Paul Richards approached a firm of financial planners seeking advice on how to invest $ 1 million dollars. The financial planners introduced Paul Richards to a property developer whom they knew had serious liquidity problems and had difficulty borrowing money, but Paul Richards was told none of this. The financial planners instructed solicitors to draft the loan agreement and not to have Paul Richards and the property developer sign it until the property developer provided documentary evidence that it had taken out mortgage insurance as an added security for the loan. The loan agreement was signed without mortgage insurance having been obtained. The loan was not repaid, the property developer was bankrupted and Paul Richards lost his $1 million. Determine whether the financial planners are liable in negligence? Note: Mortgage insurance protects the lender/investor in case the property developer defaults on repayment of the loan. Mortgage insurance is most often used where higher risk loans are made. The property developer takes out the mortgage insurance so that the insurance company will fulfil the mortgage obligations if the property developer defaults or is no longer able to make payments. Issues:

Law: Common Law : Statute Law : Civil Liability Act (QLD) 2003

Application:

Conclusion: