Steve Case Study - Law Assignment Help

Assignment Task

HYPOTHETICAL ILAC QUESTION

Steve is a pre-existing client of Bill, a financial planner. Bill has provided financial advice to Steve for the past  5 years and Bill is very familiar with Steve’s financial affairs. Owing to losing his job due to Covid-19, Steve is  hoping to restructure his investments into a more conservative fund, which will provide a more consistent  return whilst Steve is unemployed. Steve communicates these wishes to Bill. Bill looks into some of the options  his firm is currently recommending and settles on the ‘Super Duper’ Fund which has yielded healthy returns  in every one of the past 12 years. Bill mentions this performance to Steve and he is easily swayed. Steve  transfers almost all of his investment account ($1,000,000) funds to the Super Duper Fund.  

Whilst receiving advice from Bill, Steve enquires about the prospects of investing in cryptocurrency. Bill states  that he has not previously advised clients on cryptocurrency investment. However, he notes the opportunities  for significant returns and has heard ‘good things’ about such investments. Steve leaves Bill’s office happy and  decides to invest $200,000 in the newest cryptocurrency, Not-A-Scam Coin. He performs no research on the  investment whatsoever and takes Bill’s endorsement as sufficient evidence of the prospects of a healthy  return. With Steve’s financial future now secure, he decides to take his wife, Beth, on a round-the-world trip  and spends much of his savings in the process (upwards of $50,000).  

A year later, Steve’s investments are performing poorly. Not-A-Scam coin turned out to be a disastrous  investment with Steve losing all of his initial $200,000 investment. Additionally, the Super Duper Fund is down  20%. The Australian market as a whole is down 15% on the previous year, but the Super Duper fund has taken  an even larger hit, as it is being dragged down by its investment in several airports which are suffering huge  losses, due to Covid-19. Even worse, not a single company in the portfolio paid out a dividend, which was  consistent across the market. As it turns out, Bill was extremely busy when he gave Steve the advice a year  ago, and his research was not as thorough as it would usually be. He did not notice the high portfolio weighting  of airport shares and probably would have selected a different option had he known of this.  

Cryptocurrency is a challenging proposition within the financial planning industry. Despite the high risks, many  clients are now asking for advice on such investments. The Financial Planning Association of Australia (FPA)  advises that its members should not recommend cryptocurrency to its clients as a potential investment  opportunity, but if clients raise the matter themselves, it is necessary for members/ financial planners to warn  of the high-risk nature of the investment. Due to the increasing interest from clients, professional seminars  exist to help financial planners navigate cryptocurrency advice to their clients. Bill had previously looked into  these seminars but had not been able to afford the significant cost (each 1 hour seminar cost more than  $1,000).  

Unfortunately, due to these significant losses, Steve’s lack of income, and lack of savings, he was unable to  keep up with his mortgage repayments. Steve’s bank foreclosed on his home and sold the property at auction  for significantly less than it was worth. The property was worth $1,000,000 pre-covid and was sold at auction  for $650,000. Steve is especially frustrated as he has since secured employment and if he had received the  $20,000 in dividends he was expecting, his house would have been safe. Steve is furious and wishes to sue Bill  for providing negligent advice.  

Advise Steve as to his prospects in a claim for negligence against Bill for the losses incurred as a result of the  Super Duper Fund, the cryptocurrency advice, and the sale of Steve’s house. In your answer, you should use  the ILAC method as taught in workshops, and refer to the relevant provisions of the Civil Liability Act 2003 (Qld) as well as the supporting common law. You should discuss all three (3) elements of negligence and  consider possible defences. You only need to discuss Bill’s potential liability under the tort of negligence. You  do not need to discuss any liability under contract law, or any other causes of action. 

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