Adviser liable for investor's Bridgecorp loss
A financial adviser has been found personally liable for a client's losses in Bridgecorp, after he told the retired man he would lose most of his commission if the client withdrew his money early.
The High Court ordered Hamilton-based adviser Rodney Hartles to pay $90,000 to retired pharmacist Kenneth Gilmour following losses he suffered in the collapse of finance company Bridgecorp in 2007.
Hartles says he had a "transactional" relationship with Gilmour, who began investing his savings in finance companies through Hartles' company Decisionmakers after a referral from Hartles' brother.
He kept few records of the pair's conversations but acknowledged during cross-examination that he had given the former pharmacist advice.
Gilmour - who was already retired by this time - invested in four finance companies, including renewing a $100,000 investment in Bridgecorp for five years in 2003.
In 2004 Gilmour decided to help his daughter and her husband pay to build a house and arranged for an early redemption request to be sent to Hartles.
Hartles told him that if he withdrew from Bridgecorp early, Hartles would lose most of his commission and instead suggested Gilmour contact finance companies St Laurence and Property Finance and withdraw most of that money instead, the court found.
In 2007 Bridgecorp went into receivership and Gilmour has not recovered his $100,000.
The District Court found Hartles' company Decisionmakers was negligent in its duty of care to Gilmour and breached the Fair Trading Act by misleading Gilmour.
The company went into liquidation without paying the $72,700 awarded.
Both parties appealed the District Court's judgment, with Gilmour seeking to increase the amount and make Hartles personally liable.
Lawyers for Hartles argued that the court had been wrong to rely on Gilmour's diary note to find that the money was invested in Bridgecorp for five years on Hartles' advice. The note recorded the appointment before the $100,000 investment but nothing about what was said.
Hartles said in a media statement he advised against the investment.
In the Hamilton High Court, Justice Woolford found Hartles - the sole director and employee of Decisionmakers - was personally liable and increased the amount to $90,000.