Bluechip case no benchmark: Chapman Tripp

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Law firm Chapman Tripp doesn't believe that the recent case against an adviser's recommendation to an elderly client about investing in Bluechip will set a precedent for the industry.

Friday, September 25th 2009, 12:00PM 2 Comments

A High Court decision in Napier ordering VPFS Financial Planning to around $260,000 to a 75 year-old widow, Beryl Breeze, for recommending she buy into Blue Chip property investment.

The law firm notes that at least one commentator has claimed that the case could become a "benchmark" for other claims relating to the $80 million Blue Chip collapse last year.

"In our view, it would be premature to claim that Mrs Breeze's victory sets a strong precedent for similar claims.

"Few other cases are likely to be as straightforward as Mrs Breeze's, which required the application of well-settled principles to achieve a common sense outcome."

It says that in general, a professional owes a duty to a client to take reasonable care when giving advice to that client. A professional's actions will be measured against what a reasonably competent and prudent professional would have done in the circumstances.

"Like many disputes, claims of professional negligence turn on their particular facts. For a plaintiff in Mrs Breeze's position, the court had no difficulty finding the adviser liable.

"In other circumstances, where sophisticated, well-informed investors are involved, the court is likely to be required to carefully assess competing expert views and evidence before granting judgment.

"In some cases, an adviser will no longer be in business or will not have the funds to satisfy any claim.  In this situation, claimants will no doubt look to the adviser's insurer (if any) to recover losses."

Earlier story: Blue Chip verdict highlights age-old problem

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