowing money to finance an investment that was not liquid, which had a long time to complete; the now very high proportion of the portfolio which was concentrated on managed investments was aggressive, according to Mr Barber's evidence and that would not be the approach of a reasonably competent adviser who had considered Mr Dennis' position. 419 Mr Barber had a number of concerns with the making of such a tax efficient MIS investment at this point: That while Mr Takla's file note of 17 June 2003 suggested an estimated tax liability of $30,000, he considered a pay advice slip from 20 June suggested a tax refund, not liability was due. That the existing level of Mr Dennis' debt and ongoing commitments suggested he was close to the limit. The 17 June 2003 notes of Mr Takla did not comply with post-FSR s 945A and replacement policy P5 175 (as of 30 June 2003) and the "Suitability Rule". The MIS represented an aggressive investment and tax minimisation strategy. 420 Mr Takla says that this MIS was for a different species of timber than earlier projects, being Acacia trees on the Tiwi Islands in the Northern Territory, which required only eight years to mature, compared with 11 in the case of bluegums. 421 He says he recommended the investment to Mr Dennis because: the investment would provide the same tax benefits as previous MISs as well as further diversity, shorter duration and cheaper cost; although the finance was relatively more expensive, the added features of the investment and the small amount invested suggested that this was unlikely to be problematic to his cashflow. 422 It may be noted that at this point the objective of acquiring a home and paying down the finance associated with that purchase had been met in May 2002, a year earlier. Thus, the recommendation to invest in another MIS of an agribusiness nature could no longer be justified by reference to that objective. It could only be judged on the grounds of a tax efficient investment with good longer term prospects (with a different tree species). 423 In the result, Mr Barber's reliance on P5 175 was misplaced as s 945A did not come to apply to the respondents until early 2004, when Chambers received its AFSL. Of course, the general issue of reasonable basis under s 851 continued to apply. 424 I do not accept that Mr Takla should have considered a tax refund, not liability, was appropriate at material times. 425 I also consider that, following consideration of Mr Dennis' capacity to meet loan expenses, Mr Takla adjudged he could afford to meet this tax efficient MIS investment 426 In those circumstances, I do not consider Mr Dennis has shown that Mr Takla did not have a reasonable basis for the recommendation to invest in this MIS or that he failed to exercise reasonable judgement when doing so. 427 I also note, in passing, that this fifth MIS investment is not the subject of a claimed loss in the above loss table. 428 This part of Mr Dennis' claim fails. 429 Macquarie Bank GEI No 3: While Mr Dennis and Mr Takla met in December 2003 and February 2004, no investments under Chambers' advice appear to have been made in the financial year ending 30 June 2004. 430 In March 2004, Chambers commenced holding an AFSL under the new FSR regime, which brought them under a duty to comply with s 945A and s 946B of the Corporations Act at that time. 431 At material times s 945A(1) required a "providing entity" (such as Chambers) only to provide advice to a client if: they determine the relevant personal circumstances in relation to giving the advice; they make reasonable enquiries in relation to those personal circumstances; having regard to the information obtained from the client in relation to those personal circumstances, and given such consideration to and conducted such investigation of the subject matter of the advice "as is reasonable in all of the circumstances"; the advice is appropriate to the client, having regard to that consideration and investigation. 432 Section 946A at material times required that providing entity to give a client an SOA. By subs (2) the SOA could be either the means by which the advice is provided or a separate record of the advice. 433 It might be said that s 945A tightened up the "reasonable basis" requirement when compared with the earlier s 851, in that it placed emphasis on the need to both determine relevant personal circumstances of a client in relation to the giving of advice and the making of "reasonable enquiries" in relation to those personal circumstances. In my view, the "reasonable enquiries" requirement does not necessarily mean that there had to be enquiries made every time a recommendation or advice was given under that provision, as it may be that the earlier determination of the relevant personal circumstances and necessary enquiries made in relation to them would remain sufficient to meet the statutory requirement. The point is that a reasonable basis to advice was required both before and after the FSR period commenced with renewed emphasis on the SOA or SOAA. 434 By SOA dated 6 October 2004, the respondents recommended that Mr Dennis invest $200,000 in a further Macquarie Bank GEI – GEI No 3. The recommendation had earlier been made and acted upon and finance approval given by Macquarie Bank dated 6 October 2004. 435 At that time, Mr Dennis' annual income had fallen from what it had been previously, to about $120,000. In the letter of 6 October 2004, the risk tolerance of Mr Dennis was also changed by Chambers from "balanced", as assessed in the initial plan, to "moderately aggressive", as set out in the letter of 6 October 2004. It may be observed that, in this regard, Mr Takla came to assess Mr Dennis along the lines the experts consider he should have been assessed from the outset – as a growth-orientated investor. 436 Mr Dennis complains, however, that there was no further Fact Find prepared at this point which prefaced the recommendation and assessments made of his investor type and says there was no record of Mr Takla discussing with Mr Dennis the significance of the changed risk assessment status. I do not accept the criticism, as Mr Takla had at this point been advising Mr Dennis for some five years and, in my view, had a developed appreciation of his client's circumstances and appetite for risk. As the experts said, and as set out above, the adviser's responsibility includes making continuing assessments about precisely these sorts of things. 437 The advice of 6 October 2004 also included a section dealing with "strategy implementation" that contained two tables. One set out investments recommended which had been implemented by Mr Takla. Mr Dennis says the amounts subscribed to the investments were incorrect. He says for the MISs the full values were allocated even though the investments could not be sold prior to completion and were always subject to agricultural and commercial risks. The second table set out debts associated with the investments. He submits that even before correcting for the error for the value of investments it was apparent from the two tables that the level of investment debt was broadly equivalent to the value ascribed to the investments. 438 Mr Dennis also complains that before making the GEI recommendation, Mr Takla did not undertake a cashflow analysis to review his ability to pay the additional debt associated with the investment. He acknowledges, however, that in the letter there was reference to Mr Dennis' ability "to service the new borrowings from your existing investment account (the Buffer)". A reference was also made to the need to restructure the limit on the account in order to allow further expansion of the buffer to meet further investment commitments. 439 Mr Dennis further complains that the advice of 6 October 2004 did not set out why his goals and objectives together with his financial circumstances meant GEI No 3 was suitable for him. 440 Mr Dennis also notes that the letter of 6 October 2004 listed two alternative strategies, one of which was that Mr Dennis could borrow to invest in shares, without protection for capital. However, that strategy was said not to be consistent with the recorded desire to protect capital. Mr Dennis says there was no explanation of how MISs, which also do not protect capital, were consistent with this desire. Further, there was no explanation provided of how the recorded intention was consistent with the new risk assessment of Mr Dennis being moderately aggressive. The only other alternative considered was investment in property, but that was ruled out as it was said (incorrectly) that he already had other investment properties, when he only owned a house jointly with his then wife. 441 Mr Takla says of the SOA of 6 October 2004, that the letter records him having provided Mr Dennis at that time with a copy of Chambers' financial services guide version number 3, and Macquarie Bank's combined PDS and financial services guide dated 4 June 2004, that document being entitled, "The flexible share market investment with zero capital risk". 442 Mr Takla says that in addition to achieving Mr Dennis' objective of creating wealth and tax planning, the recommendation to enter into GEI No 3 was in order to replace GEI No 1 which was anticipated to mature in December 2004, which Mr Dennis told him that he wished to sell. Mr Dennis intended to use the capital gains to reduce his debt. 443 Mr Takla says the SOA also noted the alternative strategies mentioned, that were considered by Chambers and disregarded for the reasons given. 444 In cross-examination Mr Takla was pressed concerning the fact that the statement of position he prepared at that time did not include the Macquarie Bank loans. Mr Takla pointed out (transcript 350), in my view reasonably, that at this point Mr Dennis' GEI No 1 was to mature in about two months' time and he had indicated his desire to sell the investment on maturity. Mr Takla said that, in those circumstances, the only debt that Macquarie then would have would be the $100,000 the subject of GEI No 2. 445 Mr Takla accepted, however, as he had before, that he had mistakenly shown the entire value of the jointly owned Ardross property as belonging to Mr Dennis. 446 In my view, notwithstanding the deficiencies in the accounts of some of the financial information, they are not ultimately relevant to the question of whether there was a reasonable basis or a breach of contractual or tortious duty by recommending investment in the GEI No 3. In my view, in the circumstances, on the basis of Mr Takla's evidence, there was a reasonable basis to the SOA of 6 October 2004. 447 I accept the opinion of Mr Pillai, to the effect that the investment in this product was appropriate as the benefits favour investors with high marginal tax rates, seeking medium to longer term diversified equity investment, with a potential of sound capital returns and protection of downside risk, with minimal initial capital investment as Macquarie provided the credit facility. Mr Pillai said that generally clients such as Mr Dennis with a high marginal tax rate, seeking tax efficiencies with an appetite for long term investments and its associated risk have a tendency to suit tax efficient gearing. He considered the GEI a fundamentally sound product, the PDS for which he had viewed, backed up by good research ratings and recognised operators in the sector. He noted, as did Mr Takla, that the GEI No 3 appeared to be intended replace the first GEI, which was maturing. 448 Mr Pillai also considered, and I accept this view, that in consideration of the market outlook at the given time, a new investment in a Macquarie GEI was appropriate for someone in Mr Dennis' position, having regard to his income and his objectives of accumulating assets outside of superannuation with tax efficiencies and the capital protected nature of the product which he had reasonable experience in. 449 As a result of these findings, I do not consider that Mr Dennis has shown that the respondents lacked a reasonable basis for making the recommendation or breached their contractual or tortious duties of care owed to Mr Dennis in doing so. 450 The fact that the SOA did not discuss the unprotected capital nature of MISs, which Mr Dennis draws attention to, is not, in my view, relevant to the reasonable basis issue under s 945A or the duty issue raised in relation to GEI No 3 – although it is clear evidence of Mr Takla's awareness of this as an issue. Nor do I consider the observations made by Mr Dennis as to the valuation/debt equivalence of MISs recorded in the SOA, affect the reasonable basis issue. 451 This part of Mr Dennis' claim fails. 452 Equinox, Fusion and Rubicon: In November 2004, relatively soon after the 6 October 2004 SOA, Mr Takla provided Mr Dennis with a SOAA recommending a $200,000 investment in shares financed by Macquarie Bank in Equinox, $200,000 financed by Macquarie Bank in Fusion Fund, and $200,000 in Rubicon's capital protected international leaders fund. The combined debt in relation to these investments was therefore $600,000. 453 Mr Takla says the 2004 year marked a major development in the geared capital protected investments market and for the first time Macquarie offered a new generation of products allowing diversification of investments outside Australian shares and at a much cheaper interest rate. He says that Chambers, after conducting due diligence on these investments, decided to offer them to its clients including Mr Dennis, noting 100% finance was available. 454 Mr Takla points out that, in the SOAA, Chambers provided details of alternative strategies that he had considered but which he did not recommend, and the reasons why he did not recommend the alternative strategies. 455 Mr Takla says the recommendation he did make was made having regard to the same factors which prompted his recommendation to invest in GEI No 3, when, however, the new generation investments were not available. 456 Mr Takla said the three investments put together would provide Mr Dennis with substantial exposure to investments outside the Australian share market and the combination of low interest rates and capacity to generate income above the local share market dividends would allow him to service a higher level of borrowing to the GEI investments and without putting pressure on his NAB facilities. 457 He says the SOAA explained the reason for expanding his portfolio under the heading "Strategy Implementation". 458 Mr Takla further notes that the NAB banking position in February 2005 shows that Mr Dennis had a total debt of $78,000 against a limit of $140,000 indicating he had adequate ability to meet the commitment of the new investment. 459 He also notes in passing that Mrs Dennis also signed the authority to proceed with the recommendations contained in the SOAA, notwithstanding that she was not a recipient of the advice. He believes that happened because the advice may have had some effect on the family home. Thus, this was done as a matter of courtesy to the non-client spouse. 460 Mr Barber noted certain errors in the SOAA as to the recording of existing investments and said that in his experience most licenced dealer groups have an approved level of gearing an adviser can recommend to a client and, although it can vary between dealer groups in his experience, the limit is typically set at a maximum of 50% of the portfolio value. 461 Mr Barber accepted the reasons in the SOAA provide for the recommendation and the investments selected had merit in that the recommendations would diversify the asset composition of the portfolio, providing diversification benefits, and would be more representative of a diversified growth orientated portfolio. However, he considered that the SOAA did not address how the cost of servicing the new investments would affect Mr Dennis given his existing loan commitments or how he would service the new debt from his existing income, which had recently declined. 462 Additionally, he said the SOAA did not provide any forecasts showing how the new investments would complement the original strategy in the initial plan or would be suitable to meet his needs and objectives. It simply attached a number of research reports on the recommended products. 463 Mr Barber separately completed an analysis which led him to the view that by implementing the new recommendations, Mr Dennis would be reliant on drawing against his loan facilities to meet his investment commitments, as well as funding his cost of living expenses, and that while he would be able to claim the expenses in his tax return, it could not be done immediately and would require his tax return to be prepared and the refund received and so there would be a time lag for cashflow purposes. 464 Mr Barber ultimately concluded that the SOAA failed to show the recommendations were appropriate to Mr Dennis' needs and objectives, given the level of debt he had at the time and the additional risk of doubling the amount of the debt he had to service and so failed to meet the requirements of s 945A. 465 Mr Pillai said he would have preferred to have seen more updated information in relation to Mr Dennis' earnings in the current financial year July 2004 to 7 October 2004 in relation to the provision of this SOAA. But as to whether or not he considered the three recommended investments as appropriate he noted that Mr Dennis' taxable income disclosed in his taxation return for the financial year ending 30 June 2005, was in fact higher than the previous year and, assuming this to be correct, and Mr Dennis' stated risk tolerance and desired outcomes remained the same, the recommendation to invest was appropriate. Mr Pillai said, in forming that view he had regard to the associated PDS relating to the investments and the independent research review which showed that all funds recommended had reasonable ratings. 466 Mr Pillai's view, expressed above in relation to other investments, was that generally clients with a high marginal tax rate seeking tax efficiencies with an appetite for long term investments and associated risks have a tendency to suit tax efficient gearing and MIS investments. In his view Mr Dennis fitted that description. 467 Mr Takla, in cross-examination, said at the time he made this recommendation he also knew that Mr Dennis was about to receive $55,000 in capital gains and he also knew that those investments were a breakthrough in the marketplace where, for the first time in Australia, one had diversified capital protected investments outside Australian shares. He calculated on the basis of a simple calculation of the dividends plus tax less interest that there would not be undue pressure on Mr Dennis' cashflow by the fact that he would not be required to find any out of pocket expenses on an annual basis. 468 Mr Takla accepted that he did not do an analysis of cashflow in order to make the recommendation, at least not in that SOAA. He said, however, that the cashflow had been addressed. He had consulted the bank statements of Mr Dennis. He had also consulted his investments that were ready to be liquidated at the time, when he would get $55,000 in the next month or so. He found that he would still be maintaining a good level of liquidity bearing in mind that the three recommended investments were not going to cause any pressure on cashflow. 469 In all the circumstances, while there were errors to be found in the description of the investments in the SOAA that already existed, and, as Mr Pillai suggested, more information about earnings in the current financial year 2004 might have been provided, I do not consider that the respondents did not have a reasonable basis for the advice provided to Mr Dennis to invest in those three investments. I accept a fresh cashflow analysis would have been desirable, but accept that Mr Takla gave consideration to cashflow in the manner he described. 470 At that stage I accept that Mr Dennis remained a growth-orientated investor (or a moderately aggressive investor as Mr Takla has reassessed him) having regard to investments he had made to that point and his apparent capacity for risk. 471 In the result, Mr Dennis has not shown that the respondents did not have a reasonable basis to make the recommendation to invest in the $600,000 worth of new investments or that they breached their contractual or tortious duties owed to Mr Dennis in making the recommendation. 472 This part of Mr Dennis' claim fails. 473 Great Southern Plantation 2005: On 16 February 2005, Mr Takla met with Mr Dennis. The meeting followed the familiar approach of notes being recorded on a whiteboard and later printed out and held on Mr Takla's file. As a result of the meeting Mr Dennis applied to invest $99,000 in Great Southern Plantations 2005 (as it is referred to in the above loss table), the sixth MIS investment. 474 The SOAA concerning the Great Southern Plantations 2005 was issued on 6 March 2005. 475 Mr Dennis makes a number of complaints, based on Mr Barber's opinion, about the advice he received in relation to this MIS investment, including: The application for finance again showed he held the whole value in the Ardross home, rather than half. The whiteboard discussions were at a high level of generality with no reference to reasoning for any particular investment. There was no discussion or analysis of cashflow or of Mr Dennis' goals of retiring debt or supplementing superannuation. 476 Mr Takla says of the 16 February 2005 meeting that Mr Dennis had informed him of his voluntary redundancy from Woodside at that point and his accepting of an offer from the same employer to work in the same position, but as a consultant. He recalls him joking that he would be working from the same desk and would be paid more. He expected to receive a redundancy payment of $153,000. At that time, Mr Takla said that as a result of selling GEI No 1, Mr Dennis had made about $65,000 in capital gains in that financial year. 477 As a result, Mr Takla said, the presentation at the meeting calculated the investment cashflow and resultant tax position on the white board and projected investment costs at $94,000 with an income of $120,000 for the first seven months and an additional $153,000 from the anticipated redundancy package. The presentation also recorded $64,000 capital gains from selling the GEI No 1. 478 Mr Takla says the whiteboard presentation also records that he recommended investment in another $300,000 GEI, but Mr Dennis told him he would prefer to invest in another MIS, and it was on that basis he recommended Great Southern Plantations 2005. 479 Mr Dennis generally recalls the meeting on 16 February 2005, "but not the detail" [see [107] of exhibit 2]. He says, however, that to the best of his recollection at that time he was aware he would receive a redundancy payment, but not the precise amount, and considers his conversation with Mr Takla was not based on an actual payout figure. 480 Also he does not believe that as of February 2005 he would have been confident that he would be re-employed as a consultant, as that did not occur until about April or May 2005, and so doubts he indicated this at the meeting. 481 He says that if he had estimated the redundancy payment, as a matter of caution he believes he would have proposed a smaller part of the redundancy payment to be paid back into the loans. This was because moving to self-employment was for him a significant step. 482 He also says that, as he understood Mr Takla's explanation, the early retirement of debt was useful and desirable but not critical to the success of the plan. 483 Mr Dennis rejects this latter evidence concerning his preference for an MIS investment. 484 It should be said there was considerable reconstruction in Mr Dennis' evidence about this meeting, given his admitted overall lack of recall of detail. 485 In the course of cross-examination, Mr Takla repeated his evidence that he recalled initially advising Mr Dennis to invest in a third GEI but Mr Dennis declined the offer and said he was more comfortable investing in plantations. Counsel for Mr Dennis put it to Mr Takla that he had made up that evidence "today". Mr Takla denied that, saying it was documented. He referred to pg 2190 of the trial book. Indeed, Mr Takla had earlier made the same allegation in his initial witness statement at [477] (exhibit 6). Thus, it is not correct to suggest that Mr Takla had invented the allegation as of the day he was sitting in the witness box being cross-examined. 486 Given the investments subsequently made by Mr Dennis, which included further MISs of an agribusiness nature, I am far from convinced that he did not at some point disclose a degree of comfort in such an MIS on this occasion, although it may have been later. As discussed below, I am satisfied Mr Dennis certainly did say such things on a later occasion. 487 I accept, however, that on this occasion there was some discussion or estimates made as to the likely redundancy payout, even though the matter was the subject of formal advice by Mr Dennis later. The fact that the SOAA of 6 March 2005 made express reference to the estimated taxable income lends support to Mr Takla's recollection that it was mentioned on 16 February. 488 Mr Barber made a number of observations in respect of the SOAA of March 2005, including that the investment proposed in April that Mr Dennis was to receive a substantial tax refund. However, Mr Barber considered that given the MIS recommended was for a minimum of ten years and funds had to be borrowed outside the NAB loan facility to finance the transaction, it was necessary for Mr Takla to demonstrate how the recommendation was appropriate to Mr Dennis' long term needs and objectives, something which he considered was not demonstrated. 489 Mr Barber said that while he had not been able to verify the valuations given in the SOAA on individual investments in the table provided with it, if the values were accepted as presented, the recommendation to invest $99,000 into the new MIS would lift Mr Dennis' investment in MIS projects from 21.07% of the total portfolio value, to 27.10% under Chambers' advice. He considered that would be considered aggressive from a portfolio construction perspective and not consistent with the documents that identified Mr Dennis' circumstances, goals and risk profile and the recommendation should not have been made by a reasonably competent financial adviser. 490 Mr Pillai's view, consistent with the earlier expression of his view in relation to other MISs, was that generally clients with high marginal tax rates seeking tax efficiencies with an appetite for long term investments and associated risks have a tendency to suit tax efficient gearing and MIS investments, such as Great Southern Plantations 2005. 491 Mr Pillai had viewed the PDS and independent research reports, although he was unable to attach the report or provide specific comment on rating due to reasons of confidentiality. 492 He considered the PDS relating to the investment described the main features of the product, any significant benefits or risks in holding it, the costs of the product, any investment return from it and any significant taxation implications as well as any relevant commission arrangements that may affect an investor's return. 493 In his view, Great Southern Plantations 2005 was a fundamentally sound product backed up by sound research ratings and at that managed by well regarded operators in the sector. 494 Mr Pillai added that tax efficiencies and asset accumulation from tax savings appeared to be the agreed strategy between Mr Dennis and his adviser at that point. He considered a strategy embedding tax efficiencies was appropriate for Mr Dennis, given his financial circumstances as revealed in the materials given to him. 495 Mr Pillai considered that having reviewed the information provided relating to the advice, and given the strategy for Mr Dennis, the investment in Great Southern Plantations 2005 was appropriate, as the benefits were tax related with potential long term investment returns via forestry. 496 In forming that view, he considered Mr Dennis' financial position, income in the given year, including his termination payment from Woodside and consulting income, his stated risk tolerance, stated desired outcomes and funding requirement for vesting Woodside options. 497 In my view, the evidence, including that of the 6 October 2004 SOA that recognised the differences between capital protected investments and those lacking that feature, supports the inference, that I draw, that Mr Takla exercised judgement in relation to the balance that MIS investment of an agribusiness nature would represent in the investment portfolio. 498 Further meetings in April and May, however, relate to the March SOAA. On 22 April 2005, a meeting occurred where, having regard to the whiteboard notes, there was discussion of a redundancy payment of $150,000. 499 At the 22 April meeting, which Mr Takla says was at Mr Dennis' request in order to discuss restructuring his bank facilities with NAB and the chain of emails on 12 April 2005 relating to a credit application that Mr Dennis had made, there was relevant discussion. 500 The whiteboard notes of the meeting are referred to by Mr Takla. He says they show that Mr Dennis wished to increase his banking facilities limit to $360,000 in order to consolidate his present debts and to give him additional liquidity of $100,000. 501 Mr Takla notes that on 6 May 2005 he received a NAB service report, which enabled him to review Mr Dennis' funds and liquidity. 502 From his review of that document he believes that the handwritten notes on it are those of Mrs Dennis. 503 On 9 May 2005, Mr Takla met Mr and Mrs Dennis together. They were at that time in the process of finalising a divorce financial settlement. Mr Takla recorded in a file note of the meeting that Mr Dennis was contemplating increasing his NAB loan by $50,000 and Mrs Dennis needed the comfort that he would be able to meet the repayment. 504 In cross-examination, Mr Takla was asked why Mrs Dennis was asking him to check the ability of Mr Dennis to meet his financial obligations. Mr Takla said he was not being instructed to do that. Mr Dennis also says this should have caused Mr Takla to complete a new Fact Find. 505 I do not accept that by reason of the meeting with Mr and Mrs Dennis there was any particular need for a new Fact Find. The position was that there was an understanding reached that Mr Dennis would be obliged by a financial settlement with his wife to transfer his interest in the Ardross property to her unencumbered together with cash. Obviously financing needed to be considered in order to achieve that. Mr Takla was plainly possessed of sufficient information to consider the implications of additional finance from what he already knew of his client's circumstances. 506 Counsel for Mr Dennis, however, also notes that two weeks later, on 24 May 2005, Mr Dennis emailed Mr Takla referring to a meeting the day before in which Mr Takla had offered to assist Mr Dennis purchase a home, which offer Mr Dennis declined. Mr Dennis indicated his reluctance to increase his outgoings, his desire to prepare for retirement in the next three to five years and discomfort with extending his obligations to NAB. Mr Takla responded by an email of the same day and recorded the following further goals of Mr Dennis: To use redundancy funds to reduce debts with NAB but leave sufficient funds to service investments. To not extend the NAB debt. To retain the current monthly commitment of $2,500 for the foreseeable future. To reduce overall debts. 507 In cross-examination it was put to Mr Takla that he made the offer to assist Mr Dennis with the purchase of a home, as such an asset was required for Mr Dennis' to maintain an entitlement to participate in Macquarie GEI loans. He denied this was a motive for his suggestion. Counsel for Mr Dennis suggests that this denial ought to be ignored. Even if the denial is rejected, it does not directly or necessarily bear on the reasonable basis or duty issue here under consideration. 508 Overall, it appears to me that Mr Takla responded adequately to the changing circumstances of Mr Dennis in light of his impending divorce and this was not an occasion calling for further investigation of Mr Dennis' financial circumstances. As I said above, they were then known to Mr Takla. 509 Mr Barber, in relation to the email of 24 May 2005 in which Mr Dennis expressed his reservation about taking on more debt, given the uncertain nature of his earning capacity, said that a reasonably competent financial adviser would understand Mr Dennis to have changed the degree to which he was comfortable with investment recommendations that carried risk or compromised his financial circumstances. But, despite that, the subsequent recommendations made by Mr Takla involved taking on additional debt. 510 In my view, the position at that point was not as stark as Mr Barber suggests. Plainly Mr Takla took account of the changing circumstances. The immediate concern was to ensure that the financial settlement agreed between Mr and Mrs Dennis could be achieved. 511 In the result, I do not consider that Mr Dennis has shown that there was a lack of a reasonable basis in respect of the Great Southern Plantations 2005 recommendation or the late May exchange of emails and advice given in relation to the impending financial settlement between Mr Dennis and his then wife, or that Mr Takla failed to exercise reasonable judgement in respect of those matters. 512 This part of Mr Dennis' claim fails. 513 Great Southern Beef 2006, Great Southern Vineyards 2006 and Great Southern Olives 2006: On 14 June 2006, Mr Takla and Mr Dennis met and Mr Dennis signed applications to invest in these three further MISs: Great Southern Beef 2006, Great Southern Vineyards 2006 and Great Southern Olives 2006, as they are referred to in the above loss table. 514 On 20 June 2006, an SOAA relating to the recommendations was provided to Mr Dennis. 515 Mr Dennis' complaints concerning the meeting on 14 June are similar to those made in respect of previous such meetings involving notes made on the whiteboard, in that he says the notes do not address his goals and objectives and ability to meet debt obligations. 516 As to the 20 June 2006 SOAA, Mr Dennis notes the advice stated it was based on information in the SOA dated 6 October 2004 and made no reference to objectives expressed in the exchange of emails dated 24 May 2005. 517 Mr Dennis complains, having regard to Mr Barber's opinion, that: the advice indicated it was based on previous information (which was not otherwise identified), a personal taxable income of $200,000, capital gains of $230,000 (not detailed) and an ability to maintain monthly repayments of $2,500 (which it may be noted was the repayment commitment mentioned in the 24 May email); the advice failed to consider goals and objectives stated in the initial plan or the exchange of emails of 24 May 2005; while consistent with the previous two advices, it set out investments current and proposed splitting investments between Australian equity, international equity, alternative and opportunistic investments but omitted reference to the Rubicon investment and that while $300,000 was borrowed to invest in that fund it was, at around this date, worth less than the purchase price, according to a note of the investment; did not consider the debt owing on investments made; did not consider the proportion of investments held in MISs compared to other forms of investment; did set out risks to agricultural schemes involving olives, vineyards and cattle but did not address the risk to goals and objectives to reduce or rationalise debt or invest to supplement superannuation or address the concerns in the exchange of emails dated 24 May 2005; did not set out fees and commissions payable to Chambers on the investments; while it set out a table of current liabilities, it referred only to the debt to NAB and did not set out debt to financiers for MISs or Macquarie Bank; while a table setting out loan repayment schedules for the olives, vineyards and cattle MISs was provided it was flawed for reasons similar to those put forward in relation to earlier tables, with linear growth depicted and a failure to evaluate the effect of accumulating debt in circumstances where the investment did not return those projected figures and did not note the effect of adverse circumstances on goals and objectives or a reason to invest that was consistent with goals and objectives of debt retirement and supplementing superannuation. 518 On Mr Barber's analysis, Mr Dennis' net asset position at this point had not improved and he considered that if the annual management fees and interest paid by Mr Dennis were taken into account, his net portfolio position may have deteriorated. He considered this was certainly the case in the SOA of 6 October 2004, which was the last time an advice presented Mr Dennis' liability position in the portfolio. 519 In Mr Barber's opinion, Mr Takla should have presented Mr Dennis' liability position at the time of making the recommendations to invest in these three new MISs and should have reviewed the original and subsequent advice and projections to determine if the strategy was working in the manner recommended and whether it was still appropriate for Mr Dennis' needs, objectives and personal circumstances. In addition, Mr Barber considered that the recommendation to invest a further $203,300 in these MIS projects would increase the exposure to the agribusiness sector to 39% of the total portfolio under Chambers' advice, something a reasonably competent financial adviser would not have recommended in the circumstances. 520 Mr Barber also considered that the cost of living expenses referred to in the SOAA were understated, having regard to the recent divorce settlement and so the SOAA projections were based on incorrect assumptions and projected asset values were overstated. 521 Mr Takla notes that on 27 February 2006 he had a six monthly meeting with Mr Dennis. He refers to the whiteboard notes made at that meeting and says that Mr Dennis informed him that he expected his income to increase to $200,000 and to make a capital gain of $230,000 from the sale of his Woodside shares, which he obtained as a result of his redundancy. All of that is recorded on the whiteboard presentation. 522 He says Mr Dennis also disclosed for the first time other investments that were not under Chambers' advice. They included two superannuation funds totalling $700,000, other investments worth $200,000 and a yacht worth $60,000. 523 Mr Takla says that he subsequently obtained reports from NAB in April and May. He also referred to a document showing Mr Dennis' investment position as at 8 May 2006. He said the format was used by Chambers for internal purposes, such as calculating the annual fees. He said where there were problems with investments, such as Equinox and Rubicon, Chambers showed no value and no fees were charged. Thus, he said, the investment position statement was prepared in order to allow Chambers to calculate its annual fees. It was not intended to be a valuation of his investments. He did not discuss the document with Mr Dennis and it was not provided to him. 524 On 9 May, Mr Takla met with Mr Dennis, again. He referred to the whiteboard notes in relation to the discussion. Mr Takla says that presentation updated the previous presentation of 27 February 2006, reflecting no change in position. 525 Mr Takla said that in June he then obtained further statements from NAB and prepared a summary of Mr Dennis' investment position as of 14 June 2006, when he met Mr Dennis again. 526 He says the presentation then made was a continuation of the previous presentation and Mr Dennis was advised to invest a total of $206,000 in the three Great Southern beef, vineyard and olive projects. The projection showed that he would pay tax on a taxable income of $60,000 and not pay any taxes on the capital gains for that year. He said he discussed Mr Dennis' investment options with him and Mr Dennis told him that he was in favour of more agribusiness, particularly the vineyard project as, in his words, his family had always operated vineyards. 527 Thus, Mr Takla said, the SOAA dated 20 June 2006 recommended the $72,000 investment in Great Southern Olives 2006, $66,300 in Great Southern Vineyards 2006 and $65,000 in Great Southern Beef 2006 (as each of those MISs are referred to in the above loss table), all using finance from Great Southern Finance. 528 He says the SOAA disclosed brokerage and ongoing fees. He also provided Chambers' financial services guide version number 5, dated 1 March 2006, a PDS for each of the MISs and a supplementary PDS for Great Southern Forests, although Mr Dennis decided not to invest in that project. 529 Mr Takla said the investments were recommended in order to provide significant diversification to the existing tree-based MIS investments. He said they were significant in the context of the overall portfolio as they were all anticipated to provide Mr Dennis with an annual income for the duration of the projects, which ranged from seven years in the case of Great Southern Beef 2006 and 20 years in the case of Great Southern Olives 2006 and Great Southern Vineyards 2006. He said Mr Dennis' tax returns show that he did receive returns on all these projects prior to the collapse of Great Southern during the GFC. 530 Mr Takla also said the funds generated from the sale of Woodside shares were not used to reduce debts. He notes this all coincided with the difficult family issues that led to the divorce. 531 Mr Takla acknowledged Mr Dennis borrowed the capital required to invest in these Great Southern investments. 532 In cross-examination, when pressed about circumstances in which Mr Dennis needed to complete a financial settlement on the divorce from his wife, Mr Takla insisted he had taken those circumstances into account. He said the divorce, however, had not happened at that point. He was aware then that Mr Dennis would require $100,000 to pay his wife. He knew what the wife would be requiring. The limits with NAB were never increased and stayed at $140,000 until December 2007. 533 When asked whether the focus at that point had become debt reduction in order to deliver the house unencumbered to Mr Dennis' wife and the matters mentioned in the 24 May email exchange Mr Takla indicated it was both things. He said there was debt reduction which was managed and Mr Dennis had $153,000 plus the tax – $220,000; which he kept somewhere. Mr Dennis had told him that he was keeping funds aside until he finished those issues with his wife. He said Mr Dennis told him that was one of the reasons for reaching the limit in Macquarie Bank, because he kept the accounts there hovering at their maximum. Mr Takla complained in the course of cross-examination (transcript 394) that if Mr Dennis had put his tax refunds into the buffer account it would have reduced his debt by something like $125,000, but he did not and kept his money somewhere else. 534 When challenged that none of that information appeared in the SOAA, Mr Takla said that was because one would not know at that time. To say that all investment benefits must be used to reduce debt was simply stating the obvious, something that Mr Dennis always knew. 535 Mr Pillai expressed the opinion in relation to these further three MIS recommendations, consistent with his expression of opinion in relation to earlier MISs, that they were appropriate for a client, such as Mr Dennis with high marginal tax rates seeking tax efficiencies with an appetite for long term investments and associated risk, having a tendency to suit tax efficient gearing and MIS investments. He considered each investment fundamentally sound, backed up by good research ratings and managed by recognised operators in the sector. 536 Mr Pillai expressed the opinion that after considering information provided relating to the advice including Mr Dennis' financial position, income, adjusted CGT (capital gains tax) of $117,049 in the financial year ended 30 June 2006, stated risk tolerance and desired outcomes as stated, the recommended investments were appropriate as the benefits were tax related with potential long term investment returns and were likely to deliver Mr Dennis' objectives at that time. 537 He also noted that the information reviewed stated that the projected cashflows from the schemes was anticipated to commence from about 15 months up to seven years following entry into the scheme. He said taking into consideration the one year interest free period across the projects it was reasonable to expect the proposed cashflow would ease ongoing holding costs across the three schemes. 538 Mr Pillai considered that various risks relating to the product placement in each case were adequately explained, particularly having regard to Mr Dennis' prior exposure to this asset class. 539 In the result, I consider that, while the change in financial circumstances of Mr Dennis reflected in the obligations he was soon to undertake through the financial settlement with his wife added complications to his circumstances, Mr Takla was both aware of these circumstances and factored them into the advice he gave. I accept his evidence that he considered the financial circumstances of Mr Dennis at the time he made the recommendations in the SOAA of 20 June 2006 and considered the MISs to be tax efficient and offering longer term prospects and, in this case, a degree of diversification from the existing tree based MIS investments. I accept his evidence that Mr Dennis indicated to him that his family had always operated vineyards. I am uncertain, on the evidence, whether I should accept that Mr Dennis also told him that he was "in favour of more agribusiness", but I do infer from the evidence and I accept that Mr Dennis was not opposed to investing in these three further agribusiness MISs. He plainly was aware of the nature of the investments, the risks associated with them and in an informed way decided to invest in them. 540 I infer that, in all the circumstances, as in the case of the previous MIS, Mr Takla exercised judgement that these MISs served Mr Dennis' stated objectives and his investor type, having regard to their tax efficient nature, the longer term prospects of the investment, the spread of agribusiness MISs that they then provided, as well as the overall balance – albeit that it was now higher – that MIS investments represented as a proportion of the total investment portfolio of Mr Dennis. In that regard, I accept, as I said above, that the respondents were entitled to regard the total investment portfolio of Mr Dennis, not just that under Chambers' advice. At this point, from February 2006, I accept that Mr Takla had become aware for the first time of other investments that were not under Chambers' advice, including two superannuation funds totalling $700,000, other investments worth $200,000 and a yacht worth $60,000. 541 In all of these circumstances, I do not consider Mr Dennis has shown that Mr Takla did not have a reasonable basis for the three Great Southern MIS recommendations or that Mr Takla failed to exercise reasonable judgement in that regard. 542 This part of Mr Dennis' claim fails. 543 Great Southern Olives 2007 and Great Southern Vineyards 2007: Mr Takla and Mr Dennis met on 14 March 2007 for a six monthly review. As before, aspects of the discussion were recorded on a whiteboard and the notes were printed and held on file by Mr Takla and Chambers. 544 That same day Mr Dennis completed the application to Great Southern Finance for a loan of $130,000 to fund investments including $72,000 in Great Southern Olives 2007 and another in Great Southern Vineyards 2007, as those MISs are referred to in the above loss table. 545 On the same date, Mr Takla recorded in an email to his staff a discussion with Mr Dennis to the effect that his objective was to transfer the home he jointly owned to Mrs Dennis unencumbered. The email recorded the adjustments to Mr Dennis' investments which would be required to discharge the debt to NAB to clear the mortgage. Those adjustments involved selling the Fusion and GEI No 2 investments and to invest in MISs to generate a tax return in order to provide the balance of the needed funds to retire the bank's debt. 546 Mr Dennis complains that the email does not record a reason for selling saleable investments and then acquiring more investments, in the form of MISs, that were not capable of being sold. 547 He also complains, as in relation to earlier such investments, that there is no mention of the wider goals and objectives or for supplementing superannuation. 548 He says that the respondents' advice increased his exposure to MISs which was not consistent with the advice of a reasonable financial planner. 549 The email also recorded the completion of applications for the MISs in Great Southern Olives 2007 of $72,000 and Great Southern Vineyards 2007 of $62,400. 550 Again, Mr Dennis complains that there was no consideration given at the meeting of debt obligations arising from those investments and that, contrary to the initial plan, the income tax return was to be used to pay the debt to the bank or meet part of the settlement with Mr Dennis' wife, rather than giving consideration of the consequences for Mr Dennis, his goals and objectives and the remainder of his investments. 551 The advice was formally recorded in an SOAA on 23 April 2007. It set out the basis of the recommendations, being the earlier information provided (which was not there otherwise identified) Mr Dennis' personal taxable income of $230,000, the ability to maintain monthly payments of $2,500, capital gains from the sale of the Fusion investment of $60,000 and the need to come to a marital settlement which would require $200,000. 552 Mr Dennis says the tables supplied with the SOAA incorrectly omitted the earlier Great Southern Olives 2006 investment of $63,000. 553 Further, it gave no consideration to the concentration of investments in MISs and the inflexibility that resulted from that. 554 Again, Mr Dennis complains that, while the SOAA addressed the risks of olives and vineyard agriculture, it did not address the risk to his goals and objectives by entering into such investments. 555 As to the table attached, containing financial information, Mr Dennis complains that it set out only the liability to NAB and omitted entirely the debts owing on the MISs. 556 For the same reasons advanced in respect of similar tables attached to earlier SOAs, Mr Dennis says the tables in this case were also flawed. 557 While Mr Barber felt unable to express an opinion about this SOAA because of insufficient information, he considered the addition of two new MIS projects and the sale of the GEI and Fusion investments would, most likely, have lifted the percentage of capital invested in MIS projects substantially above the 39% identified by him in relation to the SOAA of 20 June 2006, and for that reason he considered the recommendation was not consistent with the advice anticipated from a reasonably competent financial adviser. 558 Mr Takla said that, in the same way as he had previously, he obtained updated information from NAB during the course of the financial year in September 2006 and in November requested from Mr Dennis updated financial information for the purposes of the annual review. 559 On 14 March 2007, he says he recommended that Mr Dennis invest a further $130,000 in the two MISs. He says that during the meeting, Mr Dennis advised him that he wished to raise $280,000 for his expected divorce financial settlement and also said his income had increased to $230,000 and he expected to receive about $58,000 in capital gains from the sale of the Fusion investment. 560 Mr Takla said that the presentation as evidenced by the whiteboard notes refers to a property worth $700,000. He says that for him to have used that figure Mr Dennis must have told him the amount. Although he could not recall whether that was because he had found a property to purchase for that amount or because he wanted to consider whether he could afford such an investment, the question of a purchase of a property was, he considered, the issue. (The purchase of the South Perth unit, to which Mr Dennis says this evidence is relevant, is discussed separately below.) 561 Mr Takla also noted that after the 14 March 2007 meeting he received a letter from Mr Dennis' accountant concerning his income. 562 After the meeting he received further information from NAB concerning NAB limits. On 4 April, Mr Dennis emailed him an estimate of his annual income for that year, together with a letter from Mr Hawke, Mr Dennis' accountant, regarding an income estimate for the year ended 30 June 2007. 563 He also referred to an email string starting 30 March 2006 and ending 7 April 2007 between Mr Hawke, Mr Dennis and himself in relation to income. 564 Mr Takla confirmed that the SOAA of 23 April 2007 recommended investments of: $72,000 in Great Southern Organic Olives Project 2007, using finance from Great Southern Finance on a three year interest only and then seven year principal and interest basis; $62,400 in Great Southern Vineyards 2007, using finance of a similar nature; sell his existing Fusion investment before the end of June 2007; sell the maturing GEI investment in July 2007. 565 He notes the SOAA disclosed Chambers brokerage and ongoing fees. 566 As in other cases, he notes the SOAA attached the financial services guide of Chambers and a PDS for the two MIS projects. 567 In respect of the Great Southern Vineyards 2007 project, Mr Takla recalls Mr Dennis advising him of his family's interests in vineyards when he recommended the vineyards project and Mr Takla said Mr Dennis told him he was comfortable investing in that project for that reason. 568 Mr Pillai was of the view, consistent with his view concerning earlier MISs that, given Mr Dennis' financial position, income and anticipated capital gains tax as a result of unwinding existing investments to fund financial obligations, stated risk tolerance and desired outcomes, the recommended investments were likely to deliver Mr Dennis' objectives at that time. 569 Similarly, as in the case of the most recent MIS investments, Mr Pillai considered the projected cashflow from the schemes was estimated to commence from about seven years following entry into the scheme. Taking into consideration the one year interest free period across the projects he considered it reasonable to expect the proposed cashflow would ease ongoing holding costs across the two schemes. Therefore, considering this and the information provided to him, he considered it reasonable to make the recommendation to invest in the schemes. 570 Mr Pillai said tax efficiency and asset accumulation from tax savings appear to have been the agreed strategy between Mr Dennis and the adviser as stated in Mr Dennis' objectives. 571 He also considered that the risks of entering into the two MISs were sufficiently explained to Mr Dennis. 572 There was also a question raised by Mr Barber, in relation to this and later recommendations, as to whether or not annual child maintenance had been factored into personal expenses by Mr Takla. Mr Barber agreed with the proposition put to him in cross-examination, however, that if Mr Dennis was aware child maintenance figures set out in documents he signed off on were not accurate, he should have brought that to the attention of Mr Takla; or if he had just started paying maintenance he should have told Mr Takla. Mr Barber could not say when any maintenance payments commenced or was due to commence. 573 In the result, while Mr Dennis' financial settlement with his former wife added to the complexity of his financial circumstances, I am not satisfied by the evidence that Mr Takla failed to consider all relevant information. He was, in my view, not only aware of what the divorce settlement encompassed, but also its financial implications. 574 I do not consider Mr Barber's identification of child maintenance payments falsify Mr Takla's position. On the one hand, if they were a new expense, as Mr Barber agreed, the adviser could reasonably expect the client to disclose the information at the material time. On the other hand, the evidence suggests that the child maintenance of $1,700 per month was mentioned in the tax information supplied by Mr Dennis' tax accountant, Mr Hawke, to Chambers. There is no reason to conclude that Mr Dennis was not aware of it. 575 The level of MISs in the investment portfolio under Chambers' advice no doubt increased at this point, but having regard to the evidence overall, including in relation to previous, recent MIS investments, and the nature of other investments then in or recommended for Mr Dennis' investment portfolio, there is no basis to conclude that Mr Takla failed to exercise judgement as to the appropriateness of the MIS on this occasion. 576 In all of the circumstances, as they then prevailed, including where Mr Dennis was aware of the nature of the investments recommended and consented to them being made (and, I accept, expressed some comfort with them, his family having been in vineyards), Mr Dennis has not shown that Mr Takla's recommendations lacked a reasonable basis or that he failed to exercise reasonable judgement in respect of them. 577 This part of Mr Dennis' claim fails. 578 Macquarie Bank GEI No 4, Gunns Plantation 2008 and Willmotts 2008: On 20 March 2008 Mr Takla and Mr Dennis met and again Mr Takla made notes on the whiteboard which were printed out and kept. The discussion particularly concerned an $80,000 investment in Gunns Plantation. 579 On 9 April 2008, Mr Takla wrote to Mr Dennis to record his advice recommending an investment of $500,000 in a further Macquarie Bank GEI and $88,660 in a MIS operated by Gunns Limited. 580 The SOAA of 9 April recorded the basis for the recommendations, being earlier information (not otherwise identified), personal taxable income of $250,000, capital gains from an earlier GEI of $64,828, increased monthly payments of $5,000 and all future income increases. It also referred to sale of other shares, the expectation of a tax refund and the receipt of $200,000 from family assets. 581 The SOAA also contained a table setting out what was said to be investments at that date, categorised in a manner similar to earlier advices. 582 Mr Dennis, based on Mr Barber's opinion, makes a range of complaints including: The notes of the 20 March 2008 meeting provide no information on how the Gunns Plantation 2008 investment was consistent with Mr Dennis' circumstances, goals or objectives. The SOAA of 9 April in the table of investments did not include Great Southern woodlot investments in the sum of $99,000 or Great Southern Vineyards of $63,000 and there was no reference to the debt on any of the MISs. There was a failure to address obligations including the debt owed to Mr Takla from the purchase of the South Perth unit, which had then occurred (and is dealt with separately below). While the SOAA referred to the risks inherent in share investments and woodlots no reference was made to the specific risks by reason of the investments and the way they could impact on goals and objectives. The SOAA identified liabilities to NAB but not Mr Dennis' liabilities on the MISs. The tables which were similar to earlier tables about cashflow did not show MIS debt, did not say how debt was to be retired, did not specify what would happen if returns on investments were (and could reasonably be expected to be) adverse and so did not demonstrate a reason why the investment was recommended or explain the risks to goals by reason of making the investment. 583 Mr Barber considered (exhibit 8[208]) that the most significant statement Mr Takla made in the SOAA of 9 April 2008, concerned the use of funds to reduce overall debt and thereby easing the cashflow position. Mr Barber said his opinion was that it was apparent right from the beginning of the advisory relationship that Mr Dennis was finding it difficult to meet his obligations under the strategy recommended, and that by continuing to recommend further debt "the position only became exacerbated". He says this SOAA highlights the issue. 584 In particular, Mr Barber identified the following deficiencies: Mr Dennis' personal expenses of $22,012 did not take into account his ongoing child maintenance payments of $20,400. No account was made for Mr Dennis' ongoing principal and interest payments under the MISs, or for the repayment of the loan to Mr Takla on the South Perth unit. 585 I have already dealt with and rejected above, the child maintenance issue. 586 In June 2008 the recommendations made in the 9 April 2008 SOAA were, in fact revised and a new SOAA dated 11 June 2008 was issued which recommended that Mr Dennis invest only $200,000 in a further GEI (not $500,000), $68,200 into Gunns Plantation 2008 (not $88,660) and $74,100 into Willmotts 2008 (a new recommendation), as those MISs are referred to in the above loss table, these projects financed by borrowing from the promoters. 587 In the result, Mr Dennis invested $68,200 in Gunns Plantation 2008 and $81,510 in Willmotts 2008 (although Mr Barber says there appears to be no revised recommendation for the increased Willmotts 2008 investment). 588 Mr Dennis also complains about the revised SOAA of 11 June 2008 but also about the finance application completed on 11 June 2008 in respect of the Willmotts 2008 investment, which he says included a figure for the debt owed to NAB less than the amount reported by the bank to Mr Takla as being owed and understating the debt owed to Great Southern and there was no reference to the investments made which had been acquired by finance as set out in the letter dated 9 April 2008. Additionally the application increased Mr Dennis' salary to $280,000 and reported an increase in the value of the South Perth unit to $750,000. 589 Mr Barber had a number of serious criticisms of the 11 June 2008 SOAA. As to the revised estimated monthly repayments to the loan account from $5,000 to $8,000 per month, which was proposed in the 11 June 2008 SOAA, Mr Barber says the SOAA does not indicate the reason for the increase and, in addition, it increases the amount of available funds to reduce debt from $200,000 to $300,000 without identifying the reason why. 590 Further, he says Mr Dennis' personal expenses continue to be understated. 591 Mr Barber says that according to his analysis of the table at page 19 of the SOAA dated 11 June 2008, by the year ending 2011 Mr Dennis was forecast not to have any further equity in his home and in fact was projected to have a negative equity position of minus $73,424, compared to the SOAA of 9 April 2008, where available liquidity was forecast at $271,761. Mr Barber notes the liquidity position in the SOAA dated 11 June 2008 was forecast to continue to deteriorate after that point as shown by the negative liquidity position in 2033 of minus $1,320,734, compared to a positive position of $3,207,055 in the SOAA dated 9 April 2008. 592 Mr Barber says that a reasonably competent financial adviser after reviewing the results of the projections would have recognised that the projections in the SOAA dated 11 June 2008 would not achieve Mr Dennis' short or long term investment objectives, and would in fact see him fall into bankruptcy. 593 In Mr Barber's opinion, a reasonably competent adviser at this point would have assessed as poor the performance of the previous recommended investments and, considering the well publicised volatile nature of the investment market in 2008, would have considered the assumption of a minimum compound rate of return of 12%, that he considered would be required to achieve the strategy, as not supported by viable evidence and as optimistic. 594 In addition, Mr Barber said the model used assumes that Mr Dennis would continue to earn $250,000 per annum and that a competent adviser would also have recognised that by 2033, Mr Dennis would be aged 80 and not likely to be working and not have that income. 595 Thus, in Mr Barber's opinion, the respondents should have or ought to have known that the results from the projections in the 11 June 2008 SOAA meant, for Mr Dennis' financial situation, that the recommended strategy was faulty and did not disclose a reasonable basis on which to recommend investments of $200,000 in another GEI, $68,200 in Gunns Plantation 2008 and $74,100 in Willmotts 2008, all financed by borrowings. Rather, the competent adviser would have sought to reduce Mr Dennis' debt obligations. 596 Mr Barber also says that in late 2007, the ATO prohibited up-front tax deductions on non-forestry agribusiness schemes and even though that decision was overturned by the courts in 2008, it created significant regulatory uncertainty in the sector, something that should have been taken into account in the SOAA, but was not. 597 On their face, the figures shown in the 11 June 2008 SOAA require explanation, especially in light of those provided in the April SOAA and in circumstances where Mr Dennis' circumstances did not appear to have changed in the ensuing two months. 598 Mr Takla accepted the modelling in the relevant cashflow table in the 11 June 2008 SOAA was wrong. His evidence was that the recommendations in the SOA nevertheless had a reasonable basis going. He says that on 1 July 2007, at the beginning of the 2008 financial year, he received a request from Mr Dennis regarding an SOA and Mr Dennis' reconciliation of that advice to other investments, to which he responded on 2 July 2007. 599 He refers to a printout from NAB showing NAB limits of 9 July 2007. 600 He also refers to an investment position summary as of 3 September 2007, an internal document which allowed Chambers to calculate annual fees but not given to Mr Dennis. 601 On 24 September 2007, Mr Takla requested updated financial information for his regular review with Mr Dennis. 602 Soon after that he obtained a further printout of NAB limits dated 9 October 2007. 603 In November 2007, he received a statement from Merrill Lynch to Mr Dennis, of October 2007, in relation to Mr Dennis' external equity margin loan account. 604 On 20 November 2007, Mr Takla received a further NAB limit statement. 605 Then on 4 December 2007, he met with Mr Dennis. He refers to his email dated 5 December 2007 in that regard. 606 An application was then compiled for a Macquarie GEI, for $500,000 in December 2007, though this was not sent until 31 January 2008. This is the GEI referred to in the SOAA of 9 April 2008. 607 In February 2008, Macquarie requested further evidence of Mr Dennis' income. 608 Mr Takla says that Mr Dennis provided the following documents in support of that application: a letter dated 15 February 2008 estimating income; a copy of an unsigned agreement concerning the performing of engineering services. 609 The letter from the company handling the consultancy agreement for Gigajoule stated that Mr Dennis' year to date gross income from July 2007 to March 2008 was $144,490 and estimated he would earn a further $140,000 by the end of the year, which would bring his total income through his company to $285,000. 610 Mr Takla said he did not take this to mean that this was the entire income for that year, as Mr Dennis had previously told him that he expected other sources of income, such as money from his family. Mr Takla said, however, he did not take the funds, which Mr Dennis told him he anticipated receiving, into consideration when preparing the advice. This was because Mr Dennis was unable to say just when he would receive those family funds. 611 Mr Takla said he was also aware at this point that Mr Dennis had other dividend income from his existing capital protected investments. 612 On 9 April 2008, Mr Takla provided the SOAA recommending the $500,000 GEI investment and $88,660 investment in Gunns Plantation 2008. 613 Mr Takla said he recommended those investments on the following basis: Mr Dennis expected to earn between $250,000 and $300,000 for the financial year, and he took the lower figure. Mr Dennis had a capital gain of $65,000 from GEI No 2. Mr Dennis would sell his existing managed funds with ABN AMRO Morgans and reduce his debts with NAB. Mr Dennis intended to roll part of his shares through ABN AMRO Morgans (not under Chambers' advice) into a new GEI which would reduce his margin loan debt by $100,000 and also reduce the overall cost of a new GEI. Mr Dennis said he would sell the balance of his margin loan account which would result in realisation of approximately $90,000, which he would use to reduce the NAB debts. Mr Dennis told him that he had at his discretion $200,000 from the sale of the family vineyard, which he intended to use to reduce his debt with NAB. Mr Dennis said that he would increase his monthly payment into the buffer account towards investments from $2,500 to $5,000 and in addition would also contribute all future income increases over $250,000 for the same purpose. The Gunns Plantation 2008 investment would assist with tax planning, having regard to his high income and capital gains. The underlying investment in Gunns Plantation was in bluegum trees similar to earlier MISs and the investment would allow Mr Dennis to enjoy any harvest proceeds before 65 years of age. 614 Mr Takla says that in May 2008, Mr Dennis met with him to discuss recent government changes regarding the tax deductibility of capital protected investments, such as the GEI which would cause an increase in the net cost of the GEI in the short term. At the meeting, he said he suggested to Mr Dennis that he split the $500,000 facility, which Macquarie had approved, to purchase two investments: $200,000 in a GEI, along the lines originally advised, and $300,000 in a newly released capital protected investment named GP100. 615 Mr Dennis then signed the application for the new investments at that meeting although at a later date he instructed the respondents that he did not wish to proceed with the GP100 but preferred to continue to invest the entire facility in a GEI. Mr Takla says this was one of a number of occasions on which Mr Dennis did not follow his advice. 616 Mr Takla says part of the facility, in the amount of $200,000, was drawn down to purchase GEI No 4 in July 2008. The remaining $300,000 that had been approved was drawn down in September 2008 to purchase GEI No 5, as Mr Dennis had instructed Chambers to do. 617 The 11 June 2008 SOAA was then issued revising the earlier SOAA and reflecting the position arrived at, in that it was then recommended that Mr Dennis only invest: $200,000 in a further GEI No 4; $68,200 in Gunns Plantation 2008; $74,100 in Willmotts 2008. 618 The Chambers' financial services guide was provided together with PDSs for the two MISs, namely, Gunns Plantation 2008 and Willmotts 2008. 619 Mr Takla received an email from Macquarie the next day, 12 June, in relation to the split of the previous GEI approval for $500,000 over a GEI and a GP100 and requiring updated financial information. 620 Also, on 12 June 2008, Chambers received information about Mr Dennis' subcontracting income suggesting an estimated income of $285,000 for that financial year. 621 On 10 July 2008, Macquarie confirmed Mr Dennis' investment in Facility 2142116 and enclosed a confirmation letter to Mr Dennis. 622 After 10 July 2008, Mr Takla notes he was also given authority by Mr Dennis to deal with NAB with a view to changing the limits between the different NAB accounts. 623 On 10 September 2008 he met with Mr Dennis for a follow up where they discussed the GEI recommended in the SOAA of 11 June. He says Mr Dennis asked whether he could increase his investment but he advised against him doing so until he had retired more debt. He says Mr Dennis then told him he was expecting to receive significant funds of approximately $500,000 from his family. He noted the file note dated 10 September 2008 to that effect. 624 In September 2008, various documents were generated relating to Facility 2142116. 625 Lehmann Brothers also sought bankruptcy protection in the United States in September 2008. 626 Mr Takla says that it now appears from the 2008 tax returns, that Mr Dennis had already received about $421,000 from his family inheritance that financial year towards his share of $500,000 – although he knew nothing of this at the time. 627 In December 2008 Mr Takla and Mr Dennis met again to discuss cashflow. Mr Takla says Mr Dennis told him he expected his overall debts to remain the same but Mr Dennis did not disclose to him that he had already received substantial funds from his family. Nor did he repay any of the money which Mr Takla had loaned to him in relation to the South Perth property purchase, which is discussed further below. 628 Mr Takla says that on 11 November 2008, he received an email from Mr Dennis in relation to that personal loan for the South Perth unit purchase (which is discussed further below) requesting a reduction in interest. He says this was not a matter they had previously agreed or discussed and he was not prepared to consider it as he considered the interest rate was agreed and reasonable, being less than market for an unsecured personal loan. 629 Also, Mr Dennis raised queries in relation to some of his investments. 630 On 11 December 2008, Chambers sent Mr Dennis an email attaching an update to all of his clients which relevantly provided that Mr Dennis review his personal budget with a fine toothed comb and cut down on any discretionary or extraneous expenses, strictly apply all investment income and tax refunds as per usual practice to reducing debt and suggesting he call if there were any issues. 631 As to why debts owed on the MIS schemes was not shown as current liabilities in the SOAA, only an "Investment loan" of $270,000, Mr Takla said that the $270,000 assumed Mr Dennis had already paid in $200,000 from his proposed inheritance. That should therefore be seen as a proposed new liability at that point. 632 When asked in cross-examination whether, by reference to the cashflow table, the debt started out at minus $246,000 in 2008 and gradually crept up to minus $1.06 million by 2018, Mr Takla agreed that is what it showed. It was then noted that the net capital gains on the cashflow prediction at that time was minus $181,716. Mr Takla said that it effectively meant that Mr Dennis' debts would go down from minus $246,738 in 2008 to minus $180,000 in 2018, before it turned into substantially positive sums, as shown on the chart. 633 When it was put to Mr Takla that in 2018 Mr Dennis, who was born in 1953, would be 65 – retirement age – he responded by saying that there was an element in Mr Dennis' financials: that is not reflected in this calculation and to be on the more conservative side. That is all his projected incomes from all his agribusiness. So if we are talking only about projections, by 2018 Mr Dennis might have something like $1.5 million to $2 million in agribusiness. 634 Mr Takla added that that item was completely on the conservative side. He further added (transcript 439) that the cattle, olives and vineyards, which came to something like $400,000 as gross investments, provided actual annual income from year one up to the next 23 years. Mr Takla acknowledged all this was not reflected in the SOAA, but said that if they were notionally incorporated, Mr Dennis' position would have been better off on a projected basis by something like at least the $1.5 million. 635 Mr Takla also admitted that some investments were not included in the SOAA, such as Sylvatech 2003 and the AGL investments, but insisted (transcript 442) that that did not affect the calculation of Mr Dennis' financial position, "because the financial projection picks all this up". He said this was an unfortunate omission but, in effect, that was all it was. 636 Mr Takla also acknowledged that the cashflow table was totally wrong in suggesting that by 2033, Mr Dennis would be in debt to the extent of $1,618,242. Mr Takla said that did not represent Mr Dennis' position at the time. 637 When it was suggested to Mr Takla that Mr Dennis was finding it difficult to meet ongoing payments at that point, Mr Takla challenged that view. Mr Takla said he recalled that in about March 2009, Mr Dennis had mentioned something about his debts and he did respond at that time, telling him effectively that his concerns could be addressed. But he did not think he heard from Mr Dennis about that too many times after that. 638 When it was put to Mr Takla that Mr Dennis had "tried to contact" him for information about his MIS investments, Mr Takla rejected the suggestion that Mr Dennis had tried to contact him unsuccessfully and said that Mr Dennis always had access to him and there was never a single complaint on that front. 639 In relation to a proposition that, when Mr Dennis' inheritance arrived, Mr Dennis had offered to pay out Mr Takla's loan in relation to the South Perth unit, Mr Takla rejected that entirely. He said at first he was not told that Mr Dennis had received his inheritance. He thought that in about July 2008, he was advised that Mr Dennis had received $170,000, and he had then spent $70,000 on a car, and was going to put $100,000 into reduction of debt. He said that was the extent to which he heard from Mr Dennis about his inheritance. It was not until later, when he saw the tax return, that he came to understand Mr Dennis had received more than $500,000 in inheritance, but he did not previously know about that. 640 Mr Takla bluntly rejected the proposition that he had told Mr Dennis that he should not pay out Mr Takla's personal loan to him on the South Perth unit, but should pay NAB instead. He said the loan was all about helping out a friend who had temporary difficulties, but he never proposed to Mr Dennis that he should keep his debts until the end. 641 Mr Takla also rejected the proposition that he extended more time to pay monies owing on rent and on the loan. Rather, he said, when Mr Dennis came to him and said, "George, I'm going to the university, I'm out of a job, can I hold on the rent and the interest for a while", he agreed. Mr Takla said he did not lose confidence in human beings and that is why he agreed to those arrangements. 642 Mr Pillai, in relation to the SOAA of 11 June 2008, expressed an opinion consistent with his earlier opinions about other such MIS and GEI recommendations that, given Mr Dennis' financial position, income in the given year of $261,000, an anticipated distribution from an estate trust of $313,000, stated risk tolerance and desired outcomes, an agreed strategy of tax minimisation and asset accumulation from tax savings, the investments were appropriate. Further, given Mr Dennis' capital gains tax of $120,728 as a result of an unwind of investments and existing Macquarie GEI investment to fund financial obligations, stated risk tolerance and desired outcomes, the recommended investments were likely to deliver Mr Dennis' objectives at that time. He also considered Mr Dennis had sufficient cashflow to fund the recommended level of borrowings and be in a position to retire debt. 643 Mr Pillai also considered that the risks of entering into the investments were sufficiently explained and in particular noted the acknowledgement made to that effect by Mr Dennis. 644 The question remains, however, whether Mr Dennis has shown that Mr Takla and Chambers did not have a reasonable basis for the recommendation made in the SOAA of 11 June 2008 and failed to exercise reasonable judgement in that regard. While it is true the SOAA of 9 April 2008 was not acted upon, the fact is that it was not greatly revised compared with the 11 June 2008 SOAA, so far as the investment recommendations were concerned. However, as noted, the cashflow projections incorporated into the 11 June SOAA were remarkably different from the April version. Mr Takla, as noted, accepted the figures were wrong. 645 Some time was spent at trial interrogating the cashflow analysis at pg 24 of the 11 June 2008 SOAA and the earlier cashflow analysis at pg 19 of the 9 April 2008 SOAA. The root of the calculation difficulties seemed to be the minus $322,400 figure for 2008 shown at pg 23 of the June SOAA. As Mr Barber said in his evidence, there was nothing in that SOAA which suggested there was going to be such a "massive further investment". 646 The cashflow analysis at pg 24 of the SOAA of June 2008, commencing with the year 2009, showed investment costs of minus $276,231. The experts, following overnight conferral, agreed that they were not able to provide the source of that figure. Indeed it provided something of a conundrum and remained inexplicable. One can only conclude that the modelling, based on inputs not explained, has produced an entirely incorrect scenario. 647 In cross-examination, Mr Barber was referred to the Note appearing at the foot of pg 24 of the 11 June 2008 cashflow analysis that states: This cashflow extrapolates year projected tax position. It assumes that your disposable income pays for your investments. In reality, your Reserve Account finances your investment commitments as explained by your adviser. As such, please ignore the negative cashflow years. Counsel observed this meant that the buffer account would finance the investment commitments and so the negative cashflow years could be ignored. When counsel asked Mr Barber whether that made sense, he agreed that it did. 648 On the face of it, the Note does direct the client to ignore the modelling on this basis and it seems to me that the error, for which explanation could not be provided by the experts, is inexplicable. In the result, I ignore the error in the cashflow analysis. There is no evidence, as the respondents submit, that Mr Dennis actually placed any reliance on it. 649 While it may be said there were misstatements in the finance application and some plain omissions in the advice of 11 June 2008, in the result I accept that the basis upon which Mr Takla recommended the investments in GEI No 4 as well as Gunns Plantation 2008 and Willmotts 2008 were as set out above. GEI No 4, as noted above, was in the sum of $200,000. The two MISs were in a total of $142,300. I note in passing an additional GEI was also planned to be taken out later in 2008. 650 In my view, the evidence supports the view that Mr Takla did regard Mr Dennis' current financial circumstances, his income, ability to carry associated expenses and cashflow capacity (notwithstanding the inexplicable cashflow table in the SOAA) when he made these recommendations. While hindsight may suggest Mr Dennis was not as well placed to carry the associated expenses at this point, hindsight is a wonderful thing. I consider Mr Takla had a reasonable basis for the advice then given. 651 In those circumstances, I do not consider that Mr Dennis has shown that the 11 June 2008 SOAA lacked a reasonable basis or that Mr Takla failed to exercise reasonable judgement when making the recommendations, including the MIS recommendation, that he did. 652 This part of Mr Dennis' claim fails. Did Chambers breach s 851 of the Corporations Law or s 945A or s 945B of the Corporations Act 2001 by giving advice that did not have a reasonable basis? 653 In light of the findings made above in relation to the question whether Chambers breached its duty under the contract or at common law to exercise reasonable care and skill in providing financial advice to Mr Dennis, the answer to this question is no. Did chambers make representations to Mr dennis concerning the appropriateness of the advice given or the recommendations made and the accuracy of finance applications that were misleading or deceptive or likely to mislead or deceive? 654 In light of the findings made above in relation to the issue whether Chambers breached its duty under the contract or at common law to exercise reasonable care and skill in providing financial advice to Mr Dennis, the answer to the first part of this question is no. 655 In relation to the second part, concerning representations arising about the accuracy of finance applications, a number of errors are admitted by the respondents. As noted above, I consider those errors were not material. There is no evidence that any of these errors misled or deceived anyone. 656 As to errors not expressly admitted, for example in relation to the finance application of 11 June 2008 in respect of Willmotts 2008, there is no evidence of any relevant person being misled or deceived, such that Mr Dennis' position was likely to have been materially affected. 657 There is no evidence that Mr Dennis suffered any loss as a result of any inaccuracy in any of the relevant finance applications. 658 The basis for seeking relief by reference to these alleged misrepresentations therefore fails. Did Mr Takla owe Mr Dennis a fiduciary duty to the effect that he would not obtain any unauthorised benefit from his relationship with Mr dennis and if so, was the duty breached? 659 In my view, having regard to the evidence and findings made in dealing with the issue whether Chambers breached its duty under the contract or at common law to exercise reasonable care and skill in providing financial advice to Mr Dennis, Mr Dennis has not established that Mr Takla obtained any unauthorised benefit from his relationship with Mr Dennis. 660 In those circumstances the question of what fiduciary duties were owed does not require attention as, in my view, there was no breach of any such duty. Did chambers and Mr Takla provide advice in relation to the purchase of the south perth unit in the course of their professional relationship and if so, was there any breach of duty? 661 The first issue here is whether Mr Takla provided financial assistance to Mr Dennis to purchase the South Perth unit which was subject to contractual, tortious or equitable duties or statutory regulation because it was the provision of "financial services advice", or whether it reflected a transaction entered into by Mr Takla in his personal capacity and therefore did not form part of the advisory relationship between Mr Dennis and Mr Takla (or Chambers). A related issue is whether or not those of Mr Takla's communications with Mr Dennis which related to the purchase and finance of the South Perth unit were authorised by or capable of binding Chambers to the extent that they constituted advice. 662 Some of the evidence concerning the reference to the purchase by Mr Dennis of another property at about the time the question of the divorce and property settlement with his former wife was being discussed, has been set out above in passing. 663 Mr Dennis says that, at the time he was arranging a property settlement with his former wife, he was not considering purchasing property and says that the whiteboard notes of 14 March 2007, which refer to the property with a value of $700,000, was a proposal developed by Mr Takla, not him. 664 He says that after leaving the Ardross home, he recalls being asked about property purchases by Mr Takla. He says he did not complain about not having a home and considered his approaches about real property to be an attempt to sell him another investment. 665 Mr Dennis says in the period after he left the Ardross home, he rented an apartment from a friend, that he occupied with his daughter. He did not stay at his daughter's house, as Mr Takla suggested, but she was staying with him. 666 Mr Dennis says he recalls that in meetings with Mr Takla after he left the Ardross home, Mr Takla tried to persuade him to purchase his own home and he generally resisted the idea. He says at the time he was focussed on trying to resolve the property dispute and thereafter removing uncertainty as to his finances before he committed to further debt. However, he understood from Mr Takla that he wished to assist him with finance to buy his own home. 667 He says that after several meetings at which Mr Takla had recommended he purchase real estate, "I probably did agree that I needed to own a house". 668 He adds that if, after one of his meetings with Mr Takla, they had formed the common view that he would buy some real estate, to the best of his recollection the only matters agreed were that Mr Takla would assist as co-purchaser (but not necessarily a co-owner) with the general value of the property within the region of $700,000 and that he (Mr Dennis) should make some inquiries to find such a property. 669 Mr Dennis says, when he signed the offer and acceptance on 1 December 2007, he made sure completion was subject to finance as he needed Mr Takla to assist him to finance the unit, and then met with Mr Takla in early December on the understanding that Mr Takla would be assisting him. 670 At that time he did not consider he was inviting him to co-own the property, rather he was informing him that he had located a property that was suitable for Mr Takla's assistance with the advice and finance he had mentioned earlier. 671 Mr Dennis says he did not understand, at the time the suggestion was made, that Mr Takla would be contributing "in a personal capacity". He says at that time this appeared to him to be a reference to a source of finance being George Takla, as opposed to his firm, Chambers. Nonetheless, the advice about how that would occur was in the context of advice that the office of Chambers would assist with a reference to his general financial circumstances. 672 Mr Dennis refers to the email of 5 December 2007 (trial bundle 463) from Mr Takla to him reporting his understanding of the meeting concerning the proposals about finance for the South Perth unit. 673 Mr Dennis says he recalls this meeting as a meeting to discuss how his finances could be structured to enable him to purchase the property that he had then found. He says although there was a new element in the email, in that Mr Takla asserted he was providing part of the funds as a personal service, all the other advice about structuring his financial affairs related to the matters that had been discussed and arranged in earlier periods. 674 He said by this time Mr Takla understood his financial circumstances completely and he was the one he was clearly going to turn to so the purchase went ahead. He was not sure how the arrangements would be made and he left it to Mr Takla. He thought that he would arrange the needed finance as he had done earlier. To the extent that Mr Takla proposed to be a co-owner or part financier, he thought Mr Takla would arrange that and let him know how that would be appropriately recorded. 675 Mr Dennis says he recalls from this email that there were several changes required and the changes were complex and he left it to Mr Takla to work out. 676 He says when he read Mr Takla's email dated 5 December suggesting that Mr Dennis had invited him to be a co-owner, he was unsure why he had turned it around that way. Similarly, when he read the email he was unsure of the reasons why there were references to "personal capacity". As a result of the earlier conversations about assisting him with real estate and having already signed a contract, it seemed odd to add a reference to personal capacity after the event. 677 Mr Dennis says he did not appreciate that there would be any real difference by making reference to "personal capacity". 678 He says the email refers to the adjustments from his other investments managed by Mr Takla and Chambers. He understood the proposals to make adjustments were to liquidate some investments and reduce debt on managed funds. The majority of the investments were used to retire the margin lending investments and there was not a lot of equity recovered in the process. 679 He recalls that what was recovered was applied to the NAB loans. He understood that Mr Takla would be in discussions with NAB to arrange a restructure of finances. Mr Dennis says his response by email dated 8 December 2007 acknowledged the substance of the propositions in the email of 5 December 2007, but says he did not consider his response to be particularly acknowledging a reference to the words "personal capacity". 680 He also recalls that his initial conversations about financing the South Perth unit included the suggestion that the anticipated inheritance would be used to reduce debt but says nothing formal about that was sent to him to be concluded. 681 Indeed, he says he recalls that at the time when the first amounts of his inheritance monies arrived, he offered to pay out Mr Takla's debt. He says when he mentioned this to Mr Takla, he said words to the effect that he should not pay out his debt first but rather should pay out other debts first and his should be the last one to pay off. 682 Mr Dennis says he did use the inheritance to pay down other debts on Chambers' investments and eventually all of the inheritance was consumed. He does not recall Mr Takla being particularly anxious about repayment of his loan until much later, in 2009, by which time he was experiencing a number of tight financial circumstances and after he thinks he had been forced to stop making the repayments on the loan made on the purchase of the South Perth unit. 683 As to the inheritance, Mr Dennis said it turned out to be around $200,000. Mr Dennis says he does not recall how much he initially thought the expected amount would be, although he says in his evidence he did not provide a certain sum estimate to Mr Takla at any time. He also says he did not have a conversation where he promised to retire debt using the whole of his inheritance. 684 Mr Takla says that sometime during 2005, Mr Dennis started telling him, during their meetings, that he and his wife were in a dispute and he later told him that he had left the matrimonial home in Ardross and was living in rented properties. 685 He said Mr Dennis complained to him about the conditions in which he was living. At one time he said he told him that he was living with his daughter and at another time that he was living in the property of a friend. Mr Takla said that from what he had been told it was clear to him that Mr Dennis was very uncomfortable. He observed that Mr Dennis appeared to be quite distressed at his living situation and his health was failing. He watched Mr Dennis climbing with difficulty the stairs to his office on the second floor. He said he was saddened by the difficulty Mr Dennis was going through and the effect that appeared, to him, to be having on Mr Dennis. 686 Then, in May 2005, he met with Mr and Mrs Dennis. He made a handwritten file note of the meeting. Mr Dennis wanted to increase the banking limits with NAB, which were secured over the jointly owned Ardross home. At that meeting, he said Mrs Dennis told him that she needed the comfort of knowing that Mr Dennis would be able to meet his financial commitments. Mr Takla said in evidence he observed that Mr Dennis appeared to be very uncomfortable and stressed during that meeting. (page 2238 of the trial book). 687 Mr Takla says that following that meeting and other meetings, he encouraged Mr Dennis to consider purchasing his own home and offered to assist him financially in order that he could do that. 688 In response to some very positive comments from Mr Dennis, he says, he told Mr Dennis that he could always depend on his support and that of his family at any time in the future. Mr Takla referred to the email string on 24 May 2005, noted above, between Mr Dennis and himself. He said in that Mr Dennis told him that he appreciated his offer, however he wanted to resolve his issues with his then wife. 689 When pressed in cross-examination about that offer, Mr Takla rejected the suggestion that the only reason he made it was to ensure that Mr Dennis owned necessary real estate to provide security for his investments and future investments. 690 Mr Takla says in March 2007, Mr Dennis observed that he needed his own home and he agreed it seemed like the best solution, and he told Mr Dennis that he was still prepared to assist him. However, he told him any financial assistance that he gave would be strictly in his personal capacity and was not linked to his role as his financial adviser. Mr Takla considered Mr Dennis understood this and did not query this in any way at the time. 691 Mr Takla said Mr Dennis agreed it seemed like the best solution. However, Mr Takla said they did not discuss any specific details including as to how Mr Dennis would buy a property, the net effect on his finances in doing so, what type of property he would buy, where he would buy, the maximum amounts he could spend or how many bedrooms it should have. 692 He says Mr Dennis then told him that he was expecting to receive a substantial sum in the vicinity of $500,000 by way of an inheritance which would be paid to him once the "legalities" had been finalised. Mr Takla says Mr Dennis told him that he anticipated that it would take approximately six months in order for the inheritance to be paid. Mr Takla said he did not recall the specific words he used during the discussion. He said that Mr Dennis also told him that his consultancy business was doing well and he anticipated an income of $300,000 per annum that financial year. 693 Mr Takla says in early December 2007, he met Mr Dennis who informed him that he had found a property in South Perth on which he had put an offer and told him that the offer had been accepted subject to finance approval. At that point Mr Takla said he did not see any documentation. 694 He said Mr Dennis then told him he did not believe that he would have sufficient equity to borrow the full amount of the purchase price but should be able to support 75% at that stage and he was still expecting to receive his inheritance. He says Mr Dennis then invited him to co-own the property with him on a 75/25 basis with Mr Dennis owning the larger share and that he was going to raise the finance through NAB, in addition to selling some personal investments not under Chambers' advice. Mr Takla said his share was later changed to 30% for some reason which he cannot now remember. It may have been because Mr Dennis did not have sufficient funds. 695 Mr Takla says that at the December 2007 meeting he reiterated what he had told Mr Dennis earlier about his involvement being in his personal capacity and not as his financial adviser. He also added that neither he, in his capacity as his adviser, nor Chambers, assumed any responsibility in relation to the purchase of the property and the loan between them. He refers to a note of the discussion, dated 5 December 2007 (page 3238 trial bundle). 696 He says Mr Dennis responded that this was consistent with his understanding by email from him dated 8 December 2007 (page 3258 trial bundle). 697 Mr Takla says he entered into the arrangement with Mr Dennis solely to assist him to cope with his personal circumstances, and told him that he would be prepared to assist him in order to allow the sale to go through in expectation of Mr Dennis receiving his inheritance within a short period of time. 698 Mr Takla says that when discussing his assistance he told Mr Dennis it was a short term loan pending receipt of his inheritance, which Mr Dennis agreed to. He says they did not discuss outgoings and who would pay for the property expenses. He told Mr Dennis, however, that he would need to pay him rent for his 30% proportion of the property, but they did not discuss the amount he would need to pay. He did not tell Mr Dennis that he would be prepared to adjust the residential tenancy. 699 On 7 December 2007, Mr Dennis completed the finance application to NAB, which was for a new facility, following Mr Dennis' divorce and financial settlement, which would also allow for the purchase of the South Perth unit. 700 Mr Takla accepts that his offices assisted him to complete the application, however, his (Mr Takla's) only involvement was in writing Mr Dennis' surname at the top of the application. A copy of the offer and acceptance, dated 2 December 2007, was attached to the finance application. 701 By that application Mr Dennis sought finance of $550,000 from NAB using the unit as security. The amount which Mr Dennis sought was in excess of 70% of the purchase price, which Mr Takla said meant Mr Dennis would be borrowing against his equity in the unit if the application was approved. He did not perceive this to be a problem at the time because he never doubted Mr Dennis' intentions and he wanted to assist him to move into his own home as soon as possible and on the expectation that the whole arrangement was for a short term duration pending the inheritance payment. 702 At that time Mr Dennis stated in the application that his monthly income was $20,800 ($250,000 per annum). Evidence of income was supplied. 703 Mr Takla says that before raising the finance application, Mr Dennis also provided him with a spreadsheet detailing his actual income received to October 2007 and projecting income to be in excess of $300,000 that financial year. He refers to an email dated 3 December 2007 from Mr Dennis (trial bundle 462 at pg 3237). 704 At that time, Mr Takla says that Mr Dennis' divorce was in its final stage and on 10 December 2007, he emailed Mr Dennis' bank to inform it of Mr Dennis' intention to pay off the existing debts and release the title to his former matrimonial home to his ex-wife unencumbered. He copied Mr Dennis into that email. 705 In January 2008, Mr Takla says he received a telephone call from Mr Dennis' bank informing him that there would be a shortage in the funds required at settlement, due mainly to Mr Dennis' existing debts at that time, including a debt to his ex-wife of $33,000 and an unsecured investment debt of $90,000 which related to Mr Dennis' AGL investment that NAB insisted be secured against the property as part of the new facility. 706 Mr Takla says he was told by NAB, and believes it to be true, that it told Mr Dennis that it would charge him up to 18% interest on the $90,000 unsecured debt if it was left unsecured. Mr Takla says he discussed that proposal with NAB on Mr Dennis' behalf who advised that rolling the unsecured debt into the new facility would bring the interest rate down to their normal interest rates. Mr Dennis told him that he was happy with that outcome and then he made a file note dated 18 January 2008 recording their discussion. 707 Mr Takla says he then told NAB to proceed and provide the funding irrespective of the effect on his equity in the unit and he telephoned Mr Dennis who told him that he would provide some funding as he now expected to receive $290,000 from the sale of the family vineyard, which he intended to use to reduce his overall debt. Mr Takla refers to a file note dated 31 January 2008 recording those discussions. 708 Prior to settlement on the purchase of the South Perth unit, Mr Takla says he was told by Mr Dennis' bank that there was a shortfall of about $115,000 because Mr Dennis did not have sufficient funds to settle. Mr Dennis was overseas at that time. 709 Mr Takla says that he was concerned that Mr Dennis was going to lose the unit if he could not come up with the additional funds and mindful of the fact that that was likely to be difficult for him, given that he was overseas at the time, Mr Takla told the bank to proceed with the transaction and he would personally fund the shortfall. 710 Mr Takla says in late February 2008 or early March 2008, NAB provided Mr Dennis with the required finance of $548,000. Mr Takla paid cash for his own share of the unit and an additional $115,000 to cover the shortfall. This allowed the successful settlement on Mr Dennis' new South Perth unit. 711 Mr Takla says the certificate of title for the property is consistent with his understanding. Mr Takla says that on 20 March 2008 he met with Mr Dennis, who informed him that he had moved into the South Perth unit which he described as "great". Mr Takla says he was pleased for him and recalls Mr Dennis thanking him profusely at the meeting. He refers to a file note dated 20 March 2008. 712 Mr Takla says that it was only at this point that he recalls discussing the personal financial arrangements with Mr Dennis either at another meeting or on the phone. He says they agreed that Mr Dennis would rent his share of the South Perth unit for $1800 per month and pay him interest of 10% per annum, which was $960 per month, on the personal loan covering the additional finance. He says this is recorded in an email dated 26 March 2008 from Mr Dennis and his reply email dated 7 April 2008. 713 Mr Dennis submits that his case is established and that the advice Mr Takla provided concerning the purchase of the South Perth unit was part of the financial planning advisory relationship. He says the evidence establishes that Mr Takla's proposition that Mr Dennis should purchase real estate was made several times after Mr Dennis' decision to divorce, in the context of other financial planning advice provided. He says the repetition of the offer of assistance and financial assistance in the context of Mr Takla's other services to Mr Dennis confirms that Mr Takla's advice in relation to the unit was financial planning advice. 714 Further, he says Mr Takla made the application on behalf of Mr Dennis to NAB and that finance was approved because of the strength of the relationship Chambers and Mr Takla had with NAB. In this regard, Mr Dennis says Chambers was a reliable source of referrals for NAB. The comprehensive guarantee of the debt provided by Mr Takla meant the advice and the finance was inexorably linked to Chambers and Mr Takla's professional advice, notwithstanding the attempts to characterise it otherwise. 715 In light of all this evidence, the respondents submit the basis of the claim concerning the South Perth unit is obscure. They say that what Mr Dennis appears to be claiming is, in effect, a financial indemnity against all outstanding monies in relation to the South Perth unit but, in the above loss table, he gives credit for his share of the current value, which has now been agreed for the purpose of the proceeding at $800,000, with Mr Dennis' share being $560,000. 716 The respondents say there seems to be some reliance on the existence and breach of fiduciary duties on the part of Mr Takla, but no steps are taken to set aside the transaction or any aspect of it. 717 The respondents say Mr Takla simply did nothing wrong in respect of the transaction. He may have been overly kind to and concerned about Mr Dennis personally, but that does not constitute an actionable wrong or a breach of fiduciary duty. 718 They say he assisted Mr Dennis in the purchase of the property but no untoward dealing has been established. 719 The respondents do not accept that Mr Takla relevantly gave financial advice in the context of the transaction. Rather, they say, it was a private transaction as the emails, including those originating from Mr Dennis, make clear. They refer to the case of Polkinghorne v Holland [1934] HCA 28; (1934) 51 CLR 143 where a partner of a law firm caused his partners to be held liable for negligence in dealings with a client. However, in the case of one transaction the Court held it was a truly private commercial dealing and described the client (at 157, 160) as a dealing "as an individual to the exclusion of the firm, as a distinct and separate agent". 720 The respondents say the personal nature of the transaction here appears from the evidence of Mr Takla and particularly when the risk to Mr Takla of lending funds to the applicant is taken into account (see transcript 422-423). 721 The respondents say even if not classified as a personal dealing, there is still nothing wrong with what happened and in that regard refer to the concession made by Mr Dennis in cross-examination (transcript 152-153). 722 Additionally, the respondents say this was a sound investment and a proper one for Mr Dennis and Mr Barber accepted in his final report that buying the house was a good idea and a sound investment. Mr Dennis put an offer in for the property prior to seeing Mr Takla in any event. Mr Dennis accepted there was nothing wrong with the property itself and it had appreciated in value. It was purchased in early 2008 for $685,000 and agreed at trial to be worth $800,000. 723 The respondents note Mr Dennis stopped paying Mr Takla on his loan or rent for occupying the property and so alleviated himself of expenses by unilateral action, but did not stop paying the NAB loan on the property. So, they observed, it was not beyond his means to keep meeting the expenses. They say Mr Dennis also admitted that the loan was intended to be a temporary arrangement until he received his inheritance. Instead, he spent his inheritance on other things, including a new Mercedes Benz motor vehicle. 724 The respondents say that, at trial and in closing, Mr Dennis referred to NAB's apparent intention to take enforcement action against him. They say that Mr Takla gave evidence during cross-examination that he was not aware of that intention. 725 The respondents say the purpose of Mr Dennis' evidence with respect to NAB can only be to found an inference that the South Perth unit was somehow beyond his means and ought not to have been purchased. No such inference, they submit, should be drawn, not least because the applicant did not adduce any evidence that NAB's position was based on any assessment of his circumstances, rather than an administrative position, or that NAB took any steps to take enforcement action against him. They say there is simply no evidence of this. 726 The respondents say there is no basis on which Mr Dennis can now seek, in effect, some indemnity in relation to this property from Chambers or Mr Takla. 727 They say that holding either Mr Takla or Chambers liable to pay out the home loans of Mr Takla and NAB would, remarkably, deliver to Mr Dennis a 70% equity in an unencumbered property. Thus, any claims for payment of those loans should be dismissed, but the good counsel given by Mr Takla regarding the property must mean that its value to Mr Dennis of 70% of the agreed value, namely, $560,000 must be brought into account in relation to any other claims for damages, if payable. 728 The respondents say that in the same vein, Mr Dennis would have to give credit against any other damages established, his saving in not having to rent accommodation, taken at what he described as low or conservative rent of $500 per week (transcript 159). This should be taken over the period March 2009 to the present which, as at 3 June 2013, equates to unpaid rent of $110,500. 729 I consider it is difficult to avoid the conclusion on all the evidence that Mr Takla's encouragement, advice and assistance in relation to the purchase of the South Perth unit, was personal advice and assistance mingled with financial planning advice. 730 Mr Takla, in his evidence at trial, was at great pains to emphasise that he was wanting to help out Mr Dennis as an aspect of a "human relationship", not a professional advisory relationship. But in my view it is very difficult to separate out the two relationships, or motivations. 731 In the result, I consider that Mr Takla was seeking to assist a client who he had got to know reasonably well over an eight year relationship by the time the South Perth unit was purchased, and who, in his estimation, was in difficult personal circumstances, but also exhibited a strong desire to get back onto his financial feet following his divorce and financial settlement. 732 The proposition was put to Mr Takla in cross-examination that the real reason for encouraging Mr Dennis to purchase real estate property was that, without the ability to offer financiers such security, Mr Dennis' wealth creation program would be put at risk. Mr Takla vehemently rejected that proposition and insisted he was helping out a friend. I find it difficult to evaluate where the truth lies in relation to the proposition. It was put and denied. Little other evidence is relied on. I assume that Mr Dennis' position is that the Court should infer Mr Takla's "true" position was as he asserts. In the absence of more evidence, I am not prepared to draw the inference. There is much in Mr Takla's evidence to rebut the inference. 733 In the end, in my judgement, the reality is that the encouragement by Mr Takla for Mr Dennis to purchase himself a home occurred in the context of a professional advisory relationship, including at a time Mr Takla was advising Mr Dennis in relation to the finalisation of the financial settlement with his former wife and the transfer of his interest in the Ardross home to her. 734 I accept that Mr Takla was, in part, motivated in encouraging and then assisting Mr Dennis with the purchase of the South Perth unit by a personal desire to see him settled and redirecting his energies, including his financial energies, after the financial settlement with his former wife. 735 But the primary relationship between Mr Takla and Mr Dennis was that of financial planning adviser and client, and there is little evidence to suggest anything in the nature of a social relationship motivated this encouragement. 736 While Mr Takla was at pains to indicate that he was providing financial assistance in a personal capacity, it is not entirely clear what that was intended to mean. I accept, however, that the parties understood there was a personal element to the transaction that involved Mr Takla, and not Chambers. I consider it meant, at least, that the financial assistance that Mr Takla provided by ensuring Mr Dennis' loan with NAB was possible, and the 30% interest that Mr Takla took in the South Perth unit, were provided and taken in his personal capacity. 737 But in other respects I consider that the encouragement given by Mr Takla for Mr Dennis to purchase the property, the dealings between Mr Takla and NAB, including while Mr Dennis was overseas to ensure that the finance for the purchase by Mr Dennis of his interest in the South Perth Unit could be put in place, all occurred as part of the financial advisory relationship, as well as in the course of something that might be described as a personal, human relationship. 738 I also accept that, on the evidence, it was Mr Dennis who was prepared in the end to accept Mr Takla's encouragement to purchase a unit with Mr Takla's assistance, both in respect of the loan and the taking of a 30% share in the property, and that it was Mr Dennis who, in acting on the encouragement to buy property, made the property search and without any guidance from Mr Takla chose to purchase the South Perth unit as appropriate for his circumstances. Nonetheless, a figure of $700,000 was apparently in mind early on, as the whiteboard notes of the 2005 meeting suggest. 739 All that said, it is not clear to me exactly on what basis Mr Dennis contends that, to the extent that Mr Takla did the things that he did in the course of the professional advisory relationship, some contractual, tortious or fiduciary duty was breached. 740 There can be no real suggestion, in my view, that the purchase of the South Perth Unit, on the arrangements finally agreed between Mr Dennis and Mr Takla on a 70/30 basis, was advice that lacked a reasonable basis, especially in light of Mr Takla's taking of a 30% stake in the property. 741 Nor is there, as the respondents point out, any suggestion that the investment was not a "good one". Mr Barber agreed, for example, that it was. 742 In my assessment of the facts, Mr Dennis in the end made a decision that was open to him to acquire the 70% interest in the South Perth unit and was not, in any relevant sense, misled. 743 Nor can I see any basis for a suggestion, if that is what it is, that by his encouragement, advice or actions Mr Takla breached any fiduciary duty that he may have owed Mr Dennis at material times. Mr Takla, for example, did not acquire any secret commissions or interests in the property and the interest that he did take in the property and the financial support that he provided were all as far as one can see, entirely transparent. Nor is there any basis to find that he somehow exploited his relationship with Mr Dennis and preferred his own interests over those of Mr Dennis. 744 In those circumstances, the remaining question concerns what remains of the financial agreement between Mr Dennis and Mr Takla in respect of the occupation of the property and the repayment of the loan that Mr Takla provided to Mr Dennis. 745 Mr Dennis, in effect, submits that there was an understanding that he should not have to repay the loan owing to Mr Takla until such time as he had dealt with all other debts, following the difficult circumstances he found himself in in late 2008 and into 2009. Mr Takla, on the other hand, accepts that there was a discussion about that time for the payment of the loan and recounts the meeting, which is not denied by Mr Dennis, that he had with Mr Dennis when Mr Dennis indicated that he was attending university and could not repay the loan at that point. 746 In my view, these post-financial difficulty discussions did not lead to some variation of an earlier agreement to the effect that the time for repayment of the loan provided by Mr Takla was to be deferred indefinitely. Nor do I accept that discussions about Mr Dennis' present inability to pay rent due to Mr Takla on his 30% in the South Perth unit was anything but an understanding between the parties that there was a temporary moratorium on payment. 747 I generally accept, however, Mr Takla's evidence that there was at the time of the financial arrangements being put in place between them, concerning the purchase of the South Perth unit, a clear understanding that Mr Dennis was to receive a substantial payment from the family estate in the hundreds of thousands of dollars and that upon receipt of those funds, the time would arrive for the repayment of the loan. Mr Dennis' evidence in cross-examination confirmed this. I do not accept Mr Dennis' evidence that Mr Takla in effect agreed to postpone repayment of the loan until all other debts of Mr Dennis had been repaid. 748 In all the circumstances, I consider the repayment of Mr Takla's loan fell to be repaid upon demand, as did outstanding rent in relation to Mr Takla's 30% ownership of the South Perth unit. 749 I do not consider Mr Takla or Chambers has breached any relevant duty in respect of the purchase of the South Perth unit that is referable to the advisory relationship or otherwise. If there was a relevant breach, is any loss established by reason of that breach; and are there any claimed losses outside the statutory limitation period? 750 In light of my findings on liability above, the question of loss and damage does not strictly arise for consideration. I will, however, address most of the loss questions as I consider there are some significant difficulties with the way Mr Dennis has framed his damages claims in any event. 751 Mr Dennis says that from September 2008, the share market was extremely volatile and resulted in Mr Takla sending his clients, including Mr Dennis, an email. Mr Dennis says he sought to ascertain the true position of his investments and reduce his exposure to the markets as a matter of urgency. He says that up to that point he had relied on the respondents to keep all the information on his investments but he then discovered that Chambers had not kept all the information and could not always assist him. Investment managers were also difficult to communicate with when he sought information from them. About this time one of the Great Southern investments failed and the financier pressed him for payment. He realised that he was obliged to make the payment for the loans even though the investment had failed. 752 Mr Dennis says that the realisation that his financial circumstances were not safe resulted in a significant change for the worse in his health and his finances became increasingly tight. He sought information from Mr Takla. He found the only investment that could be sold was the Macquarie Bank GEI-funded shares. As a result, the GEI was unwound and he incurred a loss in the process. 753 Subsequently, he says, all of the MISs failed or in substance became worthless as he was not in a position to complete the projects. This was either because of the limitations on his licence or because the project did not have a manager ready, willing and able to complete the project. He says in substance all of the investments made in MISs are currently of no value. 754 As noted above at [6], Mr Dennis now estimates his losses at the sum of approximately $1.3 million. 755 As counsel for Mr Dennis put it in oral closing submissions, Mr Dennis would like the current debt of the financiers paid out. That is where he considers his most significant financial pain is to be found. He says it is not even all of the investment debt that he has paid out over the years. He notes several of the MISs have actually been paid off but he requires the current remaining debt to be paid off. In this regard, Mr Dennis claims payment of those amounts shown in the above loss table, including the debt on the investment buffer account. He claims that is a proper measure of his damage. He also says that Mr Barber has given advice as to "where he would have been had he got appropriate advice", that is putting him in the position he would have been in but for the negligent advice, and so he also claims damages for this lost opportunity. Finally, he seeks repayment of fees and commissions that he unnecessarily paid to Chambers and reimbursement of the break costs incurred on unwinding the Macquarie Bank GEIs on the sale of those investments. 756 Current debt: the respondents note that the assessment of damages contended for on behalf of Mr Dennis is not on the conventional basis of showing what has been paid in respect of each investment, what has been received back by way of distributions and tax refunds and the like, what is outstanding and what the value of the remaining investment is. Rather, the applicant claims the outstanding balances of the nine MISs, totalling some $617,000 and says that all benefits received from such investments (except the distribution of $40,488.76 with respect to the Australian Blue Gums 2000 investment, which is accounted for separately) went into the NAB investment buffer account which now has a debit balance of $242,696. The respondents note that while the claim is in respect of the nine MISs, the buffer account serviced all of Mr Dennis' investments, which makes his claim "intractably uncertain". The respondents do not accept the argument put by Mr Dennis that he can claim on this total monies in, total monies out method of claim. I consider there is considerable force in this submission. 757 The respondents say that Mr Dennis' case at trial was not that the MIS investments were inherently bad investments, although his pleading was on the basis that the investments were worthless when entered into. Thus they say Mr Dennis has attempted to resile from that pleaded position. The respondents note that Mr Barber, called by Mr Dennis, accepted that the investments could not be said to have been worthless when entered into. 758 I should observe at this point that I do not, in the result, construe the pleading of Mr Dennis to mean that the MISs were worthless at the time of acquisition, only that they were so, or substantially were so, at the time of trial. 759 The respondents say Mr Dennis has not put forward any current valuation of the nine MISs, but simply submits they should be accepted as being currently without value. I would be prepared, however, on the agreed evidence as to the position of the MISs and their current state of administration set out above at [?], to accept that they are currently worthless. 760 The respondents say that Mr Dennis has not provided evidence that in the end he could not afford to make the payments on his investments, except his say so. They say he could not give the dates he stopped making payments. He candidly admitted, the respondents say, that the reason he stopped making the payments was that he had decided to sue Mr Takla and Chambers. In fact, they say he lapsed into irregular payments rather than stopping altogether. He also admitted in cross-examination that he knew that, if he defaulted, the capital borrowed would become repayable in full immediately and that penalty interest rates would apply, and that he would "get in all sorts of strife". The respondents thus submit that on the available evidence Mr Dennis could have kept paying if he had wanted to and that there is no evidence to support the proposition that he was unable to keep on paying. The respondents submit that the fact that he decided not to pay cannot be held against them to support the damages claim. 761 I do not accept the respondents' submissions in this regard. I do accept that Mr Dennis made careful selections as to what he could and could not afford to keep paying, but that is not evidence supporting the proposition that he was not at that point financially embarrassed and was in fact able to keep paying on all investments. I accept the position effectively advanced by Mr Dennis, that he did his best to make those payments that he could, but was not able to service all loans. 762 The respondents also note that Mr Dennis received income of $288,000 and an inheritance of $450,000 in the year ended June 2009, which Mr Barber accepted and the respondents submit the Court should accept. I accept that this is so. 763 They submit that, even if the MISs are now taken to be valueless, it is not causally related to anything done wrong or omitted to be done by Mr Takla or Chambers. The risk of failure was always explained. Moreover the GFC and the high Australian dollar were quite exceptional and unforeseeable risks which caused turmoil in financial markets and undermined the operation of the MISs. They note Mr Barber called the GFC a "Black Swan" event – this is to say, unprecedented and unexpected - and Mr Takla's own evidence in that regard to similar effect was not questioned or attacked. 764 I should also note here that I accept the "Black Swan" submission on the evidence adduced. But if liability had been established, I would not have accepted there was no causal relationship with the loss on account of the GFC or a high Australian dollar or because Mr Dennis signed for the investments and understood the rules of each MIS investment. The point would have been, if liability had been found, that the risks associated with unprotected capital investments can be unpredictable and needed to be factored into the advice given, but were not. 765 Finally, in their general response, the respondents say the total moneys in, total moneys out method of assessing damages should not be accepted. Claims for each failed investment should be individualised. Considerable leakage for private purposes they say occurred to Mr Dennis from the buffer account and he offered no reconciliation of the buffer account. Additionally, they say tax refunds were not paid in as they should have been. This submission has weight. 766 The investment or buffer account was the account in relation to which investment benefits and expenses were intended to flow and in relation to which Mr Dennis' discipline was required. 767 While Mr Dennis complains of breach of duty in para [103(3)] above to the effect that Mr Takla failed to consider Mr Dennis' cashflow obligations by always recommending that investments be acquired by finance without considering the impact of the accumulation of debt at material times, the respondents say that Mr Dennis' cashflow would have been managed by his making the agreed monthly payments into his buffer account, which he manifestly failed to do throughout the period of investment, particular in the period following the separation from his former wife and that he failed to pay tax refunds into the buffer account as well. 768 At the trial much attention was addressed by the respondents to the extent to which the buffer account was not used purely for investment related benefits and expenses but also in relation to Mr Dennis' personal discretionary spending and his lack of discipline. 769 In the respondents' written main points in closing submissions, the respondents attached Annexures 1, 2, 3 and 4. Annexure 1 was designed to provide a recalculation of Mr Dennis' schedule of damages showing that "in truth" he had not suffered a loss once his withdrawals from the buffer account, his additional tax benefits not paid in, and his failure to make agreed monthly payments were also taken into consideration. Annexure 2 provided particulars of income, paid tax and received income tax refunds. Annexure 3 dealt with Mr Dennis' non-investment related withdrawals from the investment buffer account and repayments of those amounts. Annexure 4 dealt with Mr Dennis' failures to make agreed financial contributions towards his financial plan. 770 On 12 July 2013, counsel made oral closing submissions. Counsel for Mr Dennis at that point produced responses to Annexure 3 and Annexure 4, which had only then been completed, setting out what Mr Dennis said the figures were that were missing from the respondents' calculations. 771 The respondents were then given the opportunity to put on further written submissions dealing with Mr Dennis' schedule. The respondents, on 26 July 2013, filed a reply to Mr Dennis' documents handed up on 12 July 2013. It included what was described as Annexure 5 which was said to provide a consolidated table of Mr Dennis' non-investment related withdrawals from the investment buffer account and repayments of those amounts. The respondents in their reply explained that the reply was to be understood with reference to the purpose and contents of what they had earlier submitted in Annexures 3 and 4. 772 To seek to simplify and clarify matters, the respondents in their reply said they had combined the transactions which were taken into consideration in drafting Annexure 3 and Table 1 of Annexure 4, into one table which is now Annexure 5. Further, Annexure 5 also commented on matters raised by Mr Dennis in his responses to Annexures 3 and 4. 773 The respondents pointed out that Annexure 5 did not, however, include Table 2 of Annexure 4 which should also be taken into consideration when assessing the applicant's overall position. In their reply submissions, the respondents further explained their Annexure 3 and Table 1 to Annexure 4. 774 They further said that Annexure 5 demonstrated the amounts which had taken into consideration when calculating the amounts set out at Table 1 of Annexure 4 and in effect, by implication, Annexure 3. They said it also made adjustments to those annexures in light of Mr Dennis' earlier response to Annexures 3 and 4. They also emphasised that Annexure 5 was intended to be read in conjunction with Table 2 of Annexure 4 which remains unchanged. 775 The respondents, by reference to those relevant annexures, now submit that: Annexure 3 shows that the total of the running balance at the bottom right hand corner of the table shows that Mr Dennis withdrew over $82,000 from his investment account for his own non-investment related purposes, which he failed to repay. However, the amount has been reduced in Annexure 5 to an amount of $33,238.49 to take into consideration matters raised by Mr Dennis in his responses. However the respondents add, that the shortfalls in monthly contributions has increased from Annexure 4 to Annexure 5. Also, that it appears from Mr Dennis' response to Annexures 3 and 4 that he considered that payment of his tax refunds into the investment buffer account to be an additional contribution. The respondents submit that assertion and the basis of calculations should be rejected on at least two grounds. First, that the benefits received have to be brought to account in calculating damages. Secondly, as Mr Dennis is suing for losses allegedly suffered the basis of the advice has to be taken into account and it included that Mr Dennis was obliged to pay tax refunds into the buffer account. The submission is made that if the Court forms the view that such payments were relied upon by Mr Dennis in asserting that he "more than" made up for private withdrawals from the buffer account, then that would provide a further basis for rejecting the monies in, monies out form of damages assessment. As to Table 1 of Annexure 4, the debit column could be named as a "missing payments" column. The column actually entitled "Missing payments" is in fact a comments column explaining how the respondents have calculated the missing payment amount. Table 2 of Annexure 4 is in addition to Table 1 and shows significant shortfalls in payments which Mr Dennis was to have made into his investment account and which will now be brought into the account as credits which, the respondents submit should be credited to the buffer account reducing any debit balance. The table deals with a specific category, namely tax savings generated as a result of the investments. The respondents submit the tax savings achieved by Mr Dennis as a result of the investments and which were not paid into the investment account should form an additional deduction against any damages claimed. They also submit that Mr Dennis' failure to pay those amounts into the buffer account has artificially inflated the loan balance which will have had a flow on effect in relation to interest charged on the account, which needs to be taken into account. Annexure 5 demonstrates the amounts which the respondents have taken into consideration when calculating the amounts set out in Table 1 of Annexure 4 and by implication, Annexure 3. Annexure 5 should be read in conjunction with Table 2 of Annexure 4 which remains unchanged. What the totals in Annexure 5 show is that, had Mr Dennis made all of his agreed monthly and other contributions towards the investment buffer account, and repaid the investment funds wrongly withdrawn, the balance of that account as at June 2012 would have been a loan balance of approximately $43,000. That amount would be further reduced by interest incurred (increased) in the buffer account on the private withdrawals and the failure to decrease interest because relevant payments were not made into the account. It is submitted the amount turns into a credit balance if Mr Dennis had made the payments set out in Annexure 4, Table 2, or if they were now brought into account as (missing) credits. It is submitted that had Mr Dennis done what he was required by the plan to do, he would not have had the debts in the investment account that he now claims. Further, that Annexure 5 shows significant gaps in Mr Dennis' payments towards his investments which he has not or not satisfactorily explained. These include a failure to address Annexure 4, Table 2 and the tax savings which he had expressly committed to pay into the buffer account. The respondents submit his failure to pay those funds into the account is likely to have had a significant flow on effect because not only was the amount of almost $290,000 in capital gains tax savings not paid into the investment account, but interest on those amounts has also been incurred throughout the period. Had the amounts been applied his financial position would have been significantly better than the figures shown in Annexures 3, 4 and 5. In order to accurately assess how much better off he would have been, Mr Dennis would have needed to provide expert evidence, which he failed to do, in proof of his claim. However, the respondents say it is evident from the total shortfall of payments in Annexure 5 that had Mr Dennis paid his tax savings in the financial years ended 2005 and 2006 into the buffer account, he would have achieved a significant credit balance in the loan account: the debit balance on that account without the payments at the end of June 2006 was approximately $122,000, and his tax savings in that year were approximately $117,000. The applicant's tax savings in the prior financial year were approximately $67,000. The respondents say it is also evident from the review of Mr Dennis' tax returns and loan statements that some tax refunds which were generated through the investments were not paid into the investment account. It is impossible, however, to say how much in investment related funds actually received by him (including dividend payments and tax refunds actually received) were not paid into the investment buffer account as agreed, as Mr Dennis did not discover all of his bank statements nor provide them to the Court in evidence. Further, it is submitted that Annexure 5 shows a number of additional matters at odds with Mr Dennis' evidence at trial, including within the financial year ended June 2010, in a period when he said he could no longer afford to make payments towards his investments, the investment buffer account shows that the debit balance on the account only grew by an additional $8,000 and the deficit on his payments grew by $5,000, suggesting that he was able to continue making payments towards his investments during that period; and in fact the largest increases in his shortfall in meeting payment obligations and the investment loan balance occurred after he commenced the proceedings on 6 October 2010. 776 Mr Dennis filed written submissions addressing Annexure 5 on 9 August 2013. He makes the observation that the amended Annexure 5 no longer suggests that Mr Dennis used the buffer account for personal reasons in an amount that exceeded his contributions. Mr Dennis submits, however, Annexure 5 does not: Pick up all the equivalently described investment related transactions. He says the respondents removed some but not all the debits with transaction details using the standard phrase "internet transfer 209 Dennis J Dennis". And says that a review of Annexure 5 suggests that a further $15,303.30 should be removed from the personal debits column as that is the total of other debits with an equivalent description to those removed. There should be a further $256 removed from the personal debits column when regard is had to the reference G22318, being an investment related payment. A further $1,241.53 should be removed from the personal debits column when regard is had to the references in NW00012776 and NW00012746, being investments. That the payment on 21 April 2006 of $77,674.91 should be removed as a personal deduction when it is clear from the advice at trial bundle 418, pg 3060, that this income taxation return was paid to Mr Dennis' wife as part of the financial settlement with her, which was part of the advice given by the respondents. 777 Mr Dennis says that even without making such corrections it is apparent that until about 2008, Mr Dennis met in substance the recommended monthly contribution to the buffer account. He says that is the approximate point in time when he realised the difficulties he faced as a result of following the advice of the respondents. That is the evidence of the "tipping point" he says, when the negligent advice began to cause his losses. 778 In relation to the recommended increase to his monthly contributions, Mr Dennis submits: (1) The failure to meet the recommended contributions is not a pre-condition to being entitled to receive advice appropriate to his circumstances and therefore is not relevant to the liability question. The only question arising relates to damages, namely whether the debt on the account is exacerbated by factors for which the respondents should not be responsible. Mr Dennis says no details were put to him and the transactions causing the increased debt arise from his inability to meet the monthly contribution and are within the scope of the transactions for which the respondents ought to be responsible. (2) The advice recommending the increase in monthly contributions from $5,000 to $8,000 failed to consider his actual cashflow and it did appear to consider the flawed tables, discussed above in relation to the 11 June 2008 SOAA, which, he says, predicted bankruptcy for him. (3) Mr Dennis repeats submissions previously made that the payments did not cause the MISs to be illiquid or for the underlying schemes to fail; and it was not put to Mr Barber that they were material to his conclusions about observing expected standards or catastrophic to his calculations. 779 Mr Dennis also says that the respondents have made no further submissions on their Annexure 2, in which they sought to set out particulars of income, paid tax and received income tax refunds, following Mr Dennis' criticism that the conclusions it contained were not supported by evidence or explanation, and that Annexure 2 ought be ignored as it is not relevantly helpful to determine the issues. 780 Mr Dennis submits that all of the respondents' annexures alone and as combined fail to make good the proposition that the buffer account debt is unreliable as evidence of damage. He says the inconsistent approach in creating the schedules and the absence of evidentiary explanations suggest that they ought to be ignored as unhelpful. 781 On 12 August 2013, the respondents filed a "substituted Annexure 5". The changes, which appear to take into account a number of the submissions of Mr Dennis filed 9 August 2013, are as follows: Personal debits said not to have been repaid are reduced from ($226,709.75) to ($180,412.14). Credits (attributed to repayments of personal drawings) are reduced from $193,471.26 to $191,161.26. The running balance of personal drawings is revised from ($33,238.49) to a positive $10,749.12. The running balance of missing monthly payments remains unchanged at ($166,516.87). The running balance of deficits in repayments of personal drawings and in payments of monthly contributions is reduced from a debit ($199,755.36) to a debit of ($155,767.75). The final comment as to what the table shows is amended to read as follows: This table shows that, had Mr Dennis made his agreed monthly and tax refund payments into this account (as he was required to do if he accepted the product advice), and not withdrawn funds from the account for personal use (as he was expressly warned not to do), as at June 2012 the debit balance on the buffer account would have been significantly decreased from ($242,696.78) to ($84,929.03). This is calculated by taking the debit balance on the buffer account ($242,696.78) and subtracting the total shortfall of all payments ($155,767.75 – see row immediately above). In the earlier Annexure 5 it had been submitted that the debit balance on the buffer account would have been significantly decreased to ($42,941.42). 782 The respondents contend that it is for Mr Dennis to establish and prove his loss, and also quantum in circumstances where he is not advancing some general damages claim but relies on a specific outstanding debit balance in the buffer account. The respondents submit that the total he relies upon is unreliable for the several reasons mentioned, including the fact that some of the relevant bank statements have not been adduced into evidence and upon the basis that the admitted facts, as emerged in cross-examination of Mr Dennis, are that he took out several significant sums from the buffer account and did so over a period of time, and did not pay into the buffer account a number of monetary tax refunds derived from the investments funded from the buffer account. 783 Thus, the respondents say the buffer account cannot be used as a simple means to identify damages on a "moneys in, moneys out" basis. 784 I would have accepted in broad principle, if liability had been established, by reference to the submissions of the respondents in the substituted Annexure 5 and Table 2 of Annexure 4, that amounts of the type there calculated needed to be closely regarded in assessing damages. 785 In my view, the broad approach taken by Mr Dennis in relation to the calculation of damages by simply claiming that the debit balance in the investment buffer account represents the relevant loss, has significant difficulties with it, in this case. 786 In broad terms, one might accept that, if liability had been established, the debit balance in the investment buffer account should have provided a good "starting point" for endeavouring to assess damages of loss, but plainly there would be a need to take into account the full circumstances of investments made, tax refunds achieved, those refunds not paid into the buffer account and any impermissible discretionary spending out of the account. 787 I consider that the tax refund payments in particular here would have required special consideration and that the claim for damages would need to have been supported and proved more forensically than Mr Dennis has attempted to do. It is not a task the Court can engage in with any appropriate degree of confidence or skill. An applicant in such circumstances must meet the challenges raised. 788 The result is, as the respondents say, in order to accurately assess how much better off Mr Dennis would have been, he would have needed to provide expert evidence, which he failed to do, in proof of his claim. What substituted Annexure 5 does is demonstrate that had Mr Dennis paid his tax savings achieved in the financial years ended 2005 and 2006, into the investment loan account, he would have achieved a significant credit balance in the loan account. They submit the debit balance without the payments at the end of June 2006 was approximately $122,000, and his tax savings in that year were approximately $117,000. The tax savings in the preceding financial year were approximately $67,000. 789 I also accept the respondents' submission that it is evident from a review of Mr Dennis' tax returns and the loan statements that some tax refunds that were generated through the investments were not paid into the investment account. It is impossible to say how much in investment related funds actually received by Mr Dennis (including dividend payments and tax refunds actually received) were not paid into the investment loan account, as Mr Dennis has not discovered all of his bank statements nor provided them to the Court in evidence. 790 Two points flow from my general acceptance of the respondents' submissions about the use of the buffer account. First, Mr Dennis' cashflow may well have been managed appropriately, and certainly differently, had he, in accordance with the initial plan, made all the appropriate payments by way of benefits and expenses into and out of the buffer account. In light of the analysis provided, particularly in the substituted Annexure 5 and Table 2 of Annexure 4, I am left in real doubt that Mr Dennis materially upheld his end of the arrangements concerning payments in. Secondly, if it had been necessary to assess damages in the event of a finding of liability, I would not have been satisfied in all of these circumstances that Mr Dennis had accurately proved his loss, simply by referring to the debit in the investment buffer account. 791 Lost opportunity claim: As to the lost opportunity claim, I would also have had considerable difficulty in assessing damages on the basis put forward by Mr Dennis. As noted above, when put more colloquially, counsel for Mr Dennis says that his client requires damages in that would put him in the position he would have been in but for the negligent advice, and in this regard relies on an opinion expressed by Mr Barber as to "where he would have been had he got appropriate advice". 792 In this regard, there are many difficulties in my view, in the way of adopting the lost opportunity approach to damages assessment submitted. 793 The first and certainly not the least, is the evidence of Mr Barber, that Mr Dennis seeks to rely upon, as to "where he would have been" but for the negligent advice. In my assessment, this opinion was largely based upon the instruction that Mr Barber received to assume that there was a duty to make recommendations "as to the most suitable investments". That alleged implied term of the contract has not succeeded. It was the first issue considered and rejected above. 794 In pursuance of that approach, Mr Barber, putting it simply, conducted an exercise in what he would have done himself over the period of the advice relationship, if he had been advising Mr Dennis as to the most suitable investments. The result of his approach, obviously much more conservative than that Mr Dennis actually received from Mr Takla, produces the net gain claimed under the lost opportunity heading. It also includes modelling based on salary sacrificing, something which I consider Mr Dennis at material times was not interested in pursuing, as the respondents submit. 795 Additionally, as found above, there is no doubt that Mr Barber considered that a cap on MIS investments, particularly of an agribusiness nature, of 5-10% at all times was appropriate and so he would have avoided investments in that area. I have found, however, there was no such inflexible investment rule of thumb at material times and that appropriate judgement was required. 796 I have little doubt that if a much more conservative approach to investment had been adopted, along the lines of what Mr Barber says he would have done at material times, Mr Dennis' position financially would have been quite different from what it is today and he would not have been exposed to many, if any, MIS investment of an agribusiness nature. But that is not the question that falls for assessment, in this trial, or any assessment of damages. 797 In the circumstances, I would not have relied on Mr Barber's opinion in relation to the lost opportunity claim as an appropriate basis for assessing damages in this case. No other basis was offered. 798 Repayment of Chambers' fees: As to the loss and damage claimed by way of repayment of fees paid to Chambers, that claim fails with the failure of the breach claims. 799 The respondents submit that Mr Dennis did not provide a proper basis for these claims in any event. They say the fees were properly disclosed. A number of investments, it submits, were not in dispute and accepted by Mr Barber in any event. Thus, it is submitted there was no total failure of consideration and in any event a majority of the fees were paid from the buffer account, and so there would be a danger of the claimed loss being paid twice. 800 If the Court had found liability in respect of the breach claims, it seems to me there would have been an appropriate basis upon which to say that Mr Dennis should, in effect, be refunded the fees that he paid Chambers for the negligent advice received. 801 Break costs: The final claim of loss and damages claim is in respect of the Macquarie GEI break costs. 802 The respondents reasonably note that, in his closing submissions, Mr Dennis quantifies the break fees in respect of which he claims at a lesser sum than claimed at the outset of the proceeding. 803 The respondents note that Mr Takla advised only in relation to one early unwind of a GEI investment, which was that necessitated by Mr Dennis' divorce, and say that this cannot, in those circumstances, be held against Mr Takla. I agree. 804 The respondents note that the two other instances where break costs were incurred, were incurred with respect to the GEIs unwound in 2009, which was done against their advice and cannot be held against Mr Takla as it was not reasonably foreseeable that Mr Dennis would "break" the investment early and against their advice. Nor, is there any causal connection between the investment advice given to Mr Dennis and the break costs he incurred. 805 The respondents say that pleading of the claim in this regard is by way of damages incurred to mitigate ongoing losses and this case has not been established and suffers from the "fundamental defect" attendant upon other damages claims by Mr Dennis failing to establish that he could not maintain servicing of the investments. Accordingly, the respondents should not be held responsible for those amounts. 806 They also say the break costs were paid from the buffer account and do not thereby form the subject of a separate loss. 807 If liability had been established, I consider that there would have been a basis for assessing damages by reference to these other instances of break costs. It would reasonably have been shown in those circumstances, in my view, that the financial circumstances in which Mr Dennis found himself in 2009 necessitated unwinding investments in order to release capital to alleviate his financial circumstances. A cost of doing that were the break costs incurred. 808 The limitation issue: In light of my findings on the question of liability to pay damages and observations above concerning damages in the event they needed to be assessed, the question of statutory limitation of aspects of the proceeding need not be dealt with. I doubt, however, that the submissions made by the respondents in this respect are apposite in the circumstances. 809 It is accepted by the parties that a 6 year limitation period applied to the causes of action. The respondents submit that more than six year had elapsed since a number of MISs, those before 6 October 2004 (6 years before the proceeding was commenced), had been taken out. The respondents refer to the initial pleading of Mr Dennis that when those investments were made they were effectively worthless and say the cause of cause of action made complete by the damage suffered was therefore outside the 6 year limitation period. 810 In the event, as noted above, on reflection I consider that the pleading was or in the end was only to the effect that, at the time of trial, the relevant investments had ceased to have value. 811 In those circumstances, it being open to argue that any loss suffered was suffered within the limitation period, the limitation question would not have been an obstacle to damages in relation to the post-6 October 2004 investments if liability had been established. 812 Civil Liability Act 2002 (WA): In closing oral submissions as to causation of loss, counsel for the respondents drew attention to the Civil Liability Act 2002 (WA) noting that by s 5A(1), subject to s 3A and s 4A, Pt 1A applies to any claim for damages for harm caused by the fault of a person unless that section states otherwise. Then by subs (2) it is provided that the part extends to a claim "for damages for harm caused by the fault of a person even if the damages are sought to be recovered in an action for breach of contract or any other action". The respondents submit that the Civil Liability Act applied, as from 1 December 2003, in respect of the claims over the investments in this case from that date as they are claims in contract and tort. See Strong v Woolworths Ltd [2012] HCA 5; (2012) 246 CLR 182 at [17]-[30]. 813 The respondents draw attention to s 5C which sets down general principles, and s 5D that provides that the plaintiff always bears the onus of proving any fact relevant to the issue of causation. The respondents submit that causation requirements specified in ss 5C and 5D have not been met in this case. In particular, they note the requirement in s 5C(1)(b), that it has to be "appropriate for the scope of tortfeasors' liability to extend to the harm so caused", for causation to be established. The respondents submit this poses a different test from the one at common law and is not met. 814 The respondents say they can only be held liable if the particular aspect of any negligence established is causally related to what caused the loss. They say to illustrate the point, if one has regard to the first MIS in 1999 and the AGL timber project No 4 MISs in 2001 and 2002, there is evidence that difficulties in the export market caused by such issues as the high Australian dollar caused problems for those projects. However, that risk was clearly disclosed in the PDSs. Further, turmoil was caused by the GFC and its impact on MISs. 815 It is submitted that the consequences of these events cannot be attributed to Mr Takla or Chambers even if it were to be found that in some other respects they were remiss, say, in adequately disclosing a particular risk. In that regard, it is submitted, the GFC was a "truly external event", not a defect that was inherent in the product. They refer to the distinction drawn in a common law context in Morellini v Adams [2011] WASCA 84 at [44] (McLure P for the Court). 816 The respondents also say that in relation to any liability in contract and tort based on fault, the provisions of ss 5B, 5C(3) and 5C(4) should also be borne in mind and applied; as must s 5N in relation to the fact that a person cannot recover for damages in respect of the eventuation of risk or harm that was obvious. 817 The respondents say that, even if the Court does not accept that any loss suffered by Mr Dennis was as a result of the GFC, it ought to accept that at least the break costs were outside Chambers' control and similarly the conversion of the Great Southern Cattle MIS into shares in Great Southern Pty Ltd. 818 As noted above, I do not consider, that if liability had been established, the GFC could be considered relevant. Nor would I have considered that the break costs on GEI investments not to do with the financial settlement with Mr Dennis' former wife, were recoverable. 819 Moreover, I do not consider that the events to do with the GFC or the high Australian dollar would cause the Court to have concluded that the scope of liability should not extend to the harm caused to Mr Dennis, for the purpose of s 5C(1)(b) of the respondents' submission in that regard. 820 In short, accepting that the Civil Liability Act creates fault or causation principles that are to be applied according to the terms of the Act, I do not consider s 5C(1)(b) would have had any relevant application on the facts of this case to delimit the liability of the respondents, in light of factual causation having been relevantly established in the proceeding. See Strong v Woolworths Ltd at [19] (plurality). CONSENT TO PROCEEDING AGAINST CHAMBERS 821 I should finally record that at the hearing of closing submissions on 12 July 2013, the Court was advised that administrators had been appointed to Chambers. A letter recording the consent of the administrators to the application being proceeded with against Chambers, pursuant to s 440D(1)(a) of the Corporations Act, was received into evidence. conclusion and orders 822 For the reasons given above, the proceeding should be dismissed. 823 I will hear from the parties as to the appropriate orders. I certify that the preceding eight hundred and twenty-three (823) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker. Associate: Dated: 20 June 2014