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Tomasetti, a barrister, sued his accountants for damages of more than $4 million in respect of financial advice to invest in various agribusiness investments.

Tomasetti claimed that he was a conservative investor and the financial advice given to him, his wife and his superannuation fund was deficient. His claim failed – he did not establish that the advice was negligent or that the true nature of the investments had been misrepresented to him.

Between 2000 and 2005, the plaintiffs invested in agribusiness investments on advice from Brailey. The investments included Great Southern and Timbercorp investment schemes, as well as almond and citrus schemes. Tomasetti later experienced substantial financial distress, and gave evidence that this was related to ongoing loan repayments and management fees from these investments.

A feature of agribusiness investment schemes is the obligation for investors to pay management fees until the agribusinesses mature and start generating an income – with no guarantee that any income would be derived from such projects. In relation to just one of the plaintiffs’ investments, made in 2000, resulting financial costs (to fund the investment and ongoing costs) amounted to about $1.6million by the end of June 2008.

The background

Tomasetti’s evidence was that his investment goals included achieving modest capital growth and minimising his tax liability. He claimed that he would not have invested if he had been made aware that the schemes were risky or the nature and extent of the schemes’ ongoing management fees. In addition, he claimed that he did not read any of the disclosure or other documents provided to him and that he relied entirely on his financial advisor.

Brailey, the financial advisor, gave evidence that in relation to the later investments, he told Tomasetti that he would be able to afford the ongoing commitments so long as he controlled his discretionary spending – Tomasetti had commissioned a boat to be built, for example, at a cost of some $800,000.

Tomasetti’s investments into the agricultural managed investment schemes were made using borrowed funds – his wife admitted that the investment loan was obtained to achieve a tax deduction. Tomasetti’s wife admitted that discretionary spending could have been reduced to meet loan repayments (or, indeed, could have purchased the agribusiness investment lots outright), however, they were motivated by the tax benefits of an investment loan.

Expert evidence

Evidence as to the standard of care of a reasonably prudent financial advisor was provided by an expert.

The expert’s conclusions were found to be matters of common sense, rather than opinions deriving from expertise, and were therefore inadmissible. The expert witness’ opinion failed to take into account Tomasetti’s financial situation at the time that particular investments were made, and failed to take into account the tax benefits. The expert was critical of the failure to conduct a “know your client, know your product” exercise, but failed to form an opinion about what that would have revealed and how that would bear on the advice given. The expert evidence did not set out what investments Tomasetti should have made at the relevant times and, therefore, did not support the claim that the defendants breached their duties.

The decision

The Court was critical of Tomasetti’s evidence. There were many instances of conflicts between Tomasetti’s evidence and documentary evidence. The Court criticised Tomasetti referring to his position of being a barrister, which was found to be “unnecessary and...unimpressive and self-serving attempts to bolster his own credibility” (at 374).

The Court found that it was improbable that Tomasetti did not understand the investment application forms he signed – particularly concerning the ongoing financial obligation. The judge questioned how “a person, no matter how busy or pre-occupied, could sign such documents without either having been told what they were for, or failing that, asking what they were for, defies imagination” (at 367). The Court found that the forms signed by Tomasetti, “by their very appearance” made it difficult to accept that he had no idea what he was signing.

Tomasetti’s evidence was largely directed at the risky nature of the investments which he claimed had not been explained– the judge found that the tax benefits enjoyed as a result of the investments were a primary motivating factor for Tomasetti which were not sufficiently addressed in evidence.

Advice was not misleading or deceptive

Tomasetti alleged that Brailey misrepresented to him that the investments would produce reasonable commercial returns with time, when, in fact, the investments did not provide any future income. The Court found that was a submission made with the benefit of hindsight, and that the performance of the investment was not reasonably foreseeable at the time the representation was made. In agribusiness type investments, it was found that “anything might be possible” in relation to their financial performance.

Tomasetti’s case confirms that the mere fact that a prediction or opinion as to future events is not ultimately fulfilled does not make it misleading or deceptive – particularly because there was no evidence as to how an assessment could have been made at the time that the agribusiness would not perform as expected.


The decision in this case illustrates how the Court looks at all factors that motivate someone to invest before ruling on whether advice given is misleading or deceptive. In Tomasetti’s case he would have invested no matter what the advice because his prime objective was to reduce his tax liability. A plaintiff’s evidence should address all relevant facts, but in Tomasetti’s case, his evidence did not address the tax minimisation of the investments and how this influenced his decision making.

Tomasetti’s case also clarifies that expert evidence called on behalf of a plaintiff must address the plaintiff’s financial circumstances at the time the investment was made, in order to be persuasive. Furthermore, for expert evidence to be admissible, expert witnesses must draw their conclusions based on their expertise rather than common sense.

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