Rodney Hartles responds to judgment
Financial adviser Rodney Hartles has responded to the court judgment which found him personally liable for advice given over investments in Bruidgecorp.
Thursday, August 16th 2012, 10:38AM 
8 Comments
On August 8th 2012, the decision of Justice Woolford was released where the appeal by Mr Gilmour was upheld and I was held to be personally liable for his losses.
Mr Gilmour first invested with Forsyth Barr in 1998. He retired in 2000 however he was unsure exactly when he retired. He withdrew his funds in 2000 and approached AMP (Alan Hartles, my brother) about investing with AMP. Mr Gilmour did not want what Alan had to offer as he wanted quarterly interest so Alan gave him a Strategic Finance Investment Statement with my stamp on it and referred Mr Gilmour to me. Mr Gilmour then placed his initial investment with Strategic Finance without any contact with me.
I spoke to Mr Gilmour by phone in June 2000, October 2001 and May 2002. We did not meet initially but did have two brief subsequent meetings when Mr Gilmour collected application forms from me. I regarded the relationship as transactional only, without advice. I did not keep formal file notes and I did not get Mr Gilmour to sign an Extent of Service document. Mr Gilmour was firm about what he wanted to invest in and he asked me to supply Finance Company application forms to allow him to proceed.
The problematic transaction was the rollover of a Bridgecorp debenture which had previously been recommended in 2001 for a period of two years. Early in 2003 Mr Gilmour's wife died and he was of a mind to lock up his funds for the longest possible time and to forget about them. I tried to dissuade him from this course of action but he went ahead, unbeknownst to me at the time.
Bridgecorp subsequently defaulted in July 2007 and Mr Gilmour took action against me. A Judicial Settlement Conference was held. No resolution was reached, however there were some startling revelations from Mr Gilmour. I am not able to say what these were because I am constrained by Court Rules from revealing what went on in the Judicial Settlement conference.
However because of a lack of documentary evidence on my behalf Mr Gilmour still felt that he had a case and that I was to blame for his loss. I offered to settle the dispute only because it was going to cost $30,000 to go to trial but he did not accept my offer.
Mr Gilmour took further action which resulted in a hearing in the District Court. The evidence presented at the Judicial Settlement Conference was not admissible at the subsequent proceedings. Worse, at the trial, Mr Gilmour said he couldn't remember certain remarks. He said "that is not something I would have said".
Mr Gilmour argued there was an "adviser-client relationship" based on the presentation of a calendar where he had written "Hartles" on the day he spoke to me about the Bridgecorp rollover. I presented evidence that showed no term of five years had ever been advised or put in place by me for any client. The documentation supporting this was thorough and extensive but disregarded as was the evidence given by my PA about the issue. The length of the investment term was completely contrary to my business practices and at odds with a conversation I had with Mr Gilmour.
Many IFA members supported me at the District Court. One of them has said that, like all fellow supporters, she felt that evidence presented by me had been disregarded. She also said she felt Mr Gilmour's stance in court lacked credibility.
For my part, I advised Mr Gilmour not to proceed with the Bridgecorp 5 year investment. I therefore regard the outcome of the Trial and subsequent Appeal as wrong, however I agree that I failed to properly document my dealings with this man and I have been otherwise unable to substantiate my position.
I was guilty of providing this person with an application form for secured debentures but I had no control over what was written on it. I know exactly what caused this investor's losses. It was not advice from me. As a result I now have to find a substantial amount of money to pay the judgement and costs.
- Rodney Hartles Media statement
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Comments from our readers
Continually looking for ways to bring down advisers will only bring the industry into disrepute. Why doesn't the public hear about the hundreds of Good advisers who ARE getting it right, and making many people wealthier, or giving families the protection they need? This is the news that will give us a good name.
If you have a client then you need to do a full needs analysis. In this case commission was received - so client.
If clients invest inappropriately then you cancel the relationship.
All this should be in writing, and any interviews/phone calls recorded. Courts will clearly decide in favour of the client in any ambiguous situations.
If the client refused advice, that should have been documented.
In my view the real problem is the way in which brokers and advisers have in the past been remunerated by Finance Companies and some banks.
The advisers should get their remuneration from their clients, not by way of a trailing commission or brokerage fee.
Whilst the client (and I use that term loosely) may have had a selective memory in Court, the adviser left themselves completely exposed by not keeping accurate records.
Whilst I’m the first to defend the many good advisers in the industry, I’m of the belief that the Courts got this one right.
Advisers are bound by the same duty of care.
As soon as as an adviser's client owns assets directly then they are acting as fund manager.
If the adviser in this case had been able to demonstrate that they had told their client how to invest prudently in the first place then I would have some sympathy (rather than trying to use the defence that the client failed to extract themselves from a position that the adviser got rewarded for putting the client in).
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