Lessons from the Armitage Church case

This Brief Counsel draws some practical guidance from the judgment, including a suggestion that financial advisers revisit their disclaimers.

Brief summary - Armitage v Church

The plaintiffs were Neil Armitage, a retired public servant with a portfolio of investment properties, and his family trust.  The defendants were Carey Church, a financial adviser with 20 years experience, and her company Moneyworks NZ Limited. Armitage approached Church for advice in 2005, on how best to invest around $360,000 he expected from selling a property.  Despite a risk profile questionnaire ranking Armitage as a "conservative" investor, Mrs Church advised Armitage to invest in a narrow range of fixed interest investments: four (now failed) finance companies (Bridgecorp Holdings Limited, MFS Finance Pacific, Strategic Finance Limited and North South Finance Limited); and two ING products. In 2006 Armitage again sought advice from Church on how best to invest the expected proceeds from selling his remaining investment property ($640,000) as well as $430,000 of his own funds.  This time a risk questionnaire produced slightly more aggressive results - Armitage ranked as a "balanced/ growth" investor, with his family trust a "balanced/moderately aggressive" investor.  Church advised Armitage to invest in more ING products.   Bridgecorp was placed in receivership in July 2007.  Around the same time, Armitage terminated his and his trust's relationship with Church and Moneyworks.  Armitage commenced proceedings in 2009 for losses of $292,000 he claimed were caused by Church and Moneyworks breaching their duty of care in the spread and risk level of his and his trust's portfolio.