SUPREME COURT OF VICTORIA - CAUSES JURISDICTION

HAGEN v IAN HERAUD & ASSOCIATES PTY LTD and OTHERS

Byrne J

11, 15-19, 22-24 June, 2 July 1998 - Melbourne

Byrne J On 5 September 1993 Horst Hagen died, leaving surviving him a widow, Helga Gertrud Hagen, the plaintiff in this proceeding, and two sons Alan aged 30 years and Troy aged 27 years. The estate of the deceased included superannuation in the sum of $1.5 million or thereabouts. Mrs Hagen, after a meeting with her husband's accountant, Gary Raymond Tuck, and his superannuation consultant, Ian Donald Heraud, placed this sum in a personal superannuation scheme with six managed investment companies. Mrs Hagen sues the defendants, companies associated with Mr Tuck and Mr Heraud, alleging, principally, that her money should not have been invested in the personal superannuation scheme and, further, that the investments selected were inappropriate for her situation.

Mr Hagen was, before his retirement in 1990, a successful businessman in the building industry and a highly paid executive with the Concrete Construction Group. Mr Tuck had, for some time, been his accountant carrying on business under the name of GR Tuck and Co at 199 Toorak Road, South Yarra. In June 1989 Mr Tuck, or rather his company, Tuckfam Pty Ltd, the fourth named defendant, became a consultant for the accounting firm, Todes Williams and Ferguson, the second named defendant and this firm became Mr and Mrs Hagen's accountants and tax agents. Notwithstanding this, Mr Tuck personally continued to be shown as a consultant to the accounting firm on their letterhead in late 1993 and early 1994, but not in July 1994. The matter is further complicated by the fact that Tuckfam, from an address in Malvern Road, Malvern, and not the accounting firm's address, rendered an account to Mrs Hagen in January 1994 for services rendered and by the fact that she herself considered that it was Mr Tuck personally who was advising her prior to this time. I mention all of this because, in response to the allegation contained in Mrs Hagen's statement of claim, the accounting firm does not admit that it acted as accountants and advisers to Mr Hagen before his death and Tuckfam admits that it acted as his accountant and prepared his taxation returns. While each of these defendants denied giving Mrs Hagen the investment advice of which she makes complaint, the accounting firm says that if Mr Tuck gave any such advice he did so on behalf of Tuckfam and not its behalf. At trial, however, these defendants were represented by the same solicitors and counsel and there appeared to be no issue between them. Inasmuch as it is necessary for me to make a finding on this point I am satisfied that Mr Tuck acted for Tuckfam, and was held out by the accounting firm as its agent in the period from September 1993 to February 1994 and that, at law, both Tuckfam and the accounting firm were responsible for such advice as he gave.

During the period prior to his death Mr Heraud gave superannuation advice to Mr Hagen. In their defence the first and third named defendants say that from 23 March 1992 to 22 November 1994 Mr Heraud was acting as an authorised representative of Supermaster Investment Pty Ltd, the third named defendant, which is a securities dealer and that, thereafter, he was the authorised representative of Ian Heraud & Associates Pty Ltd, the first defendant, a company which was also a securities dealer at that time. Mr Heraud was, however, the managing director of that company in September 1993 and it was on behalf of that company that he gave the investment advice which Mrs Hagen accepted and upon which she acted.

As I have mentioned, Mrs Hagen makes, in effect, a number of complaints, about the advice she received in November 1993. The first was that she ought not to have been advised to invest the funds in a personal superannuation scheme because she was ineligible to do so having regard to the requirements of the Occupational Superannuation Standards Regulations 1987 (Cth) (the OSS Regs), reg 5AA. The second was based on the fact that, at that time, she enjoyed the benefit of about $80,000 per annum income under an annuity with National Mutual. She said that, in these circumstances, the investments which she was advised to make were not such as would provide her with sufficient capital growth - they were not sufficiently aggressive, and further she was not advised that the investments may decline in value. A third complaint made against Ian Heraud & Associates and Supermaster was that they failed to monitor her investments after they had been made and failed to recommend to her that she should make changes to her portfolio.

A further complaint which is made in her statement of claim is that the first and third named defendants, contrary to s 849 of the Corporations Law, failed to disclose to her that they had or would receive commission or fees in connection with the making of investment recommendations or with the effecting of the investments as a result of the recommendation. This complaint was abandoned and I say nothing further about it.

Finally, she argued that the first and third named defendants made a securities recommendation with respect to her investments in the Rothschild fund when they did not have a reasonable basis for making it. This is said to constitute a breach of s 851(1) of the Corporations Law and she seeks damages for loss and damage suffered by her as a result, pursuant to s 852(2).

The facts

Mrs Hagen was born in Germany on 17 September 1931. She had only nine years education in that country. She and her husband came to Australia in 1956. She speaks good English and had no difficulty understanding what was said to her, although she had little, if any, familiarity with business matters and investments and none at all with superannuation. She had worked for wages in Europe in the artistic field and, after coming to Australia, in a position which was not disclosed to me, until shortly before her first child was born in 1963 and again for three months at the Watsonia army barracks canteen in the 1980s. She devoted her time otherwise until September 1993 in domestic activities. Her husband handled all the financial affairs of the family.

In 1984 Mr Hagen set up the Hagen Family Trust. This was and is a discretionary trust of which Mrs Hagen was a potential beneficiary. The trustee was Ninth Harrier Pty Ltd, a company of which Mr and Mrs Hagen were in September 1993 the sole directors. Mr Tuck at all times, at least prior to September 1993, acted as accountant and tax agent of the trust. According to its 1998 balance sheet the assets of the trust comprised, for the most part, the family home at 15-25 Hussey Lane, Warrandyte and a holiday house at Phillip Island which were together shown as worth about $800,000. In addition the trust then held certain shares, and units in a property trust which together with cash were shown as worth about $115,000. In the 1992 balance sheet the principal assets of the trust other than the real estate are shown as shares to a value of about $25,000 and an equity trust investment of $7000. This remained the position on balance day in 1993 and 1994. The income of the trust was very small; it varied from $137 in 1992 to $353 in 1994. The trust, however, suffered losses of nearly $5900 in 1992 from the sale of non-current assets and these losses were carried forward from year to year thereafter. There was no distribution to beneficiaries in the years 1988 to 1994. The accounts of the trust showed no outgoings in the nature of wages or salaries and no income in the nature of rental from the two properties.

In 1989 and 1990, in anticipation of his early retirement, Mr Hagen had GR Tuck and Co prepare a superannuation strategy. In fact they were prepared by Mr Heraud or by his company. The thrust of the strategy was the purchase of an annuity to be jointly owned by Mr Hagen and his wife in order to provide them, or the survivor of them, with a sufficient income of about $80,000 per annum for seven years, that is until 1997. At the same time Mr Hagen's superannuation benefits from his employer would be rolled over into a superannuation investment portfolio until he attained 65 years, that is, in 1998. The proceeds of this investment portfolio would then be available for income producing purposes to replace the expired annuity. The investment portfolio of about $1,009,271 was to be divided between cash based funds (14.36%), capital stable funds (74.3%) and investment linked funds (9.9%). The first two kinds of funds were described in the strategy as "highly secure investments", those in the third kind might be expected to show superior returns. The investment portfolio which was to be set up as a private superannuation fund attracted taxation at the rate of only 15% but it was, generally speaking, preserved, that is, the superannuant had no access to the fund or the income from it until the preservation date was reached. In Mr Hagen's case this date was, it seems, when he retired from employment after age 55 years or otherwise at age 65 years.

This scheme was implemented. Mr Hagen invested in his personal superannuation scheme a total of $1,202,398 in late 1990 and these investments were estimated to have a redemption value of $1,473,210 at the date of his death in September 1993. At that time they represented an essentially conservative portfolio with 13.43% of the investments market linked and 86.57% capital stable.

A few days after the death of Mr Hagen, his friend, Peter Ashworth, had a meeting with Mr Tuck and Mr Heraud on 8 September. Of the persons present at this meeting only Mr Ashworth was not called. I draw no inference adverse to any party from his absence as it does not appear that he was in the camp of any party. The three men discussed what should be done to ensure that Mrs Hagen should enjoy a financially trouble-free widowhood. Mr Heraud said that there was discussion about the possibility of placing the proceeds of Mr Hagen's superannuation in a superannuation fund in Mrs Hagen's name. Having regard to the provisions of the OSS Regs, it would be necessary, as Mr Heraud noted, that Mrs Hagen should be gainfully employed. He said, however, that he was then unsure whether she could meet this criterion for eligibility. Mr Heraud was given information by Mr Tuck about Mrs Hagen's financial position and was told by him, that she was an unsophisticated investor and a conservative person.

Between that date and 25 November 1993 Mr Heraud said he investigated the question whether Mrs Hagen was eligible to invest in a personal superannuation fund and he became satisfied that she was. His investigation took three forms. First, he read the OSS Regs and in particular reg 3(6). Second, he consulted his colleagues. He was, however, unable to recall to whom he spoke and what they told him. Third, he spoke to a Mr Vere who was described by him as an actuary and superannuation expert in Sydney. He is apparently a man of considerable standing in the superannuation industry for Mr Heraud referred to him as "the ultimate source of truth". Mr Heraud, however, was unable to recall what advice this expert gave him except that the advice gave him comfort on the issue that was troubling him. Mr Vere was not called as a witness. I infer that his absence is the result of an assessment by those advising the first and third named defendants that his evidence would not assist their cause.

On 25 November 1993 there occurred a meeting between Mr Heraud, Mr Tuck and Mrs Hagen. Mr Heraud had already determined upon an investment program for her. He had prepared a letter bearing that date setting out a recommended investment strategy and had completed a number of investment applications each dated 24 November 1993 in order to implement that strategy. All three participants at this meeting gave evidence before me. This was the first occasion upon which Mrs Hagen met Mr Heraud apart from a Christmas party. Her account of this meeting was very uncertain. This is not surprising given her inexperience at business matters and her recent bereavement. All present said that Mr Tuck took no active part in the matters discussed. Mr Heraud said he took her through his letter of 25 November. She said she did not remember this. I accept that he did take her through the three pages of the letter, the pension calculation and one of the annexures. The terms of the letter, however, are such that they would not mean very much to a person in her position. He said that he thought she understood what he explained to her. Whatever be the impression she gave to him, I am not confident that she fully understood what he explained. She acknowledged that she trusted him as a man in whom her husband had had confidence and that she would accept whatever advice he might have given. Perhaps, in these circumstances, it was not thought by her to be important for her to try to understand these technical documents. In any event, she was content to hold a portfolio of investments similar to that held by her husband and she approved the investment program which Mr Heraud suggested to her. She signed a large number of documents including the documents necessary to redeem Mr Hagen's investments and the six applications for the investments which Mr Heraud was recommending. These applications which were taken from prospectuses were single sheets with writing on both sides. Mrs Hagen said that they were presented to her for signature in a pile. Mr Heraud said he took her through one of them. She denied this but I accept his evidence. I find that she was then presented with a pile of documents including six applications and she simply signed them.

The six applications are not in identical terms. In four of them her occupation is given as company director and in a different four it is recorded that her highest average salary is $28,371.00. On one only, that for the MLC fund, is this salary shown on the side of the page where her signature appears. She said that when she signed this page she noted the salary figure and she queried this. She said that she knew as a fact that she earned no salary. She said she was told that this was the money that would come to her from her husband's investment. I accept that she made this enquiry. Her recollection of the response which I accept as genuine, shows how little she understood of what she was told. To my mind this is understandable. Mr Heraud's explanation was this. He acknowledged that he had no basis to insert in the application form a statement that Mrs Hagen had an average salary of $28,371. This sum represented one seventh of $198,600 which was the minimum/maximum benefit or "reasonable benefit limit" which a superannuation investor was allowed to receive on retirement. He said that the maximum highest average salary which would permit such a benefit was $28,371 and that it was his practice, where an investor was not eligible to receive a sum greater than this minimum, to insert this sum as the salary. Accepting this explanation, the consequence of the insertion of this false statement was, nevertheless, to give to a reader the impression that the applicant had a salary which she did not have. He said he had no intention to mislead such a person. That may be so. I find that this statement in the four applications was false to his knowledge and further that it was likely to convey to a reader the false impression that Mrs Hagen was in receipt of an average salary in that sum. It did not, however, give that impression to her because she entirely misunderstood what the figure meant and, more importantly, she knew that she did not receive such an average salary or, indeed, any salary.

The application forms for each of the Bankers Trust and Rothschild funds also contained a declaration signed by the applicant which included an acknowledgement that she was a gainfully employed person working at least 10 hours per week and a promise that she would notify the trustee of the fund if she should cease to be a gainfully employed person. Comparable statements, but not in these terms, are found in the application forms for the MLC fund, the Macquarie fund, but not in the application form for the MML fund or the Prudential fund. These are matters bearing upon the eligibility of the applicant to join these funds and I shall return to this matter in due course.

In February and March 1994 the bond market suffered a downturn. On 24 April 1994 Mr Heraud sent to Mrs Hagen a standard form letter which offered an explanation of this phenomenon. The terms of the letter are not such that it would be readily understandable by a layperson, let alone someone lacking in business experience such as Mrs Hagen. She said she could not understand it and I am not at all surprised that this should be so. She did, however, form the view that her money was "going down the drain".

And now commences the sad part of this narrative. Mrs Hagen had formed the view that her investments were at risk and she was upset and afraid. She consulted a financial adviser, Neil Griffiths, who had been introduced to her by her son, Troy. Mr Griffiths accompanied her to a meeting which was held at Mr Heraud's office on 11 May. Present also was Mr Tuck but he took no part in the meeting. Mrs Hagen's account of this meeting was not very coherent. It is apparent that she was frightened at the predicament in which she found herself. This was that she was in charge of a substantial sum of money which her husband had accumulated over his working life. She feared that within months of his death his savings and her financial future were in jeopardy. Her husband was no longer there to handle things or to advise her. It was in this state of mind that she went to the meeting. Mr Griffiths was not called as a witness. No party invited me to draw an O'Donell v Reichard [1975] VR 916 inference with respect to the events at this meeting and I do not do so. I find that at this meeting Mr Heraud talked to Mr Griffiths about the portfolio and he explained to Mrs Hagen the vagaries of the investment market and encouraged her to accept that the bond market downturn should not be seen as anything other than a temporary set-back. He advised her, too, that this was not the time to withdraw her investments. Mr Griffiths supported this advice at the meeting and Mrs Hagen appeared to accept it also. But she did say that she wanted to change her investments to products that would not lose their value. She agreed, however, to postpone any change of this kind until the market improved. She also asked Mr Heraud to look into a National Australia Bank guaranteed sharemarket fund and also into the possible encashment of her annuity. Mr Heraud said that he would look into the fund but he advised against cashing in her annuity.

Mrs Hagen went from the meeting to Mr Griffiths' office. She said that he then told her that she was not eligible to be in a personal superannuation scheme and that if the Taxation Office discovered this she might be in trouble. She said that he told her she should not have signed the investment application forms without knowing what it was she was signing. Her fear then turned to panic. She told me that this caused her to be uncertain whom to trust with her affairs. The end result was that her trust in all of her advisers disappeared.

By 8 June 1994 it was apparent that her anxiety had paralysed her ability to deal with her problems. In his letter of that date Mr Griffiths referred to her instruction to him that he take no further step while she made her own enquiries as to her eligibility. He resigned as her adviser. She told me that her state of mind at this time was such that she could not believe that Mr Heraud and Mr Tuck had let her down and she feared that Mr Griffiths might be another person out to get her money. She could not, however, bring herself to take Mr Griffiths' advice that she withdraw from the superannuation funds and sue Mr Heraud, but it seems she felt it difficult to ignore the fact that she had not been gainfully employed for over 30 years. And so Mr Griffiths left the scene.

In mid-June 1994, however, in accordance with Mr Griffiths' advice Mrs Hagen wrote to the fund managers and obtained copies of her application forms. She was still unable to accept that she had made contributions to the funds when she was ineligible to do so. On 22 June she spoke by telephone to Mr Heraud and told him she was content to hold her portfolio in place as he had suggested but would like to change part to capital guaranteed investments when some of the recent losses had been recovered. In this conversation she said she made no mention to him of her fears about her ineligibility or about the advice she had received from Mr Griffiths. Mr Heraud, too, had no recollection of discussing this with her. I infer that this was because she could not face up to the fear that she had done wrong.

The matter was troubling her nevertheless and she raised it with Bernie Walshe of Cameron Walshe Pty Ltd, investment advisers, after a meeting at which he had addressed a retirees' organisation of which she was a member. Mrs Hagen said that she consulted him in his office in August or September. I think it more likely that this was in July 1994 because his first report to her is dated 31 July. She said that the main reason she consulted him was about the question of her eligibility but she said he did not give her a response. She told me that Mr Walshe always seemed to evade this question of eligibility until she pressed him and in the end he suggested that she simply redeem her funds.

Mr Walshe, however, did advise her about her share portfolio. In his report of 31 July he gave this identical advice in respect of each of her investments: "Although volatility may persist in the short-term, investment fundamentals remain sound over the medium to long-terms." She may have been comforted by these assessments although their meaning is far from clear. Nevertheless, when he subjected her portfolio to a market exposure analysis he recommended that it had insufficient component of shares and an excess of Australian fixed interest and cash investments. This was because he classified her as a person for whom a balanced portfolio was appropriate. Mr Walshe did not give evidence and so it is not clear how he reached this conclusion or what he meant by it. I infer from his report and from his later recommendations that he considered that the appropriate portfolio for her was one which was less conservative and more aggressive than that previously recommended by Mr Heraud, one with a greater prospect of capital growth. It is unfortunate that he was not called to explain this assessment of her because it does not sit easily with Mr Heraud's assessment of her as a conservative investor in November 1993 nor with her reaction to the February/March fluctuations in the market. In any event, she accepted the advice given by him and switched six of her eight investments to other funds managed by the same fund managers. As it later appeared, this was productive of loss.

Sometime in 1994, but after the end of the financial year, Mrs Hagen took up the question of eligibility with Mr Ferguson, a principal of the second named defendant who was preparing her tax returns. Her evidence was that he advised her not to "rock the boat" and that it might cost her a lot of money. Needless to say, this did little to allay her concerns.

On 21 November at Mr Walshe's suggestion she wrote to the Rothschild fund seeking to redeem her investment. In this letter she states, "I am fully retired from the workforce and my date of birth is 17 September 1931". She told me that she wrote letters prepared by Mr Walshe in these terms to all of the funds but no other letters have been produced nor any reply other than that from Rothschilds. The terms of the quoted sentence do not sit easily with the reason which she gave for seeking to withdraw, that is because she thought she was ineligible to be a contributor. The redemption application appears to be couched in terms of a withdrawal of a properly made contribution. Again, Mr Walshe's absence is significant. I infer that such evidence as he might have given in this case would not have assisted Mrs Hagen's cause. I do not of course, speculate as to what he might have said, if called. His absence, however, causes me to approach Mrs Hagen's evidence with considerable caution. On 29 November 1994 she received from Rothschilds the sum of $232,591.44 in redemption of her investment in that fund.

Soon after, Mrs Hagen fell out with Mr Walshe. At a meeting some time after December 1994 he told her that he had met Mr Heraud in London and that they had had a good talk. She "immediately felt alarm bells ringing" and she terminated his retainer.

She next consulted Arthur St Hill of the stockbroking firm of Vinton Smith Dougall Ltd in about February 1995. Mr St Hill sought assistance from Michael Howard Heath of Allmand Partners, chartered accountants, and in middle to late May 1995 there occurred a meeting between herself and these two men and Alan Boucher and Peter Williams, solicitor of Purves Clarke Richards. Mr Williams was instructed to seek the redemption of the remaining five superannuation investments on the basis that Mrs Hagen was not an eligible contributor. This he did by a series of letters dated 11 August 1995. The delay of some months between the May meeting and the August letters was not explained. On 9 July 1995 MLC wrote to Mrs Hagen in response to a request from her to redeem her investments. This is a surprising letter because, apart from the unlikely possibility that it was in response to one of the missing letters of 21 November 1994, there is no evidence of any redemption request addressed to MLC by Mrs Hagen at this time and no reason for her to have made such a request once Mr Williams was acting for her.

In any event, following his redemption requests of 11 August, Mr Williams received from each of the funds the amounts standing to the name of Mrs Hagen as follows:

Date	Fund	Amount
		$
4/9/95	MML	357,947.45
8/9/95	Prudential	247,712.10
13/9/95	Macquarie	189,456.79
22/9/95	BT	208,302.00
24/10/95	MLC	171,383.67

		1,174,802.01

Of these funds, only MML deducted withdrawal fee and this was in the sum of $14,914.48.

The eligibility issue

In 1993 and 1994 sums invested in superannuation schemes enjoyed favoured treatment under the Income Tax Assessment Act 1936 (Cth) (ITAA 1936). They were liable to pay tax on taxable income earned and capital gains made at a preferential rate of 15%. This was, of course, a good deal less than the rates of tax for other investment companies and for non-corporate taxpayers. Where an ordinary investment company distributes its profit to investors this distribution is included in their taxable income and is liable to tax at the appropriate rate. For a taxpayer who, like Mrs Hagen after September 1993, had an income from other sources of some $80,000, some of it taxable, the income tax upon these distributions might be significant.

Broadly speaking, a superannuation fund qualified for this preferential treatment where it satisfied a number of standards which are set out in the Occupational Superannuation Standards Regulations 1987. For present purposes, one such standard was that the superannuation fund must not accept a contribution from a new member "unless the member is employed part-time or full-time": reg 5AA(2). The superannuation fund may not accept a contribution from an existing member where that member has ceased for a continuous period of two years to be employed part-time or full-time but has not retired from the workforce: reg 5AA(3). In reg 3(6)(b) it is provided, that, for the purposes of the OSS Regs, a person is employed part-time "if the person is gainfully employed for 10 hours or more weekly but less than 30 hours weekly". Paragraph (a) provides that, for the same purposes:

a person is gainfully employed if a person is employed for earnings including business income, bonuses, commissions, fees, gratuities, salary or wages.

Mrs Hagen's case is that the defendants were in breach of their contractual and tortious duties when they advised her to invest her money in a superannuation environment when:

(a) she was not employed;

(b) she was not gainfully employed within the meaning of reg 3(6)(a); and

The implied contractual duty of the professional adviser such as the defendants, is to exercise the implied skill and care to be expected of a qualified and ordinarily competent and careful investment adviser in the exercise of professional functions: Hawkins v Clayton (1988) 164 CLR 539 at 580, per Deane J. See also Voli v Inglewood Shire Council (1963) 110 CLR 74 at 84, per Windeyer J. It follows that this claim whether it be put in contract or tort, must be approached in two stages. First, was the advice that she was eligible to invest in the superannuation funds erroneous? Second, was the erroneous adviser in giving this advice in breach of the duty to exercise due care skill and diligence.

On the first question, it was contended on her behalf that the advice given to Mrs Hagen to invest in the superannuation funds was erroneous for the three reasons mentioned above. On behalf of the defendants it was put first that as a director of the company which was trustee of the Hagen Family Trust she was an employee: ITAA 1936, s 82AAA(2). I accept that in this legislation the director of a company is an employee of a company for the purposes of Subdiv AA of Pt IIIDiv 3 of the ITAA 1936. This is a subdivision which is concerned with superannuation and it was put that this definition should apply to other superannuation legislation and regulations. I accept this to be the case without expressing any concluded view on the point.

Next, it was put that her employment was gainful because she was permitted by the trustee to live rent-free in the house at Warrandyte and in the holiday house at Phillip Island and that this was an earning or gratuity within the terms of reg 3(6)(a). I should say that the argument before me proceeded on the basis that this regulation contained an exhaustive definition of "gainfully employed" so that I should not look beyond the terms of that definition properly construed. I am content to proceed on that basis without expressing any concluded view on this point. On behalf of Mrs Hagen it was submitted that all of the words of the definition, "earnings including business, income, bonuses, commission, fees, gratuities, salary or wages" connote the receipt of monetary remuneration for work. Accordingly, the receipt of rent-free accommodation was not to be included. In support of this contention I was referred to two High Court decisions, McIntosh v FCT (1978) 10 ATR 13; 79 ATC 4325 and Reseck v FCT (1975) 133 CLR 45; 5 ATR 538; 75 ATC 4213. These were cases where it was necessary for the court to determine whether a payment of money to a taxpayer upon retirement was an "allowance, gratuity or compensation" within the meaning of s 22(d) of the ITAA 1936. The question whether a receipt of something other than money fell within this expression was not in question.

The OSS Regs are part of a scheme which encourages employees to make provision for their retirement by investing in superannuation schemes and it does so by offering them taxation benefits. Such legislation should, in my view, be construed benevolently in favour of the superannuant where there is any uncertainty or ambiguity in order to give effect to this objective.

"Earnings" in its ordinary meaning is not limited to monetary remuneration. Accepting that it may take on a more restrictive meaning from the words accompanying it in the regulation, the words which follow "earnings" are connected to it by the word "including". Moreover, expressions such as "business income", "bonuses", or "gratuities" are not limited to mere monetary receipts. This is particularly the case in legislation such as that concerned with taxation and superannuation. It is pertinent to note in this regard that the role which the concept of gainful employment plays in the regulatory scheme. The OSS Regs are not concerned with the amount of the gain nor with its quantification for any calculation or other purpose. It is sufficient in order to characterise a person as employed part-time or full-time that the person be simply gainfully employed.

I am satisfied that a person who is employed for earnings of a non-monetary nature is a gainfully employed person within the meaning of reg 3(6)(a). For this purpose I accept that the receipt of rent-free accommodation is capable of being an earning.

Third, it was put that her employment involved her for more than 10 hours per week for she spent at least this time in caretaking, caring for, cleaning and maintaining these properties. The relevant time to assess this question is the time at which the initial contribution was made to each of the funds. Mrs Hagen signed the application forms on 25 November 1993 and they were lodged with the funds shortly thereafter, as and when her husband's superannuation funds became available. Her investments are shown in the documents as having been made on various dates between 21 December 1993 and 17 January 1994. A good deal of evidence was led as to what work she did to and around the properties which were held by the trust. None of this evidence was specifically directed to this period of time and no point was taken of that. It was accepted by the parties before me that the time requirement should be assessed on a more general basis.

The evidence on the question of the work performed by Mrs Hagen and the weekly hours involved was of necessity scanty. In essence she had lived in the Warrandyte home in November 1993 as she had for some 10 years before her husband's death. This was known to Mr Heraud at that time. She performed the normal domestic tasks such as cleaning and some gardening. Her sons, not surprisingly, assisted her with the gardening. On occasions, young people were employed to do gardening, perhaps twice a year. The accounts of the trust do not show that the expenses so incurred were borne by the trust. I infer that Mr and Mrs Hagen, and later Mrs Hagen alone, paid them from their own funds. This suggests that the work involved was seen as an incident of their occupation rather than as an incident of the trust's activities. I have already observed that the trust tax returns showed no income in the nature of rental or occupancy fees. The Warrandyte house was of about 70 sq and was situate on a property of 7.7 ha. Two of its three levels were closed up and she lived alone on the ground floor. She said that she did not visit the holiday house often and that her son looked after it. Mrs Hagen denied that her work on the Warrandyte house would require 10 hours per week. It was put by Kevin Christopher Bailey, a professional investment planner and adviser called by the first and third named defendants, that it would be necessary for her to learn quickly about the trust assets and how to manage them. I place little weight on this contention, given the nature of the trust and its assets.

Regulation 3(6)(b) requires that the person be "employed for 10 hours or more". This raises another difficulty of interpretation because it requires an investigation of the number of hours per week during which she was employed, not the number of hours in which she was actually working. A person is employed for a period of time where that person is available to perform the duties or work contemplated by the the employment, even if there are no duties or work to perform. Nevertheless, in the case of a director who holds that office for 24 hours a day and 365 days per year and is deemed to be an employee during that time, the time requirement of reg 3(6)(b) must be related to the time actually involved in duties as such.

What then are the duties of this employment? It is not suggested that Mrs Hagen was an employee of the trustee in any contractual sense. She is by s 82AAA(2) of the ITAA 1936 an employee by reason of her office as director. It follows that the relevant duties are those performed by her as director. The duties of a director at common law and by statute are onerous. Where the company owns property I do not understand that these include the duty personally to maintain the property. The director's duty may extend to having the company do so to the extent of its resources. A director may choose to expend effort and even personal funds to do so but this is not in fulfilment of any directorial obligation. In the present case the company holds the land as trustee, personally. I do not know the terms of the trust other than that it is a discretionary trust for the Hagen family members. It may be that the trustee is obliged to maintain and protect the trust property but this duty is not, for that reason, imposed upon all or any of the directors of the trustee personally. I am therefore unable to conclude that, where a person who is a director of a property owning trustee company, performs work maintaining or caring for the property is by reason only of that fact and the ITAA 1936 s 82AAA(2), employed by the trustee to perform that work.

The other side of the coin is the question of earnings or gain. I have indicated that I accept that payment in kind or by the provision of rent-free accommodation may amount to earnings. Regulation 3(6)(a), however, defines a person who is gainfully employed as a person who is "employed for earnings". Let it be supposed that, as director of the trustee company, Mrs Hagen is an employee of the trustee. It is apparent from the evidence that she has rent-free accommodation of the two trust properties. In order to satisfy part (a), however, she must be employed for earnings. There must be some nexus between her accommodation and her directorial position. In his submission, counsel for the first and third defendants acknowledged this and said that this is to be found in the intention behind the provision of the accommodation. The intention must be, he argued, that of the trustee and of the tenant, perhaps determined objectively from the facts. In this case it smacks of unreality to say that Mrs Hagen's right of enjoyment of the trust properties, or indeed, the same right of her husband and herself before he died, was related to the performance by her or them of any directorial functions, or even to their performance of caring or domestic maintenance chores to the properties. They lived there simply because it was their home. There is no evidence to the contrary.

The unreality of this view adopted by Mr Heraud is further demonstrated by his evidence as to what might be required if Mrs Hagen wished to withdraw her funds from the superannuation scheme before she turned 65 years. Regulation 5AC(2)(e) requires that in such a case the trustee of the fund must be satisfied that she had "retired from the workforce". It may be supposed that she would continue to live rent-free in the trust property and that she would continue to perform the ordinary maintenance and caring functions as before. Mr Heraud said that in such a case she would have to make a statement that she was working less than 10 hours per week. I am not at all confident that this, if true, would amount to retiring from the workforce, for she would, on his analysis, continue to be employed for gain. In any event, it is not clear to me how she could truthfully make such a statement in the circumstances which I have supposed. Mr Heraud later contemplated the possibility that she might achieve retirement by resigning her directorship, unless the funds might take the view that she was employed by the remaining directors.

I conclude therefore, that when she made her contributions to the funds Mrs Hagen was not employed part-time or full-time as was required by reg 5 AA(2). She was not eligible to become a member of the superannuation funds.

The next and more difficult question is whether it was a breach of the investment adviser's contractual duty or its comparable tortious duty of care for Mr Heraud to advise Mrs Hagen on 20 November 1993 that she was eligible to participate in the superannuation scheme.

On the evidence before me he knew no more, and probably less, than I do about the factual basis which is now put forward in support of the correctness of his advice. There is no evidence that he made any enquiry as to the precise work which Mrs Hagen did or the number of hours for which she was engaged. At the 8 September 1993 meeting he discussed with Mr Tuck the advantages to Mrs Hagen if her investments could be placed in a superannuation environment. These were apparent to them both. I interrupt myself to underline that they were correct in directing their minds to this. Each of these men in his own way was primarily concerned with the welfare of Mrs Hagen and with maximising her financial position. There is no question here that either of them was concerned to or in fact attempted to advantage himself at her expense. It may be, however, that Mr Heraud was conscious of the artificiality of putting her forward to the fund managers as a gainfully employed person because on this occasion and subsequently he used, in his note, the following phraseology: "the key to that [to have her in due course contribute to a pension fund] is to have her seen as gainfully employed …". He was, however, uncertain on this date whether this was possible. There was some discussion about paying her a salary in order to qualify her but Mr Heraud said he rejected this as a sham. His uncertainty, it seems, arose not so much from any uncertainty of fact other than as to the value of the trust property, but from his uncertainty as to the meaning and effect of the eligibility provisions in the OSS Regulations. Following his conversation with Mr Vere he felt comfortable that Mrs Hagen could invest in superannation funds and this was his state of mind and his advice to her at the meeting of 25 November.

Evidence was led for and against the proposition that this advice was, not only erroneous, but that it was not advice that a competent financial adviser exercising due skill and care would give. Such evidence is of assistance, especially in an arcane field such as superannuation law and practice, but in the end the standard of care is for the court to determine. For Mrs Hagen, evidence was given by Mark Cerchè, a solicitor, and Michael Howard Heath, a chartered accountant, both specialising in the field, to the effect that no reputable body of opinion in the superannuation industry would conclude that a person in Mrs Hagen's position was gainfully employed within the meaning of the OSS Regs. To the contrary was the opinion of Mr Bailey, a professional investment planner and adviser, called by the first and third named defendants. Daniel Anthony Butler, an accountant and lawyer specialising in superannuation, expressed himself more cautiously. He said that a person receiving rent-free accommodation in a property owned by their family trust could satisfy reg 3(6)(a), and a director of the trustee of a family trust in receipt of rent-free accommodation in return for work performed for the company could likewise satisfy that provision. He said, too, that this could be the case if the person were also a beneficiary of the trust. When he was asked whether there existed a reputable body of opinion which would recognise a person in Mrs Hagen's position as being gainfully employed he qualified his affirmative answer by reference to the circumstances of the case. He said that it is a matter of whether any benefit was provided pursuant to an employment or a beneficiary relationship.

It was submitted that the law in this area was uncertain and grey, and that it frequently changes. This may be so. It is for this reason that people untutored in this area seek the assistance of experts and that experts may themselves seek more expert or specialist advice. I was unimpressed by Mr Heraud's evidence as to the assistance he sought and obtained from his colleagues and Mr Vere. I make no finding as to what they told him for there was no evidence of this. In his research he referred to no text other than the Regulations themselves. In my opinion, where the law is uncertain, the expert should proceed with particular care and Mr Heraud did not do so.

I have weighed up the competing views and also the evidence of Mr Heraud and the reasons he gave for reaching the conclusion which led to his recommendation to Mrs Hagen. This issue, however, is not to be determined upon such a competition. Evidence of the conduct of reputable investment advisers is of assistance to the court in determining the appropriate standard of care but this question is one for the court to decide in all the circumstances: Rogers v Whitaker (1992) 175 CLR 479. I have regard to the fact that Mrs Hagen was required to make a decision in an area of great complexity without herself having any familiarity with the subject matter. Mr Heraud held himself out as an expert and expressed himself in terms which must have confirmed this in her eyes even if, or perhaps because, she did not understand them. I have regard to the adverse consequences which may accrue to her if his advice should be misconceived. I have considered carefully Mr Heraud's evidence as to how he reached the erroneous conclusion which formed the basis of his advice to his client. I am persuaded that his conclusion was the result of wishful thinking in his client's interests rather than the result of a careful and objective application of the facts to the Regulations. I conclude that a skilled investment adviser exercising due care would not have advised his client as Mr Heraud did on the facts as they were known to him. Accepting that he might reasonably conclude that she spent 10 or more hours per week maintaining and caring for the properties, there is, in my opinion, no factual or legal basis to conclude that she did so as part of her directorial duties or that her rent-free accommodation was in any way related to her performance of this work or these duties. Mr Heraud's advice to his client that she invest her money in a superannuation environment constitutes, therefore, a breach by the first and third named defendants of the contractual obligation and the duty of care which they owed to her. I add immediately that I find that this advice was given in the expectation and with the intent that its implementation would be to his client's advantage and not to any improper advantage to himself or his companies.

I turn now to Mr Tuck and the involvement of the second and fourth named defendants in the recommendation that Mrs Hagen was eligible to be a contributor in a superannuation scheme. I find that Mr Tuck's role in the making of the investment recommendation and the advice regarding her eligibility was limited to providing Mr Heraud with factual information regarding the financial affairs of the trust and of Mrs Hagen. Such information as he provided was accurate. He did not himself make any recommendation or offer any advice as to her eligibility to contribute to superannuation funds. His companies were not retained to make any such recommendation or to give such advice. This means that most of the causes of action alleged in the statement of claim against the second and fourth named defendant must fail. These are those causes of action based on advice given with respect to her eligibility or recommendations as to the type of investment she should undertake, whether they be put as negligent misstatements, misrepresentations, misleading and deceptive conduct, or breaches of s 851(1) of the Corporations Law.

The investment selection

Mrs Hagen's complaint is that the investments recommended to her by the defendants were inappropriate inasmuch as she should have been advised to place her funds in investments with a greater prospect of capital growth. I have found that her abiding concern which was communicated to Mr Heraud was that she should have a similar portfolio to that held by her husband. According to Mr Heraud's letter of 25 November 1993 the makeup of Mr Hagen's superannuation portfolio and its value as at 30 September 1993 were as follows:

Market linked investments

		$	$
(a)	BT	70,887.00
(b)	Colonial Mutual	52,753.00
(c)	Rothschild	74,265.00	197,905.00	(13.43%)

Capital stable investments

		$	$
(d)	AMP	248,247.00
(e)	BT Australia	132,195.00
(f)	Colonial Mutual	113,955.00
(g)	Macquarie	124,591.00
(h)	MML	372,190.00
(i)	Prudential	284,127.00	1,275,305.00	(86.57%)

			1,473,210.00

Mr Heraud told me and I accept that at the date of the meeting of 25 November 1993 his perception of Mrs Hagen was that she was a person for whom a conservative portfolio was appropriate. I find too that this was a reasonable perception in the circumstances. His advice to her was to retain the investments mentioned in paras (a), (c), (e), (g), (h) and (i) above and to transfer investment (b) and (f) to MLC and investment (d) to Macquarie and Rothschild.

This recommendation was put into effect as Mr Hagen's funds became available. The makeup of Mrs Hagen's portfolio and the sums actually invested were as follows:

Market linked investments

		$	$
(i)	Bankers Trust Life	75,000.00
	Personal Superannuation Bond
	Managed
(ii)	MLC	171,000.00
	Five Star Personal
	Superannuation Bond Balanced
	Units
(iii)	Rothschild	76,032.93	322,032.93	(21.49%)
	Five Arrows Permanent
	Superannuation Plan Balanced
	Units

Capital stable investments

		$	$
(iv)	Bankers Trust Life	136,000.00
	Personal Superannuation Bond
	Capital Stable Units
(v)	Macquarie	188,500.00
	Personal Superannuation Bond
	Units
(vi)	Mercantile Mutual Life	378,000.00
	100% Superannuation Bond
	Units
(vii)	Prudential	288,000.00
	Superannuation Bond Capital
	Stable Fund Units
(viii)	Rothschild	186,149.58	1,176,649.58	(78.51%)

	Five Arrows Personal
	Superannuation Plan Capital
	Stable Units
			1,498,681.51

In essence, this was a conservative portfolio comprising sound investments. So much was not challenged.

The complaint of Mrs Hagen is that the first and third named defendants were in breach of their contractual and tortious duties when Mr Heraud made this recommendation. It is put that he failed to have regard to the fact that she had a significant annuity from National Mutual and that he should have recommended investments with greater capital growth. Third, it is said that he failed to inform her that the investments might decline in value.

I will not dwell long on this part of the case. In order to succeed the plaintiff must show that the investment recommendations were such that they were made without due skill and care. It is beside the point that another adviser might have recommended a different portfolio. It is sufficient in this case that the recommended portfolio represented the investment strategy that had been adopted for Mrs Hagen's late husband. It was in any event entirely appropriate for a woman who wished to have a nest-egg to invest in an allocated pension or in some other form in order to produce income when her annuity expired in 1997. It is clear that Mr Heraud was aware of her income position and of her financial position generally and that he had regard to these matters in making his recommendation. Although Mr Heraud's advice must be assessed as at the date it was given, the subsequent performance of the recommended portfolios shows it to have been sound.

It was suggested by Mr Heath that she might have been advised to invest not in a managed fund but rather to manage them herself with the advice of a sharebroker. This would ensure that she had maximum flexibility in her investment strategy and, further, would enable her to retrieve the sum of $200,000 she thought she might need to buy some land at Healesville and to build a house on it. This may be so. I am, however, altogether unpersuaded that the different advice she was in fact given was unwise or amounted to a breach of the duties to which I have referred. Mr Heraud's assessment of his client is one which was entirely justified. She was a nervous woman, without resources other than her investment sum, totally inexperienced in investment matters and likely to be easily distracted from a sound long-term investment strategy by a sudden downturn in the market or by some different advice which took her fancy. To point such an investor to a managed fund could not be described as an imprudent recommendation.

Finally, it was said that Mr Heraud failed to advise her that her investments might decline in value. There is no substance in this. After the meeting of 25 November 1993 Mrs Hagen well knew that this was possible, even if perchance she did not know it before.

There is, therefore, no substance in the allegations which I am now considering. I have not overlooked the fact that they were also put against Mr Tuck's companies, the second and fourth named defendant. In addition to the conclusions I have reached, the allegations must fail against these defendants on the further ground that they were not engaged to provide investment advice and did not do so.

Failure to monitor the investments

This was alleged in the statement of claim as a failure on the part of the first and third named defendants to inform Mrs Hagen of the decline in the value of her investments and a failure on their part to recommend steps to effect alternative investments.

The short answer to these allegations is that Mr Heraud did inform her of the decline in value of her investments in April 1994. His advice in May was that she should hold tight until the market rose. She agreed. She had also an abundance of advice other than that of Mr Heraud. Mr Griffiths agreed with Mr Heraud's recommendations in May. As things turned out, Mr Heraud was correct. These allegations will also fail.

Misleading and deceptive conduct

In paras 24 and 25 of the statement of claim it is alleged that each of the defendants engaged in misleading and deceptive conduct contrary to ss 52and 53 of the Trade Practices Act 1974 (Cth) and ss 11and 12 of the Fair Trading Act 1985 (Vic) and, in para 25A, that each of them aided and abetted the other in that conduct.

So far as the conduct is concerned, I have found that Mr Tuck's role was very limited. The second and fourth named defendants were not in contravention of any of these provisions. Mr Heraud however, made representations to Mrs Hagen as to her eligibility to contribute to superannuation funds which I have found to be erroneous. Her eligibility is a matter of fact and its falsity establishes the contraventions alleged against the first and third named defendants. It was submitted that I should treat the representations as a statement of opinion and that a contravention is therefore not established so long as the opinion is honestly held upon rational grounds involving the application of the relevant expertise: James v Australia & New Zealand Banking Group Ltd (1986) 64 ALR 347 at 372, per Toohey J; Bateman v Slayter (1987) 71 ALR 553 at 559, per Burchett J. On the facts as I have found them, the representation which was implicit in the investment recommendation was not expressed as an opinion but as a fact. But even if it were, it is not the result of the application of the relevant expertise. Even on this basis, a contravention is established.

I do not, however, find that Mr Tuck aided and abetted this contravention so as to attract liability to the second and fourth named defendants. All he did was provide to Mr Heraud accurate information which, as I have found, Mr Heraud misapplied.

Breaches of the Corporations Law

As pleaded, it is alleged that the first and second named defendants were in breach of s 849(2) which requires a disclosure of commission entitlements. This contention was abandoned.

In the course of his final address, counsel for Mrs Hagen alleged that the evidence supported also a breach of s 851(1) which makes it a contravention if a securities adviser makes a securities recommendation to a person without a reasonable basis. In this case this relates only to the recommendation to Mrs Hagen that she invest part of her money in the two Rothschild funds. It was put that s 851(2) places the onus on the securities adviser to prove that the recommendation did have a reasonable basis.

I will not entertain this contention. To my mind, it is not apparent from a fair reading of the statement of claim. It is true that in para 23 it is said that the defendants did not have a reasonable basis for giving the advice or making the recommendations or the representations. Presumably this advice was the advice by all of the defendants referred to in para 11 that Mrs Hagen invest in personal superannuation. In para 13 it is said that the advice given by the first and third named defendants was a securities recommendation. Perhaps this is the recommendation referred to in para 23 but it does not relate to the second and fourth named defendants. Perhaps the representation is that referred to in para 12. There is no mention in terms of s 851 or of the reversal of onus provision in s 851(2). In para 28 of the pleading there is an allegation that "further and in the alternative" each of the defendants is liable for damages under s 852(2) and s 1005. Again, this allegation is somewhat blurred by the inclusion of the second and fourth named defendants.

The allegation of breach of s 851 was not opened by counsel for the plaintiff nor was the section mentioned by any party at trial. In these circumstances, particularly where an onus of proof shifts, it is unacceptable for the plaintiff to lie in wait until the evidence is in and the addresses of the defendants complete before raising such a claim.

Conclusions on liability

In summary, therefore, I find with respect to the first and third named defendants that they, through Mr Heraud, were in breach of their contractual obligations and were negligent in stating to Mrs Hagen that she was eligible to contribute to personal superannuation funds and in making recommendations that she do so. I find, too, that these statements amounted to contraventions by the first and third named defendants of the statutory prohibitions against misleading and deceptive conduct.

I find that the first and third named defendants are not in breach of any duty in recommending that Mrs Hagen invest in managed funds and in the funds which were in fact recommended nor in respect of any want of on-going monitoring of her investment.

I find that the second and fourth named defendants through their agent Mr Tuck, are not in breach of any contractual or tortious obligation nor any obligation imposed by the Trade Practices Act 1974 or the Fair Trading Act 1985 (Vic).

Damages

I find alleged that the loss of Mrs Hagen incurred by the erroneous advice as to her eligibility to invest in superannuation funds falls under four heads:

(a) A capital loss on withdrawing from the superannuation funds in September 1995.

(b) A loss of the opportunity to off-set these capital losses against future profits.

(d) A loss of the opportunity to invest in appropriate investments.

I shall deal with each of these in turn:

(a) Capital loss

As pleaded, this loss of $60,092 represents the difference between the sum of $1.5 million invested in December and January 1993 and $1,439,908 which she received upon redemption. These figures, which were prepared by Mr Heath and presented in Table 1 to his outline of evidence which was received as his evidence in chief, were both erroneous.

In total, the sums invested by Mrs Hagen were $1,498,681.51 as I have set out above. Moreover, the proceeds of the redemptions which Mr Heath adopted are not appropriate because in 1994, upon the advice of Mr Walshe, Mrs Hagen changed her portfolio substantially. Mr Heath overlooked these changes. The changes were not made to mitigate any loss from the erroneous advice that she invest in the superannuation environment because the new investments remained in that environment. These changes were made at a time when she knew that she had no right to remain in that environment. As things turned out Mr Walshe's recommended investments performed worse than those which Mr Heraud had recommended. The evidence which I accept shows that Mr Heraud's portfolio would have been worth a little more than $1,520,688 as appears in Table 1 of Ex 21. Mr Bailey thought that they would have been worth about $1,533,000 so that there was in any case a modest increase over the initial investment, even allowing for the exit fee of $14,914.48 charged by the MML fund.

In any event, Mrs Hagen received sums totalling $1,407,393.45 upon redemption. These redemptions represented $232,591.44 from the Rothschild fund in November 1994 and $1,174,802.01 from the remaining funds in September and October 1995.

The correct measure of damage flowing from Mr Heraud's advice that Mrs Hagen place her money in a superannuation environment is the sum which represents the difference between the value of this investment and the value of a comparable investment in a non-superannuation environment. I accept that when she discovered that she was ineligible Mrs Hagen ought, within a reasonable time, to have withdrawn from these inappropriate investments. On the evidence before me she should have done this about July 1994. I reject her evidence that she made any attempt to withdraw from the funds on the basis of ineligibility between this date and perhaps May 1995. In any event, she did not withdraw from the funds. For the most part, she remained in the superannuation environment until September 1995 and the parties were content to treat the value of the investments as at that date as the appropriate figure for the purposes of the comparison.

The figure, then, which should be compared with $1,533,000 is the value to her of a comparable non-superannuation managed portfolio in September 1995. The comparison is not easy because the investments in the superannuation funds do not produce interest for the investor. This is accumulated in the hands of the trustee and has the effect of increasing the value of the units held. Moreover, this income is taxed in the hands of the trustee at a preferential rate. The proceeds of the redemption of Mr Heraud's recommended investment portfolio in September 1995 included accumulated interest on which tax had been paid as well as the impact of any market fluctuations. In the case of the comparable non-superannuation investment portfolio, income is distributed to investors and is taxed in their hands. If the investor does not have a need for the income it may be reinvested in the fund by the purchase of further units. The value of these units will fluctuate with the market. In order, therefore, to compare like with like it is necessary to assume that Mrs Hagen had invested her money in a comparable non-superannuation managed portfolio and had reinvested the income each year and paid tax on this income. In this way the figure to be compared with $1,533,000 is the redemption value of this accumulated comparable portfolio less the tax paid during the investment period. According to Mr Heath, the redemption value of the comparable portfolio would be $1,497,153 after deducting the MML fund exit fee and the tax paid would be $41,998. Mr Heraud's figures were $1,520,566 and $57,285 respectively. Each of these sets of figures showed that Mrs Hagen suffered no capital loss by accepting the advice of Mr Heraud that she invest in superannuation funds. This is not surprising since the two types of funds which were the subject of the comparison are assumed to be similar in character and therefore likely to be similar in performance. The only significant difference is, in the impact of taxation on each. There is no capital loss suffered.

(b) Loss of opportunity to offset capital losses against future profit

This head is based on the fact that capital losses on investments in superannuation schemes may not be off-set against future income in a non-superannuation environment. No loss has been proved under this head since no capital loss has been suffered.

(c) Loss of income

This head of loss is based upon the accepted fact that, if Mrs Hagen's money had been invested in a non-superannuation environment, she would have received income each year. The total of this income after franking credits have been deducted was calculated by Mr Heraud to be $131,479 before tax. According to Mr Heath this amount was $126,340 before tax.

The difficulty about this head of damage is that it has already been brought to account as a component of the redemption prices received in November 1994 and September 1995. If Mrs Hagen was awarded this sum as a separate head of damage she would be receiving it twice. No loss under this head has been suffered.

(d) Loss of opportunity to invest in other investments

This loss cannot flow from the breaches which I have found. I must assume for present purposes that Mrs Hagen would have placed her money in similar investments in a non-superannuation environment. Mr Heraud said that if she were not eligible to contribute to superannuation funds this is what he would have advised her. I accept this and, further, that she would have followed this advice.

I have rejected Mrs Hagen's claims based upon the inappropriateness of the investments selected for her. If this finding were not to stand, I should be unable to determine that she suffered loss as a result. There is no evidence as to whether she would have invested in any particular non-managed funds or in any different managed funds or, if she did, that she would have made a greater profit than she did from Mr Heraud's recommended portfolio. Such evidence as there is shows that she took advice from Mr Walshe which caused her to suffer loss.

Conclusion

I conclude therefore that no loss has been suffered by the plaintiff. Accordingly, there should be judgment for the defendants with costs including any reserved costs and the costs of transcript.