Question 2

Richard is a financial advisor employed by Fresh-Money Pty Ltd. Gavin has recently inherited a sum of money which he wishes to safely invest. Gavin has become a client of Fresh-Money and Richard has been appointed as his advisor. After looking at various options, Gavin clearly instructs Richard to make low risk, long term gain investments, and not to make any high-risk investments. Richard advised Gavin to invest in TransitQuick Ltd. Richard reassures Gavin by stating "TransitQuick Ltd has a long history of stability and conservative growth and is a safe investment". Gavin accepts Richard's advice and invests all his inheritance with TransitQuick Ltd. Six months later, Gavin is informed that TransitQuick Ltd has failed and gone into liquidation and he has lost his entire investment. On making enquires, Gavin discovers that Richard had used old, out of date and incorrect information as his basis for advising Gavin to invest in TransitQuick Ltd.

REQUIRED

With reference to relevant legal principles use the IRAC legal problem-solving approach to determine whether Gavin can:

a) sue Richard for professional negligence

b) hold Fresh-Money Pty Ltd liable for negligence

Ensure you support your conclusion with relevant case law and/or legislation

(15 marks) ( 5 marks)