Atwealth (Pty) Ltd and Others v Kernick and Others (116/2018) [2019] ZASCA 27; [2019] 2 All SA 629 (SCA); 2019 (4) SA 420 (SCA) (28 March 2019)

Atwealth (Pty) Ltd and Others v Kernick and Others (116/2018) [2019] ZASCA 27; [2019] 2 All SA 629 (SCA); 2019 (4) SA 420 (SCA) (28 March 2019)

The Supreme Court of Appeal held that the respondents failed to discharge the onus of proving that Ms Moolman acted negligently in giving financial advice. The evidence did not establish what a reasonable financial advisor would have advised regarding the investments in question at the relevant time. There was no expert evidence on the standard of care or on whether the products were known to be fraudulent or unduly risky in 2009 and 2011. The respondents did not prove that Ms Moolman made any false or misleading representations, nor that her lack of skill or knowledge resulted in advice materially different from that of a reasonable advisor. The court found that liability in delict...

Citation
[2019] ZASCA 27
Parties
Appellant: Atwealth (Pty) Ltd; Appellant: Andrea Moolman; Appellant: Vaidro 172 CC; Respondent: Alan Kernick; Respondent: Fiona Kernick; Respondent: Kernick Consulting Ltd
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
28 March 2019
Case Number
116/2018
Procedural Posture
Civil Appeal / Appeal From Eastern Cape Division of the High Court, Grahamstown
Outcome
Appeal upheld; action dismissed with costs.
Judges
Wallis, Zondi, Dambuza, Davis, Rogers
Legal Topics
Financial Advice Liability, Negligence, Fais Act Compliance, Investment Loss, Professional Duties, Ponzi Scheme Allegation
Delict Banking and Finance Commercial and Corporate Financial Advice Liability Negligence Fais Act Compliance Investment Loss Professional Duties +1 more

Case Brief

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Parties

Atwealth (Pty) Ltd

Appellant

Andrea Moolman

Appellant

Vaidro 172 CC

Appellant

Alan Kernick

Respondent

Fiona Kernick

Respondent

Kernick Consulting Ltd

Respondent

Procedural Posture

Civil Appeal / Appeal From Eastern Cape Division of the High Court, Grahamstown

Legal Issues

  1. 1 Whether the financial advisor, Ms Moolman, breached her legal duties in advising the Kernicks to invest in certain products.
  2. 2 Whether the advice given constituted negligent conduct under the law of delict.
  3. 3 Whether the evidence established that the advisor's conduct caused the Kernicks' financial losses.

Ratio Decidendi

The Supreme Court of Appeal held that the respondents failed to discharge the onus of proving that Ms Moolman acted negligently in giving financial advice. The evidence did not establish what a reasonable financial advisor would have advised regarding the investments in question at the relevant time. There was no expert evidence on the standard of care or on whether the products were known to be fraudulent or unduly risky in 2009 and 2011. The respondents did not prove that Ms Moolman made any false or misleading representations, nor that her lack of skill or knowledge resulted in advice materially different from that of a reasonable advisor. The court found that liability in delict...

Court Disposition

Appeal upheld; action dismissed with costs.

Orders

  • The appeal is upheld with costs.
  • The order of the court a quo is set aside and replaced by: 'The action is dismissed with costs.'