Collapsed AFSL survives legal challenge

Former Chambers client John Dennis initiated proceedings against the firm and its principal George Takla after sustaining losses from geared investments – largely in agribusiness managed investment schemes, such as Willmotts, Great Southern and Australian Blue Gums – during the GFC off the back of Mr Takla’s advice.

Mr Dennis and his legal representation pleaded that Mr Takla was liable for the losses on the basis of a perceived breach of duty under the contract of advice, as well as a breach of common law and equity, “misleading and deceptive conduct”, breach of fiduciary duty and breach of duty of care.

However, Justice Barker of the Federal Court in Perth ruled on Friday that the proceeding should be dismissed, having failed to be convinced of the stated breaches.

“In my view, having regard to the evidence and findings made in dealing with the issue whether Chambers breached its duty under the contract or at common law to exercise reasonable care and skill in providing financial advice to Mr Dennis, Mr Dennis has not established that Mr Takla obtained any unauthorised benefit from his relationship with Mr Dennis,” said Justice Barker in his judgment.

“In those circumstances the question of what fiduciary duties were owed does not require attention as, in my view, there was no breach of any such duty.”

However, ifa understands that at least one other legal action is still pending against the liquidated firm, as well as a number of matters before the Financial Ombudsman Service – one of which has resulted in a FOS determination being handed down against the company.

In August 2013, ifa spoke to former clients of Chambers who said they had been left financially devastated after investing in funds recommended by Mr Takla and his staff, alleging a “one size fits all approach” to investment advice and inadequate risk profiling.

ASIC cancelled Chambers’ AFSL in October 2013 after it had discovered the firm was in liquidation and did not have adequate PI insurance in place.