Messer v Lotus Securities Limited [2018] FCA 1147

Messer v Lotus Securities Limited [2018] FCA 1147

AMMA acted unconscionably under both the unwritten law and s 12CB because, in 2014, Mr Messer was in a position of special disadvantage due to advanced dementia, that impairment would have been apparent to AMMA through Mr Forrestel, and AMMA nevertheless induced him to pay $6,600,000 for shares in a speculative venture, including by accompanying him to the bank and speaking for him, after being told he did not want to invest further and without disclosing Guvera's true poor financial position. The shares were at all times worthless, so the proper measure of damages was the whole amount paid for the 2014 shares.

Jurisdiction
Australia
Judgment Date
03 August 2018
Procedural Posture
Claim for Damages for Contravention of Ss 12 CA And/or 12 CB of the Australian Securities and Investments Commission Act 2001 (cth) in Relation to Financial Services / Final Judgment After Unopposed Hearing
Outcome
The applicants succeeded against the second respondent; damages and costs were ordered against AMMA.
Legal Topics
['statutory Unconscionability Under S 12 CB of the Australian Securities and Investments Commission Act 2001 (cth)' 'unconscionability Within the Meaning of the Unwritten Law Under S 12 CA of the Australian Securities and Investments Commission Act 2001 (cth)' 'special Disadvantage and Cognitive Impairment' 'capacity to Sign Legal Documents' 'non Disclosure of Financial Position' 'measure of Damages']
['corporations' 'financial Services' 'unconscionable Conduct' 'damages'] ['statutory Unconscionability Under S 12 CB of the Australian Securities and Investments Commission Act 2001 (cth)' 'unconscionability Within the Meaning of the Unwritten Law Under S 12 CA of the Australian Securities and Investments Commission Act 2001 (cth)' 'special Disadvantage and Cognitive Impairment' 'capacity to Sign Legal Documents' 'non Disclosure of Financial Position' 'measure of Damages']

Case Brief

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Procedural Posture

Claim for Damages for Contravention of Ss 12 CA And/or 12 CB of the Australian Securities and Investments Commission Act 2001 (cth) in Relation to Financial Services / Final Judgment After Unopposed Hearing

Legal Issues

  1. 1 ['Whether AMMA engaged in unconscionable conduct under ss 12CA and/or 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) by procuring Mr Messer to subscribe for shares in Guvera in 2014.' 'Whether Mr Messer suffered from cognitive impairment and whether that impairment was apparent to AMMA representatives in 2014.' "Whether AMMA knew of or should have appreciated Mr Messer's special disadvantage and took advantage of it in a way that offended good conscience." "Whether AMMA failed to disclose Guvera's true financial position when procuring the investments." 'Whether the claimed loss of $6,600,000 was established and was the appropriate measure of damages.']

Ratio Decidendi

AMMA acted unconscionably under both the unwritten law and s 12CB because, in 2014, Mr Messer was in a position of special disadvantage due to advanced dementia, that impairment would have been apparent to AMMA through Mr Forrestel, and AMMA nevertheless induced him to pay $6,600,000 for shares in a speculative venture, including by accompanying him to the bank and speaking for him, after being told he did not want to invest further and without disclosing Guvera's true poor financial position. The shares were at all times worthless, so the proper measure of damages was the whole amount paid for the 2014 shares.

Court Disposition

The applicants succeeded against the second respondent; damages and costs were ordered against AMMA.

Orders

  • ['The second respondent pay damages to the applicants in the sum of $6,600,000.' 'The second respondent pay the costs of the applicants, such costs to be taxed in default of agreement.']