The mayor of the Sunshine Coast who accused Westpac bank financial planners for giving him negligent advice has had his day in court and won – partially.
Mark Jamieson, who has been mayor of the Sunshine Coast for just over a year and was the CEO of APN Australia Publishing until 2009, took the bank giant to court after an SMSF
they implemented in 2007 failed.
Jamieson and his wife alleged the failure was due to the negligent advice they received from Westpac, the Queensland Supreme Court reports state.
Specifically, the advisers were held to have been negligent for failing to advise their clients that while the $600,000 in interest on a $5 million non-recourse loan from Macquarie bank needed to be paid in equal instalments over the three-year term, this only represented about half the potential interest exposure.
The Jamiesons were then required to repay another $660,000 interest on the loan, plus interest on the amount of capitalised interest, when the underlying investments failed to generate capital growth.
In 2010 Jamieson sent an email to the bank reflecting this, stating: “I entered into the investment on the understanding that my maximum exposure based on the interest assistance provided by Macquarie Bank would be $601,875 in the event of zero or less capital growth.”
In total, court documents show that overall amount payable was more than $1.2 million, almost double the amount the couple had agreed to put at risk under the arrangement.
Justice David Jackson agreed with the Jamiesons on a number of points in the case – namely that the Westpac advisers were held to have been negligent in failure to advise their client about the extra potential interest exposure.
However he reduced the amount of damages that otherwise could have applied given Mr Jamieson's track record of making large tax-driven investments each year to shield his taxable income, his position as chief executive of a listed company, and his apparent share market experience, Banking Day
The article stated that Justice Jackson also ordered that the payments and losses from the investment be recalculated to allow for the after tax effect of making notional agribusiness investments, which he said presumably would have been made had Jamieson not accepted the advice from the Westpac advisers.
However rather than four years of interest payments, the judge limited the Jamieson’s loss to two years, by which time he said they should have realised that for the strategy to be effective the loan needed to be repaid.
“Looked at from another perspective, from the time when they ought to have realised that the strategy of the private borrowing was flawed, Mr and Mrs Jamieson should have taken steps to repay the debt,” Justice Jackson said.
He noted that as “an experienced investor in the share market”, Jamieson should not have failed to understand the risks.
He directed both parties to submit calculations of the damage.