FEDERAL COURT OF AUSTRALIA Casaclang v WealthSure Pty Ltd [2015] FCA 761 Citation: Casaclang v WealthSure Pty Ltd [2015] FCA 761 Parties: CAMILO CASACLANG, KATRINA CASACLANG, ANDREW GIBSON, JACQUELINE GIBSON, HETTIGE DON ROVILLE GOONASEKERA, MARIE ANTOINETTE KANTHI GOONASEKERA and TONI HEMMING IN HER CAPACITY AS EXECUTRIX OF THE ESTATE OF ALDEMIRA LUCEY v WEALTHSURE PTY LTD ACN 097 405 108 File number(s): NSD 169 of 2013 Judge(s): BUCHANAN J Date of judgment: 27 July 2015 Catchwords: CORPORATIONS – financial services and markets – holder of an Australian financial services licence ("licensee") – authorised representative of a licensee – where authorised representative alleged to have contravened provisions in Parts 7.7, 7.9 and 7.10 of Chapter 7 of the Corporations Act 2001 (Cth) – where authorised representative alleged to have caused loss and damage to clients in negligence and breach of contract – whether conduct of authorised representative related to a "financial product" – whether investment by clients was provision of a "credit facility" within the definition of reg 7.1.06(1) of the Corporations Regulations 2001 (Cth) – whether licensee liable for conduct of authorised representative under Division 6 of Part 7.6 of the Corporations Act – whether licensee liable under s 769B of the Corporations Act for conduct of authorised representative having actual or apparent authority – whether licensee liable in negligence for conduct of former authorised representative after revocation of authorised status Legislation: Australian Securities and Investments Commission Act 2001 (Cth) Competition and Consumer Act 2010 (Cth), Sch 2 Corporations Act 2001 (Cth), ss 79, 760A, 760B, 761A, 761E, 761E(1), 761G, 761G(1), 761G(9), 762C, 762C(b), 762C(c), 763A, 763A(1), 763A(1)(a), 763A(1)(c), 763B, 763B(a), 763B(a)(ii), 763B(b), 764A, 765A, 765A(1)(h)(i), 766A, 766A(1)(a), 766A(1)(b), 766B, 766B(1), 766B(3), 766C, 766C(1)(a), 766C(1)(b), 766C(1)(d), 766C(1)(e), 766C(2), 769B, 769B(1), 769B(2), 769B(3), 769B(7), 769B(10)(b), 769B(10)(c), 769C, 910A, 911A, 911A(1), 911B, 911C, 912A, 912A(1)(a), 912A(1)(aa), 912A(1)(c), 912A(1)(ca), 912A(1)(d), 912A(1)(h), 912B, 912B(1), 916A, 916A(1), 916A(4), 916F, 916F(1), 916F(3), 917A, 917A(1), 917A(1)(a), 917A(1)(b), 917A(1)(c), 917B , 917E, 917F, 917F(1), 917F(2), 917F(3), 917F(4), 944A, 944A(a)(ii), 944A(b), 945A, 945A(1), 947C, 947C(6), 947D, 952C, 952D, 952E, 953B, 953B(1)(a), 953B(2)(a), 953B(2)(c), 953B(3)(b), 1011A, 1011A(1), 1011B, 1012A, 1012A(1), 1013D, 1013E, 1022B, 1022B(1)(a), 1022B(2)(a), 1022B(4)(a), 1041E, 1041E(1)(a), 1041E(1)(b)(i), 1041E(1)(b)(ii), 1041E(1)(c), 1041E(1)(c)(i), 1041E(1)(c)(ii), 1041F, 1041F(1)(a), 1041F(1)(b), 1041F(2), 1041H, 1041H(1), 1041H(2)(a), 1041H(2)(b)(i), 1041I, 1041I(1), 1041I(1B)(a), 1041J, 1041L, 1041L(1), 1041L(2), 1041L(4), 1041S, 1041S(a), 1311(1) Corporations Regulations 2001 (Cth), regs 7.1.06(1)(a), 7.6.02AAA(1) Evidence Act 1995 (Cth), ss 55, 56, 97, 100, 135 Federal Court of Australia Act 1976 (Cth), s 33C Limitation Act 1969 (NSW), ss 14, 55(1), 55(3) LexisNexis Butterworths, Australian Corporations Legislation, 2010 edition Cases cited: Astley v Austrust Ltd (1999) 197 CLR 1 Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 Gray v Motor Accident Commission (1998) 196 CLR 1 Hunter Grain Pty Ltd v Hyundai Merchant Marine Co Ltd and Malaysian International Shipping Corporation Bhd (1993) 117 ALR 507; [1993] FCA 133 Joel v Morison (1834) 6 C & P 501; 172 ER 1338; [1834] EWHC KB J39 Josephson v Walker (1914) 18 CLR 691 Larsson v WealthSure Pty Ltd [2013] FCA 926 New South Wales v Lepore (2003) 212 CLR 511 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 Selig v Wealthsure Pty Ltd [2015] HCA 18 Selig v Wealthsure Pty Ltd (2013) 94 ACSR 308 Seymour v Seymour (1996) 40 NSWLR 358 Williams v Milotin (1957) 97 CLR 465 Wilson v Horne (1999) 8 Tas R 363 Zhang v Minox Securities Pty Ltd; Liu v Minox Securities Pty Ltd [2008] NSWSC 689 Date of hearing: 13, 14, 15, 16, 20, 21, 22 April 2015 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 395 Counsel for the Applicants: Mr N Kidd SC with Mr SS Ahmed Solicitor for the Applicants: Mills Oakley Lawyers Counsel for the Respondent: Mr MS White SC with Mr P Holmes Solicitor for the Respondent: Clyde & Co IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 169 of 2013 BETWEEN: CAMILO CASACLANG Fourth Applicant KATRINA CASACLANG Fifth Applicant ANDREW GIBSON Tenth Applicant JACQUELINE GIBSON Eleventh Applicant HETTIGE DON ROVILLE GOONASEKERA Eighteenth Applicant MARIE ANTOINETTE KANTHI GOONASEKERA Nineteenth Applicant TONI HEMMING IN HER CAPACITY AS EXECUTRIX OF THE ESTATE OF ALDEMIRA LUCEY Twenty-First Applicant AND: WEALTHSURE PTY LTD ACN 097 405 108 Respondent JUDGE: BUCHANAN J DATE OF ORDER: 27 July 2015 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicants bring in short minutes of order within 14 days to give effect to the conclusions in this judgment. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 169 of 2013 BETWEEN: CAMILO CASACLANG Fourth Applicant KATRINA CASACLANG Fifth Applicant ANDREW GIBSON Tenth Applicant JACQUELINE GIBSON Eleventh Applicant HETTIGE DON ROVILLE GOONASEKERA Eighteenth Applicant MARIE ANTOINETTE KANTHI GOONASEKERA Nineteenth Applicant TONI HEMMING IN HER CAPACITY AS EXECUTRIX OF THE ESTATE OF ALDEMIRA LUCEY Twenty-First Applicant AND: WEALTHSURE PTY LTD ACN 097 405 108 Respondent JUDGE: BUCHANAN J DATE: 27 July 2015 PLACE: SYDNEY REASONS FOR JUDGMENT 1 Introduction [1] 1.1 The applicants [1] 1.2 The claims [5] 1.3 Mr Oberg [8] 1.4 WealthSure [10] 2 The licensing scheme in outline [12] 3 Mr Oberg's authorisation [23] 3.1 Appointment [23] 3.2 Suspension and termination [31] 3.3 Advice to clients [35] 4 Dealings with the applicants [43] 4.1 Mr and Mrs Casaclang [45] 4.2 Mr and Mrs Gibson [54] 4.3 Mr and Mrs Goonasekera [65] 4.4 The estate of Mrs Lucey [106] 5 Evidence arising in the respondent's case [138] 6 General lines of argument [175] 7 Attribution of liability to WealthSure [181] 8 The causes of action [209] 8.1 Part 7.10 [213] 8.1.1 The Casaclangs [253] 8.1.2 The Gibsons [280] 8.1.3 The estate of Mrs Lucey [285] 8.1.4 The Goonasekeras [293] 8.2 Negligence [315] 8.3 Part 7.7 [352] 8.4 Statutory duty of care [374] 8.5 Part 7.9 [378] 8.6 The ASIC Act [385] 8.7 Contract [386] 9 Summary [393] 10 Conclusion [394] Buchanan J: 1. Introduction 1.1 The applicants 1 These proceedings were commenced on 5 February 2013 as representative proceedings pursuant to s 33C of the Federal Court of Australia Act 1976 (Cth). On 16 September 2013, I ordered that the proceedings not continue as representative proceedings (Larsson v WealthSure Pty Ltd [2013] FCA 926). 2 The members of the proposed class then applied to be added as individual applicants. Those applications were granted. 3 For that reason and others, there have been a number of iterations of the pleadings. The most recent version of the statement of claim (a fourth further amended statement of claim) was filed in Court on the second day of the final hearing. Some applicants (including Mr Larsson) settled their claims before or during the final hearing and the title of the proceedings was progressively amended to its present form. 4 Seven applicants remain, consisting of the members of three married couples (Casaclang, Gibson and Goonasekera) and Ms Hemming, the sister of, and an executrix of the estate of, the late Mrs Aldemira Lucey. 1.2 The claims 5 The applicants claim that the respondent ("WealthSure") should pay damages to them for losses caused by the conduct of Mr Colin Oberg, previously an "authorised representative" of WealthSure. Mr Oberg is not a party to the proceedings. 6 Most of the claims are based on provisions of the Corporations Act 2001 (Cth) (the provisions of the Corporations Act and its regulations relevant to the proceedings may be found in the 2010 edition of "Australian Corporations Legislation" published by LexisNexis Butterworths – references hereafter are to the Corporations Act and its regulations in that form). Additional claims are based on alternative statutory obligations which I shall discuss in due course and upon various aspects of the common law such as the tort of negligence and the law of contract. 7 The various alternative formulations of the various obligations were really directed to establishing a foundation for a single objective, namely obtaining relief from WealthSure for all the losses suffered by each of the applicants as a result of Mr Oberg's conduct. I shall discuss the alternative bases for the claims to the extent necessary. It is sufficient to record at this stage that I accept that the applicants have made out a case, in one way or another, for each of their claims and they should have verdicts for the amounts which they seek from WealthSure. 1.3 Mr Oberg 8 Mr Oberg practised as an accountant, tax adviser and financial planning representative. His offices were, at one time, at 234 George Street, Sydney. 9 The events in the present case in part concern alleged recommendations by Mr Oberg for the making of particular investments and, in one case, also the taking of money by him under a power of attorney. In all these cases the money was put under his direct control either in a personal bank account or in a business account controlled by him. In each case the money has been lost. In each case, as I have said, the applicants claim that WealthSure is liable to compensate them for the loss. 1.4 WealthSure 10 From 18 October 2004 until 30 September 2010, Mr Oberg was an "authorised representative" of WealthSure which held an Australian financial services licence ("a licence") issued under Part 7.6 of the Corporations Act. 11 WealthSure was established in 2001 and is based in Perth. At the time relevant to the present proceedings, the Chief Executive Officer, and Managing Director, was Mr Darren Andrew Pawski, who was also a founding shareholder. From December 2006 until early January 2010, and again after about January 2011, Ms Cristy Lee Blackwell was WealthSure's "Compliance Manager". Ms Kirsty Pawski (Mr Pawski's wife at the time) was WealthSure's "Operations Manager" and, during 2010 while Ms Blackwell was on maternity leave, she also had the responsibilities of Compliance Manager. 2. The licensing scheme in outline 12 WealthSure was required to hold a licence (Corporations Act, s 911A(1)) because it carried on a "financial services business", namely a business of providing "financial services" (Corporations Act, s 761A). A person provides a financial service if (amongst other things) they provide "financial product advice" (Corporations Act, s 766A(1)(a)) and deal in a "financial product" (Corporations Act, s 766A(1)(b)). 13 The general meaning of the term "financial product" and the circumstances in which a person "makes a financial investment" are indicated by ss 763A and 763B. Relevantly here, they provide as follows: 763A General definition of financial product (1) For the purposes of this Chapter, a financial product is a facility through which, or through the acquisition of which, a person does one or more of the following: (a) makes a financial investment (see section 763B); … (Emphasis in original.) 763B When a person makes a financial investment For the purposes of this Chapter, a person (the investor) makes a financial investment if: (a) the investor gives money or money's worth (the contribution) to another person and any of the following apply: … (ii) the investor intends that the other person will use the contribution to generate a financial return, or other benefit, for the investor (even if no return or benefit is in fact generated); (iii) …; and (b) the investor has no day-to-day control over the use of the contribution to generate the return or benefit. (Emphasis in original.) (Notes omitted.) (I have only included the specific matters most relevant to the claims in the present proceedings). 14 It will be necessary to return, in due course, to a particular argument which concerns whether a "credit facility" is a financial product but that may be put to one side for the moment. 15 A person provides financial product advice (relevantly here) when s 766B(1) applies: 766B Meaning of financial product advice (1) For the purposes of this Chapter, financial product advice means a recommendation or a statement of opinion, or a report of either of those things, that: (a) is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or (b) could reasonably be regarded as being intended to have such an influence. 16 I shall deal with the position of authorised representatives, and the liability which in many cases attaches to a licensee for conduct of an authorised representative, but at this point some more general features of the licensing arrangements should be noted. 17 Section 912A states some general obligations on licensees, which include the following: 912A General obligations (1) A financial services licensee must: (a) do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly; and (aa) have in place adequate arrangements for the management of conflicts of interest that may arise wholly, or partially, in relation to activities undertaken by the licensee or a representative of the licensee in the provision of financial services as part of the financial services business of the licensee or the representative; and … (c) comply with the financial services laws; and (ca) take reasonable steps to ensure that its representatives comply with the financial services laws; and (d) unless the licensee is a body regulated by APRA—have available adequate resources (including financial, technological and human resources) to provide the financial services covered by the licence and to carry out supervisory arrangements; and … (h) unless the licensee is a body regulated by APRA—have adequate risk management systems; and … 18 Section 912B(1) of the Corporations Act required a licensee, who provided financial services to persons as "retail clients" to have arrangements for compensating those persons for loss or damage suffered because of breaches of relevant obligations under Chapter 7 by the licensee or its representatives. The requirement for those arrangements (i.e. professional indemnity insurance – reg 7.6.02AAA(1)) is a fundamental aspect of the statutory scheme underpinning the liability provisions which render a licensee directly responsible to a retail client for many aspects of the work of representatives. 19 Each of the applicants was a retail client (Corporations Act, s 761G). 20 Section 769B of the Corporations Act makes general provision for when a body corporate is, for the purposes of Chapter 7, liable for the conduct of its agents. Conduct by an agent is taken to be the conduct of the corporation if within the scope of the agent's actual or apparent authority. Examination of this statutory directive in connection with the particular provisions assigning liability to a licensee for conduct by an authorised representative may be deferred, as may discussion of the limits of "apparent authority". 21 Separately, and even more generally, s 79 of the Corporations Act states when a person is "involved in" a contravention of the Corporations Act, but ultimately, s 79 is not relevant to any of the causes of action in the present case. 22 I shall discuss these questions of attribution of liability in due course. 3. Mr Oberg's authorisation 3.1 Appointment 23 To provide a financial service on behalf of another, conditions stated by s 911B of the Corporations Act must be satisfied. Relevantly here, WealthSure was required to hold a licence. If Mr Oberg was to act for WealthSure he was required to be its authorised representative. Section 911C prohibited Mr Oberg from holding out that he was an authorised representative when he was not. 24 Section 916A(1) and (4) provide: 916A How representatives are authorised (1) A financial services licensee may give a person (the authorised representative) a written notice authorising the person, for the purposes of this Chapter, to provide a specified financial service or financial services on behalf of the licensee. … (4) An authorisation may be revoked at any time by the licensee giving written notice to the authorised representative. (Emphasis in original.) 25 It was obligatory to notify ASIC of authorisation (within 15 business days) or revocation (within 10 business days) (s 916F(1) and (3)). Failure to comply was an offence (s 1311(1)). 26 Mr Oberg was appointed an authorised representative of WealthSure on 18 October 2004, under a written agreement. Unsurprisingly, Mr Oberg's obligations included the following: 3. REPRESENTATIVE'S OBLIGATIONS … 3.2 Obligations of the Representative … (f) The Representative must: … (vi) perform his or her duties effectively, honestly and fairly; … (x) ensure that he or she has a reasonable basis for any recommendation, having ascertained the Client's investment objectives, financial situation and particular needs and having given such consideration to, and conducted such investigation of, the subject matter of the recommendation as is reasonable in all the circumstances; … 27 He agreed to the following: 3.3 Limitation of Representative's Authority Subject to the other terms of this Agreement, the Representative will not do any act as a Representative of the Licencee which is not directly in the course of the Licencee's Business. … 3.5 Conduction of Representative (a) The Representative must, in the course of doing any act authorised by this Agreement, only promote and advise prospective Clients to invest in the Approved Products. … (f) The Representative will deliver all Client's applications for Approved Products and funds intended by Client for investment, directly and without any deductions, to the Licencee and will observe all conditions regarding applications and payment of funds as the Licencee may impose from time to time. … … 3.7 Indemnity (a) The Representative will indemnify and keep indemnified the Licencee from and against all and any charges, claims, costs, losses, expenses and liabilities arising directly or indirectly from any negligent act or omission of the Representative in the course of carrying out its activities pursuant to this Agreement, or any act or omission of the Representative in breach of the terms and conditions of this Agreement. (b) The indemnity granted in this clause shall not be terminated or limited by or on the termination of this Agreement. 28 It will be seen that any acceptance of the evidence of the applicants in a number of respects carries with it the acceptance with respect to their claims that Mr Oberg must have breached a number of those obligations. However, Mr Oberg was not a party to the proceedings and the question of what rights WealthSure might have against him for breach of his contract is outside the scope of the present proceedings. 29 Termination of Mr Oberg's authority was dealt with by the following clauses: 9. TERMINATION 9.1 This Agreement shall continue until terminated in accordance with clauses 9.2. 9.2 (a) The Representative may terminate this Agreement at any time by giving 30 days prior written notice to WealthSure Pty Ltd. (b) WealthSure may terminate this Agreement at any time by giving 30 days prior written notice to the representative. 9.3 IMMEDIATE TERMINATION This agreement is terminated immediately if: (a) an Insolvency Event occurs in respect to the Representative; or (b) the Representative is convicted of a criminal offence of a dishonest, deceitful or fraudulent nature. 9.4 On termination of this Agreement, the Representative ceases to be authorised to act for or by arrangement with the Licencee and must return: (a) all Client Files relating to WealthSure clients in its possession; (b) any compliance manual or documents relating to the Licencee's business issued by the Licencee; and (c) all other material obtained from or through association with the Licencee including all promotional material and computer software to the Licencee within five Business Days, or such other period as the Licencee may specify in writing. 30 On the same date as the Agreement, Mr Oberg was provided with a "Certificate of Authorisation", to be "displayed prominently" within his office. Other documents were given to him to make available to clients including an "Adviser Profile" and a "Financial Services Guide" from WealthSure. The Certificate of Authorisation identified Mr Oberg as authorised to deal in and provide advice about the following classes of products in the following way: Basic Deposit Products Managed Investments, including Deposit Products other than basic deposit products • Mastertrusts, Wrap Facilities, Property Syndicates • Margin Lending Products Life products including: • Tax-effective investments • Investment life insurance products and Securities • Life risk insurance products Government debentures stocks and bonds Superannuation, including • Public Offer Superannuation Funds Retirement Savings Account • Corporate Superannuation Option Contracts and Warrants To wholesale and retail clients. 3.2 Suspension and termination 31 On 20 September 2010, Ms Kirsty Pawski purported to suspend Mr Oberg's authorisation, pending the outcome of an investigation into a complaint from a person who is not (and was not) an applicant in the proceedings. On 30 September 2010, after a further complaint, Mr Oberg was advised by email from Ms Pawski of the revocation of his authority. The email commenced: Please be advised that effective today, Wealthsure has terminated your authorised representative agreement and cancelled your authority with ASIC. The corporate authority for Oberg Financial Planning Pty Ltd has also been terminated. 32 This notice does not appear to conform to the provisions of the Agreement for termination, although no doubt it took effect no later than 30 days thereafter if not immediately effective. Mr Oberg was directed to notify clients, return a range of material and immediately remove references to his authority. There is no evidence that he complied with any of those requirements or that WealthSure took further, effective, steps in relation to any of them. Such evidence as I have is to the contrary. 33 Mr Oberg was reminded of a previous requirement (of uncertain date) to provide a list of all clients and funds owed to them. In the email dated 20 September 2010, Ms Pawski had said: Please also provide a statement confirming whether any other clients have been invested into non-approved investment products. Where this is the case, we require the provision of their names and contact details. This list should not be limited to those clients whom you believe are "financial planning" clients. Due to the nature of the advice, your accounting clients would most likely also be considered financial planning clients. (Emphasis added.) and … Wealthsure requires a complete audit of your client files and processes. Mr Wayne Turnbull our NSW Practice Manager will be attending your offices at 1pm on Friday, 24th September 2010 to collect client files and conduct an onsite audit. Your client files will be audited at head office and returned to you once the audit is completed. Please ensure you are available for this meeting and you have your client files readily available for Mr Turnbull. … 34 Again, such evidence as there is suggests that none of those steps were insisted upon, the audit did not occur, the client files were not returned and details of clients and sums owed were not obtained. 3.3 Advice to clients 35 For a long time, until 25 July 2011, WealthSure took no apparent step to contact or notify Mr Oberg's clients – i.e. those with respect to whom he was the representative of WealthSure, including those "accounting clients" who "would most likely also be considered financial planning clients" – and tell them of the termination of his authority. 36 So far as the present applicants are concerned, the only advice to any of them which was established by the evidence was contained in a letter to Mrs Gibson in the following terms: 25th July 2011 MRS JACQUELINE GIBSON [Address] Dear Sir/Madam, Change of Adviser Please be advised Mr Colin Oberg is no longer an authorised representative of Wealthsure. In his place we have appointed the services of Sam El Shammaa for the purposes of reviewing your existing investments and insurances to ensure that you continue to receive ongoing support and advice from a highly respected and qualified Wealthsure authorised representative. Sam has been working in the financial planning industry for over 16 years and has been an authorised representative of Wealthsure since July 2004. He holds a Bachelor of Science Degree in Business Administration with a double major in Business Management and International Business from the United States. Sam has also completed the Advanced Diploma of Financial Services. He possesses a strong passion for financial planning which is evident in his ability to assist clients to manage and build their wealth. Sam would be happy to meet with you to discuss your circumstances and can be contacted on: [Mobile telephone number] [(02) telephone number] [Email address] If you do not wish for this transfer to occur, please contact our office on (08) [telephone number]. Yours Sincerely, Cristy Blackwell Complaints Manager 37 This uninformative and anodyne communication cannot be considered to represent any kind of warning of the potential consequences for the Gibsons of what WealthSure knew by late September 2010. Other applicants had no information given to them, despite WealthSure's undoubted knowledge that Mr Oberg had been taking clients' funds. 38 The general character of WealthSure's knowledge is illustrated by the terms of letters written to the Tax Practitioners Board, and New South Wales Police, on 10 January 2012 and 29 March 2012 respectively. WealthSure knew well before those letters were written the character of the conduct referred to in them. I shall refer later to evidence from a number of Mr Oberg's clients about those matters, before and after the termination of his authority, well before even those letters were written. 39 The Tax Practitioners Board was advised: Due to the nature and the number of the allegations WealthSure Pty Ltd ("WealthSure") has received from Mr Oberg's clients (both accounting and financial planning), in good conscience and as a matter of professional ethical standards, we felt that the prudent approach would be to advise the TPB of the circumstances surrounding the allegations. WealthSure has completed a thorough investigation into the circumstances surrounding the complaints received and, as a result, have reported Mr Oberg to both the Australian Security Investments Commission and the NSW Major Fraud Squad. After speaking at length with the clients involved, it has come to our attention that certain client monies have been withdrawn from their accounts (without their knowledge) and cannot be accounted for. Other client monies have been withdrawn from their accounts (without their knowledge) and deposited into Mr Oberg's personal finance company JRCC Finance Pty Ltd ("JRCC"). WealthSure directed Mr Oberg to repay all funds to the clients involved and close down his personal finance company JRCC. WealthSure has since attempted to contact Mr Oberg on several occasions requesting an update on Mr Oberg's progress in returning the client funds. Mr Oberg has chosen not to respond. On the basis of the information presented to WealthSure and Mr Oberg's failure to provide an adequate response, WealthSure terminated Mr Oberg as an Authorised Representative on 30th September 2010. WealthSure has written to all fund managers that Mr Oberg has clients with and advised them that Mr Oberg has been terminated and should be removed from all client accounts. WealthSure has also written to Mr Oberg's clients to advise them of his termination however, we hold grave concerns for the clients that we have been unable to contact. We have been advised by certain clients that Mr Oberg has, since his termination, been in contact with them and has attempted to obtain further funds. It would seem that as a registered agent of the TPB, Mr Oberg's alleged conduct is in direct breach of the Code of Professional Conduct and, as a result, WealthSure respectfully request for the Board to conduct a thorough investigation into Mr Oberg's conduct. 40 There is no evidence before me of any response, or consequence, of this letter. Such evidence as I have does not suggest that any letter to any other client (i.e. other than the applicants) was more helpful than the letter to Mrs Gibson. There was no evidence of any advice at all to the other applicants. 41 The letter to Miranda Detectives referred to 10 complaints, including one by Mrs Casaclang. Then it said: After speaking at length with the clients involved, it has come to our attention that certain client monies have been withdrawn from their accounts (without their knowledge) and cannot be accounted for. In at least two situations ([A] and [W]), it appears that cheques were made out to the BT Superwrap but were instead deposited into the following account: Colin Oberg t/as Colin Oberg & Associates Institution: NAB BSB: [number] Branch: Caringbah Other client monies have been withdrawn from their accounts and deposited into Mr Oberg's personal finance company JRCC Finance Pty Ltd ("JRCC"). The clients that were aware of the deposits into JRCC did so on the premise that they would receive the money back plus interest. Other clients were simply not aware. WealthSure directed Mr Oberg to repay all funds to the clients involved and close down JRCC. WealthSure has since attempted to contact Mr Oberg on several occasions requesting an update on Mr Oberg's progress in returning the client funds. Mr Oberg has chosen not to respond. The last complaint in the file (Casaclang) was received by phone on the 28th March 2012 and, as such, I have not received any documentation as yet. 42 The response to, or consequence of, this letter was not the subject of evidence. 4. Dealings with the applicants 43 The evidence about the position of the various applicants is somewhat sketchy. I have only the evidence of some of the applicants themselves, save in the case of Mrs Lucey where I admitted "tendency" evidence under s 97 of the Evidence Act 1995 (Cth), to which I will refer hereunder. 44 As will be seen, the circumstances in which the applicants who remain in the proceedings came into contact with Mr Oberg vary and no completely uniform position exists. In addition, in one case the interaction continued after Mr Oberg's authorisation was revoked by WealthSure. Nevertheless, there are some common themes, although it will be necessary to make specific findings of fact in each of the cases when I discuss whether the causes of action have been established. Before the particular events which are the subject of the claims for relief in the present case, all of the applicants had a previous relationship with Mr Oberg who was their accountant and/or tax adviser. Sometimes he had given financial planning advice as the representative of another licensee, before he moved to WealthSure. In each case, he was trusted implicitly. 4.1 Mr and Mrs Casaclang 45 Camilo and Katrina Casaclang used Mr Oberg as accountant and tax adviser from the mid-1980s in the case of Mr Casaclang and the mid-1990s in the case of Mrs Casaclang. Mr Casaclang gave affidavit evidence and was cross-examined. Mrs Casaclang did not give evidence. 46 Mr Casaclang's evidence was that in the late 1990s or early 2000s, Mr Oberg mentioned to them that he had an investment opportunity available which provided a 10% return after three months. The money invested was used to provide short-term finance to Mr Oberg's clients who were having difficulty obtaining finance. It was asserted by Mr Oberg that there was no risk because he carried investment insurance. 47 Subsequently, over about a ten year period until the late 2000s, Mr Oberg raised the issue again on a number of occasions but the Casaclangs did not have money available to make such an investment. 48 On or about 6 August 2010, Mr Oberg made a further approach proposing an investment of $70,000 to $75,000 for only three months. Mr Casaclang was assured there was no risk because Mr Oberg had "investment insurance through WealthSure". 49 In his initial affidavit, which was sworn at the time he applied that he and his wife become individual applicants in the proceedings, Mr Casaclang said, in [8]: 8. On the basis of Mr Oberg's advice, my wife and I transferred $75,000 to Mr Oberg on 6 August 2010 for the purpose of investing. 50 Apparently concerned about some aspects of WealthSure's pleaded defence, Mr Casaclang swore a further short affidavit on the second day of the hearing which said: 1. I make this affidavit to amend the wording of my previous affidavit dated 9 December 2013. 2. I refer to paragraphs 7 and 8 of my affidavit sworn 9 December 2013. My intention when I transferred $75,000 to Oberg on 6 August 2010, was that: (a) Oberg would use the money to assist in providing short term loan funds to a client of Oberg in Australia who needed the money for some purpose that was not known to me; (b) As a result of the money being used in that way, a return of 10% on the moneys would be generated in 3 months for my benefit, and I would receive the moneys back together with the 10% return at that time. 51 Under cross-examination, Mr Casaclang accepted that the additional evidence arose as a result of discussions with his solicitors. It was put to him that the money he provided to Mr Oberg was really understood by him to be, and in truth represented, a loan to Mr Oberg, but he was firm in his responses that he understood, and intended, it to be an investment. 52 Mr Casaclang struck me as an honest witness who was not evasive in his answers. I accept his evidence that he thought he was making an investment on favourable terms. He accepted that he had done little to protect his own interests but he had, over the years, invested money on three previous occasions based on Mr Oberg's advice and had made money as a result. 53 Mr Casaclang also said, in his first affidavit, that he had not been provided with either a Statement of Advice or a Product Disclosure Statement by Mr Oberg for the investment. Those are obligations under the Corporations Act which are relied upon to support the claims for compensation by WealthSure. I shall discuss those obligations and their significance in due course. 4.2 Mr and Mrs Gibson 54 Andrew and Jacqueline Gibson also used Mr Oberg as an accountant and tax adviser from the mid-1990s (about 1996). He prepared their annual tax returns from that time. 55 In about April 2003, Mr Oberg prepared a financial plan for them and thereafter he gave them "regular advice regarding property, investment portfolios and superannuation". 56 Mr Gibson received an "Adviser Profile" associating Mr Oberg with WealthSure as its authorised representative. He deposed to receipt of this document around January 2004, but that seems unlikely as Mr Oberg was not appointed as an authorised representative of WealthSure until October 2004. Nothing turns on that discrepancy. 57 Mr Gibson annexed to his affidavit some statements from his superannuation account with BT Financial Group showing Mr Oberg as his adviser in the years to 30 June 2009 and 30 June 2010. Thereafter, WealthSure was shown as the adviser. This change corresponded to the termination of Mr Oberg's appointment, but Mr and Mrs Gibson were not informed about that termination until 25 July 2011 in the letter to which I earlier referred. 58 Mr Gibson said that Mr Oberg approached him between 2008 and 2010 on three or more occasions suggesting an investment for a 10% return in three months. In early September 2010, Mr Oberg telephoned again with the proposal, saying the investment was guaranteed. This was important to Mr Gibson because, to make the investment, he would need to draw on a mortgage account. 59 Mr Gibson said in his first affidavit at [12]: 12. On the basis of this conversation, my wife and I transferred $50,000 to Mr Oberg on 3 September 2010 for the purpose of investing. … 60 Like Mr Casaclang, Mr Gibson swore a further affidavit on the second day of the hearing which said: 1. I refer to paragraphs 11 and 12 of my affidavit sworn 5 December 2013. 2. My intention when I transferred $50,000 to Oberg on 3 September 2010, was that Oberg would use the money (in a way that was not known to me) to generate a return of 10% on the moneys in 3 months for my benefit, and I would receive the moneys back together with the 10% return at that time. 61 When the money had not been returned some months after the three month nominated period, Mr Gibson began pressing Mr Oberg for more information in April 2011 but without success. Mr Gibson made further approaches in September 2011 and on this occasion Mr Oberg responded: I am still waiting for funds to go into the bank. I will call you Wednesday. Regards, Colin 62 However, those assurances were empty. 63 Mr Gibson also struck me as an honest witness. He accepted that he was careless in the supervision of his own affairs but explained that he trusted Mr Oberg. He, like Mr Casaclang, firmly rejected the proposition that he understood he was making a personal loan to Mr Oberg. I believe his denials that such was his understanding or his intention. I accept his evidence that he intended to make an investment recommended to him by a trusted adviser. 64 Like the Casaclangs, the Gibsons made a single transfer of money to Mr Oberg, intended as a three month investment, while he was an authorised representative of WealthSure. Mr Gibson had no recollection of any Statement of Advice or Product Disclosure Statement and I infer that none was provided. 4.3 Mr and Mrs Goonasekera 65 The position of Hettige and Marie Goonasekera is less straightforward. It is convenient to say at the outset, however, that I accept that Mr Goonasekera also was generally an honest witness. Mrs Goonasekera provided an affidavit but was not cross-examined. 66 Mr Goonasekera was careful and apparently candid in his evidence. He was not resistant to reasonable propositions and I had the impression he was doing his best to give truthful evidence in most aspects. There were some aspects of his evidence which were less than satisfactory, however, although they do not affect my overall assessment of his credit. 67 It became apparent in Mr Goonasekera's cross-examination that a number of statements attributed to Mr Oberg in an affidavit sworn late in the week before the trial commenced were unreliable reconstructions which did not represent his true recollection. It is impossible to know whether the fault lies with Mr Goonasekera or with those who assisted him in the drafting and settlement of the terms of the affidavit, although he must take ultimate responsibility as the person who swore it. 68 Despite my misgivings about the reliability of the particular passages, it does not affect my overall assessment of the nature of the financial commitments made by the Goonasekeras and the reasons for them. 69 The position of the Goonasekeras was complicated by a number of factors, and their exposure to Mr Oberg was significantly more extended than any other of the applicants. 70 Mr Goonasekera began to use Mr Oberg as his accountant in 1996. About two years later, Mr Oberg informed him that he was also now qualified as a financial planner. Relying on that, Mr Goonasekera started taking advice from Mr Oberg about how to build an investment portfolio and plan for retirement. His reliance on Mr Oberg for those matters continued until discovery of the matters at the heart of the present case. 71 In 2003, Mr Oberg (who was then an authorised representative of Madison Financial Group Pty Ltd) prepared a long financial plan for Mr and Mrs Goonasekera. Much of its volume arose from the fact that it appears to reproduce a template, with template observations and recommendations, into which their particular financial details are inserted. Nevertheless, specific recommendations were made for the rollover of existing superannuation arrangements into new "BT" superannuation products to be managed for them by Madisons and Mr Oberg. Recommendations for a named range of investments were included but the securities nominated appeared, again, to be drawn from more general or template recommendations based on the "risk profile" assigned to the Goonasekeras. The Goonasekeras accepted the recommendations. 72 In December 2004, after Mr Oberg's appointment by WealthSure, Madisons was instructed to "transfer" all their investments to WealthSure. 73 Mr Oberg gave advice about mortgage arrangements for the Goonasekera family home in Peakhurst Heights, New South Wales, which they continued to hold during absences from Australia referred to shortly. Mr Goonasekera also acted on Mr Oberg's advice to purchase two investment properties. The properties were selected by Mr Oberg. They were held until last year. 74 In his initial affidavit sworn on 6 December 2013, Mr Goonasekera said: 13. In or about November each year, I come back to Australia, partly to complete and sign off on my tax return. Each time I returned, I would meet with Colin Oberg. … 18. Colin Oberg and I worked on trust. I provided him with a power of attorney which he used to assist making investments as I was overseas for all but 2 or 3 weeks in each year. 75 At the time of that affidavit, Mr Goonasekera believed that he and his wife had transferred a total of $445,500 to Mr Oberg and invested that sum with him. That contention requires examination, and was amended during the course of the proceedings. 76 In about August 2012, Mrs Goonasekera took a telephone message from a Mr La Rocca who said he had taken over Mr Oberg's accounting practice. What she was told, and conveyed to her husband, distressed them and they commenced to make enquiries of Mr Oberg, and elsewhere, about the state of their investments. Those enquiries resulted in the provision of more detail about the particular transactions in which Mr Oberg was involved, and the basis for them. The claim by the Goonasekeras in these proceedings which was finally pressed was increased from $445,500 to $590,500. Of that amount, $30,000 relates to three transactions after Mr Oberg's authority was revoked, but the balance of the transactions occurred while he was an authorised WealthSure representative. 77 Some examination of the particular transactions is required. Some were the result of Mr and Mrs Goonasekera responding to advice or recommendations from Mr Oberg; some were the outcome of Mr Oberg's unilateral action. 78 In November 2006, Mr and Mrs Goonasekera relocated to Kuwait where Mr Goonasekera became employed by a local airline as an aeronautical engineer. Before leaving, on 12 September 2006, Mr Goonasekera gave Mr Oberg a general power of attorney and, it is clear, by that method and more generally authorised him to conduct Mr and Mrs Goonasekera's affairs in their absence. The arrangements extended to the receipt at Mr Oberg's office of any statements or correspondence associated with their investments. Everything was left in Mr Oberg's hands. His day-to-day authority was complete, and Mr Goonasekera intended that it be so. Occasionally, on their (generally) annual return to Australia when they signed their Australian tax returns, Mr Oberg showed Mr Goonasekera the statements which had arrived but it appears that Mr Goonasekera showed no great interest in those and was content with general assertions of the kind to which he deposed in his first affidavit, as follows: 14. At each of the meetings I used words to the following effect: Me "Is everything fine with my investment?" Oberg "Yes everything is fine, all your investments are working for you." 79 I will return to mention some particular transactions which were made, apparently drawing authority from the power of attorney. However, the general arrangements and the investiture of trust and confidence in Mr Oberg on which they were based, are important matters to bear in mind when the history of other particular transactions is examined. 80 In about June 2009, in a telephone conversation, Mr Oberg recommended that the "BT" superannuation fund be transferred to a self-managed superannuation fund which Mr Oberg would set up and manage, putting the money "into investments that will earn 10% per annum, which is better than what the BT super fund is earning". Mr Goonasekera agreed. 81 Mr Oberg shortly thereafter transferred $175,000 from Mr Goonasekera's BT superannuation investments to a new account he had established for the self-managed superannuation fund he had recommended. Later, he transferred a further $40,500, drawing upon BT superannuation investments in the name of both Mr and Mrs Goonasekera. Mr Oberg then withdrew amounts from the new superannuation fund account and transferred them to the account of JRCC Finance Pty Limited ("JRCC"), an account under his control. Those amounts, which total $215,500, and the date of the transfers, are as follows: 27 July 2009 $20,000 27 July 2009 $35,000 29 July 2009 $20,000 31 July 2009 $20,000 31 July 2009 $40,000 3 August 2009 $11,000 3 August 2009 $27,000 14 August 2009 $2,000 9 November 2009 $40,000 6 January 2010 $500 82 The Goonasekeras were unaware of those transfers. They were unilaterally made by Mr Oberg. They were not the result of any specific (or general) advice or recommendation, apart from the advice to set up a self-managed superannuation fund from which Mr Oberg would make investments on their behalf. 83 In addition, Mr Goonasekera responded to a series of recommendations by Mr Oberg from January 2009 for particular transfers of money. Those recommendations were, in each case, that money be transferred to Mr Oberg for investment by him. The first occasion is illuminated by representations made in writing by Mr Oberg. The subsequent occasions are the subject of evidence by Mr Goonasekera about which I was earlier critical but, despite those criticisms, I am satisfied about the general factual position which is disclosed. 84 On 14 January 2009, in an email to Mr Oberg, Mr Goonasekera said: Hope that all is going okay with the investments and house details, especially with all thats happening around the world. Colin, Marie and I have yet to do the Income Tax for the last financial year. Pls let me know as to whether you could get them done and send it across to me for signatures ( If reqd ). Can see myself getting some leave from work for a few months. Also I have some money saved up in my account in Sydney, approx. A$ 100,000. Its not doing anything. Pls let me know as to how that can be put into good use? 85 Mr Oberg replied on the same day: With the $100,000 I can arrange a cash investment returning 9% per annum paid monthly. The share market is still very volatile and in the short term I would rather invest and ensure that your capital remains in tact. If you would like me to place the investment please arrange to transfer the funds to my trust account the details of which are as follows: … The sooner you can transfer the funds the more chance I have of placing the investment at the 9% as the economic gurus are predicting an interest rate drop at the beginning of February so we need to get in beforehand. 86 Mr Goonasekera replied on 16 January 2009: I have instructed my sister Jeanine to send you the money for investing. 87 Mr Goonasekera deposed to a further four conversations with Mr Oberg about investments of a similar nature. All but the last occasion were while he was in Sydney. The last two conversations occurred after WealthSure had revoked Mr Oberg's authority, and I shall return to that fact. 88 The conversations occurred on or about 23 October 2009 (Sydney), 29 September 2010 (Sydney), 31 October 2011 (Sydney) and 29 April 2012. 89 On each occasion, Mr Goonasekera told Mr Oberg that he had a specific sum of money available ($60,000, $40,000, $20,000 to $25,000 and $5,000). On each occasion, Mr Goonasekera deposed in his affidavit of 10 April 2015 (i.e. late in the week before the trial commenced) that Mr Oberg advised him that he should put it into the same investment(s) as before. The specific statements attributed to Mr Oberg in Mr Goonasekera's sworn affidavit were as follows: $60,000 Oberg said: "You should put it in the same investment returning 9% per annum as your previous investment. Pay it into my account and I will arrange the investment." $40,000 Oberg said: "You should put it in the same investment as your previous investments. Pay it into my account and I will arrange the investment." $20,000 to $25,000 Oberg said: "You should put it in the same investment as your previous investments. Give the money to me and I will arrange the investment." $5,000 Oberg said: "You should put it in the same investment as the previous investments. Write a cheque to Colin Oberg & Associates and I will arrange the investment." 90 The slight differences should be noted. Presumably, they were intended to bolster the idea of specific and careful attention on the part of the deponent to the matters he was addressing. 91 With respect to the third incident, payment of $25,000 was made in two tranches – $20,000 described hereunder on 31 October 2011 and $5,000 by cheque on 8 November 2011. The circumstances of the first payment were described as follows: 34. Shortly [after the conversation], on 31 October 2011, I went to Westpac, withdrew $20,000 from my account (account number xxxx) and gave that money in cash to Oberg. 92 Notwithstanding the specificity of the statement attributed to Mr Oberg, and the description of payment of the $20,000 which appeared in the affidavit, when Mr Goonasekera gave his evidence orally under cross-examination a different picture emerged. Mr Goonasekera said he had no particular understanding or expectation about Mr Oberg making any particular investment, or any investment of a particular character. Rather, he intended that Mr Oberg should invest the extra funds as he thought appropriate. 93 Indeed, he was asked specifically, and answered: HIS HONOUR: Did he say anything like, "You should put it in the same investment as the previous investments"?---No, he did not. 94 So far as the payment on 31 October 2011 was concerned, Mr Goonasekera was adamant that he had never handed cash to Mr Oberg. The following exchange occurred: MR WHITE: You just gave him the cash?---Not actually currency notes. Well what does: Gave cash, 20K to Colin at Miranda mean?---I need to find out how it was deposited. I never gave him cash, like in actual money, to his hand, ever. HIS HONOUR: What do you mean by paragraph 34 of your affidavit?---Your Honour, though I've written it cash, but I never gave him, at any stage, money in hand, like that. Well, what does that – what do you mean by paragraph 34? Is that true or not? If it's not true, what was the position?---I withdrew the money from my account but I can't recollect as to how I gave him the money but never, right through this, that I have given him cash, your Honour. You say that you wrote the words "gave cash" and you put in your affidavit "gave that money in cash" but that's not what happened?---That's correct. As I said, never in cash. Well, how did you give him the money on that occasion?---I cannot recollect at this stage. 95 Where Mr Goonasekera's oral evidence departed from his affidavit evidence, I regard his oral evidence as more reliable. Although the discrepancies do not have much effect on the matters which fall directly for decision, they obviously had the potential to reflect adversely on Mr Goonasekera's credit. His position under cross-examination was sufficiently clear and unembarrassed that I think it unlikely that Mr Goonasekera was initially responsible for the unreliable picture painted in respect of the matters I have mentioned. I cannot help but think that he was put in a false position as his affidavit was drafted and settled. Ultimately, of course, Mr Goonasekera must take responsibility for the affidavit he swore and I am satisfied that he was insufficiently diligent in that regard. That does not mean, however, that his credit was substantially affected, or that I disbelieve him. On the contrary, his oral evidence, in particular, was sufficiently direct and candid to give adequate support to the general picture. 96 I am satisfied, therefore, that specific requests for advice were made about how to invest the $130,000 referred to in those conversations, that Mr Oberg advised that it be entrusted to him to invest, and that Mr Goonasekera acted on that advice. 97 As I mentioned earlier, two of the conversations (31 October 2011 and 29 April 2012) occurred after WealthSure notified Mr Oberg that his authority was revoked. In his latest affidavit, Mr Goonasekera said: 43. I did not know that Oberg's position as an authorised representative of Wealthsure had been revoked until about November or December 2012 when I met with Mr La Rocca. 44. I did not receive any letter from Wealthsure in July 2011 (or at any time) informing me that Oberg was no longer an authorised representative of Wealthsure. I understand that Ms Blackwell of Wealthsure contends that she sent such a letter to me on or about 25 July 2011 at an address "GPO Box 3989 Sydney". I did not receive any such letter. That GPO Box number does not belong to me or my wife and never has. 45. Had I received such a letter or otherwise been informed that Wealthsure had revoked Oberg's authority to continue as an authorised representative, I would have been very concerned and would not have continued to make investments with Oberg unless I had understood the reasons for his removal and been satisfied that there were no doubts about Oberg's competence or honesty. 98 I accept this evidence. I think it is likely that Mr Goonasekera would have reviewed the position anxiously if he had cause to question his trust in Mr Oberg, because that was the foundation upon which all the arrangements depended. 99 In fact, for reasons which were not explained, or explored in cross-examination, shortly after the last transaction, Mr Goonasekera posed a series of questions to Mr Oberg. I will set out the queries and responses in full. Mr Goonasekera wrote, in an email: Hi Colin … There are few things that have been troubling me regarding payments of Taxes, Loan repayments, Super Fund and other expenses, especially as I am away and not in with the system, and also have noted lots of sudden large sum payments in recent times, and further payments towards the end of the financial year? Firstly re the HDR Super Fund: Has this fund got to be registered as a company of some nature? What is this fund all about? Is it an investment? And if it is just a Super Fund, is there any Govt contribution towards it, and is it something additional to any other payment if any, that I am contributing to? And the sudden payment need of $9520 payment. What is my monthy contribution/Expense towards it? What taxes do we pay towards same? And if so doesn't it have to be shown on the same yearly tax returns? Last year 2 sets of tax returns were sent? Is any payment component Tax Refundable? What is the end Saving that I will receive and at what stage? LOANS/REPAYMENTS Please let me know as to which Banks that I do have loans with and as to the amounts borrowed, and approximate payments monthly/yearly and other fees? The reason for this is because, every month, the loan repayments are far over the Rents received, and other payments towards the properties, with no tax refunds at the end of the year? Is the Negative gearing system applicable? Every 3-4 months I keep remitting approximately A$ 20000, and the funds keep reducing for some payment or the other. This does not leave me with anything as and when we do return to Sydney. INVESTMENT PROPERTIES Recently I contacted the respective agents who are handling Perth and Wolli Creek properties regarding their values, if I were to sell? The figures given were Perth at A$343K and Wolli Creek at A$430-450K, considering properties sold recently in the same complex. Considering the other expenses that have to be paid at the time of selling, are we still ahead on these investments considering the monthly payments towards them? And as to how long more should I have to hang on to them? Regarding Peakhurst, I have no intention of going back to live there, if I had a choice. At his stage I do not have a selling value of that place. I am seriously thinking of getting rid of same when I visit Sydney later in the year, as the property is not really looked after by the tennants and the agent, which will also incur some work to be done prior sale. My intention is to somehow get a small unit to retire once we get back to Sydney. As I wont have an income then, I somehow have to pay up in full before I finish up in Kuwait. At this present stage, depending on my health etc I plan to be in Kuwait another 2 years or so? As you know I have nearly completed 6 years in Kuwait. So please let me know as to how I need to plan my near future. I understand that lots of changes are taking place at your end. These issues are troubling me a lot. Please let me know Roville [Mr Goonasekera] 100 Mr Oberg replied: 20th June, 2012 Dear Roville and Marie, I received your queries outlining taxes; loans etc and I'll attempt to answer them as best I can. Firstly re the HDR Super Fund The superannuation money for you and Marie are now in a structure that you control rather than be at the mercy of stock market fluctuations. The superannuation that you had with Qantas and that Marie had have been transferred to this fund from the BT account that we set up years ago. The funds have been invested in capital stable interest bearing accounts earning 10% per annum and the income will be tax free. You are not required to make any payments to the fund and there are no government contributions towards it as you are currently a non resident of Australia. The fees of $9,520 are bills I should have sent you years ago when the funds was originally set up in July 2009. These costs are a once off except for the accounting fee which will be approximately $660 per annum. Further there is a filing fee with ASIC each year for the company of $45. The end saving will be the return on the investments that you receive of 10% per annum that will be tax free on your return to Australia when you retire. You will be earning about 22,000 per annum for an outlay of approximately $705 and the principal of $215,000 stays in tact. Loans/repayments You have two loans. Homeloans of $280K and ING of $395K. The approximate monthly repayments based on 7% interest payment are $12,000. Investment Properties The current values of the properties are the same as when you bought them. There is a downturn in the property market everywhere in Australia at the moment. You should be hanging onto them till the property market improves and sell them as you get closer to retirement in two years time. I do understand your position with Peakhurst. Marie ends up paying tax on her half of the rental income while your half is absorbed by the tax losses on the other two properties. In view of your comments it may be prudent to look at selling Peakhurst and reducing your overall debt situation. With your other investments you should be able to retire in comfort in two years time with a debt free unit in place and money in the bank. I hope that this helps you not be so troubled. If you need to know anything else please let me know. Regards, Colin 101 It is impossible to know what to make of Mr Goonasekera's concluding comment in his own email that: "I understand that lots of changes are taking place at your end. These issues are troubling me a lot", and he was not cross-examined about the meaning of either statement. There is no evidence to contradict Mr Goonasekera's assertion that he had no knowledge of any change to Mr Oberg's authority or association with WealthSure when any of the transactions occurred and I, therefore, accept that evidence. Whether WealthSure could be liable for events occurring outside the period of Mr Oberg's authority must await later discussion. 102 I need now to return to the perspective provided by Mr Goonasekera's oral evidence, which I accept, about the transactions made by Mr Oberg directly under the power of attorney, although assessment of any liability WealthSure might have for the transactions must also be deferred for later discussion. 103 I am satisfied that, although Mr Goonasekera did not know that Mr Oberg was transferring money out of his self-managed superannuation fund, had he known about those transactions he would not have been concerned because he would have assumed that the transfers were directed to investments in his interests. I am also satisfied that he regarded Mr Oberg as acting directly for him in everything that he might do under the power of attorney. No doubt, he did not anticipate deceit, dishonesty or fraud, because he trusted Mr Oberg, implicitly and expressly. He did not, I am satisfied, ever intend to invest WealthSure with any of the authority under the power of attorney; it was, and was intended to be, personal to Mr Oberg. Nevertheless, giving Mr Oberg the power of attorney was an ingredient in the overall judgment that Mr Goonasekera made that Mr Oberg, a qualified financial planner and an authorised representative of WealthSure, could be trusted in those capacities to deal effectively and advantageously with investments on behalf of the Goonasekeras. Mr Goonasekera regarded the particular arrangements under the power of attorney (which were based on his personal trust of Mr Oberg) as an extension of Mr Oberg's role as a trusted financial adviser and as an authorised representative of WealthSure. 104 Some of the evidence on which those conclusions are based is as follows: MR WHITE: … In that affidavit, the May one, Mr Goonasekera, can you find annexure HG4?---Yes. You've got that. HG4, there is a table, have you got that?---Yes. Yes. And you see halfway down the table there's a reference to a direct debit being set up under the power of attorney and there's a date given of 12 June 2007. Do you see that?---Yes. And is that something you knew about in 2007?---No. But you understand, do you now, that that is what happened?---That's correct, from the documents that was given to me. And if Mr Oberg had – I take it what your evidence is, is that Mr Oberg didn't inform you about that in 2007?---No. But if he had informed you about that you would have been happy for that to happen because you had given him the power of attorney to manage your accounts?---Yes. … MR WHITE: And when you signed the power of attorney were you in Australia at the time?---Yes. In September 2006?---Yes. And Mr Hancock explained it to you?---Yes. Was he a solicitor?---Yes. He wasn't from WealthSure, to your knowledge, was he?---No. He was in Hurstville. From Hurstville?---His office is in Hurstville. Yes. And he explained to you, didn't he, that you were effectively delegating to Mr Oberg the ability to control your accounts and manage them?---Yes, he did. And that he could manage your investments without recourse to you?---He didn't explain that in detail but he said he is – can, you know, manage everything, sign for everything. You understood that was the effect of it?---Yes. … MR WHITE: …. So you understood that when he made a decision, for example, by transferring money from one of your accounts or funds or loans to manage the investments that he was doing that on your behalf?---Yes, I understood that. … MR WHITE: In paragraph 7 of the affidavit, that's the 2015 affidavit, you refer to a recommendation by Mr Oberg that you establish a self-managed super fund? In June 2009; do you see that?---Yes, I see that. Paragraph 7. And did you understand that that meant that you would be removing your funds from your current super fund and you would be placing it into a new fund that was set up that was in your name and/or your wife's name and that you would have the ability to make decisions about investments?---Yes. But you also expected that, as part of the arrangement you had entered into with Mr Oberg, that he would, once the fund was established, make decisions about where the money was invested?---Yes. I followed his guidelines all along. And, consequently, you weren't concerned to know which particular investments he would make out of the self-managed super fund?---Can you say that again, please? You weren't concerned to know the particulars of the investments that he made with the money that was in the self-managed super fund?---No. Not directly, but every time I saw him, he confirmed that everything was working fine. … MR WHITE: … Mr Goonasekera that when Mr Oberg was making decisions about where to invest the money for you, you understood that when he was doing that, and when he carried it out, he was acting as your attorney?---Yes. 105 Mr Goonasekera also deposed that, apart from the 2003 financial plan and the email on 14 January 2009 about his desire to invest $100,000, Mr Oberg gave no written advice and did not ever provide a Statement of Advice or a Product Disclosure Statement. 4.4 The estate of Mrs Lucey 106 Mrs Aldemira Lucey died in October 2012 at the age of 84. Affidavit evidence was given in the case brought by an executrix of her estate, her sister Ms Toni Hemming (the applicant) and her daughter Ms Peta O'Connor. In addition, I received particular evidence from other witnesses (some remaining applicants and some former applicants) as "tendency" evidence to which I will refer later. 107 Ms O'Connor held an enduring power of attorney for her mother from 2005 until Mrs Lucey's death but she deposed that her mother was both independent and competent and conducted her own affairs. 108 Mrs Lucey's husband died in 2002 and she moved to a retirement home in Cairns in 2003. Mr Oberg was her financial adviser from at least 2000, when Mr Oberg was an authorised representative of Madison Securities Pty Limited and Mr Oberg organised investments for her on the "Madison BT Platform". In April 2005, Mr Oberg advised Mrs Lucey by letter that he had "changed Dealer Groups to WealthSure" and asked her to sign documents transferring her investments "from the Madison BT Platform to the BT Platform", telling her it was an "administration exercise only". Both Mr Oberg and WealthSure appear to have been shown as Mrs Lucey's adviser in BT "Pension Plan" documents after that time. 109 Some part of the BT arrangements involved the payment to Mrs Lucey of a pension of $2000 per month and at 4 March 2008 the value of her fund was shown as $292,427.54. 110 Some of that amount was held in shares in managed funds. On 6 and 7 October 2009, a number of those securities were redeemed, to a value of a little over $151,000. On 13 October 2009, Mrs Lucey instructed the transfer of $150,000 from her BT cash account to her account at the Commonwealth Bank of Australia ("CBA") and on 14 October 2009 that amount showed as a credit to her CBA account. On 15 October 2009, the same amount was withdrawn. 111 At the same time, on 14 October 2009 Mrs Lucey made a diary note, referring to a telephone conversation with Mr Oberg and noting that $150,000 was to be put into the account of "JRCC Finance" and also noting the BSB and account number for JRCC Finance. 112 Ms O'Connor deposed that the following year she had a discussion with her mother as follows: 25. In 2011 we discussed her monthly payments because she raised them following a dramatic fall in the monthly amount she was receiving from Colin. She was concerned to know the reasons for the reduction. 113 Ms O'Connor also deposed to a conversation in August 2010 in these terms: 28. In August 2010 I had a telephone call with mum and Colin Oberg. 29. I made the call in the presence of mum with the phone on loudspeaker so she could hear what was discussed and give her authority to enable me to speak on her behalf. 30. During the course of the conversation I discussed mum's bank account statements with Colin in words to the following effect: Me "Colin, mum is concerned that on her bank statements her monthly payments have dropped significantly. Can you tell us why that is?" Oberg "Yes, because of the financial crash last year. The investment is not making any money. Some of it is actually frozen and not accessible currently." Me "But why has the income been cut so drastically when the financial markets are now recovering?" Oberg "It's because the investments are still not making any money''. 31. Mum and I accepted the explanation Colin gave. 114 Ms Hemming deposed that nothing in Mrs Lucey's papers indicated that the $150,000 had been returned. Ms O'Connor's understanding also was that it had not been. 115 At the trial, counsel for the applicants sought to rely in Ms Hemming's case for the estate of Mrs Lucey upon a notice given under s 97 of the Evidence Act to support the contentions: (a) That Colin Oberg induced clients to pay money into bank accounts controlled by Mr Oberg by advising the clients that he would invest the money on their behalf in an investment that would generate a return to the client in the short term; (b) That Colin Oberg would fail to provide those clients with any product disclosure statement or any written statement of advice; and (c) That Colin Oberg would fail to return to the client the moneys they invested (or any return on those moneys). 116 The notice identified the evidence of Mr Casaclang and Mr Gibson as well as evidence from former applicants, Mr Ahrens, Mr Chapman, Mr Doyle, Ms O'Keefe and Mr Telim, to which I will refer hereunder. At the trial, counsel for the applicants also sought leave to rely in Ms Hemming's case on the evidence of Mr Molden, another former applicant. 117 Counsel for the respondent opposed any reception of tendency evidence. However, I was satisfied that the evidence appeared to be relevant within the meaning of ss 55 and 56 of the Evidence Act and that, taken with the evidence to which I have referred in Ms Hemming's case, the evidence appeared to have significant probative value. I therefore ruled that the evidence was admissible as tendency evidence. I gave leave pursuant to s 100 of the Evidence Act for Mr Molden's evidence to be received for the same reason. At the same time, I rejected an application made by counsel for the respondent that the evidence be excluded under s 135 of the Evidence Act because the probative value of the evidence might be outweighed by the danger of unfair prejudice to the respondent. Mrs Lucey's death, and the consequent unavailability of direct evidence about the matters to which the tendency evidence is directed, is a relevant circumstance to take into account. The respondent is not "unfairly" prejudiced by the reception of other probative evidence in that circumstance. 118 Ultimately, the affidavits of Mr Doyle and Ms O'Keefe were not read or relied upon. 119 Mr Ahrens deposed that Mr Oberg became his tax accountant in about 1994, and thereafter prepared his annual tax returns. Mr Ahrens said, in his affidavit: 9. On the basis of Mr Oberg's advice, I invested in numerous financial products between 1996 and 2011. These financial products included negative gearing options, offset accounts, managed funds, superannuation and how to go about buying and selling a property. In 2002, Colin also provided some advice on how to buy and sell shares directly on the internet. 10. … In respect of each of these investments, my original outlay was always returned together with all interest payable or the investment is still generating wealth today. None of these investments were handled directly by Mr Oberg nor did they involve transferring any money to Mr Oberg or the respondent. 120 On 17 May 2011, Mr Ahrens received a telephone call from Mr Oberg who advised him to make an investment in the short term property market, arranged directly by Mr Oberg, which would provide a 15% return in six weeks. The money was required at once. Mr Ahrens transferred $75,000 to him that day, to an account called the "Tuesday Finance Account". Two days later, Mr Ahrens received a further telephone call to advise him that one of the seven member group of investors had not been able to raise his share in time, and soliciting from Mr Ahrens a further contribution. On 20 May 2011, Mr Ahrens transferred a further $75,000 to Mr Oberg. None of the $150,000 was returned. There was no documentation. 121 It must be observed that those transactions occurred some months after Mr Oberg's authority had been revoked and about 19 months after the transfer from Mrs Lucey. Although I ruled that Mr Ahrens' evidence was amongst the evidence which should be admitted on the question of tendency, now that all the evidence is available for analysis I cannot see in Mr Ahrens' evidence any basis for any inference about the likely nature of any conversation which Mr Oberg may have had with Mrs Lucey, or the nature of any advice he may have given her. A more general inference is available, and I will discuss it later. 122 Mr Chapman's tax accountant (both personal and business) from about 1996 to 1999, and again from 2000, was first one, and then another, accountant working in Mr Oberg's accountancy practice. Mr Chapman would often see Mr Oberg at his local shopping centre where Mr Oberg's office then was. At some point, Mr Oberg told Mr Chapman that he was a financial adviser for WealthSure. 123 Eventually, on 3 March 2011, they met in Mr Oberg's office in Sydney where Mr Chapman noticed various accreditations from WealthSure even though, by this time, Mr Oberg's authority had been revoked. Nevertheless, Mr Oberg outlined an investment in which others had joined, spruiking it as a WealthSure investment. The investment was to return 10% in 6-8 weeks. Over about the next 11 months, Mr Chapman made a series of transfers to Mr Oberg, sometimes with Mr Oberg accompanying him to the bank for that purpose. In respect of three of the transfers, Mr Oberg signed a receipt (which was countersigned by Mr Chapman) indicating that the funds were to be returned in six months (not 6-8 weeks) with 10% interest. Mr Oberg explained the discrepancy to him as the maximum period it might take to complete the investment. 124 The investment was explained to Mr Chapman as one where WealthSure was assisting a small bank in the United States to take over a larger bank. 125 Mr Chapman initially made transfers of $60,000 (3 March 2011), $45,000 (23 March 2011), $25,000 (28 March 2011) and $15,000 (30 March 2011). On 6 April 2011, Mr Oberg rang to say that some (not all) of the money had "arrived back" – just under $115,000 of the $145,000 transferred to that point – the remaining $30,000 being "still with WealthSure". On 18 April 2011, Mr Oberg called suggesting further amounts of investment in the same project and Mr Chapman complied. Thus a further $50,000 (18 April 2011), $10,000 (2 May 2011) and $50,000 (2 February 2012) were transferred to Mr Oberg. Mr Chapman's total exposure was finally $140,030, which was never returned. Apart from the receipts there was no other documentation. 126 Again, I am not able to draw particular inferences from these circumstances which bear in a useful way on an understanding of the likely course of events concerning Mrs Lucey, effectively around two years earlier, and before Mr Oberg's authority was revoked although, again, a general inference is available. 127 Mr Telim's accountant worked in the accounting business apparently purchased by Mr Oberg in about 2003, but Mr Oberg was not his accountant personally. In early 2011 (again after revocation of his authority therefore), Mr Oberg rang Mr Telim suggesting an investment with WealthSure for 12 months with a 10% return. Mr Telim went to Mr Oberg's office and they talked further. On 23 February 2011, Mr Telim transferred $80,000 to Mr Oberg. There was no documentation. The money has not been returned. 128 Again, this transaction was after Mr Oberg's authority was revoked and in this case there was no prior history of a relationship between Mr Oberg and Mr Telim based on trust, as there had been, for example, with Mr Ahrens and also with Mrs Lucey, according to her daughter. There was one similarity with Mr Chapman in that Mr Oberg went to the bank with Mr Telim. As with some of the other tendency evidence there is no particular help with Mrs Lucey's circumstances. 129 Mr Molden's exchanges with Mr Oberg were more relevant. From the early 1990s, Mr Oberg was his accountant. In about 2000, Mr Oberg also began providing financial advice to Mr Molden and to his business. 130 In May 2010, Mr Molden asked Mr Oberg for advice about how to invest some available cash. The advice was to invest it through Mr Oberg for a 10% return in only three months. Mr Molden made a series of transfers; some from company funds and some funded by drawing on a personal home loan line of credit. In this way, he transferred $135,000 in early May 2010 ($50,000 company funds and $85,000 personal funds), $40,000 in early July 2010 (personal funds) and $50,000 in September 2010 (company funds). None of the $225,000 has been returned. There was no documentation. 131 Mr Molden's investments were made over the same period as the Casaclangs and the Gibsons were sought. In each of those cases a relationship of trust had developed which appears to have led to an almost unthinking acceptance of Mr Oberg's advice. The same may be said of Mr Ahrens' faith in Mr Oberg early in the following year. To that extent, at least, there is the basis for an argument that Mrs Lucey's earlier investment was likely the product of the same exploitation of trust and was the result of false assurances which were uncritically accepted. Mr Chapman and Mr Telim do not fall as easily into the same category. I accept that they were duped, but there is not the same foundation for a conclusion of breach of a trust which had been established over years arising from a course of conduct which was apparently professional and effective. 132 The highest inference that can arise from their evidence is that Mr Oberg was prepared to tell a story in order to obtain a transfer into an account he controlled, by promising a secure and profitable investment. I place no real weight on their evidence as tendency evidence. 133 I discount Mr Ahrens' evidence also. His case occurred when Mr Oberg was no longer an authorised representative and he was apparently embarked on a course of conduct altogether heedless of professional obligations. 134 Evidence to which I will refer makes it apparent that complaints about Mr Oberg transferring money from clients' cash management accounts to one of his own accounts were raised with Mr Oberg in March 2010. The earliest of the affidavit tendency evidence post-dates those events. All of the transactions for the Casaclangs, the Gibsons and Mr Molden post-date those events. I do not know if at some stage Mr Oberg simply threw caution to the winds, or whether he had some pressing financial issue to which those transactions owe their genesis. Whatever the explanation, I cannot finally see in them a particular inference to explain what happened in Mrs Lucey's case. 135 I need to be cautious also to find a tendency in events which post-date Mrs Lucey's transfer. 136 However, with those reservations all expressed, in my view, there is adequate support for the modest findings sought by counsel for Mrs Lucey which I set out earlier. In support of such modest findings even the evidence of Messrs Ahrens, Chapman and Telim make their contribution by way of a general inference, as I mentioned earlier. Moreover, there was further documentary evidence adduced during WealthSure's case which also bears on Mrs Lucey's case as tendency evidence and which enables me to reach conclusions about that case with comfortable satisfaction. 137 I am satisfied that Mrs Lucey was one of Mr Oberg's clients who placed their trust in him to the point that they agreed to place money in his hands to invest for them. The particular schemes and the individual returns promised are not critical to the general picture. I have no doubt that Mr Oberg obtained Mrs Lucey's money on a false promise to invest it for her securely and that she transferred the money to him with the intention that he should invest it for her. In my view, it is probable that there was no documentation and that the money was never returned. 5. Evidence arising in the respondent's case 138 The respondent provided affidavit evidence from Mr Darren Pawski (who was until September 2013 WealthSure's Managing Director and Chief Executive Officer) and Ms Cristy Blackwell (who was until 27 February 2015 WealthSure's Compliance Manager and then the Head of Risk Management and Legal with similar responsibilities). 139 Mr Pawski's family trust continues to hold the majority of WealthSure shares. He resigned his position pursuant to enforceable undertakings given to ASIC by both WealthSure and himself personally on 29 August 2013. By the same undertakings Mr Pawski agreed not to take part in any capacity in the management of any licensee or to exercise any influence over decision-making at WealthSure and WealthSure agreed to persist with a range of management initiatives and to engage a Compliance Consultant and an Independent Expert, each of whom was to have identified responsibilities. 140 The documents record WealthSure's and Mr Pawski's acknowledgment of a number of concerns held by ASIC including lack of appropriate supervision by Mr Pawski and WealthSure of WealthSure's authorised representatives and a failure of risk management and compliance controls. 141 Mr Pawski's affidavit evidence seemed directed to establishing that, under his superintendence, WealthSure had adequate practices and procedures in place to protect its clients and that he had (at least when Mr Oberg was approved as an authorised representative) no reason to doubt Mr Oberg's probity or competence. 142 However that might be, there is no doubt that sufficient reason was given to entertain those doubts, at least from early 2010. At a more general level, WealthSure has admitted insufficient supervision and control. That seems to be exemplified by the evidence concerning Mr Oberg, given what WealthSure knew and its failure to take meaningful steps to protect clients, to which I will refer. 143 Ms Blackwell was absent on maternity leave during 2010 but upon her return she became concerned about the matters to which I will refer. She was in charge (under Mr Pawski) of steps to alert authorities and clients about Mr Oberg's conduct but those steps, I am satisfied, were meagre and inadequate. 144 In Ms Blackwell's absence, the duties of Compliance Manager throughout 2010 were carried out by Ms Kirsty Pawski, Mr Pawski's then wife. Ms Pawski was not called to give evidence. 145 On 3 March 2010, Mr Pawski was alerted by a compliance officer at "Macquarie", one of the fund managers that issued products on WealthSure's approved product list, that Mr Oberg had arranged money to be transferred from a number of his clients' cash management accounts to JRCC Finance. A list of transactions was supplied shortly thereafter. They totalled $853,500. 146 Mr Pawski contacted Mr Oberg who informed him that all transactions had been based on "verbal" authority and there was no documentation. Mr Oberg said the money would be returned but represented to Mr Pawski that they were "loan funds". This assertion may be the foundation for a suggestion in the present case that transactions of those nature are not a "financial product" but involved the establishment of a "credit facility", the legal significance of which I will discuss in due course. However, it did not appeal to Mr Pawski who gave evidence that he told Mr Oberg that the arrangement might constitute an unlicensed managed investment scheme. 147 In any event, Mr Pawski told Mr Oberg he would have to return the money and Mr Oberg promised to do so. He told Mr Pawski on 8 April 2010 by email that he had arranged finance with St George Bank Limited (an additional $900,000) which would enable the funds to be returned by 30 April 2010. Mr Pawski took the view that WealthSure was obliged to report the matter to ASIC and WealthSure did so on 9 April 2010. The "breach or likely breach" was described as follows: 2.5 Description of breach or likely breach A representative of Macquarie phoned Mr Darren Pawski (Managing Director of WealthSure Pty Ltd) on the 4th March 2010 to advise that they had identified an unusual pattern of transactions which indicated large lump sum withdrawals and then instructions for the funds to be deposited to the same account, namely JRCC Finance Pty Ltd. Mr Pawski contacted Mr Oberg by phone that day and discussed the situation as outlined by Macquarie. Mr Oberg confirmed that a group of his clients had agreed to deposit funds to JRCC Finance Pty Ltd for the purpose of investing. Mr Oberg was unaware that by pooling of investor funds for the purposes of investments it met the requirements as a managed investment scheme. As soon as Mr Oberg was aware, he has taken steps to ensure funds returned by taking a loan over his own property for the sum of the client's investments. Mr Oberg has received conditional approval and we anticipate return of funds to the clients upon settlement. 148 Mr Oberg reported the return of some client funds on 7 May 2010, some more on 18 May 2010, and proposals to return more on 21 May 2010 and 24 May 2010. On 17 June 2010, Mr Oberg confirmed that all funds had been repaid. Mr Pawski's evidence was that he verified this statement with a representative of Macquarie, but was unable to provide any documentary support. 149 Later, on 19 October 2010, Mr Pawski sought and obtained from Macquarie details of transactions on the particular accounts which appear to show repayments in May and June 2010 as well as the original transactions debiting the accounts in favour of JRCC Finance. It is unclear whether Mr Oberg used the claimed facility with St George Bank to make any of the repayments, although it is obvious that those events were occurring at around the same time as Mr Oberg was taking money from other clients to whom I have already referred. 150 WealthSure Compliance Committee Minutes for 30 July 2010 record that there were 74 ongoing complaints at that time. The concern about Mr Oberg is referred to as follows: 6. Breaches … Colin Oberg reported to ASIC, Colin has now settled with this clients by taking a loan out against his properties and ASIC will not pursue. 151 That is apparently where WealthSure and its officers were content to leave the matter. However, the problem had not resolved and shortly thereafter there were more complaints. 152 On 20 September 2010, a complaint was made by the daughter of Mrs Megan Jenkinson that in January 2008 $450,000 was deducted by "Colin Oberg WealthSure Pty Ltd" from Mrs Jenkinson's BT Wrap investment. BT Wrap was a WealthSure approved product. Apparently, $125,000 was returned which may have included a payment of $25,000 on 22 July 2010 following repeated requests by Mrs Jenkinson or her daughter. 153 Ms Pawski rang Mr Oberg. Later that day she wrote to him. Although I set out an extract earlier, I shall set out the letter in full: Dear Colin COMPLAINT -INVESTMENT ISSUES I refer to our discussion earlier today with regard to the complaint received by Wealthsure Pty Ltd on behalf of Megan Jenkinson. Please find attached a copy of the complaint letter encompassing the issues raised by Ms Jenkinson's daughter, Dimity. You have advised that you invested approximately $500,000 of Ms Jenkinson's money in overseas mortgage trusts. These mortgage trusts are not on Wealthsure's approved product list and have not been researched by Wealthsure. Please provide a written statement explaining why Ms Jenkinson's money was invested into these investment products, with particular regard to why you invested client money into investments that were not approved by Wealthsure. We require documentation supporting the amount of Ms Jenkinson's initial investment and any capital returned to her. We also require the name of the investment funds and any documentation you have regarding these investment funds. You have advised that Ms Jenkinson requested these investments – please provide evidence of this request. In addition, you advised Wealthsure that Ms Jenkinson's funds were invested in your name – please provide a statement explaining the reasons for that. Please also provide a statement confirming whether any other clients have been invested into non-approved investment products. Where this is the case, we require the provision of their names and contact details. This list should not be limited to those clients whom you believe are "financial planning" clients. Due to the nature of the advice, your accounting clients would most likely also be considered financial planning clients. Wealthsure is extremely concerned by the nature of these allegations. As explained to you in our discussion, based on the information you have provided Wealthsure and the apparent breaches of the Corporations Act and Wealthsure's internal policies and procedures, Ms Jenkinson is entitled to the immediate return of her money. We require that the outstanding funds are returned to her within 7 days. Failure to comply with this request will result in Wealthsure reporting this matter to ASIC. Wealthsure's obligation to notify ASIC of a significant breach will encompass both this complaint and the alleged unauthorised managed investment scheme earlier this year. Due to the seriousness of both allegations, it is likely that ASIC will conduct a formal investigation into these matters. Due to these apparent systemic breaches, Wealthsure has no option but to immediately suspend your authority to provide advice under the Wealthsure license pending the outcome of our investigation. No advice is to be provided to any of your retail or wholesale clients until Wealthsure has completed its investigation. Wealthsure has suspended your commissions until such time as the investigation is complete and Ms Jenkinson's money has been returned to her. In light of this new complaint and having regard to the alleged unauthorised managed investment scheme, Wealthsure requires a complete audit of your client files and processes. Mr Wayne Turnbull our NSW Practice Manager will be attending your offices at lpm on Friday, 24th September 2010 to collect client files and conduct an onsite audit. Your client files will be audited at head office and returned to you once the audit is completed. Please ensure you are available for this meeting and you have your client files readily available for Mr Turnbull. If you need to make alternative arrangements, please contact Wayne on 0400 xxx xxx. If you wish to discuss these matters further or have any questions, please contact me on 0432 xxx xxx. We hope to be able to resolve this complaint as soon as possible. Regards Kirsty Pawski Operations Manager Wealthsure Pty Ltd … 154 Mrs Jenkinson's outstanding money was not recovered. There is no evidence it was ever invested in "overseas mortgage trusts". The matter was not reported to ASIC in seven days, or within any reasonable period. None of the requests for documentation or explanation were met. There was no follow-up. Mr Turnbull did not go to Mr Oberg's office or recover any WealthSure stationery, any client files or any other material. Mr Oberg was left free to continue to display his WealthSure accreditation and use WealthSure stationery if he wished. 155 The suspension of Mr Oberg's authority was, moreover, short-lived and soon there was even greater reason to deal with such matters. 156 On 30 September 2010, WealthSure received a complaint from Mr Oberg's sister, Ms Catherine Johnston, that he had misappropriated over $1 million from their parents' BT accounts, without documentation and without returning their funds. On the same day Ms Pawski wrote by email to Mr Oberg terminating his appointment as an authorised representative. The email said: Dear Colin Please be advised that effective today, Wealthsure has terminated your authorised representative agreement and cancelled your authority with ASIC. The corporate authority for Oberg Financial Planning Pty Ltd has also been terminated. You are no longer authorised to provide financial services in any format under the Wealthsure license. You are required to notify any clients who have not yet completed business but would reasonably conclude that you are an Authorised Representative of WealthSure of your change of status. Such notification will be in made in writing. You are required to return to Wealthsure the following within one month from the date of this email: • Authorised Representative Agreement; • Certificate of Authorisation; • Stamp; • Technical, marketing and research papers; • Any Wealthsure software; and • Any other item that would reasonably be construed as belonging to Wealthsure. Wealthsure note that your website refers to financial planning and your authorised representative status with Wealthsure. This should be removed immediately. WealthSure is to be informed immediately of any current, future or anticipated claim against you, which may result in legal action to which there is a possibility that WealthSure may be considered liable. You are to advise WealthSure immediately if, to your knowledge there are any investigative or disciplinary actions pending against you by the ACCC, the Australian Securities Investments Commission or any professional and/or industry association. Wealthsure has taken this step due to the extremely concerning complaints lodged by Ms Megan Jenkinson and your parents and the alleged illegal managed investment scheme run via JRCC Finance Pty Ltd. Your failure to provide documentation and adequate statements in response to these complaints and your continued involvement in the MIS after Wealthsure directed you to wind up the MIS, leaves Wealthsure with no option but to terminate your agreement based on apparent systemic breaches of the Corporations Act, the terms of the Wealthsure Representative Agreement and Wealthsure policies and procedures. On that basis, this matter including all complaint circumstances will be reported to ASIC tomorrow. Under the circumstances, I have no doubt that ASIC will commence an immediate investigation. You should be aware that under the provisions of the ASIC Act, ASIC has the jurisdiction to press criminal charges against you. On that basis, it is in your best interests to co-operate with Wealthsure in assisting these clients to locate their investment funds and, where necessary, provide documentation and statements that will assist the clients to recover their funds. Wealthsure has also written to all fund managers with whom you have clients and advised them that your authority has been terminated and you are to be removed from the client account. Please confirm your understanding of this email. As previously requested, I require a detailed list of all clients involved with JRCC Finance Pty Ltd and all funds owed to the clients. I also require a written statement in relation to the allegations raised by your sister on behalf of your parents. Your urgent attention to this is required. Regards Kirsty Pawski Operations Manager Wealthsure Pty Ltd … 157 However, no step was taken to follow up, monitor or enforce the directive that clients be notified, or to recover the WealthSure material identified, or to report the matter to ASIC the following day. On 12 October 2010, ASIC was sent a formal notice of revocation of Mr Oberg's authority, presumably for its records, but there is no indication that the reason was disclosed. 158 Any attempt by WealthSure to notify any of Mr Oberg's clients occurred much later and did nothing to alert them to any risk or danger to their own finances. 159 On 17 October 2010, Mr Oberg's sister sent further details of her complaint, including a statutory declaration from Mr Oberg's father which included the following: 2. My son Colin James OBERG has been my accountant and financial adviser since about 1994. 3. From November 2006 to August 2007, I loaned my son Colin money from my BT Superannuation account by writing cheques made out to him. He told me that he was repaying some of this money into the same account but, because I never received statements for the account, I had no evidence of this. Later examination of the statements shows that the money was not repaid. I told Colin in late August 2007 that I would not lend him any more money. 4. I asked Colin more than once if he was able to withdraw money from my BT account and he told me each time that he could not access my account without my permission. 5. Money taken from my BT Superannuation account after this time was taken without my knowledge or permission, nor my wife's knowledge or permission, by my financial adviser and son Colin James Oberg. 6. I do not know by what means he was able to take the money and was only aware that it was gone when my daughter Catherine told me of a confrontation she had with Colin in November 2008 where Colin admitted to the theft. On more than one occasion since November 2008, Colin has admitted directly to me and to my wife Shirley that he took money from our BT accounts without our knowledge or permission. 7. I was not aware of the existence of a BT Sales account set up in my name in 2003, until November 2008 when we contacted BT through Westpac. We obtained copies of statements for both BT accounts which show multiple large withdrawals. My wife and I had not made ANY withdrawals from either account at any time except for the cheques made out to Colin Oberg from November 2006 to August 2007. We closed the accounts in early 2009. 8. Colin has not told us where the money he took went. He has said that it is invested in a scheme with a syndicate. He has made many promises that it would be returned but the deadlines set have all been passed with no money returned for the past two years. 9. Colin came to me and my wife on 19th Oct 2009 demanding that we pay $150,000 within an hour and a half in order to release our misappropriated funds from an overseas bank. The urgency, he said, related to a time lock on the bank. I gave him a cash cheque for $150,000 but none of our money was returned. 10. On 19th August 2010 Colin demanded that we pay a further $80,000 within the next hour to release our money tied up in an overseas bank with a time lock. I again wrote out a cash cheque for $80,000 but no money was returned. 11. It is my testimony that my son Colin James Oberg has, through his role as my financial adviser, stolen approximately one million dollars from my BT accounts. He has extorted a further amount of $230,000 from me in relation to recovery of the stolen money. 160 Similarities with matters concerning other clients of Mr Oberg's will be noted. Mr Oberg's sister attached a more detailed statement about some of those transactions and the similarities are further illuminated, but I shall not set them out in further detail. 161 Further complaints arrived. One of those was dated 1 April 2011, but it related to events from 21 February 2008 when Mr Oberg provided a long statement of advice to the trustees of the Aeberli Superannuation Fund recommending the existing fund be wound up and the proceeds be put in BT SuperWrap. 162 As a result of Mr Oberg's recommendations, on 24 October 2008, four cheques were made out to nominated BT accounts and later (on 5 March 2009) two cheques were made out to JRCC Finance. Later, on 10 September 2010 an electronic transfer of $70,000 was made from a Building Society account also to JRCC Finance. The first four cheques were not banked to the nominated accounts at all. Those accounts were never activated. Rather, the Financial Statements for the Aeberli Superannuation Fund for the year ended 30 June 2010 showed that the fund (supposedly to be wound up concurrently with payment to BT SuperWrap) had notional funds on deposit with JRCC Finance totalling $752,781 (before the $70,000 transaction on 10 September 2010). 163 There were further complaints in evidence, to which I shall refer shortly, which were tendered through Mr Pawski as those earlier ones were. However, the point has now been reached chronologically at which WealthSure claimed to have given some "advice" to Mr Oberg's clients with which I will deal first. 164 Ms Blackwell's evidence was that she constructed a list of clients from enquires made to issuers of WealthSure approved products. The list was current at July 2011 and presumably referred to active accounts. An identical letter was then sent to those clients through a "mail merge" facility. I set out the terms of this letter, dated 25 July 2011, when I discussed the circumstances of the Gibsons. 165 In two cases, the address to which the letter was sent was GPO Box 3989, Sydney (to which I referred when discussing the circumstances of the Goonasekeras). This was a postal address for Mr Oberg's accountancy firm. It was an ineffective medium of communication and Ms Blackwell agreed that if she had in fact checked addresses and realised it was Mr Oberg's, she would not have sent a letter to it. 166 Ms Blackwell accepted in cross-examination, moreover, that the letter would do nothing to alert or warn its addressees to any risk represented by Mr Oberg's past conduct. In the circumstances, in my view, those who were cheated by Mr Oberg are entitled to harbour a real sense of grievance that their interests were treated with scant disdain by WealthSure. 167 The legal consequences require separate consideration. 168 There were a further two complaints in evidence. 169 One arose after contact by Miranda Police. The couple, who sent an email to Mr Turnbull, WealthSure's NSW Practice Manager, complained of losing $400,000 given to Mr Oberg to invest, who said he was with WealthSure, but no dates were given. 170 The final additional complaint in evidence was dated 9 November 2011 from Ms Karen Smith. The background was set out as follows: 1. I began a business relationship with Mr. Oberg in 2002. My mother had been placed in a high care nursing home, the fees were exorbitant, and he was recommended to me as the right person to invest my mother's funds to maximise the savings. 2. At the time the funds were placed in a BT Wrap product. 3. I was her Enduring Power of Attorney and also her only child and benefactor in the will she had prepared. 4. From 2002 to 2009 I was extremely pleased with Mr. Oberg's financial advice and assistance. 5. My mother passed away on 1 January 2009, by this time after 6 years of nursing home payments, expenses, and the market crash the money·had dramatically reduced. 6. At the time of the crash a substantial portion of the products were frozen and the funds could not be accessed. In fact these products remain frozen. 7. It took 7 months for probate to finalise. 8. In late September 2009, Colin contacted me and said that he wasn't sure the market was going to continue to stablize, and that he wanted to place my money, the amount that was liquid from BT into, what he described, as a short term money lending product. 9. He advised me that I would receive 8% to 9% per annum on the money, it was rolled over for 6 month terms, and that I could access the funds with one (1) month's notice. 10. I never hesitated, I trusted him completely. He emailed me the detail of where the funds were to be deposited and on 30 September and 5 October 2009 I transferred $90,000 and $8,000 respectively into JRCC Finance Pty Limited. 171 Then there was a detailed account of efforts to recover the money which, in May 2011, yielded a return of $5000. Then, on 3 June 2011, Mr Oberg asked for (but was not given) a further $10,000 for an 8% return to assist some friends settle on a property the following Monday. Further, unsuccessful attempts to recover the original funds were then set out and then Ms Smith's complaint said: 21. On Tuesday 13 September I contacted Wealthsure, and so the nightmare continues as I find out he was "sacked" as an advisor at some time prior, and I hadn't been advised because my contact details were·all via his office. … 25. On 21 September I emailed you (Kirsty) to ask what was happening, was anything occurring. 26. On Monday 26 September you responded advising you were meeting with Colin on the Wednesday, 28 September and you would discuss further the next week. 172 According to the complainant, neither Mr Oberg nor WealthSure made any further useful or responsive reply. The complainant said: This is a grave matter and as I previously mentioned if it was grave enough to sack him, it was grave enough to try to find all the clients at the time you had concerns. To be honest I am not sure now after talking to you yesterday that having that knowledge would have changed the outcome of the circumstance I am now in, but I do feel I had the right to know. 173 Nothing in the evidence I have taken in this matter reveals any attempt by WealthSure, serious or otherwise, to bring to the attention of Mr Oberg's clients any risk to their finances. Nor was any attempt made (so far as the evidence discloses) to retrieve the material things through which Mr Oberg might profess an association with WealthSure. Nor did WealthSure publish the fact that its connection with Mr Oberg had been severed (e.g. by something on its website) much less why that was so. In short, WealthSure appears to have taken no effective step to avoid harm, or further harm, to Mr Oberg's clients, past, present or potential. 174 Whether WealthSure had a duty to attempt to protect the interests of such persons is a matter which requires examination. 6. General lines of argument 175 The applicants relied on a number of propositions and lines of argument in their claims to fix WealthSure with liability for the conduct of Mr Oberg, and the consequences of that conduct. The first was the operation of the Corporations Act (through Division 6 of Part 7.6) to fix WealthSure with liability for the conduct of authorised representatives. The nature of those provisions will be examined shortly. Upon this foundation, the applicants pointed to the liability of a licensee for conduct of an authorised representative at common law and otherwise, even when the conduct was unauthorised, and also to various statutory obligations upon an authorised representative (and thus vicariously upon a licensee), such as an obligation to provide Product Disclosure Statements and Statements of Advice, together with obligations to provide advice only if there was a reasonable basis for it, and submitted that if those steps had been taken the applicants would not have succumbed to Mr Oberg's representations. 176 A variant of this argument pointed to similar provisions of the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act"). That variant was proposed to answer a contention by the respondent that the transactions by the applicants did not concern any "financial product", or arise from advice about a financial product, but were concerned with a "credit facility" to which the same protections did not apply. The ASIC Act provisions are similar to those in the Corporations Act, and they do not exclude credit facilities from the obligations which they state. However, they are not identical. The details may be avoided because those provisions only require close attention if the respondent is correct that Mr Oberg's advice did not concern financial products. 177 The second broad argument upon which the applicants' cases depended was that WealthSure was liable for Mr Oberg's conduct at all times when he had "apparent authority" from WealthSure to deal with the applicants in WealthSure's name. This argument relied on s 769B of the Corporations Act. It extended to an argument that Mr Oberg (and thus WealthSure) was liable for the applicants at common law for negligence and in contract, as well as liable for the consequences of misleading and/or deceptive representations and materially false information upon which they relied. 178 The third broad argument was that WealthSure was directly liable to the applicants at common law for negligence. This argument depended on showing that WealthSure owed a duty of care to the applicants to avoid foreseeable economic loss to the applicants from Mr Oberg's conduct as an authorised representative and later. The argument suggested that WealthSure had breached its duty of care by failing to take particular steps, including failing to notify (or take any steps to warn) clients, or potential clients, that Mr Oberg was not any longer an authorised representative and failed to adequately supervise or monitor his activities while he was an authorised representative. 179 Apart from its line of defence (that no financial product was involved) which sought to avoid the direct application of obligations on WealthSure under the Corporations Act, the respondent denied that Mr Oberg had any actual or apparent authority (either as an authorised representative or later) which bound WealthSure to his conduct under s 769B of the Corporations Act, and denied that it either had a common law duty to the applicants which might give rise to a cause of action against it directly in negligence, or that it had breached any such alleged duty of care. The respondent denied any relevant breach of contract. 180 If it was liable at all, the respondent sought to argue that the applicants had contributed to their own loss, with the result that any damages should be reduced and that, as Mr Oberg was primarily liable, damages against WealthSure should be reduced further. There were some particular defences arising out of the claims by the Goonasekeras that were also advanced. 7. Attribution of liability to WealthSure 181 The scheme in the Corporations Act for attributing liability to persons generally, corporations particularly and licensees specifically is not without its complexities, and neither is the scheme making persons liable for particular conduct under the Corporations Act. I propose to concentrate on only so much of these arrangements as is relevant to the resolution of matters in the present proceedings. With one exception, attention may be confined to Chapter 7 of the Corporations Act, which deals with "Financial services and markets". 182 That one exception may be referred to immediately and then put aside. Section 79 provides: 79 Involvement in contraventions A person is involved in a contravention if, and only if, the person: (a) has aided, abetted, counselled or procured the contravention; or (b) has induced, whether by threats or promises or otherwise, the contravention; or (c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the contravention; or (d) has conspired with others to effect the contravention. (Emphasis added.) 183 The formulation is a familiar one. It requires knowledge of the facts which constitute the contravention, even if not an appreciation that they constitute or may evidence contravention. None of the causes of action in the present proceedings depend on s 79 to attribute responsibility to WealthSure. I mention that at this point to emphasise that the asserted responsibility of WealthSure which the applicants' cases assert is not that of being "involved in" conduct by Mr Oberg, but is a responsibility which is attributed directly to WealthSure by the Corporations Act, even though the conduct was Mr Oberg's. 184 Chapter 7 of the Corporations Act is organised into Parts, which themselves contain Divisions. Some provisions to which I will refer operate for the purposes of a particular Division or Part only. 185 I will return to and set out again some provisions mentioned in the early part of this judgment because it is convenient and useful to do that again at this point of the discussion. 186 Section 760A (the first provision in Part 7.1 – Preliminary) states the objects of Chapter 7 as follows: 760A Object of Chapter The main object of this Chapter is to promote: (a) confident and informed decision making by consumers of financial products and services while facilitating efficiency, flexibility and innovation in the provision of those products and services; and (b) fairness, honesty and professionalism by those who provide financial services; and (c) fair, orderly and transparent markets for financial products; and (d) the reduction of systemic risk and the provision of fair and effective services by clearing and settlement facilities. 187 In the Outline of Chapter in s 760B which follows, the following descriptions are relevant: 760B Outline of Chapter An outline of this Chapter is set out in the table below. Part-by-Part outline of Chapter 7 Part... Covers... 1 7.1 definitions of key concepts and of commonly occurring expressions … … … 6 7.6 licensing of providers of financial services other related matters (e.g. restrictions on use of terminology; agreements with unlicensed persons relating to provision of financial services) 7 7.7 disclosure requirements for financial services licensees and their authorised representatives disclosure requirements for certain people who are not required to be licensed … … … 10 7.10 market misconduct and other prohibited conduct relating to financial products and services … … … 188 Division 7 of Part 7.1 contains some important provisions which apply to matters within Chapter 7, in ss 769B and 769C: 769B People are generally responsible for the conduct of their agents, employees etc. (1) Subject to subsections (7) and (8), conduct engaged in on behalf of a body corporate: (a) by a director, employee or agent of the body, within the scope of the person's actual or apparent authority; or (b) by any other person at the direction or with the consent or agreement (whether express or implied) of a director, employee or agent of the body, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, employee or agent; is taken, for the purposes of a provision of this Chapter, or a proceeding under this Chapter, to have been engaged in also by the body corporate. (2) Conduct engaged in by a person (for example, the giving of money or property) in relation to: (a) a director, employee or agent of a body corporate, acting within the scope of their actual or apparent authority; or (b) any other person acting at the direction or with the consent or agreement (whether express or implied) of a director, employee or agent of a body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, employee or agent; is taken, for the purposes of a provision of this Chapter, or a proceeding under this Chapter, to have been engaged in also in relation to the body corporate. … (7) Nothing in this section, or in any other law (including the common law), has the effect that, for the purposes of a provision of Part 7.7, or a proceeding under this Chapter that relates to a provision of Part 7.7, a financial service provided by person in their capacity as an authorised representative of a financial services licensee is taken, or taken also, to have been provided by that financial services licensee. … (10) In this section: … (b) a reference to conduct is a reference to an act, an omission to perform an act, or a state of affairs; and (c) a reference to the state of mind of a person includes a reference to the knowledge, intention, opinion, belief or purpose of the person and the person's reasons for the person's intention, opinion, belief or purpose. Note: For the meaning of offence based on a provision, see the definition in section 9. (Emphasis in original.) 189 Section 769C is more relevant to discussion of causes of action which engage Part 7.10. However, some general points may be made at once about s 769B. 190 The carve-out in s 769B(7) is relevant only to Part 7.7 (which will be mentioned in due course) because that Part has its own scheme for attributing responsibility and liability to a licensee for conduct by an authorised representative. 191 Section 769B(1) (and the related operation of s 769B(2) and (3)) depend upon the notions of "actual" and "apparent" authority, notions which are familiar in the general law and which have an established meaning. 192 The distinction between the notion of actual and apparent authority was explained by Diplock LJ in Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 at 502–503: An " actual " authority is a legal relationship between principal and agent created by a consensual agreement to which they alone are parties. Its scope is to be ascertained by applying ordinary principles of construction of contracts, including any proper implications from the express words used, the usages of the trade, or the course of business between the parties. To this agreement the contractor is a stranger; he may be totally ignorant of the existence of any authority on the part of the agent. Nevertheless, if the agent does enter into a contract pursuant to the " actual " authority, it does create contractual rights and liabilities between the principal and the contractor. It may be that this rule relating to " undisclosed principals, " which is peculiar to English law, can be rationalised as avoiding circuity of action, for the principal could in equity compel the agent to lend his name in an action to enforce the contract against the contractor, and would at common law be liable to indemnify the agent in respect of the performance of the obligations assumed by the agent under the contract. An " apparent " or " ostensible " authority, on the other hand, is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the " apparent " authority, so as to render the principal liable to perform any obligations imposed upon him by such contract. To the relationship so created the agent is a stranger. He need not be (although he generally is) aware of the existence of the representation but he must not purport to make the agreement as principal himself. The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract. It is irrelevant whether the agent had actual authority to enter into the contract. 193 In Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, the High Court said (at [36]): 36 In Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd, and in Northside Developments Pty Ltd v Registrar-General, this Court followed and applied Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd as to the general principles concerning the apparent or ostensible authority of an officer of a company dealing with a third party. Where an officer is held out by a company as having authority, and the third party relies on that apparent authority, and there is nothing in the company's constitution to the contrary, the company is bound by its representation of authority. ''The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract.'' It is not enough that the representation should come from the officer alone. Whether the representation is general, or related specifically to the particular transaction, it must come from the principal, the company. That does not mean that the conduct of the officer is irrelevant to the representation, but the company's conduct must be the source of the representation. In many cases the representational conduct commonly takes the form of the setting up of an organisational structure consistent with the company's constitution. That structure presents to outsiders a complex of appearances as to authority. The assurance with which outsiders deal with a company is more often than not based, not upon inquiry, or positive statement, but upon an assumption that company officers have the authority that people in their respective positions would ordinarily be expected to have. In the ordinary case, however, it is necessary, in order to decide whether there has been a holding out by a principal, to consider the principal's conduct as a whole. (Footnotes omitted.) 194 The statements in those (and other) cases emphasise some matters of importance for the present case. When actual authority is under attention it requires examination of the arrangement between (in this case) the licensee and the authorised representative. By contrast, when the question of apparent or "ostensible" authority is being considered, that requires examination of the representation of authority to third parties by the licensee. In that examination the conduct of the authorised representative may be relevant (e.g. if it is consistent with a representation by the licensee) but is insufficient on its own to establish apparent authority. In the case of apparent authority it must be shown that the third party relied on the representation of authority (i.e. by the licensee ultimately) and was induced by it to do something. 195 Provided those tests are met, and provided there is no relevant statutory qualification in other parts of Chapter 7, Mr Oberg's conduct is deemed to be conduct by WealthSure itself for all relevant purposes. I do not accept an argument by WealthSure that s 769B has no relevance for actions under the common law. 196 The next matter which requires attention are the provisions of Division 6 of Part 7.6 of Chapter 7. Part 7.6 deals with "Licensing of providers of financial services". Division 2 imposes the need for a person carrying on a financial service business in Australia to hold a licence (s 911A). Division 3 states the obligations of licensees. Division 4 regulates how to obtain a licence and related matters. Division 5 deals with authorised representatives. It is in that legislative context that Division 6 deals with "Liability of financial services licensees for representatives" (representatives is defined by s 910A to include an authorised representative). 197 Within Division 6, ss 917A(1), 917B, 917E and 917F(1) – (4) provide: 917A Application of Division (1) This Division applies to any conduct of a representative of a financial services licensee: (a) that relates to the provision of a financial service; and (b) on which a third person (the client) could reasonably be expected to rely; and (c) on which the client in fact relied in good faith. (Emphasis in original.) 917B Responsibility if representative of only one licensee If the representative is the representative of only one financial services licensee, the licensee is responsible, as between the licensee and the client, for the conduct of the representative, whether or not the representative's conduct is within authority. 917E Responsibility extends to loss or damage suffered by client The responsibility of a financial services licensee under this Division extends so as to make the licensee liable to the client in respect of any loss or damage suffered by the client as a result of the representative's conduct. 917F Effect of Division (1) If a financial services licensee is responsible for the conduct of their representative under this Division, the client has the same remedies against the licensee that the client has against the representative. (2) The licensee and the representative (along with any other licensees who are also responsible) are all jointly and severally liable to the client in respect of those remedies. (3) However, nothing in this Division imposes: (a) any criminal responsibility; or (b) any civil liability under a provision of this Act apart from this Division; on a financial services licensee that would not otherwise be imposed on the licensee. (4) This Division does not relieve a representative of a financial services licensee of any liability they have to the client or the licensee. 198 It is convenient to make some remarks first about s 917F(3). It was submitted by WealthSure that the effect of s 917F(3) is to carve out from the operation of the provisions in Division 6 any statutory remedies under the Act, as well as criminal responsibility, leaving the provisions of Division 6 to operate in relation to common law or other statutory causes of action. In my view, this construction is too narrow and should not be accepted. 199 The effect of s 917F(3) is to ensure that neither criminal responsibility or civil liability imposed elsewhere in the Corporations Act is extended or added to. Hence, nothing in the Division imposes a liability which would not otherwise be imposed. Within that limit, however, in my view, the provisions in Division 6 apply according to their plain terms to give effect to an evident statutory intent that for all purposes (but without extending liability) conduct of a representative within or without authority is also the responsibility of a licensee for which a licensee is directly liable to a client. A licensee retains rights of action against the representative (s 917F(4)). The purpose is to provide protection for clients. 200 One area in which the carve out has practical work to do is in relation to Part 7.10 (which I shall discuss later) where there is some scope for notions of contribution or apportionment in relation to remedies given by that Part. The effect of s 917F(3) in relation to such matters is that the licensee has full scope and capacity to argue for a reduction in liability on those grounds. A further area is in relation to the operation of Part 7.7 where attribution of responsibility to a licensee for particular conduct by a representative is the subject of detailed prescription. Section 917F(3) has the effect that the limits of attribution and liability established by those detailed prescriptions are not exceeded. Within those limits, however, in my view, Division 6 has an unconfined operation as between licensee, authorised representative and client. 201 One limit should, nevertheless, be noted. The assignment of responsibility concerns (in this case at least) the conduct of an authorised representative. Although s 917B makes clear that responsibility is assigned to a licensee whether or not particular conduct is within authority that can only be the case when a person is a representative. 202 Authorisation as a representative must be given by written notice (s 916A(1)) and may be revoked at any time by written notice (s 916A(4)). In my view, a person is not the representative of another for the purpose of Division 6 if authorisation has been revoked. 203 Another limitation upon which WealthSure placed some reliance concerns satisfaction of the tests in s 917A(1) and, in particular s 917A(1)(b). To the extent that discussion of the proposition that certain of the applicants could not "reasonably be expected to rely" on things Mr Oberg said to them is necessary, that discussion may be deferred until I deal with the particular representations. 204 Within the boundaries I have identified, s 917B assigns responsibility to WealthSure for the conduct of Mr Oberg while he was an authorised representative even if he was (as Barrett J said in Zhang v Minox Securities Pty Ltd; Liu v Minox Securities Pty Ltd [2008] NSWSC 689 at [33]) on a "frolic of his own". The colloquial content of this phrase is not without importance in an understanding of this issue at the heart of the present case. The phrase appears to have its origins in a summing up by Parke B, recorded in Joel v Morison (1834) 6 C & P 501; 172 ER 1338; [1834] EWHC KB J39, where he said: 5. … This is an action to recover damages for an injury sustained by the plaintiff, in consequence of the negligence of the defendant's servant. There is no doubt that the plaintiff has suffered the injury, and there is no doubt that the driver of the cart was guilty of negligence, and there is no doubt also that the master, if that person was driving the cart on his master's business, is responsible. If the servants, being on their master's business, took a detour to call upon a friend, the master will be responsible. If you think the servants lent the cart to a person who was driving without the defendant's knowledge, he will not be responsible. Or, if you think that the young man who was driving took the cart surreptitiously, and was not at the time employed on his master's business, the defendant will not be liable. The master is only liable where the servant is acting in the course of his employment. If he was going out of his way, against his master's implied commands, when driving on his master's business, he will make his master liable; but if he was going on a frolic of his own, without being at all on his master's business, the master will not be liable. … 205 In the present case, Mr Oberg may be said to have been, to a substantial extent, engaged on an enterprise of which WealthSure neither knew or would have approved. He may truly be said, in those respects, to have been on a frolic of his own, well outside his authority. Nevertheless, s 917B makes WealthSure responsible, and intendedly so. 206 Under this scheme the "client' need have no relationship with WealthSure. The client is simply a third party who could reasonably be expected to rely on the conduct of the representative (s 917A(1)(b)). 207 If s 917B applies, then s 917E is engaged to make WealthSure liable for any loss or damage suffered by any of the applicants as a result of Mr Oberg's conduct (at least while he was an authorised representative) and s 917F(1) gives the applicants the same remedies against WealthSure as they have (under the Corporations Act and otherwise) against Mr Oberg. 208 Those features and consequences are the product of the statutory scheme of licensing and regulation which is established by Chapter 7 of the Corporations Act. They take effect subject to any limitation or relief under the Corporations Act upon which WealthSure may rely (s 917F(3)) but otherwise the responsibility and liability cast on WealthSure for Mr Oberg's conduct is strict and unyielding. 8. The causes of action 209 It will be convenient first to consider the cases for relief arising under Part 7.10 of the Corporations Act and then deal with the other statutory causes of action before giving attention, to the extent necessary, to the cases in negligence and contract. 210 The primary focus of attention, in each case, is on Mr Oberg's conduct, for which he also would be liable. The attributed responsibility which I have already discussed may then be considered. 211 There are some, relatively minor, matters where WealthSure was said to be only directly liable. They concern the period after the revocation by WealthSure of Mr Oberg's appointment as an authorised representative. They only concern $30,000 of the amount claimed by the Goonasekeras. Even in respect of that period, however, there is an argument that Mr Oberg continued to act under an apparent authority to which s 769B applies. 212 In each case, after I have identified the provisions, or common law causes of action, relied upon it will be necessary to apply them to the particular circumstances and claims of the individual applicants. 8.1 Part 7.10 213 Part 7.10 of the Corporations Act is concerned with "Market misconduct and other prohibited conduct relating to financial products and financial services". 214 Division 2 states the prohibited conduct and provides for recovery of loss or damage and (to a limited extent) for reduction by reason of the claimant's own conduct when considered with matters exculpatory of the defendant (in claims relying on s 1041H). 215 Section 1041J is an important provision which states: 1041J Sections of this Division have effect independently of each other Subject to any express provision to the contrary, the various sections in this Division have effect independently of each other, and nothing in any of the sections limits the scope or application of any of the other sections. 216 It follows, therefore, that rights under individual provisions may generally be vindicated in full, notwithstanding any limitation which might apply if the same conduct was considered under a different section. 217 That general position is subject to one exception which, as will be seen, does not appear to me to be significant in the present case. 218 Division 2A provides for reduction of claims where there are "concurrent wrongdoers". It applies to the same claims as may be reduced on the basis of contribution (i.e. claims invoking s 1041H). 219 Section 1041L(1), (2) and (4) provide: 1041L Application of Division (1) This Division applies to a claim (an apportionable claim) if the claim is a claim for damages made under section 1041I for: (a) economic loss; or (b) damage to property; caused by conduct that was done in a contravention of section 1041H. (2) For the purposes of this Division, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind). … (4) For the purposes of this Division, apportionable claims are limited to those claims specified in subsection (1). (Emphasis in original.) 220 The effect of those prescriptions is that only claims under s 1041H are "apportionable claims" (Selig v Wealthsure Pty Ltd [2015] HCA 18). In respect of the same loss or damage there can only be one such apportionable claim under s 1041H. Otherwise, it seems to me, s 1041J preserves the independence of causes of action arising under other provisions of Part 7.10, to which I will come. 221 Section 1041S is another important provision which states (relevantly here): 1041S Application of Division Nothing in this Division: (a) prevents a person being held vicariously liable for a proportion of an apportionable claim for which another person is liable; or … 222 Read with s 917F(3) and s 1041J, the effect of s 1041S appears to me to be that strict or vicarious liability applies in any case to which Division 6 applies, recognising and giving full effect to stated circumstances where apportionment may be appropriate, but confined to those stated circumstances (i.e. as stated in Division 3 itself). Section 1041S, in that fashion, operates in aid of the strict liability regime established by Division 6 of Part 7.6. 223 The particular provisions in Division 2 relied upon by the applicants were ss 1041E, 1041F and 1041H. Only s 1041H is subject to the possibilities of contribution and/or apportionment (see s 1041I(1B)(a) and s 1041L(1)). Sections 1041E, 1041F and 1041H provide (so far as here relevant): 1041E False or misleading statements (1) A person must not (whether in this jurisdiction or elsewhere) make a statement, or disseminate information, if: (a) the statement or information is false in a material particular or is materially misleading; and (b) the statement or information is likely: (i) to induce persons in this jurisdiction to apply for financial products; or (ii) to induce persons in this jurisdiction to dispose of or acquire financial products; or … (c) when the person makes the statement, or disseminates the information: (i) the person does not care whether the statement or information is true or false; or (ii) the person knows, or ought reasonably to have known, that the statement or information is false in a material particular or is materially misleading. Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1)). For defences to a prosecution based on this subsection, see Division 4. Note 2: Failure to comply with this subsection may also lead to civil liability under section 1041I. For relief from liability under that section, see Division 4. 1041F Inducing persons to deal (1) A person must not, in this jurisdiction, induce another person to deal in financial products: (a) by making or publishing a statement, promise or forecast if the person knows, or is reckless as to whether, the statement is misleading, false or deceptive; or (b) by a dishonest concealment of material facts; or … Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1)). For defences to a prosecution based on this subsection, see Division 4. Note 2: Failure to comply with this subsection may also lead to civil liability under section 1041I. For relief from liability under that section, see Division 4. (2) In this section: dishonest means: (a) dishonest according to the standards of ordinary people; and (b) known by the person to be dishonest according to the standards of ordinary people. (Emphasis in original.) 1041H Misleading or deceptive conduct (civil liability only) (1) A person must not, in this jurisdiction, engage in conduct, in relation to a financial product or a financial service, that is misleading or deceptive or is likely to mislead or deceive. Note 1: Failure to comply with this subsection is not an offence. Note 2: Failure to comply with this subsection may lead to civil liability under section 1041I. For limits on, and relief from, liability under that section, see Division 4. (2) The reference in subsection (1) to engaging in conduct in relation to a financial product includes (but is not limited to) any of the following: (a) dealing in a financial product; (b) without limiting paragraph (a): (i) issuing a financial product; … 224 There is a good deal of overlap in the potential application of those provisions to the facts of the present case. Generally speaking, the facts of the present case more readily raise consideration of s 1041E, than s 1041F or s 1041H. In addition, any claim under s 1041H is potentially subject to consideration of contribution and apportionment (each of which WealthSure expressly relied upon) but, for the reasons I have given, that could not operate to reduce any verdict required under either s 1041E or s 1041F. 225 One difficulty for the applicants which arises under s 1041F is the requirement to meet the tests stated in combination by ss 1041F(1)(b) and 1041F(2) (i.e. that Mr Oberg dishonestly concealed material facts and he knew he was being dishonest by the standards of ordinary people). I have no evidence at all of Mr Oberg's state of knowledge. I may not simply assume that he knew that what he was doing would be judged dishonest by the standards of ordinary people. If that was the test, s 1041F(2) would be entirely superfluous. 226 The remaining possibility presented by s 1041F(1)(a) (that Mr Oberg was reckless as to whether his statements were misleading, false or deceptive) may be possible to satisfy, but it faces obstacles. 227 Many of the statements attributed to Mr Oberg by the applicants were in the nature of promises or forecasts. I have no evidence or information about Mr Oberg's belief in the reliability of those promises or forecasts. The applicants' cases depend on inferences arising from the failure to return their funds, but that may not be a reliable indication of whether Mr Oberg was reckless when he made the statements. 228 On the facts of the present case, the tests in s 1041E will be more likely to be satisfied than the tests in s 1041F. If s 1041E is not satisfied I see no reason to think (and none was suggested) that s 1041F would provide an independent and effective remedy for any of the applicants. 229 I therefore propose to give no further separate attention to s 1041F. 230 The relevant parts of s 1041H would require it to be demonstrated that Mr Oberg's conduct (being misleading or deceptive or likely to mislead or deceive) was "dealing in" a financial product, perhaps by "issuing" a financial product. 231 Under s 761E, generally a financial product is issued to a person when the person acquires the product from the issuer. This is not an easy concept to apply to the allegations against Mr Oberg. The case against him is, in substance, that the applicants got nothing for their money. It is a notable feature of the present case that it does not depend at all on the proposition that a particular product was acquired. Rather, as I shall need to discuss, the case turns on the idea that the applicants were induced to make financial investments, an idea dealt with by different statutory provisions. 232 Similarly (so far as s 1041H(2)(a) is concerned) "dealing" in a financial product means (s 766C(1)(a) and (b)) applying for or acquiring, or issuing a financial product or (s 766C(2)) arranging for a person to do so. Applying the extended meaning so that it has the potential to apply to the applicants, it would still be necessary to show that Mr Oberg had arranged for them to "acquire" a financial product. The meaning of acquire (like the meaning of issued) is supplied by s 761E(1). It would be necessary to show that Mr Oberg arranged for a financial product to be acquired by the applicants. Then it might be a dealing by him (i.e. arranging for the acquisition – s 766C(2)) for the purpose of s 1041H(2)(a). However, the journey through the labyrinthine provisions in Chapter 7 is not yet over. 233 The relevant financial product would require identification (it may be making an investment) to which the concept of Mr Oberg arranging for the applicants to acquire that "making an investment" would need to be applied. In that exercise, it would need to be noted that a financial product is (s 763A(1)) a "facility" through which something is done, which facility might be (s 762C(c)) an arrangement. 234 If all those constructional challenges could be negotiated or resolved in a way which seemed intellectually defensible, the applicants would be left with no better case, in my view, than their case under s 1041E, and it would, in any event, be subject to attack or erosion on the grounds that they were insufficiently careful to look after their own interests and/or that it was Mr Oberg and not WealthSure who should be declared substantially, or entirely, liable. 235 I do not propose to explore those questions further. It would not be productive to do so. In my view, it could add nothing to the applicants' prospects for relief. If their case cannot satisfy s 1041E then, upon examination of all the facts and circumstances it will not satisfy s 1041H either. 236 Before I deal with the individual cases under s 1041E, there are further matters of construction to which I need to draw attention. However, I will digress for a moment to make some observations arising from my attempt to explain the matters dealt with to this point, and the explanations which will follow. The standards of conduct which are set out in the Corporations Act in general and in Chapter 7 in particular should operate as a reliable guide to conduct, readily ascertainable and capable of equally ready understanding. They should be accessible and comprehensible by those whose conduct is governed and by those whose interests might be affected – i.e. consumers and clients, small as well as big. The provisions with which I am dealing in this judgment fall short of that objective by a large margin, even for trained lawyers. That is unfortunate. The result is that the provisions of Chapter 7 do not, in my view, act as an effective guide to conduct at all. They represent a complicated catalogue from which to select instruments of retribution well after loss or damage has been suffered. The applicants in the present case have persevered, but justice for them and others (and for licensees) should not depend upon such complexities as Chapter 7 presents, and should not be endangered by the real possibility of misunderstanding or misapplication of its provisions. 237 I return to the exercise before me, which requires further matters to be resolved before I can give direct attention to the central facts of the case. 238 It is critical to the present case, and to the operation of s 1041E, to identify what are financial products in respect of which false or misleading information may have been given. 239 A financial product includes a facility through which a person makes a financial investment (s 763A(1)(a)) and, as I have said, a facility includes an arrangement (s 762C(b)). A person makes an investment in the circumstances set out in s 763B (which I set out earlier but will set out again here for convenience): 763B When a person makes a financial investment For the purposes of this Chapter, a person (the investor) makes a financial investment if: (a) the investor gives money or money's worth (the contribution) to another person and any of the following apply: (i) the other person uses the contribution to generate a financial return, or other benefit, for the investor; (ii) the investor intends that the other person will use the contribution to generate a financial return, or other benefit, for the investor (even if no return or benefit is in fact generated); (iii) the other person intends that the contribution will be used to generate a financial return, or other benefit, for the investor (even if no return or benefit is in fact generated); and (b) the investor has no day-to-day control over the use of the contribution to generate the return or benefit. Note 1: Examples of actions that constitute making a financial investment under this subsection are: (a) a person paying money to a company for the issue to the person of shares in the company (the company uses the money to generate dividends for the person and the person, as a shareholder, does not have control over the day-to-day affairs of the company); or (b) a person contributing money to acquire interests in a registered scheme from the responsible entity of the scheme (the scheme uses the money to generate financial or other benefits for the person and the person, as a member of the scheme, does not have day-to-day control over the operation of the scheme). Note 2: Examples of actions that do not constitute making a financial investment under this subsection are: (a) a person purchasing real property or bullion (while the property or bullion may generate a return for the person, it is not a return generated by the use of the purchase money by another person); or (b) a person giving money to a financial services licensee who is to use it to purchase shares for the person (while the purchase of the shares will be a financial investment made by the person, the mere act of giving the money to the licensee will not of itself constitute making a financial investment). (Emphasis in original.) 240 On the facts of the present case it is sufficient to concentrate on s 763B(a)(ii), because it is not in issue that the applicants gave Mr Oberg money and lost day-to-day control over it at that time. 241 WealthSure argued that the circumstances described by the applicants did not show that they intended that Mr Oberg would use the contribution as contemplated by s 763B(a)(ii). Rather, WealthSure argued, the applicants each gave Mr Oberg a loan (or a series of loans) which, although repayable with interest, did not meet this test. WealthSure relied on the example provided by Note 2(b) to s 763B. 242 One difficulty with this argument is that it receives very little support in the evidence. WealthSure relied on some email references (by Mr Gibson and Mr Casaclang) to loan funds but, in my view, those references are apt to refer to money provided to Mr Oberg, not as a loan to him, but as funds which he said he would make available to others. Whether or not "loan funds" is an accurate description of that purpose from a lay person does not matter for present purposes. 243 It would be necessary for me to reject the description of the transactions given by the applicants and all the other evidence about Mr Oberg's pattern of conduct in order to accept that he asked for, and was given, some form of personal loan by each of the applicants. Such a conclusion would signify also that the applicants understood the character of the transactions to be a loan to him, even where (for example) the money was drawn from a superannuation fund or investment. I would really need to find in each case that they had given false evidence. At least, I would need to reject the evidence which they did give and upon which some were cross-examined. I am not prepared to do so. 244 Although I will refer to the individual circumstances, the general position which emerged from the evidence was that Mr Oberg gave advice about potential investments, sometimes as an alternative to existing ones. The applicants responded by entrusting him with money, believing it would be used to make the investments on their behalf and generate a return for them. In my view, those circumstances fall within s 763B(a)(ii). They did not represent, as WealthSure argued, the mere giving of money to Mr Oberg, accompanied by a promise by him to pay the money back with interest. 245 It was integral to the arrangements that the applicants understood (as I am satisfied they did where they gave direct evidence about it) that the return on the funds would be generated by the deployment of those funds by Mr Oberg on their behalf, as Mr Oberg had indicated, and not that the return on the funds would come from Mr Oberg's pocket. 246 Those conclusions are sufficient to dispose also of the next issue of construction, but I need first to set it out. 247 WealthSure argued that the proper characteristics of the arrangements to which the applicants deposed was that they represented the establishment of a "credit facility" and they, therefore, did not involve a financial product. 248 The general meaning of a financial product is given by s 763A to which I have referred. Section 764A identifies specific things which are financial products. Section 765A identifies specific things that are not financial products including: 765A Specific things that are not financial products (1) Despite anything in Subdivision B or Subdivision C, the following are not financial products for the purposes of this Chapter: … (h) any of the following: (i) a credit facility within the meaning of the regulations (other than a margin lending facility); … 249 Regulation 7.1.06(1)(a) provides: 7.1.06 Specific things that are not financial products: credit facility (1) For subparagraph 765A (1) (h) (i) of the Act, each of the following is a credit facility: (a) the provision of credit: (i) for any period; and (ii) with or without prior agreement between the credit provider and the debtor; and (iii) whether or not both credit and debit facilities are available; and (iv) that is not a financial product mentioned in paragraph 763A (1) (a) of the Act; and (v) that is not a financial product mentioned in paragraph 764A (1) (a), (b), (ba), (f), (g), (h) or (j) of the Act; and (vi) that is not a financial product mentioned in paragraph 764A (1) (i) of the Act, other than a product the whole or predominant purpose of which is, or is intended to be, the provision of credit; … (Emphasis in original.) 250 It will be noted that a financial product mentioned in s 763A(1)(a) is (by definition) not a credit facility and, therefore, not within s 765A(1)(h)(i). Making a financial investment is not to establish a credit facility within the meaning of reg 7.1.06(1)(a) or s 765A(1)(h)(i). Despite the potential circularity, it is clear that s 763A predominates. 251 I am satisfied, therefore, that s 1041E(1)(b)(ii) potentially applies, if the other elements in s 1041E are established. Resolution of that question requires attention to the facts relating to particular applicants. 252 I indicate now that, notwithstanding the matters and reservations discussed earlier, I accept the evidence of the applicants reflected in the discussion which follows. 8.1.1 The Casaclangs 253 The first matter to mention is that WealthSure put in issue whether any statement was made, or information provided, to Mrs Casaclang (or Mrs Gibson or Mrs Goonasekera) because they did not give evidence to say so. It was accepted, however, that in each case the funds were jointly held where not separately identified. In my view, Mr Casaclang, Mr Gibson and Mr Goonasekera were sufficiently the agents of their respective wives. There is no doubt that in each case a joint purpose was being pursued and, if a case for relief is made out, vindication should be available to each wife in question, equally with the husbands who gave evidence. I will not return to this issue again. 254 Mr Oberg approached Mr Casaclang on a number of occasions, trying to interest him in providing money, to be pooled with other investments, to provide loan funds for short term finance on the basis of good returns (10% for three months). On 6 August 2010, Mr Casaclang, relying on the nature of the investment described, including that it was "no risk", transferred $75,000 from their joint accounts into Mr Oberg's hands. 255 I am satisfied that Mr Oberg's statements were either false or materially misleading. Although there is no evidence about how the $75,000 was used by Mr Oberg there is no doubt it was part only of funds gathered in by Mr Oberg around this time which were lost to those providing them. There is no evidence that the scheme he described actually existed. A fair inference in the circumstances is that it did not. 256 Section 1041E(1)(a) is satisfied. 257 No doubt the question of whether a statement is "likely" to induce particular conduct (e.g. make a financial investment) must be judged by whether there was a real or not remote chance that it would do so, tested at the time, regardless of whether the chance was more or less than 50%. I see no reason to adopt any different approach to that issue than the established principles concerning s 18 of the Australian Consumer Law (previously s 52 of the Trade Practices Act 1974 (Cth)). 258 Applying that test, I am satisfied that the statements made to Mr Casaclang, in the context of their previous dealings and conversations, were likely to induce him to make the investment. They were, I am satisfied, intended to do so and some practical regard may be paid to Mr Oberg's assessment of the utility of his request, and the matters he advanced in support of it. Also, at a practical level, there is abundant evidence in the present case that Mr Oberg succeeded in many instances in persuading his clients (who seem in each case to have trusted him as their adviser) to make investments of a similar kind. I am satisfied that s 1041E(1)(b)(ii) is satisfied. 259 I am also satisfied that s 1041E(1)(c) is satisfied. It does not matter which limb more closely reflects Mr Oberg's state of mind. Either he knew that the statements he made were false (or did not care) or it ought to have been apparent that the statement was materially misleading. 260 It follows from those conclusions that the Casaclangs would be entitled to relief, as against Mr Oberg, under s 1041I(1), which provides: 1041I Civil action for loss or damage for contravention of sections 1041E to 1041H (1) A person who suffers loss or damage by conduct of another person that was engaged in in contravention of section 1041E, 1041F, 1041G or 1041H may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention, whether or not that other person or any person involved in the contravention has been convicted of an offence in respect of the contravention. 261 For the reasons given above, I am satisfied that Mr Casaclang could reasonably be expected to rely upon the advice which Mr Oberg gave him. Mr Casaclang (and the other applicants) trusted Mr Oberg. In some cases the trust grew out of, and was evidently based on, a long prior relationship of prior advice. Mr Oberg obviously played on that aspect and bolstered his advice and recommendations in a number of ways with personal reassurances about the security and probity of the investment and sometimes his own participation in it. His representations were clearly directed to an objective of securing reliance on them and, on the evidence before me, Mr Oberg was successful in very many cases in achieving that objective. 262 Mr Oberg's conduct was "financial product advice" (s 766B(1)) because it was intended to influence a person or persons in making a decision about a particular financial product, or could reasonably be regarded as intended to have such an influence. The particular financial product was the facility (s 763A(1)) and, therefore, the arrangement he proposed (s 762C(b)) by which the Casaclangs might make the financial investment (s 763A(1)(a)). 263 Being financial product advice, Mr Oberg's conduct represented provision of a "financial service" (s 766A(1)(a)) and, therefore, related to the provision of a financial service within the meaning of s 917A(1)(a). 264 There is no suggestion that the Casaclangs did not rely on the financial product advice in good faith (s 917A(1)(c)). The same may be said for the other applicants. 265 In my view, the Casaclangs (and the other applicants when I come to them) could reasonably be expected to rely on the advice of a trusted adviser, known to be an authorised representative of WealthSure whose very business and profession involved giving expert advice on wealth accumulation and financial management. 266 Accordingly, in my view, Mr Oberg's conduct was conduct to which Division 6 of Part 7.6 applied by virtue of s 917A(1). 267 It follows that WealthSure is responsible for the conduct (s 917B), WealthSure is liable to the Casaclangs in respect of their loss or damage (s 917E) and the Casaclangs have the same remedies against WealthSure as they would have against Mr Oberg (s 917F(1)) including remedies under s 1041E. 268 They should, therefore, have a judgment in their favour under s 1041I(1). 269 The conclusions I have stated have the result that I need not give separate attention to whether WealthSure would be directly liable to the Casaclangs under s 1041E because of s 769B – i.e. because Mr Oberg's conduct is taken to have been engaged in also by WealthSure – but in deference to WealthSure's argument (which I have rejected) that Division 3 of Part 7.7 has no application at all to proceedings under Part 7.10 I should at least state my conclusions about it. 270 It is convenient to do so in the case of the Casaclangs because theirs is the weakest case of any of the applicants on this particular issue. Each of the other applicants was, before the events in question, an established investor in at least one financial product on WealthSure's approved product list – either a "BT Wrap" or "BT SuperWrap" investment. 271 Mr Casaclang gave no evidence about having any such existing investment through WealthSure. Nevertheless, he did depose that in the late 1990s/early 2000s he had a meeting with Mr Oberg at "the offices of WealthSure Pty Ltd located at 234 George Street, Sydney". Those premises were ones used by Mr Oberg as the authorised representative of WealthSure. Such a meeting must have occurred after 18 October 2004 when Mr Oberg was appointed as an authorised representative. Mr Casaclang deposed that at this meeting, which he attended with his wife, Mr Oberg told them of an investment opportunity of a kind which they later accepted. I am satisfied that the appointment as authorised representative gave colour and context to this discussion, and the later one. Together with the inevitable display of accreditation by WealthSure, and WealthSure material and stationery, it conveyed a representation by WealthSure of Mr Oberg's association with it and its support for him. With the insurance obligations and the statutory scheme for the protection of consumers and clients, publishing the association also sufficed to represent to the world the protections and guarantees afforded by the Corporations Act which flowed from Mr Oberg's appointment as an authorised representative, including s 769B itself. 272 The certificate identified that Mr Oberg was authorised to provide advice and deal in financial products including "Managed Investments" which included "Property Syndicates" and "Tax-effective investments". He could also deal with "Superannuation" which was more relevant to some of the other applicants but it is convenient to deal with this additional aspect now. 273 In relation to his superannuation authority, Mr Oberg held additional specific authority concerning BT products. On 21 February 2005, Mr Oberg was expressly appointed by WealthSure as a "Wrap Adviser" in relation to those products. He was to have "full access" to the online facility associated with these products. He was to have a confidential password that allowed that full access to be exercised through the internet. In relation to applicants other than the Casaclangs, I am satisfied that Mr Oberg had some actual authority, which engaged s 769B, in relation to superannuation investments. 274 The Financial Services Guide which WealthSure published (supplied in conjunction with an Adviser Profile, but having independent significance) indicated that WealthSure (through its authorised representatives) could arrange "Financial planning advice", "Wealth accumulation advice", "Asset allocation advice", "Asset management advice", amongst many other possibilities. 275 The Financial Services Guide said: Who do you act for when you provide financial services to me? As an authorised representative your adviser acts on behalf of WealthSure Financial Services when providing financial advice to you. WealthSure Financial Services is therefore responsible to you for any advisory services your adviser provides. Your advisers primary duty is to you, the client. 276 So far as it concerns all the applicants, I am satisfied that Mr Oberg had apparent authority stemming from his appointment as an authorised representative, in the context of the statutory scheme pursuant to which that occurred, which engaged s 769B in relation to the advice and recommendations which he gave. When he expressly referred to WealthSure (as he did to Mr Casaclang on 6 August 2010) as providing insurance, that was a further relevant circumstance. Although apparent authority cannot depend solely on the person claimed to have such authority, the conduct of such a person is not necessarily irrelevant. In my view, in the present case, it was all part of the same picture. 277 In my view, Mr Oberg had apparent authority in each case, within the meaning of s 769B, during the period he was an authorised representative. I will give separate attention, in the case of the Goonasekeras, to whether that survived the revocation of his appointment. 278 For that reason, if it had been necessary to so find, I would have found that the Casaclangs were entitled to succeed against WealthSure relying on s 1041E, having regard to s 769B. 279 I propose to apply the conclusions I have reached about the application and operation of Part 7.10 to the cases of the other applicants with only such elaboration as is necessary to deal with their individual circumstances. 8.1.2 The Gibsons 280 At mid-2010, Mr Gibson had investments in the BT SuperWrap product. Mr Oberg was shown as the authorised representative. Mr Oberg had been Mr Gibson's tax accountant and financial adviser since about 1996. 281 In 2003 (before Mr Oberg became a WealthSure authorised representative), Mr and Mrs Gibson met Mr Oberg in his office at 234 George Street, Sydney. As a result, Mr Oberg prepared a general financial plan for them. He subsequently provided them with regular advice. 282 Between 2008 and 2010, Mr Oberg raised with Mr Gibson on three or more occasions the possibility of an investment with a 10% return on a three month term. In early September 2010, Mr Oberg raised the matter again. On this occasion, on 3 September 2010, the Gibsons transferred $50,000 to Mr Oberg to invest. 283 When pressed for return of the funds, Mr Oberg did not confess any difficulty with the investment but said he was "waiting for the funds to go into the bank" and promised to ring. He did not. The funds have never been returned. 284 For the reasons I have already given, I am satisfied that the Gibsons are entitled to succeed against WealthSure under s 1041E, relying either on Division 6 of Part 7.6 or upon s 769B. 8.1.3 The estate of Mrs Lucey 285 It is convenient to deal with this case now, before I consider the claims of the Goonasekeras. 286 This case also involves a single transaction, $150,000. It is complicated by the lack of direct evidence of any particular statement by Mr Oberg. 287 Nevertheless, in my view, the position is sufficiently clear to enable a confident finding on the balance of probabilities. 288 Mrs Lucey had been a client of Mr Oberg from at least early 2000. Before Mr Oberg's appointment as an authorised representative by WealthSure, Mrs Lucey had investments in a BT Superannuation product. Following Mr Oberg's appointment, those investments were transferred to a BT Wrap product with "Colin Oberg at WealthSure Pty Limited" shown as her adviser. 289 The money transferred to Mr Oberg on 14 October 2009 was withdrawn from the BT investment the previous day. Mrs Lucey signed the Withdrawal Request but it was faxed from Oberg Accountancy. The money passed briefly through Mrs Lucey's Commonwealth Bank account on its way to Mr Oberg. 290 Although there is no direct evidence of any statement by Mr Oberg, I have evidence of similar requests for the same amount of money from other clients at about this time, as well as the wider practice established by the evidence which was notified under s 97 of the Evidence Act. During final submissions, counsel for the applicants applied to be relieved of any requirement of notice with respect to material produced under a notice to produce late in the trial (complaints by Ms Smith and Ms Johnston discussed earlier) as well as the information which led to the investigation by WealthSure in March 2010. I am satisfied that I should waive any requirement of notice under s 100 of the Evidence Act, and I do so. 291 The contemporaneous events, and the broader picture, raise a clear inference, in my view, that the transfer to Mr Oberg on 14 October 2009 was most probably the result of advice of a similar kind to that referred to in that other evidence and that Mrs Lucey relied on that advice from her trusted adviser. 292 For the reasons already given, I am satisfied that Mrs Lucey's estate had a good cause of action against WealthSure under s 1041E, relying on either Division 6 of Part 7.6 or upon s 769B. 8.1.4 The Goonasekeras 293 This case is factually much more complicated. It is affected, in some respects, by the lack of diligent attention by Mr Goonasekera to his own interests and to his uncritical acceptance of Mr Oberg's advice on repeated occasions, without any apparent attempt to monitor his own investments or attend to his own interests. His preparedness to delegate completely to Mr Oberg, both formally and in practice, appears to have been total. 294 Nevertheless, I am satisfied that the Goonasekeras have a good cause of action with respect to anything done by Mr Oberg while he was an authorised representative. I need to give later attention to the claim concerning $30,000 paid after that time. 295 There are four different kinds of transactions to be considered: $200,000 in payments responsive to advice from time to time which Mr Goonasekera sought and Mr Oberg gave while he was an authorised representative; a further $30,000 of such payments after Mr Oberg's appointment was revoked; $145,000 paid by Mr Oberg from Mr Goonasekera's accounts to JRCC Finance in 2007; and $215,500 paid by Mr Oberg out of Mr Goonasekera's HDR Super Fund account to JRCC Finance in 2009, which had earlier been in BT SuperWrap accounts of either Mr or Mrs Goonasekera. 296 There are some technical issues which arise in respect of some of the transactions – extra-territoriality, limitation of actions. 297 The first group of payments were made in response to specific requests for advice from 14 January 2009 to 29 September 2010. I am satisfied for reasons I have already discussed that the Goonasekeras have a good cause of action against WealthSure under s 1041E, based on either Division 6 of Part 7.6 or s 769B. 298 One matter to be mentioned (but only briefly at this point) concerns an argument put by WealthSure related to the first $100,000 transaction in this group of payments. Mr Goonasekera was in Kuwait when he sought and received the advice which led to the payment. Mr Oberg was in Sydney. The funds were in Sydney. Nevertheless, WealthSure argued that, for some purposes, the advice given to Mr Goonasekera by Mr Oberg's email of 14 January 2009 could not be relied upon because the advice was received outside "this jurisdiction". 299 The argument did not, however, apply to s 1041E, and it does not affect the conclusion I have stated. 300 I shall put aside and defer the second group (payments of $30,000) for the moment. 301 The third group consisted of payments made by Mr Oberg to his own company. Mr Goonasekera did not learn about those payments until after August 2012. 302 Mr Oberg had been given authority by Mr Goonasekera in the form of the Power of Attorney. Perhaps Mr Oberg relied on that. However, the payments were made from a BT Wrap investment, in respect of which Mr Oberg had "full access", assigned to him by WealthSure. There were three payments: $50,000 in the period 16 – 18 June 2007; $75,000 on 19 September 2007; and $20,000 on 22 October 2007. 303 None of these payments was the consequence of any identified statement which would be actionable under s 1041E. The claim for relief depends on an action in negligence and I shall consider it further in that context, together with a "limitation" defence which was relied upon by WealthSure. 304 The fourth group of payments were also made ultimately by Mr Oberg over a period from 27 July 2009 to 6 January 2010. However, the source of the funds requires explanation. 305 Initially, in about June 2009, Mr Oberg recommended to Mr Goonasekera that he should transfer funds from his BT Superannuation investments into a new self-managed superannuation fund which Mr Oberg would set up and manage. Thereafter, the money was to be put into investments selected by Mr Oberg. Mr Goonasekera agreed. However, Mr Goonasekera took no further step of his own which gave effect to the advice, or his agreement. 306 Thereafter, Mr Oberg (presumably acting on the Power of Attorney and/or his "full access" to the BT accounts) implemented the scheme. First, he transferred $175,000 from Mr Goonasekera's BT SuperWrap account and paid it to a new account at the Commonwealth Bank called "HDR Pty Limited in trust for HDR Super Fund". Then, between 27 July 2009 and 14 August 2009 Mr Oberg paid the $175,000 out in eight transfers to JRCC Finance. Then, from 2 to 5 November 2009 Mr Oberg paid into the HDR Super Fund account $22,000 from Mr Goonasekera's BT SuperWrap account and $18,500 from Mrs Goonasekera's SuperWrap account (it is unclear whether the Power of Attorney from Mr Goonasekera extended to this). Then Mr Oberg transferred the $40,500 out again to JRCC Finance in two instalments: $40,000 on 9 November 2009 and $500 on 6 January 2010. 307 I am not satisfied that any cause of action arises under s 1041E in respect of these payments. In view of my later conclusions about the case in negligence it is not necessary to turn again to s 1041F or s 1041H with respect to these payments. 308 One problem is that it is not clear that the Goonasekeras acquired a financial product as the result of Mr Oberg's statements in June 2009, within the meaning of s 1041E(1)(b)(ii), because it is not clear that they made an investment within the meaning of s 763B(a). At this point, despite his acceptance of the advice, Mr Goonasekera did not give any money to Mr Oberg. 309 It may be arguable that the Goonasekeras agreed to the disposal of a financial product within s 1041E(1)(b)(ii) and were induced to do so by Mr Oberg's statements in June 2009. The connection is less direct with the transfers made by him from the BT SuperWrap accounts in early November 2009, than it is with the transfer of $175,000 first made. In view of the conclusions I reach about the case in negligence it is not necessary to finally resolve this issue. 310 I shall deal with the case in negligence later. 311 The claim about the $30,000 in transfers, based on specific advice may also be considered under the case in negligence but I will deal here with whether, in the case of the Goonasekeras, Mr Oberg's apparent authority continued after 30 September 2010 until 29 April 2012. 312 The Goonasekeras were only alerted to Mr Oberg's conduct in August 2012 by Mr La Rocca who had taken over Mr Oberg's accountancy practice. Despite the fact that their BT SuperWrap investments had been accessed by Mr Oberg on numerous occasions to transfer money directly to his own JRCC Finance account, and that such conduct was the reason for the concern in March 2010, WealthSure appears to have done nothing to notify, or attempt to notify the Goonasekeras. 313 Equally importantly, for present purposes, WealthSure took no effective steps to revoke or deny Mr Oberg's apparent authority. It sent no effective notice to clients to whom it did not properly address the 25 July 2011 letter and it put nothing on its website. In my view, WealthSure is estopped from denying Mr Oberg's apparent authority pursuant to s 769B. 314 It follows that the Goonasekeras have a good cause of action against WealthSure for this amount under s 1041E, relying on s 769B(1). 8.2 Negligence 315 In light of my earlier findings, most attention concerning the claim in negligence is required to the claims by the Goonasekeras concerning the amounts taken by Mr Oberg directly from their accounts. However, the analysis and views which follow would have equal application to the other applicants. For the reasons which follow I uphold their claims in negligence and I also uphold a claim in negligence concerning the $230,000 lost by the Goonasekeras arising from Mr Oberg's advice (i.e. the first and second groups of losses) as well as in relation to money he took directly (i.e. the third and fourth groups of losses), which I consider more directly. 316 It is first necessary to consider how WealthSure might be liable for the negligent conduct of Mr Oberg. I will deal first with the advice which led to the establishment of the HDR Super Fund account, permitting the transfer of money to that account at various times and then its taking by Mr Oberg. 317 The advice for the establishment of the account, and the transfer to it of money in existing investments for the purpose of then making investments selected by Mr Oberg was "financial product advice" within the meaning of s 766B(1), which provides: 766B Meaning of financial product advice (1) For the purposes of this Chapter, financial product advice means a recommendation or a statement of opinion, or a report of either of those things, that: (a) is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or (b) could reasonably be regarded as being intended to have such an influence. (Emphasis in original.) 318 Giving the advice was, therefore, "providing a financial service" (s 766A(1)(a)). It was, therefore, conduct to which Division 6 of Part 7.6 applied (s 917A(1)(a)). In view of the complete trust which Mr Goonasekera invested in Mr Oberg, and the history of their dealings over some years, the advice which Mr Goonasekera was given about the redeployment of his superannuation investments into a self-managed fund was advice on which he could reasonably be expected to rely (s 917A(1)(b)). 319 Accordingly, if Mr Oberg would be liable in negligence WealthSure too would be liable in its own right under Division 6 of Part 7.6. 320 In my view, as a financial adviser Mr Oberg did owe a duty of care to the Goonasekeras and he breached that duty of care. The loss which they suffered by reason of the loss of the money which he took was reasonably foreseeable and they would be entitled to damages at common law to compensate them for that loss. 321 WealthSure accepted that Mr Oberg had a duty of care and made no submission that the duty of care was not breached. 322 When Mr Oberg took money from the Goonasekeras' BT accounts, whether in 2007 or in 2009, he was, in my view, engaged in conduct that related to the provision of a financial service within the meaning of s 917A(1)(a), because he was dealing with a financial product (s 766A(1)(b)), including varying or disposing of it (s 766C(1)(d) and (e)). With respect to those payments out of the BT products it may not be possible to say (at least so far as the $145,000 in 2007 is concerned) that Mr Goonasekera relied on that particular conduct. However, even if that is the case, in my view s 766B applies because Mr Oberg was acting at least within his apparent authority when he dealt with the BT products and, either directly or indirectly, transferred money from them to JRCC Finance. 323 There is then a limitation question which must be considered concerning the payments made to JRCC Finance in 2007 and also a submission made by WealthSure that negligence is not an appropriate cause of action for deliberate conduct. 324 The limitation period of six years stated by s 14 of the Limitation Act 1969 (NSW) would normally apply to any action in negligence against Mr Oberg to recover a loss which was incurred by his taking the Goonasekeras' money from their accounts. The proceedings were commenced on 5 February 2013, but WealthSure relies on the fact that no pleading raising a case at common law was filed with respect to moneys taken in 2007 until 2015. WealthSure, therefore, submits that the claim is statute barred. 325 Section 55(1) and (3) of the Limitation Act provides: 55 Fraud and deceit (1) Subject to subsection (3) where: (a) there is a cause of action based on fraud or deceit, or (b) a cause of action or the identity of a person against whom a cause of action lies is fraudulently concealed, the time which elapses after a limitation period fixed by or under this Act for the cause of action commences to run and before the date on which a person having (either solely or with other persons) the cause of action first discovers, or may with reasonable diligence discover, the fraud deceit or concealment, as the case may be, does not count in the reckoning of the limitation period for an action on the cause of action by the person or by a person claiming through the person against a person answerable for the fraud deceit or concealment. … (3) For the purposes of subsection (1), a person is answerable for fraud deceit or concealment if, but only if: (a) the person is a party to the fraud deceit or concealment, or (b) the person is, in relation to the cause of action, a successor of a party to the fraud deceit or concealment under a devolution from the party occurring after the date on which the fraud deceit or concealment first occurs. 326 In Seymour v Seymour (1996) 40 NSWLR 358 the New South Wales Court of Appeal (Mahoney A-CJ, with whom Meagher JA and Abadee A-JA agreed) held, in relation to the meaning of "fraudulently concealed" that: … there must be in what is involved a consciousness that what is being done is wrong or that to take advantage of the relevant situation involves wrongdoing. At least, this is so in the generality of cases. … 327 Mr Oberg's conduct, in this particular respect and more generally, appears to have been marked by both concealment and deceit. 328 Based on the evidence before me, I am satisfied that Mr Oberg fraudulently concealed the cause of action which arises in relation to those payments and that, as against him, the time until discovery of the payments does not count. WealthSure claimed that the effect of s 55(3) was that there was no postponement of the bar so far as it was concerned. However, I accept the submission for the applicants that s 769B(1) has the effect that the applicants have the same remedies against WealthSure as they would have against Mr Oberg. It follows that the limitation period stated by s 14 of the Limitation Act does not bar the claim in negligence against WealthSure. 329 Subject to the next argument to be considered, the Goonasekeras are entitled to recover from WealthSure, as damages for negligence, the $145,000 paid away by Mr Oberg in 2007. They are also entitled to recover at least the amounts paid to JRCC Finance from the HDR Super Fund account in the period when Mr Oberg was an authorised representative – i.e. $215,500. 330 WealthSure argued that a cause of action in negligence was an inappropriate remedy to address Mr Oberg's conduct. It relied upon the judgment of Sheppard J in Hunter Grain Pty Ltd v Hyundai Merchant Marine Co Ltd and Malaysian International Shipping Corporation Bhd (1993) 117 ALR 507; [1993] FCA 133, where his Honour said (at 526): There remains the cause of action based on negligence. There is much to be said for the view that Hyundai [sic: the plaintiff] is entitled to succeed on this cause of action, but the conduct engaged in by Hyundai and its employees and agents was deliberate. It is not a case of the clean receipt contained in the bill of lading having been given in circumstances which demonstrate that Hyundai was in breach of a duty owed to the plaintiff to take reasonable care in relation to the receipt which it signed. It is not a case involving negligent conduct. It is a case of deliberately embarking upon a course of conduct which was deceitful and dishonest. In these circumstances, I do not think that the cause of action in negligence is appropriate for the circumstances of this case. (Emphasis added.) 331 But in that case the plaintiff succeeded in fraud on the same facts, and in contract. No question of additional relief would arise. The observation that a cause of action in negligence was, in the circumstances of that case, inappropriate should not be read, in my respectful view, as a statement that it was legally unavailable. 332 WealthSure relied on Williams v Milotin (1957) 97 CLR 465 (at 470, 474) to support a proposition (as I understood it) that intentional conduct will not ground an action in negligence but must be vindicated in some other cause of action based on intentional conduct. I see no real support for that proposition in Williams v Milotin, which was a limitation case. 333 The case is a complicated one, which turns on historical considerations. In my respectful view, it does not stand for the proposition that an action in negligence cannot be based on intentional conduct, including an intention to take money. 334 The reasoning in Williams v Milotin was explained by the judgments of the Full Court of the Supreme Court of Tasmania in Wilson v Horne (1999) 8 Tas R 363, where it was held: (1) The fact that circumstances complained of by a plaintiff might fit more than one category of tort and might, in this case, be more appropriately described as trespass rather than negligence, is not sufficient to deprive a court of jurisdiction to entertain an action in the latter form. The plaintiff was entitled to pursue whichever cause of action she preferred. Williams v Milotin (1957) 97 CLR 465, explained. 335 [Special leave to appeal to the High Court from this judgment was refused, Gleeson CJ observing that an appeal enjoyed insufficient prospects of success]. 336 Cox CJ referred to the same line of argument as WealthSure advanced in the present case (that negligence cannot be constituted by intentional conduct, and reliance on Williams v Milotin) and said (at 367): 7 In my view, that case is not authority for the proposition relied upon by the plaintiff, but establishes that prior to the introduction of the judicature system, a direct and intentional application of force only gave rise to an action for trespass. A recent example of conduct involving an intentional trespass to the plaintiff's person but pleaded in negligence is Gray v Motor Accident Commission … 337 In Gray v Motor Accident Commission (1998) 196 CLR 1, the High Court dealt with whether exemplary damages could be awarded as a punishment in a negligence case. Gleeson CJ, McHugh, Gummow and Hayne JJ said (at [21]-[24]): Negligence and exemplary damages 21 Provoked by differing limitation periods for claims for damages for personal injury caused by negligence and other torts, there was a deal of debate in the 1960s about whether trespass to the person could be committed negligently. 22 We do not think it necessary to revisit that debate. No question arises here of an intentional wrong being committed by inadvertence. For present purposes it is enough to note two things. First, exemplary damages could not properly be awarded in a case of alleged negligence in which there was no conscious wrongdoing by the defendant. Ordinarily, then, questions of exemplary damages will not arise in most negligence cases be they motor accident or other kinds of case. But there can be cases, framed in negligence, in which the defendant can be shown to have acted consciously in contumelious disregard of the rights of the plaintiff or persons in the position of the plaintiff. Cases of an employer's failure to provide a safe system of work for employees in which it is demonstrated that the employer, well knowing of an extreme danger thus created, persisted in employing the unsafe system might, perhaps, be of that latter kind. No doubt other examples can be found. 23 In many jurisdictions in the United States reckless indifference to the rights of others and other culpable conduct short of malicious intent is sufficient for the issue of an award of exemplary damages to be left to a jury. 24 Secondly, the present proceeding, although said to have been framed as an action in negligence, appears to have been conducted at trial as if it were a claim in trespass. The allegation made in the appellant's statement of claim, and pursued at trial, was that Bransden drove his vehicle "deliberately towards [the appellant] without regard for the safety of [the appellant]" and such evidence of the events as was given at trial was all directed to showing Bransden deliberately inflicted injury on the appellant. Whatever may be the true characterisation of the pleading, the case was conducted as one of conscious wrongdoing by the tortfeasor. (Emphasis added.) (Footnotes omitted.) 338 Nothing in that case holds that the negligence case was unavailable. 339 In New South Wales v Lepore (2003) 212 CLR 511, McHugh J referred to Williams v Milotin and Gray v Motor Accident Commission as follows (at [162]): 162 The plaintiff elected to sue the teacher for trespass to the person. But if it matters — and I do not think it does — the plaintiff could have sued the teacher in negligence. An action for negligent infliction of harm is not barred by reason of the intentional act of the person causing the harm. Historically, as long as a plaintiff did not make the intention of the defendant part of the cause of action, the plaintiff could sue in trespass to the person or by an action on the case for the direct infliction of force. At all events, that was the position before the enactment of the Common Law Procedure Act 1852 (UK) and its analogues in Australia (247). Since the abolition of the forms of action, a plaintiff may, if he or she chooses, sue in negligence for the intentional infliction of harm (248). (247) Williams v Milotin (1957) 97 CLR 465 at 470-471. (248) Gray v Motor Accident Commission (1998) 196 CLR 1. (Emphasis added.) 340 I propose to proceed upon the basis that an action in negligence is not rendered unavailable because the conduct of Mr Oberg may be viewed as involving the intentional infliction of economic loss. 341 There were two causes of action in negligence pressed against WealthSure directly. They related first to the period when Mr Oberg was an authorised representative of WealthSure and secondly to the period after the revocation so far as the Goonasekeras were concerned. 342 There are various reasons why the first of those cannot succeed. 343 The duty of care postulated was one to effectively monitor and superintend Mr Oberg's conduct. Various mechanisms and procedures were suggested but they do not need detailed consideration. The relevant obligations were those imposed by the Corporations Act, in any event (s 912A). 344 In the case of the Casaclangs, the Gibsons and Mrs Lucey, where only one transaction was involved, it cannot be suggested with sufficient confidence that any system of the kind proposed would more likely than not have avoided the loss, rather than yielding a possibility of its earlier discovery, but still after the event. This aspect of the cause of action cannot succeed in my view. 345 As for the Goonasekeras, the procedures proposed cannot be predicted to have avoided the $200,000 loss (i.e. $230,000 less $30,000), which could easily have been kept "off the books" and concealed from WealthSure. Nor can it with reasonable confidence be predicted to have avoided transfer of $215,500 to a self-managed superannuation fund from which location it may, again, have simply been kept "off the books". At least, it may not be accepted, in my view, that more probably than not either those or the subsequent transactions would have been avoided. 346 In the case of the $145,000 transferred during 2007, the claim against WealthSure directly is statute barred by s 14 of the New South Wales Limitations Act. The Goonasekeras do not have the benefit of the operation of s 55(1) of that Act in a case against WealthSure in its own right, because of s 55(3). 347 The relevant obligations of superintendence and otherwise are stated by Part 7.6 (see especially s 912A). Consequences for failure to meet those standards are given by the Corporations Act. The statutory scheme may well both identify and confine available relief with respect to those matters in a way which excludes common law actions (see Josephson v Walker (1914) 18 CLR 691) although it is not necessary to come to a final view about that because relief should be granted for the reasons I gave earlier. 348 The negligence claim for the period after Mr Oberg's authority was revoked must be considered separately. I consider that WealthSure did have a duty of care to take steps to alert at least those clients of Mr Oberg who had been put into WealthSure approved products (and from which WealthSure earned commission) that Mr Oberg's authority had been revoked. There was sufficient evidence before WealthSure by that time that Mr Oberg had been interfering in funds held in such products. 349 I am satisfied that the duty was breached, that loss was foreseeable and that the Goonasekeras would have taken some steps which would have avoided the further loss of $30,000. That money was transferred by Mr Goonasekera in response to advice. I accept his evidence that he would not have done so had he been warned. 350 This conclusion does not lead to any additional relief, but it provides further support for my earlier finding that WealthSure is liable to the Goonasekeras for the $30,000 which they transferred to Mr Oberg after he ceased to be an authorised representative. 351 The findings which I have made to this point will, it will be seen, suffice to explain all the relief to which, in my view, the applicants are entitled. However, I shall deal with further claims for relief which were also relied on. 8.3 Part 7.7 352 When personal advice is provided to a retail client by an authorised representative in that capacity Division 3 of Part 7.7 applies (s 944A(a)(ii) and (b)). The advice must only be provided if there is a reasonable basis for it (s 945A(1)). 353 Part 7.7 provides its own method and tests for attributing liability to a licensee (s 953B). In the case of a contravention of s 945A a licensee will be a "liable person" from whom loss or damage resulting from the contravention may be recovered (s 953B(2)(c) and (3)(b)). 354 Advice is "personal advice" where the provider of the advice has considered a person's objectives, financial situation or needs, or a reasonable person might expect the provider to have done so (s 766B(3)). Each of the applicants is presumed to be a retail client because there was no evidence to the contrary (s 761G(9)) but, in any event, they fall within that description (s 761G(1)). 355 It is important, however, that the advice be given to the client by a provider in the capacity of authorised representative. It will be necessary to consider the position of the applicants separately because there are some differences. 356 In the case of the Casaclangs, I accept Mr Casaclang's evidence that Mr Oberg said the proposed investment was covered by insurance through WealthSure. However, in my view Part 7.7 is not directed to misrepresentations about the true position (that is dealt with elsewhere), but to defects or omissions in the quality or nature of advice or material supplied. The obligation to provide a Statement of Advice and Financial Services Guide also arises under Part 7.7 and the question of defects is addressed directly. In my view, the statutory scheme is directed at this point to the nature and quality of advice, disclosures and notice (whether oral or written), given by a licensee, or by an authorised representative. In the case of Division 3 of Part 7.7, and s 945A, the consequences which are provided for a failure of the statutory standards appear to me to apply to conduct which is in fact (rather than as a matter of mere representation) undertaken as an authorised representative. The position may be distinguished from the matters dealt with in s 917B which applies whether or not the conduct of a representative is within authority. 357 There is no basis to think that what Mr Oberg proposed to the Casaclangs actually represented a proposed investment in a WealthSure approved product. I would not be prepared to find WealthSure liable for breach of s 945A in those circumstances. 358 The same conclusion must be reached in the case of the Gibsons. The fact that Mr Oberg had, at an earlier time, provided a copy of the Adviser Profile and Financial Services Guide on WealthSure letterhead does not establish that in early September 2010 Mr Oberg in fact or reality acted in his capacity as an authorised representative of WealthSure when he proposed the investment of $50,000 which Mr Gibson thought he made on 3 September 2010. 359 In Mrs Lucey's case, there is no evidence what advice was given. The suggestion of inadequate advice seems highly plausible but it rests on supposition. The matters which suggest the supposition, however, tend strongly against any contention that Mr Oberg was acting at that point as an authorised representative of WealthSure, except for one matter. Mrs Lucey's notice of withdrawal of funds from her BT facility named Mr Oberg as her representative and was sent by facsimile to BT from Mr Oberg's office. In my view, a conclusion is open in this case that Mr Oberg was acting under, and in fact using, the authority which WealthSure and BT had given him as an authorised representative of WealthSure in relation to BT products. 360 I think I may infer from the facts that I know, and the surrounding circumstances, that the advice to Mrs Lucey was a step on the way to Mr Oberg coming into possession of the money withdrawn from the BT facility, and a step in the loss of the funds which, for practical purposes, occurred when they passed out of Mrs Lucey's Commonwealth Bank account and into Mr Oberg's control. That advice, I am satisfied, failed the test in s 945A(1) which provides: 945A Requirement to have a reasonable basis for the advice (1) The providing entity must only provide the advice to the client if: (a) the providing entity: (i) determines the relevant personal circumstances in relation to giving the advice; and (ii) makes reasonable inquiries in relation to those personal circumstances; and (b) having regard to information obtained from the client in relation to those personal circumstances, the providing entity has given such consideration to, and conducted such investigation of, the subject matter of the advice as is reasonable in all of the circumstances; and (c) the advice is appropriate to the client, having regard to that consideration and investigation. Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). 361 WealthSure is, therefore, liable for any loss or damage suffered because of the contravention. I am satisfied that the transfer from the BT facility, and thereafter to Mr Oberg, would not have been made if any advice given conformed to s 945A(1). WealthSure is, therefore, separately liable to compensate the estate of Mrs Lucey for the loss of $150,000. 362 Similar considerations apply to part of the claims made by the Goonasekeras. 363 Although formally pleaded it was not ultimately submitted that s 945A applied to the amounts totalling $145,000 taken by Mr Oberg in 2007. These amounts were taken directly by Mr Oberg. 364 I am not satisfied, for reasons given in relation to the Casaclangs and the Gibsons, that any part of the advice given periodically by Mr Oberg in relation to the $230,000 which was progressively transferred by Mr Oberg (i.e. $200,000 while he was an authorised representative) was given in the capacity of an authorised representative. 365 However, the advice to take money out of the BT facilities to put into the HDR Super Fund, which was accepted by Mr Goonasekera, was implemented by Mr Oberg acting under his express authority from WealthSure and BT as an authorised representative of WealthSure. Mr Oberg acted on that authority to transfer $175,000 from Mr Goonasekera's BT SuperWrap facility on 21 to 23 July 2009, and transfer $22,000 from Mr Goonasekera's BT SuperWrap account and $18,500 from Mrs Goonasekera's BT SuperWrap account on 2 to 5 November 2009. 366 I am satisfied that if the advice given in June 2009 to set up a self-managed superannuation fund, from which Mr Oberg might make investments had conformed to s 945A(1), Mr Goonasekera would not have approved the proposal. Acceptance of the advice led directly to the money being placed by Mr Oberg under his own control and the money being lost to the Goonasekeras. WealthSure is liable for the loss ($215,500) under s 953B. 367 Division 3 of Part 7.7 also contains a requirement that retail clients be given a written Statement of Advice. I am satisfied that none of the applicants was given such a document in relation to any of the transactions I am considering. Section 947C states the main requirements to be observed. Additional requirements to be observed when the advice recommends the replacement of one product with another are stated in s 947D. 368 Section 947C(6) provides: 947C Statement of Advice given by authorised representative—main requirements … (6) The statements and information included in the Statement of Advice must be worded and presented in a clear, concise and effective manner. 369 It is an offence not to give a Statement of Advice (s 952C), to give a Statement of Advice knowing it to be defective (s 952D) and, in some circumstances, to give a defective Statement of Advice whether or not it is known to be defective (s 952E). It is clear, therefore, that the statutory premise in Part 7.7 is that a Statement of Advice will contain accurate, effective and sufficiently comprehensive advice to allow a properly informed decision by a retail client. It may, therefore, be taken, in my view, that if the true position was revealed none of the applicants would have made any of the transactions. 370 However, the limitations in Division 3 of Part 7.7 which I have already discussed apply here also. For that reason, any possibility of relief is confined to Mrs Lucey and to part of the claims ($215,500) by the Goonasekeras. 371 I think I may safely infer that Mrs Lucey was not given a Statement of Advice which met the statutory standard. I accept that the Goonasekeras were not given such an advice. WealthSure is liable for loss or damage which is suffered because a Statement of Advice was not given by an authorised representative (s 953B(1)(a), (2)(a), (3)(b)). 372 I am satisfied, as before, the relevant transactions would not have occurred if a Statement of Advice in proper form had been given. 373 WealthSure is, therefore, liable on this additional ground to compensate the estate of Mrs Lucey for her loss of $150,000 and the Goonasekeras for their loss of $215,500. 8.4 Statutory duty of care 374 I have deferred consideration of this cause of action (direct reliance on s 912A) to this point because it, also, is based on an allegation of a duty owed to retail clients. I have accepted that each of the applicants was a retail client. 375 Section 912A states the general obligations of a licensee, which apply in regard to retail clients, amongst others. Section 912B requires compensation arrangements to be put in place to protect retail clients. 376 WealthSure's defence denied that an alleged breach of s 912A was directly actionable on the part of the applicants individually. 377 No written or oral submission was advanced to this issue to argue that any separate statutory liability arose from s 912A. I will, therefore, not consider it further as a separate head of claim. 8.5 Part 7.9 378 Section 1012A sets out the circumstances in which personal financial product advice to a retail client must be supported by a Product Disclosure Statement. Each of the opening conditions is satisfied with respect to the Casaclangs and the Gibsons. I am satisfied that the conditions are also satisfied in the case of Mrs Lucey. They are satisfied in the case of the advice to the Goonasekeras in June 2009 which led to the loss of $215,500 and in relation to some (but not all) of the elements of the loss of $230,000 which resulted from Mr Goonasekera seeking and acting on Mr Oberg's recommendations from time to time. The initial $100,000 in that group of transactions is not covered because s 1011A(1) provides that s 1012A only applies to advice and recommendations received within the jurisdiction. Mr Goonasekera received advice about that investment in Kuwait. Section 1012A does not apply to the $30,000 lost after Mr Oberg's authority was revoked because he was no longer a "regulated person" within the meaning of s 1011B (s 1012A(1)). 379 The main requirements for a Product Disclosure Statement are set out in s 1013D. Section 1013E provides: 1013E General obligation to include other information that might influence a decision to acquire Subject to subsection 1013C(2) and sections 1013F and 1013FA, a Product Disclosure Statement must also contain any other information that might reasonably be expected to have a material influence on the decision of a reasonable person, as a retail client, whether to acquire the product. 380 It is an offence to fail to provide a Product Disclosure Statement when it is required, or to give a defective Product Disclosure Statement. For similar reasons to the Statement of Advice, I am satisfied that if a Product Disclosure Statement had been given as required the relevant transactions would not have been made, and the loss has flowed sufficiently directly from Mr Oberg's failure to comply with those obligations. 381 Like Part 7.10, Part 7.9 contains its own mechanisms and methods for attributing responsibility for a relevant failure. WealthSure is made liable for Mr Oberg's failures instead of him (s 1022B(1)(a), (2)(a), (4)(a)). 382 That liability, I am satisfied, requires WealthSure to compensate the Casaclangs and the Gibsons for their losses. I am satisfied that I should infer that no Product Disclosure Statement was given to Mrs Lucey for the same reasons I gave about the Statement of Advice. Her estate must, therefore, be compensated for the $150,000 loss she sustained. 383 I accept Mr Goonasekera's evidence that he was not ever given a Product Disclosure Statement. The Goonasekeras are entitled to compensation under this head of $215,500 flowing from the advice in June 2009, and $100,000 of the losses flowing from Mr Oberg's advice from time to time after January 2009 while he was an authorised representative. 384 Of course, those findings only supplement, in various ways, earlier conclusions about liability and do not add to the relief already assessed. 8.6 The ASIC Act 385 To meet the allegation that various transactions involved the provision of credit facilities, rather than financial products, the applicants relied on various provisions of the ASIC Act where the asserted limitation or exclusion does not apply. It is not necessary for me to deal with this alternative. 8.7 Contract 386 There were two elements to the pleaded case in contract. One was, by a late amendment, that promises to repay and about rates of return on their investments to the Casaclangs and the Gibsons were contractual, so that Mr Oberg was liable to repay the investments plus 10% and WealthSure was liable under Part 7.6. 387 This case does not sit very comfortably with the proposition that the arrangements with Mr Oberg did not involve the provision of credit to him personally, which I have accepted. In any event, I am not satisfied that there was any contract of the kind suggested. The evidence does not support any proposition of a promise to repay with interest come what may and it does not identify any consideration which might support a contract. No liability arises in this way. 388 The other contractual case asserted in the pleadings was that Mr Oberg's "retainer" by each of the applicants gave rise to an implied contractual term that Mr Oberg would exercise due care and skill in providing his services. 389 This pleaded case, which was also advised by a late amendment, does not really add anything in terms of relief to the matters I have already discussed and it was addressed in the written submissions (as it was in the pleadings) as concurrent with negligence. However, it invites recognition in its own right for the reasons which follow. 390 A duty to exercise reasonable care in the provision of professional services arises as a contractual duty by implication of law, concurrently with a liability in tort (Astley v Austrust Ltd (1999) 197 CLR 1 at [47]; see also Selig v Wealthsure Pty Ltd (2013) 94 ACSR 308 per Lander J at [868]-[869]). Mr Oberg breached that duty. WealthSure is liable for that conduct at least under s 769B(1) for reasons earlier given. Division 6 of Part 7.6 also applies to the extent discussed earlier. In the present case, the different causes of action in tort and contract give rise to no different measure of damages. My conclusion about this issue is, therefore, a further reason why WealthSure is liable to the Casaclangs and the Gibsons, to the estate of Mrs Lucey and to the Goonasekeras for all their loss in one way or another. 391 In this particular case, consideration arises from the nature of the relationship, and the fact that the professional is rewarded for it. That is distinguishable from my observations earlier about the lack of consideration for any particular contract concerning the specific transactions involving the Casaclangs and the Gibsons. 392 WealthSure's liability for the breach by Mr Oberg of this implied contractual term is a further foundation for relief for each of the applicants to the full extent of their claims. 9. Summary 393 The various principal amounts I have decided may be recovered by the applicants, and the various independent foundations for that recovery, may be summarised as set out hereunder: Casaclangs $75,000 - Corporations Act s 1041I, based on contravention of s 1041E - Corporations Act s 1041E in combination with s 769B - negligence in combination with s 769B - Corporations Act s 1022B based on contravention of s 1012A - breach of contract in combination with s 769B Gibsons $50,000 - Corporations Act s 1041I based on contravention of s 1041E - Corporations Act s 1041E in combination with s 769B - negligence in combination with s 769B - Corporations Act s 1022B based on contravention of s 1012A - breach of contract in combination with s 769B Estate of Mrs Lucey $150,000 - Corporations Act s 1041I based on contravention of s 1041E - Corporations Act s 1041E in combination with s 769B - negligence in combination with s 769B - Corporations Act s 953B based on contravention of s 945A - Corporations Act s 953B based on contravention of s 947C - Corporations Act s 1022B based on contravention of s 1012A - breach of contract in combination with s 769B Goonasekeras $200,000 - Corporations Act s 1041I based on contravention of s 1041E - Corporations Act s 1041E in combination with s 769B - negligence in combination with s 769B - Corporations Act s 1022B based on contravention of s 1012A (but only as to $100,000) - breach of contract in combination with s 769B $30,000 - Corporations Act s 1041E in combination with s 769B - negligence in combination with s 769B - direct liability in negligence - breach of contract in combination with s 769B $145,000 - negligence in combination with s 769B - breach of contract in combination with s 769B $215,500 - negligence in combination with s 769B - Corporations Act s 953B based on contravention of s 945A - Corporations Act s 953B based on contravention of s 947C - Corporations Act s 1022B based on contravention of s 1012A - breach of contract in combination with s 769B 10. Conclusion 394 Each of the applicants is entitled to relief by way of damages or compensation for the loss identified, plus interest from the date of those losses which is, I am satisfied, in each case the date of transfer of funds to the control of Mr Oberg. 395 The applicants should bring in short minutes of order within 14 days to give effect to the conclusions in this judgment. I certify that the preceding three hundred and ninety-five (395) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. Associate: Dated: 27 July 2015