90 The slight differences should be noted. Presumably, they were intended to bolster the idea of specific and careful attention on the part of the deponent to the matters he was addressing.
91 With respect to the third incident, payment of $25,000 was made in two tranches - $20,000 described hereunder on 31 October 2011 and $5,000 by cheque on 8 November 2011. The circumstances of the first payment were described as follows:
34. Shortly [after the conversation], on 31 October 2011, I went to Westpac, withdrew $20,000 from my account (account number xxxx) and gave that money in cash to Oberg.
92 Notwithstanding the specificity of the statement attributed to Mr Oberg, and the description of payment of the $20,000 which appeared in the affidavit, when Mr Goonasekera gave his evidence orally under cross-examination a different picture emerged. Mr Goonasekera said he had no particular understanding or expectation about Mr Oberg making any particular investment, or any investment of a particular character. Rather, he intended that Mr Oberg should invest the extra funds as he thought appropriate.
93 Indeed, he was asked specifically, and answered:
HIS HONOUR: Did he say anything like, "You should put it in the same investment as the previous investments"?---No, he did not.
94 So far as the payment on 31 October 2011 was concerned, Mr Goonasekera was adamant that he had never handed cash to Mr Oberg. The following exchange occurred:
MR WHITE: You just gave him the cash?---Not actually currency notes.
Well what does:
Gave cash, 20K to Colin at Miranda
mean?---I need to find out how it was deposited. I never gave him cash, like in actual money, to his hand, ever.
HIS HONOUR: What do you mean by paragraph 34 of your affidavit?---Your Honour, though I've written it cash, but I never gave him, at any stage, money in hand, like that.
Well, what does that - what do you mean by paragraph 34? Is that true or not? If it's not true, what was the position?---I withdrew the money from my account but I can't recollect as to how I gave him the money but never, right through this, that I have given him cash, your Honour.
You say that you wrote the words "gave cash" and you put in your affidavit "gave that money in cash" but that's not what happened?---That's correct. As I said, never in cash.
Well, how did you give him the money on that occasion?---I cannot recollect at this stage.
95 Where Mr Goonasekera's oral evidence departed from his affidavit evidence, I regard his oral evidence as more reliable. Although the discrepancies do not have much effect on the matters which fall directly for decision, they obviously had the potential to reflect adversely on Mr Goonasekera's credit. His position under cross-examination was sufficiently clear and unembarrassed that I think it unlikely that Mr Goonasekera was initially responsible for the unreliable picture painted in respect of the matters I have mentioned. I cannot help but think that he was put in a false position as his affidavit was drafted and settled. Ultimately, of course, Mr Goonasekera must take responsibility for the affidavit he swore and I am satisfied that he was insufficiently diligent in that regard. That does not mean, however, that his credit was substantially affected, or that I disbelieve him. On the contrary, his oral evidence, in particular, was sufficiently direct and candid to give adequate support to the general picture.
96 I am satisfied, therefore, that specific requests for advice were made about how to invest the $130,000 referred to in those conversations, that Mr Oberg advised that it be entrusted to him to invest, and that Mr Goonasekera acted on that advice.
97 As I mentioned earlier, two of the conversations (31 October 2011 and 29 April 2012) occurred after WealthSure notified Mr Oberg that his authority was revoked. In his latest affidavit, Mr Goonasekera said:
43. I did not know that Oberg's position as an authorised representative of Wealthsure had been revoked until about November or December 2012 when I met with Mr La Rocca.
44. I did not receive any letter from Wealthsure in July 2011 (or at any time) informing me that Oberg was no longer an authorised representative of Wealthsure. I understand that Ms Blackwell of Wealthsure contends that she sent such a letter to me on or about 25 July 2011 at an address "GPO Box 3989 Sydney". I did not receive any such letter. That GPO Box number does not belong to me or my wife and never has.
45. Had I received such a letter or otherwise been informed that Wealthsure had revoked Oberg's authority to continue as an authorised representative, I would have been very concerned and would not have continued to make investments with Oberg unless I had understood the reasons for his removal and been satisfied that there were no doubts about Oberg's competence or honesty.
98 I accept this evidence. I think it is likely that Mr Goonasekera would have reviewed the position anxiously if he had cause to question his trust in Mr Oberg, because that was the foundation upon which all the arrangements depended.
99 In fact, for reasons which were not explained, or explored in cross-examination, shortly after the last transaction, Mr Goonasekera posed a series of questions to Mr Oberg. I will set out the queries and responses in full. Mr Goonasekera wrote, in an email:
Hi Colin
…
There are few things that have been troubling me regarding payments of Taxes, Loan repayments, Super Fund and other expenses, especially as I am away and not in with the system, and also have noted lots of sudden large sum payments in recent times, and further payments towards the end of the financial year?
Firstly re the HDR Super Fund:
Has this fund got to be registered as a company of some nature?
What is this fund all about? Is it an investment? And if it is just a Super Fund, is there any Govt contribution towards it, and is it something additional to any other payment if any, that I am contributing to? And the sudden payment need of $9520 payment.
What is my monthy contribution/Expense towards it?
What taxes do we pay towards same? And if so doesn't it have to be shown on the same yearly tax returns? Last year 2 sets of tax returns were sent?
Is any payment component Tax Refundable?
What is the end Saving that I will receive and at what stage?
LOANS/REPAYMENTS
Please let me know as to which Banks that I do have loans with and as to the amounts borrowed, and approximate payments monthly/yearly and other fees?
The reason for this is because, every month, the loan repayments are far over the Rents received, and other payments towards the properties, with no tax refunds at the end of the year? Is the Negative gearing system applicable?
Every 3-4 months I keep remitting approximately A$ 20000, and the funds keep reducing for some payment or the other. This does not leave me with anything as and when we do return to Sydney.
INVESTMENT PROPERTIES
Recently I contacted the respective agents who are handling Perth and Wolli Creek properties regarding their values, if I were to sell? The figures given were Perth at A$343K and Wolli Creek at A$430-450K, considering properties sold recently in the same complex.
Considering the other expenses that have to be paid at the time of selling, are we still ahead on these investments considering the monthly payments towards them? And as to how long more should I have to hang on to them?
Regarding Peakhurst, I have no intention of going back to live there, if I had a choice. At his stage I do not have a selling value of that place. I am seriously thinking of getting rid of same when I visit Sydney later in the year, as the property is not really looked after by the tennants and the agent, which will also incur some work to be done prior sale.
My intention is to somehow get a small unit to retire once we get back to Sydney. As I wont have an income then, I somehow have to pay up in full before I finish up in Kuwait. At this present stage, depending on my health etc I plan to be in Kuwait another 2 years or so? As you know I have nearly completed 6 years in Kuwait.
So please let me know as to how I need to plan my near future. I understand that lots of changes are taking place at your end. These issues are troubling me a lot.
Please let me know
Roville [Mr Goonasekera]
100 Mr Oberg replied:
20th June, 2012
Dear Roville and Marie,
I received your queries outlining taxes; loans etc and I'll attempt to answer them as best I can.
Firstly re the HDR Super Fund
The superannuation money for you and Marie are now in a structure that you control rather than be at the mercy of stock market fluctuations.
The superannuation that you had with Qantas and that Marie had have been transferred to this fund from the BT account that we set up years ago.
The funds have been invested in capital stable interest bearing accounts earning 10% per annum and the income will be tax free.
You are not required to make any payments to the fund and there are no government contributions towards it as you are currently a non resident of Australia.
The fees of $9,520 are bills I should have sent you years ago when the funds was originally set up in July 2009. These costs are a once off except for the accounting fee which will be approximately $660 per annum. Further there is a filing fee with ASIC each year for the company of $45.
The end saving will be the return on the investments that you receive of 10% per annum that will be tax free on your return to Australia when you retire.
You will be earning about 22,000 per annum for an outlay of approximately $705 and the principal of $215,000 stays in tact.
Loans/repayments
You have two loans. Homeloans of $280K and ING of $395K. The approximate monthly repayments based on 7% interest payment are $12,000.
Investment Properties
The current values of the properties are the same as when you bought them. There is a downturn in the property market everywhere in Australia at the moment. You should be hanging onto them till the property market improves and sell them as you get closer to retirement in two years time.
I do understand your position with Peakhurst. Marie ends up paying tax on her half of the rental income while your half is absorbed by the tax losses on the other two properties.
In view of your comments it may be prudent to look at selling Peakhurst and reducing your overall debt situation.
With your other investments you should be able to retire in comfort in two years time with a debt free unit in place and money in the bank.
I hope that this helps you not be so troubled.
If you need to know anything else please let me know.
Regards,
Colin
101 It is impossible to know what to make of Mr Goonasekera's concluding comment in his own email that: "I understand that lots of changes are taking place at your end. These issues are troubling me a lot", and he was not cross-examined about the meaning of either statement. There is no evidence to contradict Mr Goonasekera's assertion that he had no knowledge of any change to Mr Oberg's authority or association with WealthSure when any of the transactions occurred and I, therefore, accept that evidence. Whether WealthSure could be liable for events occurring outside the period of Mr Oberg's authority must await later discussion.
102 I need now to return to the perspective provided by Mr Goonasekera's oral evidence, which I accept, about the transactions made by Mr Oberg directly under the power of attorney, although assessment of any liability WealthSure might have for the transactions must also be deferred for later discussion.
103 I am satisfied that, although Mr Goonasekera did not know that Mr Oberg was transferring money out of his self-managed superannuation fund, had he known about those transactions he would not have been concerned because he would have assumed that the transfers were directed to investments in his interests. I am also satisfied that he regarded Mr Oberg as acting directly for him in everything that he might do under the power of attorney. No doubt, he did not anticipate deceit, dishonesty or fraud, because he trusted Mr Oberg, implicitly and expressly. He did not, I am satisfied, ever intend to invest WealthSure with any of the authority under the power of attorney; it was, and was intended to be, personal to Mr Oberg. Nevertheless, giving Mr Oberg the power of attorney was an ingredient in the overall judgment that Mr Goonasekera made that Mr Oberg, a qualified financial planner and an authorised representative of WealthSure, could be trusted in those capacities to deal effectively and advantageously with investments on behalf of the Goonasekeras. Mr Goonasekera regarded the particular arrangements under the power of attorney (which were based on his personal trust of Mr Oberg) as an extension of Mr Oberg's role as a trusted financial adviser and as an authorised representative of WealthSure.
104 Some of the evidence on which those conclusions are based is as follows:
MR WHITE: … In that affidavit, the May one, Mr Goonasekera, can you find annexure HG4?---Yes.
You've got that. HG4, there is a table, have you got that?---Yes.
Yes. And you see halfway down the table there's a reference to a direct debit being set up under the power of attorney and there's a date given of 12 June 2007. Do you see that?---Yes.
And is that something you knew about in 2007?---No.
But you understand, do you now, that that is what happened?---That's correct, from the documents that was given to me.
And if Mr Oberg had - I take it what your evidence is, is that Mr Oberg didn't inform you about that in 2007?---No.
But if he had informed you about that you would have been happy for that to happen because you had given him the power of attorney to manage your accounts?---Yes.
…
MR WHITE: And when you signed the power of attorney were you in Australia at the time?---Yes.
In September 2006?---Yes.
And Mr Hancock explained it to you?---Yes.
Was he a solicitor?---Yes.
He wasn't from WealthSure, to your knowledge, was he?---No. He was in Hurstville.
From Hurstville?---His office is in Hurstville.
Yes. And he explained to you, didn't he, that you were effectively delegating to Mr Oberg the ability to control your accounts and manage them?---Yes, he did.
And that he could manage your investments without recourse to you?---He didn't explain that in detail but he said he is - can, you know, manage everything, sign for everything.
You understood that was the effect of it?---Yes.
…
MR WHITE: …. So you understood that when he made a decision, for example, by transferring money from one of your accounts or funds or loans to manage the investments that he was doing that on your behalf?---Yes, I understood that.
…
MR WHITE: In paragraph 7 of the affidavit, that's the 2015 affidavit, you refer to a recommendation by Mr Oberg that you establish a self-managed super fund? In June 2009; do you see that?---Yes, I see that.
Paragraph 7. And did you understand that that meant that you would be removing your funds from your current super fund and you would be placing it into a new fund that was set up that was in your name and/or your wife's name and that you would have the ability to make decisions about investments?---Yes.
But you also expected that, as part of the arrangement you had entered into with Mr Oberg, that he would, once the fund was established, make decisions about where the money was invested?---Yes. I followed his guidelines all along.
And, consequently, you weren't concerned to know which particular investments he would make out of the self-managed super fund?---Can you say that again, please?
You weren't concerned to know the particulars of the investments that he made with the money that was in the self-managed super fund?---No. Not directly, but every time I saw him, he confirmed that everything was working fine.
…
MR WHITE: … Mr Goonasekera that when Mr Oberg was making decisions about where to invest the money for you, you understood that when he was doing that, and when he carried it out, he was acting as your attorney?---Yes.
105 Mr Goonasekera also deposed that, apart from the 2003 financial plan and the email on 14 January 2009 about his desire to invest $100,000, Mr Oberg gave no written advice and did not ever provide a Statement of Advice or a Product Disclosure Statement.