A High Court decision in Napier ordering a financial adviser to pay an elderly widow $250,000 could become a "benchmark" for other claims related to the $80 million failure of the Blue Chip property investment company last year.
Myles Wealth Management director Craig Myles, of Dunedin, suggested yesterday the 3000 investors who lost money through Blue Chip could compare the details of their cases with the Napier case.
"If the facts of your case mirror the case that has just received judgement, the closer your circumstances are . . . the more likely your claim would be successful.
"When you establish liability through case law like this, it will now create a benchmark for others to be assessed against," he said.
The widow, 75-year-old Beryl Joyce Breeze, was awarded $204,465 damages plus $54,361 costs and disbursements after Justice Simon France found VPFS Financial Planner Ltd "failed to meet the standards of a reasonable financial adviser" in placing the funds.
VPFS had recommended Mrs Breeze invest in a Blue Chip-related scheme and Justice France said it had been negligent, or alternatively had not used reasonable care and skill in advising Mrs Breeze.
VPFS did not defend the action.
Originally, other parties - which included legal advisers - were also involved but they had settled.
New Zealand Shareholders Association chairman Bruce Sheppard said last night he expected the Napier case would be a one-off.
"There may be other old people that have been advised by planners but it would be very unusual for a respectable planner to have ever embarked on recommending such a plan to elderly people."
Most Blue Chip investments were "hard sold" by company agents.
Mr Sheppard said there was still the issue of whether Mrs Breeze could recover the money from the planner.
"The issue will be whether or not the financial planner was insured. If he was insured, she will recover."
An experienced financial adviser, Andrew Guest, who gave evidence for Mrs Breeze, said the investment was unwise for anyone "but one wholly unsuited to an investor in Mrs Breeze's position".
"Her investment profile was conservative, and primarily aimed at modest income returns."
The judge said there should have been written advice which clearly set out the risks.
The scheme was wholly dependent on the ongoing viability of the companies involved and given that they were all closely related, the risks were "manifest" and should have been carefully explained in written form, Justice France said.
"It is apparent that the advice Mrs Breeze received was wholly deficient for the circumstances."
The $80 million failure of Blue Chip left more than 3000 New Zealand investors out of pocket.
