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Tribunal says estate’s claim not for them

May 29, 2013

Tribunal says estate’s claim not for them

TIM HUNTER

Last updated 12:39 27/05/2013

 

The Disputes Tribunal has refused to hear a claim for investment losses against financial adviser Forsyth Barr, recommending it should instead be heard in the District Court.

The claim arose from the firm’s handling of investments for an elderly couple, Ivan and Muriel Nicolson, of Alexandra, both now deceased. Their estate has alleged Forsyth Barr failed in its duty of care to the Nicolsons, whose age and infirmity made them particularly reliant on financial advice.

It was alleged disastrous investments made by the firm in the preference shares of South Canterbury Finance and Strategic Finance, as well as a complex derivative product called Credit Sails, were inappropriate.

Losses were $8000, $5000 and $7000 respectively. The claim was limited to be within the tribunal’s $15,000 maximum jurisdiction.

Speaking on behalf of the Nicolson estate, son-in-law Ollie Turner said the hearing had been scheduled for May 13 but the tribunal had declined to hear it after receiving a letter from Forsyth Barr.

“It was just an ambush,” he said.

In the letter presented to the tribunal referee on the morning of the hearing, Forsyth Barr head of private client services Shane Edmond said he was putting forward the firm’s view “in order that the Disputes Tribunal is not ambushed at the hearing”.

“The essence of our position is that the estate’s claim is not suitable for hearing in the Disputes Tribunal, and should not be heard.”

Edmond said the claims were not minor and needed proper legal discussion because there were complex financial issues involved. The claim related to a “tort” of economic loss over which the tribunal had no jurisdiction, he said, referring to an aspect of the law covering general wrongs as opposed to breach of contract.

He also requested Forsyth Barr critic and investor advocate Greg Marshall of Logic Funds be barred from the hearing. “The claimant’s request for Mr Marshall’s presence is said to be in order that he may speak to some of the materials provided. This is problematic: Forsyth Barr’s view is that the additional materials provided by Mr Marshall are wholly irrelevant to the issues at hand.”

Turner said the estate was seeking advice on whether to apply for a rehearing in the tribunal or proceed to the District Court. “Our claim is simply one to do with poor service,” he said. “Financial services are not some special category that should be exempt from the same checks and balances that apply to everyone else. If Forsyth Barr think we will walk away they are seriously deluded.”

Forsyth Barr managing director Neil Paviour-Smith said it was important to note the Nicolsons’ portfolio had risen in value overall while the couple were clients of the firm, despite the losses incurred in individual stocks.

– © Fairfax NZ News

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