Knowles v Interprac Financial Planning Pty Ltd [2025] QSC 78

CORPORATIONS - FINANCIAL PRODUCTS - GENERALLY - where the first plaintiff sought investment advice from an authorised representative of the defendant - where the authorised representative was empowered to deal in certain financial products under the Corporations Act 2001 (Cth) but not residential property - where the plaintiffs alleged the authorised representative advised the first plaintiff to establish a self-managed superannuation fund and invest superannuation monies, as well as monies outside superannuation, into residential property - where the plaintiffs alleged that the authorised representative's advice was in a written statement of advice and conversations the first plaintiff had with the authorised representative - where the plaintiffs claimed that they had purchased three residential apartments following the authorised representative's advice and suffered loss as a result - where the defendant claimed that the statement of advice was not negligent - where the defendant argued that the oral advice of the authorised representative was not provided within the authorisation the defendant conferred on the representative - whether the written advice was negligent or in contravention of Corporations Act 2001 (Cth) ss 945A, 945B - whether the authorised representative provided the oral advice and, if so, whether that advice was provided within the authorisation the defendant conferred on the authorised representative.

LIMITATION OF ACTIONS - SIMPLE CONTRACTS, QUASI-CONTRACTS AND TORTS - ACCRUAL OF CAUSE OF ACTION AND WHEN TIME BEGINS TO RUN - where the plaintiffs' claims were subject to a six-year limitation period either in negligence or for breach of ss 945A, 945B Corporations Act 2001 (Cth) - where the statement of advice provided by the representative was provided in June 2011 - where the plaintiffs executed contracts to purchase the residential properties in November 2011 - where the mortgagees of the properties exercised their power of sale from November 2017 - where the plaintiffs argued that their causes of action did not accrue until the investment properties were sold by the mortgagee - whether the plaintiffs claims were statute barred.

ABN AMRO Bank NV v Bathurst Regional Council (2014) 224 FCR 1; [2014] FCAFC 65.

Astley v Austrust Ltd (1999) 197 CLR 1; [1999] HCA 14.

Commonwealth v Cornwell (2007) 229 CLR 519; [2007] HCA 16.

D W Moore & Co Ltd v Ferrier [1988] 1 WLR 267.

Dean v Pope [2022] NSWCA 260.

Equiticorp Finance Ltd (In liq) v Bank of New Zealand (1993) 32 NSWLR 50.

Filmalter v Swenson [2025] QSC 32.

Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480.

Hawkins v Clayton (1988) 164 CLR 539; [1988] HCA 15.

HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54.

Hutchinson v Equititour Pty Ltd [2011] 2 Qd R 99; [2010] QCA 104.

Joslyn v Berryman (2003) 214 CLR 552; [2003] HCA 34.

Segal (t/a Segal Litton & Chilton) v Fleming [2002] NSWCA 262.

Wardley Australia Ltd v Western Australia (1992) 175 CLR 514; [1999] HCA 55.

Winnote Pty Ltd (in liq) v Page (2006) 68 NSWLR 531; [2006] NSWCA 287.

Civil Liability Act 2003 (Qld) ss 11, 22, 28.

Corporations Act 2001 (Cth) ss 761A, 765A, 766A, 766B, 911A, 916A, 945A, 945B, 953B.

Corporations Regulations 2001 (Cth) r 7.1.06.

Limitation of Actions Act 1974 (Qld) s 10.

• [1] The first plaintiff (Mr Knowles), and companies he incorporated with his former wife (Mrs Knowles), claim to have suffered loss by reason of financial advice provided by Drew Grosskreutz in 2011 and 2012.
• [2] The defendant (Interprac) holds an Australian Financial Services Licence (AFSL) authorising it to carry on a financial services business subject to certain conditions. Between 26 October 2009 and 29 January 2013, Interprac authorised Mr Grosskreutz to provide advice about, and deal in, specified financial products pursuant to s 916A of the Corporations Act 2001 (Cth) (Act). The plaintiffs claim that Interprac is liable for the conduct of Mr Grosskreutz as its authorised representative.
• [3] On 1 June 2011, Mr Grosskreutz provided a written statement of advice to Mr and Mrs Knowles (SOA) recommending that they establish a self-managed superannuation fund (SMSF), transfer their existing superannuation entitlements into the SMSF and use part of those funds to purchase an investment property through the SMSF. The SOA also recommended that Mr and Mrs Knowles look at purchasing another investment property outside superannuation.
• [4] The plaintiffs allege that the advice in the SOA was negligent and that it contravened ss 945A and 945B of the Act. Interprac admits that Mr Grosskreutz provided the SOA as its authorised representative and agent but denies that the advice was negligent or that it contravened the Act.
• [5] The plaintiffs also allege that Mr Grosskreutz gave further oral advice (Further Advice) in various meetings in late 2011 and 2012 that:

(a) the SMSF should purchase a unit in a development called Hillcrest Villas in Emerald;

(b) Mr Knowles should set up another trust structure to purchase two further units in the Hillcrest Villas development.

• [6] Interprac does not admit that Mr Grosskreutz provided the Further Advice. If it is found that he did, Interprac denies that Mr Grosskreutz acted as its authorised representative or agent in doing so.
• [7] In 2013, the second plaintiff and the fourth plaintiff purchased three units at Hillcrest Villas using borrowed funds. The investments failed. The value of the properties declined significantly around mid-2014 and they remained vacant for lengthy periods. Mr Knowles and his associated companies were unable to continue repaying the loans taken out to finance the purchases. Eventually the banks took possession of the investment properties as mortgagees and sold them.
• [8] In that context, the following issues arise for determination:

(a) whether the advice given by Mr Grosskreutz in the SOA was negligent or given in breach of obligations he owed under the Act;

(b) if Mr Grosskreutz is found to have given the Further Advice to Mr Knowles, whether Interprac is liable for that advice;

(c) the amount of the plaintiffs' loss;

(d) whether the plaintiffs failed to mitigate their loss;

(e) whether the plaintiffs were contributorily negligent;

(f) whether the claim in negligence is apportionable and, if so, whether any person besides Interprac is a concurrent wrongdoer who caused a proportion of the plaintiffs' loss;

(g) whether the plaintiffs' claims are statute barred.

• [9] Mr Knowles works in the construction industry. He initially worked as a labourer before completing a carpentry apprenticeship. He later obtained licences from the Queensland Building and Construction Commission for carpentry and building construction.
• [10] By the time Mr Knowles was in his early thirties his disposable income exceeded his living expenses. He began to think about investing. Part of his motivation was that he had seen older tradespersons continue to engage in strenuous manual labour because they had little financial security. He hoped that by seeking financial investment advice he would be able to obtain financial security and retire from roles involving manual labour at a younger age.
• [11] In early 2011, Mr Knowles was searching on the internet for investment strategies when he saw an advertisement by Francis Investment Strategists Pty Ltd (Francis Investments) for a free seminar on investing in real estate through superannuation. Francis Investments was a corporate authorised representative of Interprac. Mr Knowles attended the seminar which was run by Mr Grosskreutz. At the end of the seminar, Mr Knowles spoke with Mr Grosskreutz and filled out a contact form.

• [12] On 25 May 2011, Mr and Mrs Knowles met with Mr Grosskreutz at Francis Investments' office. During that meeting, Mr Grosskreutz asked Mr Knowles questions about his financial circumstances and used the information provided by Mr Knowles to prepare a document titled "Client Needs Analysis" (CNA). He also provided Mr Knowles with a letter of engagement and a copy of Interprac's Financial Services Guide (FSG).
• [13] The CNA recorded Mr and Mrs Knowles' short term goals as: "Property in Super" and "Property outside of Super - Max spend". It did not record any medium term or long term goals. It recorded Mr and Mrs Knowles' existing financial position by reference to their income, expenditure, assets and liabilities. It also recorded Mr and Mrs Knowles' response to ten questions directed to their risk profile.
• [14] The CNA identified Mr and Mrs Knowles' risk profile as being that of an assertive investor. According to that description:

"You are a growth style investor who understands the movement of investment markets. You are most interested in maximising long term capital growth, although you do not wish to make unbalanced investment decisions. You are happy to sacrifice short term safety in order to maximise long term capital growth"

"Assertive [Growth]: you are a 'growth' investor who aggressively seeks a long term capital growth by investing mostly in growth assets. You remain cautious towards taking high levels of long term risks. However your general understanding of the investment market enables you to feel comfortable with short term risk. You accept the possibility of a negative annual return that may occur once every 4-5 years."

• [15] The FSG stated that Mr Grosskreutz was an authorised representative of Interprac and identified the products for which Mr Grosskreutz was authorised to provide advice. It further stated that "the Interprac network" also provided access to associated entities which could provide advice and assistance with other matters, relevantly including financing and investment property.

• [16] On 1 June 2011, Mr Grosskreutz sent the SOA to Mr and Mrs Knowles. The SOA recorded Mr and Mrs Knowles' goals and objectives as being:

"• Review of your current superannuation arrangements

• Provide recommendations to maximise your superannuation savings in a cost effective financial structure
• Provide guidance regarding the purchase of an investment property both inside and outside superannuation"

• [17] The specific recommendations made in the SOA were: first, to implement a superannuation strategy which involved establishing an SMSF, transferring Mr and Mrs Knowles' superannuation benefits from their existing superannuation fund into the SMSF and investing those funds in accordance with their assertive investment risk profile (SMSF Strategy); and, secondly, to investigate purchasing an investment property outside superannuation (Further Property Investment Strategy).
• [18] Under the SMSF Strategy, the SOA recommended that, after Mr and Mrs Knowles' existing superannuation benefits of approximately $68,500 had been transferred to the SMSF, $60,000 would be used as a deposit towards the purchase of an investment property. The balance of the purchase price for the investment property would be borrowed through the SMSF at a loan to value ratio (LVR) of approximately 80%, meaning that the SMSF would have a loan of $240,000. The investment property would be purchased through a bare trust owned by the SMSF. Rental income from the investment property was to be used to pay down the loan. The balance of the transferred superannuation benefits would be held in an interest-bearing account to provide liquidity for the SMSF. The SOA also recommended that Mr and Mrs Knowles have their future superannuation contributions paid to the SMSF to cover any shortfall between rental income and costs, including loan repayments. The SOA estimated that repayments on an interest only loan of $240,000 over 15 years at 9% interest would be $21,600 per annum. The combined future superannuation contributions to be paid by Mr and Mrs Knowles to the SMSF were estimated to be approximately $14,850 per annum, leaving a shortfall of $6,750 per annum. On the basis that the rental income from the investment property would need to cover this shortfall, the SOA stated that the rental income from the investment property should be $130 per week or more after all rental property expenses and ongoing superannuation costs including tax.
• [19] The Further Property Investment Strategy provided information about two possible structures for purchasing a further investment property; one where the investment property would be positively geared and one where it would be negatively geared. In that context, the SOA stated that in either gearing situation Mr and Mrs Knowles should be mindful of the fact that if the investment property was vacant or not able to be rented the property costs, including loan repayments, would need to be met from surplus household income. Based on the CNA, that surplus income was only $3,500 per annum and may only cover one month of property costs.

"Every investment entails a degree of risk. The larger the potential return on any investment, generally the higher the risk it has. This means the greater the chance of large fluctuations in its value over time - from significant gains to possibly the loss of some or all of your initial investment.

Timing is also a risk when you have to sell an investment. The market could be in a downturn, so you won't get the best price. Similarly, you may sell your investment too early because you have lost confidence in it and then if the market improves you could lose out."

• [21] The SOA identified the following risk factors that Mr and Mrs Knowles needed to be aware of:

"• The value of investments can fall. Therefore your investment time frame must allow for fluctuations

• The amount of income generated from investments can fluctuate, or fall. This is important if you will be relying on the income to meet your future income needs."

• [22] The SOA described property as being a growth asset and stated:

"Property investments have potential for a higher long term return, and can provide a combination of income and capital growth. The risk with property investments is mostly in the cyclical nature of property markets, which is why most property investments need to be held over a period of at least 5 years."

• [23] It also stated that diversification would reduce the overall level of risk and referred to this as a fundamental aspect of investing well.
• [24] Appendix 1 of the SOA, titled "Risk", stated (among other things) that: all investments carry a degree of risk; there is no such thing as a risk-free investment; individual investments might underperform the market; this underperformance might take the form of a less than expected positive return or even a negative return; investment markets are volatile and can rise and fall over the short term.

Recommendation to purchase an investment property at Hillcrest Villas

• [25] Mr Knowles began looking for a property to purchase through the SMSF. He was considering purchasing a townhouse or apartment at Sippy Downs on the Sunshine Coast because it was close to the university. Mr Knowles thought that would mean the property would be easy to rent. When Mr Knowles informed Mr Grosskreutz of this, Mr Grosskreutz said that he did not think that Mr Knowles should invest in a property at Sippy Downs or anywhere on the Sunshine Coast. He told Mr Knowles that investing in a property in that area would not deliver the capital growth or rental returns required for the superannuation strategy he had recommended.
• [26] Mr Grosskreutz then provided Mr Knowles with information about Hillcrest Villas, which was an off-the-plan development in Emerald. He told Mr Knowles that he had looked hard for a good investment and had identified Hillcrest Villas. He said that a property in that development would achieve rental income of $600 to $650 per week. He told Mr Knowles that he was so confident that the investment would be successful that he had also recommended it to his uncle.
• [27] Mr Grosskreutz advised Mr Knowles that he should purchase Unit 26 at Hillcrest Villas (Unit 26) through the new SMSF for $315,000.

Establishment of the SMSF and contract to purchase the first property

• [28] On 10 June 2011, Mr and Mrs Knowles incorporated the third plaintiff, which was appointed trustee of the SMSF.
• [29] On 5 August 2011, Mr Knowles transferred his superannuation benefits (less an exit fee of $1,566.60) from his existing superannuation fund into the SMSF.
• [30] On 12 October 2011, Mr and Mrs Knowles incorporated the fourth plaintiff, which was appointed trustee of a corporate bare trust.
• [31] On 15 November 2011, Mr and Mrs Knowles caused the fourth plaintiff to execute a contract (as trustee on behalf of the SMSF) to purchase Unit 26 for $315,000, with a deposit of $31,500.

Recommendation to purchase further investment properties at Hillcrest Villas

• [32] About a month after Mr Grosskreutz had advised Mr Knowles to purchase Unit 26, he invited Mr Knowles to meet with him again at Francis Investments' office and discussed the purchase of further properties at Hillcrest Villas through an investment trust outside the SMSF. When Mr Knowles expressed doubt about having enough money to purchase further investment properties, Mr Grosskreutz told him that taking on substantial debt and using the bank's money to grow his own investments was how successful investors operated.
• [33] Mr Grosskreutz subsequently advised Mr Knowles that, to access funds required to secure approval for the loans for the purchase of two further units, Mr and Mrs Knowles should refinance their residence, claim two building grants from the State Government, cash in Mr Knowles' long service leave and use $11,750 from their savings. Mr Grosskreutz also informed Mr Knowles that he knew the developer of Hillcrest Villas and might be able to negotiate some type of rebate at settlement which would allow Mr and Mrs Knowles to obtain finance for the purchase of two further units at an LVR of approximately 97%. Mr Grosskreutz told Mr Knowles that loans with an LVR of 97% was "good debt" and the more that Mr Knowles borrowed the better off he would be because he would be using the bank's money to facilitate his investment.

Establishment of the Knowles Investment Trust and purchase of further properties

• [34] On 28 October 2011, Mr and Mrs Knowles incorporated the second plaintiff, which was appointed trustee of the Knowles Investment Trust.
• [35] Mr and Mrs Knowles subsequently caused the second plaintiff to execute contracts:

(a) on 15 November 2011, to purchase Unit 23 at Hillcrest Villas (Unit 23) for $315,000, with a deposit of $500;

(b) on 23 December 2011, to purchase Unit 19 at Hillcrest Villas (Unit 19) for $315,000, with a deposit of $500.

Financing for the purchase of the investment properties

• [36] Given the need to obtain finance to purchase the investment properties, Mr Grosskreutz introduced Mr Knowles to Steve Panebiango of CEC Finance. CEC Finance conducted business in the same building and on the same floor as Francis Investments' office. Mr Grosskreutz said that Mr Panebiango was a mortgage broker that Mr Grosskreutz had worked with for a long time and that he was good at making mortgage deals work.
• [37] On 14 August 2012, Mr Panebiango sent an email to Mr Knowles (copied to Mr Grosskreutz) summarising his assessment of Mr Knowles' capacity to borrow funds to purchase the investment properties at Hillcrest Villas. At the start of the email, Mr Panebiango stated that Mr Knowles would only be able to secure finance sufficient to purchase one unit in the SMSF and two units outside superannuation. As Mr Knowles accepted during cross-examination,[1] this was consistent with Mr Knowles at one stage contemplating buying four properties at Hillcrest Villas. Mr Panebiango's email indicated that the bank finance for the purchase of the three investment properties would need to be supplemented by various measures, including refinancing Mr and Mrs Knowles' residence at Bli Bli to borrow a further $8,500 to put towards the purchase of the investment properties, a $9,000 rebate from the developer of Hillcrest Villa (to be paid at settlement), and a building boost from the state government of $10,000 on each of the investment properties (to be received after settlement). Mr Panebiango calculated that Mr Knowles would need an additional $12,000 at settlement of the purchase of Unit 26 and an additional $44,000 at settlement of the purchase of Unit 19 and Unit 23.
• [38] Mr Knowles replied to Mr Panebiango's email on 29 August 2012 (copied to Mr Grosskreutz). In that email he proposed various ways by which he was hoping to be able to finance the purchase of four units at Hillcrest Villas. Those proposed steps included: borrowing at a loan to value ratio of more than 90% for the units to be purchased outside superannuation; drawing down further on the loan for his residence up to a loan to value ratio of 95%; cashing in his long service leave; using his credit card for the deposit; and involving his father in the purchase.
• [39] It seems that Mr Knowles then had further discussions with Mr Grosskreutz. On 30 August 2012, Mr Grosskreutz sent an email to both Mr Panebiango and Mr Knowles. He informed Mr Panebiango that Mr Knowles was clear on what was required to successfully obtain finance and complete the purchase of the properties. He stated that Mr Knowles would need to have $90,000 cash at bank to obtain finance approval. He referred to an indication by Mr Knowles that he would have assistance from his father depositing that $90,000 into Mr Knowles' account. Upon completion, Mr Knowles would return the $90,000 to his father after receiving the building boost payments and developer rebates and cashing in his long service leave. Mr Grosskreutz noted that there were risks involved, including Westpac not wanting to take the risk on four properties. Mr Grosskreutz concluded his email by informing Mr Knowles that he only recommended purchasing a maximum of three units but that, based on Mr Knowles' instructions, he and Mr Panebiango would look at servicing and finance approval sufficient for the purchase of four units.

• [45] The plaintiffs rightly describe their investment in Units 19, 23 and 26 at Hillcrest Villas as an abject failure.
• [46] Unit 19 was tenanted at a rent of $480 per week from 12 January 2013 to 14 June 2013. It was then vacant for approximately 12 months until the middle of 2014 when it was tenanted at a rent of around $280 per week. That lasted until 24 December 2014. It was then vacant for a further three months. In March 2015 it was tenanted at a rent of around $250 per week. That lasted until 9 January 2017.
• [47] Unit 23 was vacant from 8 March 2013 until 18 April 2013. It was then tenanted at a rent of about $370 per week from 18 April 2013 to 18 December 2013. It was then vacant for a further period of about 15 months. It was tenanted at a rent of about $240 per week from early 2015 until the middle of 2015 and then vacant for several more months before being tenanted at a rent of around $190 per week from late 2015.
• [48] Unit 26 was tenanted at a rent of $400 per week from 18 January 2013 until 17 July 2013. It was then vacant for about seven months until 12 February 2014. It was tenanted from 12 February 2014 until 21 August 2016 at a rent of $220 per week. It was then vacant for a further two months until 24 October 2016, following which it was tenanted at a rent of about $190 per week until 6 April 2018.
• [49] The poor rental returns from the investment properties meant that the Knowles Investment Trust ran at a loss from the outset. Financial statements for the second plaintiff record: a loss of $10,943.80 in the financial year ending 30 June 2013; a loss of $20,257.89 in the financial year ending 30 June 2014; and a loss of $18,296.45 in the financial year ending 30 June 2015.
• [50] On 25 November 2013, Mr Knowles exchanged emails with his accountant concerning the September 2013 quarter instalment activity statement for the SMSF which required that tax be paid. In his email, Mr Knowles queried that requirement and stated:

"Reason being with such heavy losses incurred by us (of which we have had to personally pay) as a result of poor rental return and costs associated with keeping this property i.e body corporate I can't see how this trust could be running at anything but a significant loss."

• [51] In cross-examination Mr Knowles accepted that, by the time he sent that email, he was aware the SMSF had suffered what he described as "heavy losses".[2]
• [52] The rental income earned from the investment properties was not sufficient to service the loan repayments. In the case of Unit 26, this was partly covered by the payment of Mr and Mrs Knowles' superannuation contributions to the SMSF. However, loan repayments to the Commonwealth Bank for Units 19 and 23 had to be met from Mr and Mrs Knowles' income. In that regard, I accept the unchallenged evidence of Mr Stephens, the forensic accountant called by Interprac, that Mr and Mrs Knowles had each contributed: $35,433 to the second plaintiff to service the loans to the Commonwealth Bank by 30 June 2013; $48,295 each by 30 June 2014; and $56,923 each by 30 June 2015.
• [53] From about July 2014, the property market in Emerald experienced a substantial decline. Consequently, the market value of each of the investment properties was greatly diminished. For example, the financial statements for the SMSF for the year ending 30 June 2015 recorded the value of Unit 26 as $124,000, a decrease of $191,000 from the value of $315,000 as of 30 June 2014. By 30 June 2016, the value of Unit 26 had reduced by a further $14,000 to $110,000.
• [54] Mr Geyer, the valuer called by Interprac, gave unchallenged evidence (which I accept) that the value of each of Units 19, 23 and 26 was:

(a) $280,000 on 30 June 2014;

(b) $210,000 on 30 June 2015; and

(c) $130,000 on 30 June 2016.

• [55] Mr and Mrs Knowles were unable to continue to contribute funds to meet the loan repayments. The second plaintiff was in default under the Commonwealth Bank loans by about May 2015. The third plaintiff was in default under the Westpac loan by about January 2016.
• [56] In about May 2015, Mr Knowles contacted the Commonwealth Bank and attempted to arrange a payment plan for the loans for Unit 19 and Unit 23. A payment plan with reduced monthly repayments was put in place until 11 August 2015. Mr Knowles continued to attempt to negotiate with both the Commonwealth Bank and Westpac seeking to defer loan repayments or convert the loans to interest only. Eventually, Mr Knowles contacted both the Commonwealth Bank and Westpac and told them that he could not continue making loan repayments.
• [57] On 3 June 2016, the Commonwealth Bank issued a Default Notice and Notice of Exercise of Power of Sale in respect of the loans for Unit 19 and Unit 23.
• [58] On 28 November 2017, the Commonwealth Bank exercised its power of sale as mortgagee over Unit 23 and sold the property for $105,000.
• [59] On 8 January 2018, the Commonwealth Bank exercised its power of sale as mortgagee over Unit 19 and sold the property for $90,000.
• [60] On 4 September 2018, Westpac exercised its power of sale as mortgagee over Unit 26 and sold the property for $130,000.

• [61] The plaintiffs' claims in both negligence,[3] and for contravention of ss 945A and 945B of the Act,[4] must be brought within six years from the date on which the cause of action arose. The proceeding was commenced on 2 August 2022. Accordingly, if either cause of action arose before 2 August 2016 it will be statute barred.
• [62] The relevant principles were not in dispute and can be shortly stated. Where there is a claim for economic loss the cause of action does not arise until the plaintiff suffers actual damage; prospective loss is not sufficient.[5] Further, a plaintiff who is exposed to a contingent loss or liability sustains no actual damage until the contingency is fulfilled.[6] However, once a plaintiff suffers actual damage then the cause of action accrues and time will commence to run under the relevant limitation period regardless of whether the plaintiff discovers, or could on reasonable inquiry have discovered, that such damage had been sustained.[7] Time will run even if, at the time the plaintiff first suffers actual damage, it would be difficult to assess the extent of that damage;[8] and even though substantial loss occurs at a later point in time as a consequence of the same breach.[9]
• [63] A defendant bears the onus of establishing that actual and measurable loss first occurred before a date six years before the commencement of the proceeding.[10] Of course, the fact that a breach has caused actual loss of a measurable kind can sometimes be self-evident or clear beyond argument.[11]
• [64] Interprac submits that the plaintiffs suffered actual damage when they first took steps to implement Mr Grosskreutz's advice. As set out at [29] above, Mr Knowles paid an exit fee to his superannuation fund when he transferred his existing entitlements to the SMSF. This immediately reduced the value of his superannuation entitlements and, on Interprac's submission, amounted to actual damage suffered by Mr Knowles. As to the SMSF and the Knowles Investment Trust, Interprac submits that the associated companies first suffered actual damage when they purchased the investment properties at Hillcrest Villas. That is because, factoring in transaction costs, those companies paid a greater amount for the properties than their ue value.12

"On the other hand, where a person incurs a chance, even a substantial chance, of suffering a loss, in due course it may become clear that no loss is ultimately suffered; and so long as there is some appreciable chance that no loss will be suffered, it is unreasonable to require a plaintiff to commence proceedings and unreasonable to award damages against a defendant. However, once there is actual loss, even if there is also the chance of further loss, a plaintiff must commence proceedings within the appropriate limitation period, and can obtain damages reflecting actual loss suffered plus damages reflecting the chance of any further loss."

• [67] The plaintiffs submit that until their losses crystallised when the banks sold the investment properties, they were only exposed to the chance that they would suffer a loss. While they continued to hold the investment properties there remained some appreciable chance that the capital value of the investment properties and the rental returns received from those properties would recover to a level where they would not suffer any loss.
• [68] Although I am inclined to accept Interprac's submissions set out at [64] above, it is ultimately not necessary to determine whether the plaintiffs suffered actual damage when they first took steps to implement Mr Grosskreutz's advice. That is because, having regard to the financial performance of the plaintiffs' investment set out at [45]-[60] above, even if I was to accept that, when they first took steps to implement Mr Grosskreutz's advice, the plaintiffs were only exposed to the chance of a loss I am nevertheless satisfied that each of Mr Knowles, the second plaintiff and the third plaintiff suffered ac[14]al damage before 2 August 2016.14
• [69] The actual damage suffered by the second and third plaintiffs included the financial loss those companies incurred in holding the investment properties[15] and the reduction in the capital value of those properties in the years prior to 2 August 2016. In circumstances where, in the period before 2 August 2016: (i) there was a persistent failure to achieve rental returns from the investment properties sufficient to service the loan repayments; (ii) Mr Knowles was unable to continue making up the shortfall in loan repayments; (iii) the loans from both the Commonwealth Bank and Westpac were in default; (iv) the Commonwealth Bank had issued a notice of default and of the exercise of power of sale in relation to Unit 19 and Unit 23; and (v) there was a significant and ongoing diminution in the value of the investment properties, I cannot accept that by the end of the financial year ending 30 June 2016 there was any appreciable chance that the second plaintiff and the third plaintiff would not suffer any loss by reason of purchasing the properties at Hillcrest Villas.
• [70] Mr Knowles deposes that from the time the loans went into default he contacted Westpac and the Commonwealth Bank seeking some assistance with his difficulties in making loan repayments. He describes those discussions as being ultimately unhelpful and to being concerned that the banks would commence recovery steps at any time. Those concerns were justified. Once the loans were in default, Mr Knowles and the corporate plaintiffs were at risk of the banks repossessing the investment properties and selling them to recover the outstanding debts. That it was only after 2 August 2016 that the banks eventually took those steps does not alter the fact that the plaintiffs were faced with the prospect of foreclosure from the time they defaulted under the loans. I cannot see any reason why, if the second and third plaintiffs had brought proceedings at that time, they could not have demonstrated actual damage.

(a) it owed Mr and Mrs Knowles a duty to exercise the degree of care and skill to be expected of a reasonable financial adviser in the provision of the SOA. In the circumstances of this case, this was a duty to exercise reasonable care and skill in recommending an investment that was suitable for Mr and Mrs Knowles and warning them of the material risks of that investment;[16]

(b) because Mr Grosskreutz was its authorised representative for the purpose of providing the SOA, it would be liable for any breach of that duty by him in providing the SOA.[17]

• [76] On that basis, the issue for determination is whether Mr Grosskreutz (and, through him, Interprac) was negligent in providing the SOA.

• [77] The standard of care owed by Mr Grosskreutz was that of a reasonably competent person professing to have the skills of a financial adviser, subject to the operation of s 22 of the Civil Liability Act 2003 (Qld). That provision sets the standard of care of a person practising a profession. It states:

(1) A professional does not breach a duty arising from the provision of a professional service if it is established that the professional acted in a way that (at the time the service was provided) was widely accepted by peer professional opinion by a significant number of respected practitioners in the field as competent professional practice.

(2) However, peer professional opinion cannot be relied on for the purposes of this section if the court considers that the opinion is irrational or contrary to a written law.

(3) The fact that there are differing peer professional opinions widely accepted by a significant number of respected practitioners in the field concerning a matter does not prevent any 1 or more (or all) of the opinions being relied on for the purposes of this section.

(4) Peer professional opinion does not have to be universally accepted to be considered widely accepted.

(5) This section does not apply to liability arising in connection with the giving of (or the failure to give) a warning, advice or other information, in relation to the risk of harm to a person, that is associated with the provision by a professional of a professional service."

• [78] This provision alters the standard of care when the elements of s 22(1) are satisfied and s 22(5) is not engaged.[18] It has been said of s 22(1) that:[19]

"It is engaged by evidence that, in the same circumstances, a substantial body of peer professional opinion would have considered the manner in which the defendant acted to be competent professional practice. Evidence that a substantial body of competent professional peers would in the same circumstances have acted in the same way will, at least generally speaking, have that effect."

• [79] The defendant need not bring evidence of a particular specific or established practice, but rather s 22(1) requires a consideration made by reference to how an assessment of the circumstances would be undertaken by a knowledgeable and experienced practitioner.[20]

• [80] The plaintiffs allege that, in providing the SOA, Mr Grosskreutz breached the duty which he owed to Mr and Mrs Knowles by:

(a) failing to make reasonable inquiries in relation to Mr and Mrs Knowles' personal circumstances;

(b) providing investment recommendations (establishing a SMSF, transferring existing superannuation entitlements into that SMSF and using part of those funds to purchase an investment property at an LVR of 80%) that were not suitable for Mr and Mrs Knowles;

(c) failing to warn Mr and Mrs Knowles of the material risk of the investment recommendations.

Inquiries into Mr and Mrs Knowles' personal circumstances

• [81] I have referred to the process by which Mr Grosskreutz prepared the CNA at [12]-[14] above. I accept Interprac's submission that, through that process, Mr Grosskreutz obtained information:

(a) that Mr and Mrs Knowles short term objectives were as set at [12] above;

(b) as to Mr and Mrs Knowles' dates of birth, intended retirement ages, health status, occupations, insurances, net employment income, annual living expenses, investments, assets and liabilities, and superannuation balances;

(c) that Mr and Mrs Knowles had no investments (excluding their existing superannuation);

(d) in response to questions directed towards ascertaining Mr and Mrs Knowles' risk profiles, that:

(i) they did not consider that they would need to access any money they invested for 10 or more years;

(ii) they considered that, once they started using invested money, they would need it to last for more than 10 years or for their retirement;

(iii) they regarded their current and future incomes to be fairly secure.

• [82] In addition to this information, the section of the SOA which set out Mr and Mrs Knowles' personal circumstances recorded no major future expenses to be considered in formulating the advice.
• [83] In those circumstances, I am not satisfied that the way Mr Grosskreutz made inquiries as to Mr and Mrs Knowles' personal circumstances breached the duty which he owed to them.
• [84] Mr Green, a financial adviser called by the plaintiffs, addressed this issue in general terms. At paragraph 4.2.12 of his main report dated 21 October 2024, he stated:

"It is my experience that the adviser would have the client outline personal details including a full list of the assets and liabilities, notes on their estate planning goals, their current health, their ability to earn income in the future with specific emphasis of the risk of health issues and voluntary work commitments, and their overall requirements immediately / over the medium term and longer term. These overall requirements include a blend of personal asset and fund requirements such as the purchase of homes, upgrading homes, purchase of holiday homes, acquisitions of motor vehicles, monies to support elderly parents and dependants, health expenditure etc, as well as acquiring assets that will provide for an individual and family in retirement."

• [85] Having regard to the information which Mr Grosskreutz did obtain from Mr and Mrs Knowles through the CNA process, I am satisfied that Mr Grosskreutz met the standard required of a reasonable adviser in this respect.
• [86] This is consistent with Mr Green having made no specific criticism in his main report of the way Mr Grosskreutz obtained information from Mr and Mrs Knowles concerning their personal circumstances. To the contrary, in paragraph 3.2.17 of his supplementary report dated 10 February 2025, Mr Green stated that the SOA recorded Mr and Mrs Knowles' personal circumstances and was presented to them after Mr Grosskreutz completed the CNA. Mr Green described these as steps that a financial adviser would take in executing their duty in line with guidance provided by industry bodies.
• [87] The plaintiffs have not established this aspect of the alleged breach of duty.

• [88] This issue was the subject of conflicting expert evidence.
• [89] Mr Green gave evidence that Mr Grosskreutz's advice was inappropriate for Mr and Mrs Knowles because it unnecessarily concentrated their investment in a single class of asset, namely residential property. In his written reports, Mr Green expressed his opinion on that issue by reference to the whole of the advice provided to Mr and Mrs Knowles; that is, both the recommendations set out in the SOA and the further recommendations conveyed by the Further Advice.[21] However, when cross-examined, Mr Green explained that he considered the advice set out in the SOA, taken alone and without reference to the Further Advice, to be inappropriate because: (i) the value of Mr and Mrs Knowles' existing superannuation entitlements was not sufficient to justify the costs involved in establishing and operating the SMSF; and (ii) the SOA did not consider the availability of potential alternative investments and, consequently, did not set out any justification for the lack of diversification involved in the recommended strategy.[22]
• [90] Mr Richards, a financial adviser called by Interprac, expressed a different opinion. He gave evidence that advice to purchase residential property with borrowed funds was not inappropriate despite the client having no diversification. He described this as a common strategy that was understood to be generally appropriate advice. On that basis, Mr Richards did not regard the advice in the SOA to be inappropriate for Mr and Mrs Knowles.[23] Mr Richards adhered to this opinion in his oral evidence.[24] He described the advice set out in the SOA as appropriate and fairly common in 2011. He stated that, from his experience, more than half of all financial advisers practising in 2011 would likely have considered the recommendations in the SOA to be appropriate advice given the personal circumstances of Mr and Mrs Knowles.[25] Mr Richards also gave evidence that the value of Mr and Mrs Knowles' existing superannuation entitlements did not mean the costs of the SMSF rendered the advice inappropriate because Mr and Mrs Knowles had indicated their wish was to invest directly in real property and their cashflow for that investment would be better if they borrowed to invest through superannuation.

Warning of the material risks of the recommended investment strategies

• [94] Interprac submits that appropriate warnings of the material risks of the investments recommended in the SOA were provided in both general and specific terms. It relies on the written warnings provided in the SOA itself (see [18]-[24] above).
• [95] Again, there was a difference between the evidence of Mr Green and Mr Richards as to the appropriateness of these written warnings. Mr Richards considered the written warnings were appropriate. Mr Green did not. However, both experts agreed that, in addition to providing warnings in writing, a competent financial adviser would take the client through those warnings and ensure that the client understood the relevant risks.[28]
• [96] Mr Knowles' evidence is that, when taking him through the SOA, Mr Grosskreutz described a lot of the contents of the document as bureaucratic red tape he was obliged to go through. He says Mr Grosskreutz did not go through most of the document in much detail. Mr Knowles says that Mr Grosskreutz breezed by the pages which addressed the risk of investments and told him that this information was generic. He says that Mr Grosskreutz did not take him through any sections of the SOA outlining any risks. He says that Mr Grosskreutz did not warn him that failure of the investments recommended in the SOA could have financially catastrophic consequences. He says that Mr Grosskreutz presented the recommendations in the SOA as the best and safest investment that Mr and Mrs Knowles could make.
• [97] Although not going so far as to suggest that Mr Knowles was dishonest,[29] Interprac submits that I should treat Mr Knowles' evidence with caution on the basis that it is unreliable and inconsistent in various respects and is ultimately self-serving. Interprac emphasises Mr Knowles' evidence that the 11 recommendations set out in the SOA were consistent with his discussions with Mr Grosskreutz and submits that, in circumstances where recommendations 10 and 11 contained specific warnings about the proposed investments, that evidence could not stand with Mr Knowles' account of Mr Grosskreutz glossing over sections addressing the risks of investment and describing those parts of the SOA as generic. It submits I should find that Mr Knowles was either told about the material risks and ignored those risks, or that he should have known about those risks because they were set out in writing in the SOA provided to him on 1 June 2011 and he had sufficient time to read and comprehend those warnings before took steps to implement Mr Grosskreutz's advice. In that regard, Interprac relies on Mr Knowles' concession in cross-examination that he had sufficient time to read the SOA before he caused the second plaintiff and the fourth plaintiff to sign contracts to purchase the investment properties.

Was the advice in the SOA provided in contravention of the Act?

• [100] In June 2011, the relevant provisions of the Act provided as follows:

"945A Requirement to have a reasonable basis for the advice

(1) The providing entity must only provide the advice to the client if:

(i) determines the relevant personal circumstances in relation to giving the advice; and

(ii) makes reasonable inquiries in relation to those personal circumstances; and

(b) having regard to information obtained from the client in relation to those personal circumstances, the providing entity has given such consideration to, and conducted such investigation of, the subject matter of the advice as is reasonable in all of the circumstances; and

(c) the advice is appropriate to the client, having regard to that consideration and investigation.

945B Obligation to warn client if advice based on incomplete or inaccurate information

(a) the advice is based on information relating to the client's relevant personal circumstances that is incomplete or inaccurate; and

(b) the providing entity knows that the information is incomplete or inaccurate, or is reckless as to whether it is incomplete or inaccurate;

the providing entity must, in accordance with subsections (2) and (3), warn the client that:

(c) the advice is, or may be, based on incomplete or inaccurate information relating to the client's relevant personal circumstances; and

(d) because of that, the client should, before acting on the advice, consider the appropriateness of the advice, having regard to the client's relevant personal circumstances.

(2) The warning must be given to the client at the same time as the advice is provided and, subject to subsection (3), by the same means as the advice is provided.

(3) If the Statement of Advice (see Subdivision C) is the means by which the advice is provided, or is given to the client at the same time as the advice is provided, the warning may be given by including it in the Statement of Advice."

• [101] As to the obligations imposed by s 945A:

(a) for the reasons set out at [82]-[87] above, I am not satisfied that the plaintiffs have established that Mr Grosskreutz failed to determine the relevant personal circumstances of Mr and Mrs Knowles, or that he failed to make reasonable inquiries in relation to those personal circumstances;

(b) I am also not satisfied that the plaintiffs have established that Mr Grosskreutz failed to give such consideration to, or conduct such investigation of, the subject matter of the advice as was reasonable in all the circumstances. That is an issue on which the plaintiffs bore the onus of proof. In circumstances where Mr Grosskreutz did not give evidence the plaintiffs failed to discharge that onus. Without that evidence, any answer to the question of what consideration Mr Grosskreutz gave to the subject matter of the advice, or what investigation he conducted, could not rise above the level of speculation. Nor is this a case in which it would be expected that Interprac would call Mr Grosskreutz. He ceased to be Interprac's authorised representative on 29 January 2013 and then became the authorised representative of a different AFSL holder which Interprac sued in third party proceedings which settled shortly before the trial. In those circumstances, no Jones v Dunkel inference could assist the plaintiffs;

(c) finally, for the reasons set out at [89]-[93] above, I am not satisfied that the plaintiffs have established that the advice in the SOA was not appropriate to Mr and Mrs Knowles.

• [102] It follows that the plaintiffs have not established that Mr Grosskreutz contravened s 945A of the Act by providing the advice in the SOA.
• [103] As to the obligations imposed by s 945B, it is clear from the words of ss945B(1)(a) and (b) that the provision would only have operated if the advice in the SOA was based on information relating to Mr and Mrs Knowles' personal circumstances that was incomplete or inaccurate (and Mr Grosskreutz knew that or was reckless as to whether it was so). As already discussed, Mr Grosskreutz obtained information from Mr and Mrs Knowles about their personal circumstances. There is no evidence that the information provided to Mr Grosskreutz was either incomplete or inaccurate. Again, that is an issue on which the which the plaintiffs bore the onus of proof and they have failed to discharge the onus.
• [104] As the plaintiffs have failed to establish that s 945B was engaged in this case, it follows that they have failed to establish that Mr Grosskreutz contravened that provision by providing the advice in the SOA.

• [105] Based on the findings set out at [25]-[44] above, I accept Mr Knowles' evidence that, after he received the advice in the SOA, Mr Grosskreutz further advised him:

(a) to purchase Unit 26 through the SMSF (including borrowing the funds necessary to complete that purchase at an LVR of approximately 80%);

(b) to purchase Unit 19 and Unit 23 through the Knowles Investment Trust (including borrowing the funds necessary to complete each of those purchases at an LVR of approximately 97%).

• [106] Accordingly, I am satisfied that Mr Grosskreutz provided the Further Advice. The issue to be determined is whether, when he did so, Mr Grosskreutz was acting on behalf of Interprac.
• [107] During the plaintiffs' oral address, they confined their case in this regard to one of implied actual authority.[33] Although the plaintiffs' written submissions advance a case based on ostensible authority it is not necessary to address that case.
• [108] Actual authority is a legal relationship between principal and agent created by a consensual agreement between those parties. It arises where the principal grants, and the agent accepts, authority for the agent to perform specific tasks on behalf of the principal. Notwithstanding the absence of an express agreement, actual authority can, by applying ordinary principles of construction of contracts, be implied from the express words used, trade customs, or the course of business between the principal and the agent. An agent will have implied actual authority where the principal and the agent conduct themselves in such a way that it is proper to infer that the relevant authority has been conferred on the agent. Accordingly, in a case such as this, where the question is whether the agent has implied authority to act in a particular way an assessment must be made of the conduct of the parties to decide whether the inference of authority should be drawn.[34]
• [109] The relationship between Interprac and Mr Grosskreutz arose in the context of the regulation of financial services under the Act in the form it was in when Mr Grosskreutz provided the Further Advice. In broad terms, the structure of that regime was:

(a) a person who carried on a financial services business was required to hold an AFSL covering the provision of the financial services (s 911A);

(b) a person would provide a financial service if (among other things) they provided financial product advice or dealt in a financial product (s 766A);

(c) financial product advice included a recommendation or statement of opinion that was intended to influence a person in making a decision in relation to a particular financial product or class of financial products (s 766B);

(d) a person who held an AFSL could give a person (referred to as the authorised representative) a written notice authorising that person to provide a specified financial service on behalf of the licensee (s 916A and the definition of authorised representative in s 761A).

• [110] In this case, two further points should be made about the statutory regime:

(a) real property was not a financial product that was regulated under the regime as it did not fall within the general definition of that term. It was not a facility through which a person made a financial investment, managed a financial risk or made a non-cash payment (s 763A).[35] Nor was it identified as a specific inclusion in the statutory regime as a financial product (s 764A);

(b) a credit facility within the meaning of the Corporations Regulations 2001 (Cth) was expressly excluded from the definition of financial product (s 765A(1)(h)(i)). This exclusion extended to the provision of credit (reg 7.1.06(1)(a)); a mortgage that secures obligations under a credit contract (reg 7.1.06(1)(f)); a guarantee related to a mortgage that secures obligations under a credit contract (reg 7.1.06(1)(g)); and a guarantee of obligations under a credit contract (reg 7.1.06(1)(h)).

• [111] Interprac held an AFSL pursuant to s 911A which authorised it to carry on a financial services business to provide financial product advice for (and to apply for, acquire, vary, or dispose of) the following financial products:

(a) deposit and payment products limited to basic deposit products and deposit products other than basic deposit products;

(b) derivatives limited to old law securities options contracts and warrants;

(c) debentures, stocks or bonds issued or proposed to be issued by a government;

(d) life products including investment life insurance products and life risk insurance products as well as any products issued by a Registered Life Insurance Company that are backed by one or more of its statutory funds;

(e) interests in managed investment schemes including investor directed portfolio services;

(f) retirement savings accounts (within the meaning of the Retirement Savings Account Act 1997_)_;

(g) securities;

(h) standard margin lending facility; and

(i) superannuation.

• [112] On 8 July 2010, Interprac authorised Mr Grosskreutz under s 916A to provide specified financial services on its behalf. The certificate of authorisation issued by Interprac to Mr Grosskreutz stated that Mr Grosskreutz was authorised by Interprac to advise and deal in the following financial products:

(a) deposit products - including basic deposit and non-basic deposit products;

(b) government debentures, stocks or bonds;

(c) life products - including any products issued by a registered life insurance company that are backed by one or more of its statutory funds;

(d) managed investment schemes - including investor directed portfolio services;

(e) retirement savings accounts;

(f) securities;

(g) standard margin lending; and

(h) superannuation.

• [113] By its terms, the certificate of authorisation expressly authorised Mr Grosskreutz to provide financial product advice for, and deal in, the same financial products as Interprac was licensed for under its AFSL (except for derivatives). Nothing in the express words of the certificate authorised Mr Grosskreutz to give advice about investing in specific real properties or the terms upon which such investments should be financed.
• [114] As already observed, the plaintiffs submit that it should be implied that Interprac conferred authority on Mr Grosskreutz to provide advice about investing in real property and the credit required to finance such an investment. That submission begins from the uncontroversial proposition that Mr Grosskreutz acted as Interprac's authorised representative when he provided the SOA to Mr and Mrs Knowles. From there, the plaintiffs submit that the recommendations in the SOA included two aspects related to real property investment: first, the recommendation that Mr and Mrs Knowles purchase an investment property through the SMSF; secondly, that Mr and Mrs Knowles look at purchasing a further investment property outside the SMSF. The plaintiffs contend that these recommendations in the SOA provide a sufficient basis to imply, from the course of business dealings between Mr Grosskreutz and Mr Knowles, that Mr Grosskreutz's actual authority extended to the provision of advice relating to investments in real property.[36]
• [115] The difficulty with that submission is that, according to the principles set out at [109] above, the conferral of authority on Mr Grosskreutz must be implied from the course of business dealings between Mr Grosskreutz and Interprac, not (as the plaintiffs submit) from the dealings between Mr Grosskreutz and Mr Knowles. The plaintiffs do not point to any dealings between Mr Grosskreutz and Interprac from which it could be concluded that those parties conducted themselves in such a way that it would be proper to infer that authority to advise on investments in real property or on credit facilities had been conferred by Interprac on Mr Grosskreutz. There is no evidence of any conduct between Interprac and Mr Grosskreutz that supports the drawing of such an inference.
• [116] That is unsurprising. The authority which Interprac conferred on Mr Grosskreutz was granted under the statutory regime regulating the provision of financial services. It was authority to provide specified financial services under the auspices of Interprac's AFSL. As neither real property nor credit facilities were a financial product, advice about investment in real property or about credit facilities suitable to finance such investments, was not a financial service; it did not fall within the statutory regime. There is no evidence that Interprac and Mr Grosskreutz ever agreed, or that they conducted themselves in such way that it should be inferred, that Mr Grosskreutz had authority to act on behalf of Interprac in providing any advice which did not fall within the statutory regime. This is consistent with the FSG drawing a distinction between the financial products which Interprac had authorised Mr Grosskreutz to advise on and other matters, including financing and investment property, in respect of which a client could seek advice and assistance from associated entities in the Interprac network (see above).

• [118] Mr Lethbridge has assessed the following heads of loss:

(a) opportunity loss suffered by Mr Knowles;

(b) reliance loss suffered by each of Mr Knowles, the second plaintiff and the third plaintiff.

• [119] Mr Knowles claims the value of the superannuation entitlements he would have now if he did not establish the SMSF and transfer his existing superannuation benefits in accordance with the recommendation in the SOA.
• [120] I am satisfied that the breach of duty by Mr Grosskreutz in providing the SOA, set out at [100] above, was a necessary condition of him transferring his existing superannuation benefits into the SMSF and, ultimately, losing those benefits. I am also satisfied that, in the circumstances in which Mr Grosskreutz provided the SOA, it is appropriate for the scope of Interprac's liability to extend to the opportunity loss claimed by Mr Knowles. Accordingly, pursuant to s 11 of the Civil Liability Act, I am satisfied that Mr Grosskreutz's breach of duty in providing the SOA caused the harm which is the subject of the claim for opportunity loss by Mr Knowles.
• [121] Mr Lethbridge has calculated the quantum of this opportunity loss up to the date of the trial to be $323,319.
• [122] Interprac submits that this figure should be reduced for two reasons:

(a) although Mr Lethbridge deducts taxation payable on Mr Knowles' employer contributions he does not deduct taxation (at a rate of 15%) on the superannuation investment returns;

(b) Mr Lethbridge's assessment ignores the administration and other fees that his previous superannuation fund (or any retail superannuation fund) would have charged.

• [123] I do not accept Interprac's submission. The suggestion that Mr Lethbridge's calculation of lost superannuation investment returns fail to take account of tax, fees and charges was not put to him in cross-examination. That is relevant because in section 6 of Mr Lethbridge's report dated 5 March 2025, the lost superannuation investment returns have been calculated using rates of return published by Mr Knowles' previous superannuation fund, Onepath. Mr Lethbridge records in paragraph 6.21 of the report that Onepath has stated that the published returns were calculated on an exit price to exit price basis and are net of fees, taxes and charges. Accepting that to be the case (which I do in circumstances where the statement was not challenged in cross-examination), I am satisfied that by using those published rates of return Mr Lethbridge has calculated lost superannuation investment returns on the same basis; that is, net of tax, fees and charges. There was no need for him to take account of those matters further in his calculations.
• [124] I also note that although Mr Stephens raised the issues of tax, fees and charges in his report of 3 November 2023 (see paragraphs 33.3, 33.4 and 122 to 129), by the time the experts prepared the joint report dated 11 March 2025, Mr Stephens agreed that Mr Lethbridge's use of the published rates of return was reasonable given the available information (see paragraph 2.1.3). The joint report did not identify the need to reduce the calculated investment returns to take account of tax, fees and charges as an area of disagreement between the expert accountants.
• [125] On that basis, if the plaintiffs' claims were not statute barred I would have allowed Mr Knowles' claim for opportunity loss in the amount of $323,319.

(a) wasted expenses he paid on behalf of the other plaintiffs amounting to $5,653;

(b) amounts owed under guarantees which he says he provided to:

(i) Westpac in respect of the loan for Unit 26 (the experts agreeing that the residual debt is $151,770);

(ii) the Commonwealth Bank in respect of the loan for Unit 19 (the experts agreeing the residual debt is $273,086) and, separately in respect of the loan for Unit 23 (the experts agreeing that the residual debt is $242,131).

• [127] As to a guarantee to Westpac, Interprac submits that the plaintiffs have not discharged the onus of proving the existence and enforceability of such a guarantee in circumstances where they have not produced any written guarantee or any demand made by Westpac on Mr Knowles personally pursuant to such a guarantee. It submits that I should not accept Mr Knowles' evidence that he provided a guarantee to Westpac where that is not supported by documentary evidence. It notes, correctly, that emails sent to Mr Knowles by an entity called Recoveries Corp, purportedly on instructions from Westpac, were not tendered as evidence of the truth of their contents and could not prove the existence of a guarantee.
• [128] Contrary to Interprac's submission, I am satisfied that the plaintiffs have proved that Mr Knowles provided a guarantee to Westpac in respect of the loan for Unit 26. Interprac's submission overlooks the fact that the provision of such a guarantee was a condition of the loan for Unit 26 (see [43] above). The inclusion of that condition, together with the fact that Westpac advanced monies under the loan, provides a basis to infer that Mr Knowles satisfied the condition of Westpac's loan approval by providing a personal guarantee. Furthermore, the inclusion of that condition in the loan approval document supports Mr Knowles' evidence (which I accept) that he provided the guarantee to Westpac. Finally, although the email from Recoveries Corp seeking to collect the outstanding debt cannot itself prove the existence of the guarantee (which I have otherwise found to exist), it is evidence that Mr Knowles has been threatened with recovery action if he failed to pay the outstanding amount owed to Westpac. I am satisfied that my finding that Mr Knowles provided the guarantee to Westpac, together with the fact that recovery of the outstanding Westpac debt is still being sought from Mr Knowles, provides a basis to infer that Mr Knowles remains liable to Westpac under the guarantee.
• [129] As to the guarantees provided to the Commonwealth Bank, the amounts claimed by Mr Knowles are set out in demands issued to him by Sphere Legal on behalf of Pioneer Credit Solutions Pty Ltd (Pioneer). Those documents state that Mr Knowles is in default to Pioneer due to a failure to make repayments owing under his contract with them. They make no reference to the Commonwealth Bank guarantees. The only evidence connecting these documents to the Commonwealth Bank guarantees is Mr Knowles' statement that he understood the amounts demanded by Pioneer to be the outstanding balance of the loans owed to the Commonwealth Bank in relation to Unit 19 and Unit 23.

Reliance loss claimed by the second plaintiff

• [133] The second plaintiff claims reliance loss in the amount of $116,273.
• [134] Mr Lethbridge has calculated that amount by:

(a) assessing the acquisition costs, financing costs and management costs wasted by the second plaintiff in acquiring and holding Unit 19 and Unit 23 in the amount of $870,311;

(b) deducting mitigating payments of $754,038, comprising rental income, amounts recovered from the sale of the properties and the residual debt owed under the two loans from the Commonwealth Bank (on the basis that those amounts are claimed by Mr Knowles' personally such that the rule against double recovery prevents the second plaintiff recovering the same loss).

• [135] In the joint report, Mr Stephens agreed with Mr Lethbridge's calculation on the assumption that the residual debt is a loss claimed by Mr Knowles.
• [136] Regardless of the operation of the rule against double recovery, the plaintiffs have not established that the residual debt is a loss recoverable by the second plaintiff. Statements for both Commonwealth Bank loan accounts exhibited by Mr Knowles show a closing balance of nil. There is no evidence that the Commonwealth Bank assigned its rights to recover the residual debts to any other party such as Pioneer. Consequently, the plaintiffs have not proved on the balance of probabilities that the Commonwealth Bank or any other party such as Pioneer is entitled to pursue the second plaintiff to recover the residual debts.
• [137] In any event, if the plaintiffs' claims were not statute barred I would not have allowed any part of the second plaintiff's claim for reliance loss because, for the same reason I would have rejected the whole of Mr Knowles' claim for reliance loss (see [133] above), the plaintiffs have failed to establish that the breach of duty in providing the SOA caused the second plaintiff's reliance loss.

Reliance loss suffered by the third plaintiff

• [138] The third plaintiff claims reliance loss of $15,082.
• [139] Mr Lethbridge has calculated that amount by:

(a) assessing the acquisition costs, financing costs and management costs wasted by the second plaintiff in acquiring and holding Unit 26 in the amount of $467,359;

(b) deducting from that amount mitigating payments of $323,867, comprising rental income, interest received, a refund of a dishonour fee, the amount recovered from the sale of the properties and the residual debt owed under the Westpac loan (on the basis that this amount is claimed by Mr Knowles' personally such that the rule against double recovery prevents the third plaintiff recovering the same loss);

(c) further deducting the lost superannuation benefits claimed by Mr Knowles as opportunity loss in the amount of $128,409 (again, to avoid the third plaintiff recovering the same loss as Mr Knowles).

• [140] While I accept the correctness of Mr Lethbridge's calculation, if the plaintiffs' claims were not statute barred I would not have allowed any part of the third plaintiff's claim for reliance loss because, for the same reason I would have rejected the whole of Mr Knowles' claim for reliance loss (see [133] above), the plaintiffs have failed to establish that the breach of duty in providing the SOA caused the third plaintiff's reliance loss.

• [141] If the plaintiffs' claims were not statute barred, the only part of those claims I would have allowed is Mr Knowles' claim for opportunity loss. That claim has been calculated based on notional investment returns which Mr Knowles would have earned from his superannuation each year if he did not follow the advice in the SOA. If Mr Knowles was awarded damages reflecting those notional investment returns, he would be compensated for the loss of the use of his notional superannuation benefits from year to year. In those circumstances, he would not have any entitlement to also claim interest on those notional superannuation benefits.
• [142] As I would not have allowed any of the plaintiffs' claims for reliance loss there would have been no need to calculate interest on those losses.

• [143] I address this issue on the basis that, as explained above, if the plaintiffs' claims were not statute barred the only claim I would have allowed is Mr Knowles' claim for opportunity loss.
• [144] Interprac submits that the plaintiffs' damages should be reduced to the extent it is found that they did not act reasonably in the circumstances in not seeking to mitigate their losses by selling one or more of the investment properties for the best price possible earlier than the sales by the banks.
• [145] That submission proceeds as follows:

(a) on an objective assessment of the performance of the investments it should have been apparent to the plaintiffs by around 30 June 2014 that the rental market in Emerald had begun to experience a material decline in terms of both occupancy rates and rental returns. Property values had also begun to fall. Each of the investment properties had been vacant for a significant period. Mr and Mrs Knowles had been required to pay substantial amounts to cover the shortfall between rental returns from the investment properties and the amount of the loan repayments. The Knowles Investment Trust had operated at a loss for the preceding two years;

(b) if all three of the investment properties had been sold around 30 June 2014 for a price of about $280,000 then, taking into account the costs of selling the properties, the plaintiffs would have been left in the position that most, if not all, of the Westpac loan would have been repaid and the aggregate amount owed under the two Commonwealth Bank Loans would have been somewhere between $50,000 and $75,000;

(c) alternatively, it should have been apparent to the plaintiffs by around 30 June 2015 that the value of properties in Emerald, as well as rental returns, had significantly declined. By that time the rental returns earned by each of the investment properties were insufficient to service each of the loans. Mr and Mrs Knowles continued to have to make substantial personal contributions to meet the loan repayments. The Knowles Investment Trust continued to operate at a loss;

(d) if all three of the investment properties had been sold around 30 June 2015 for a price of about $210,000 then, accounting for the costs of selling the properties, the plaintiffs would have been left in the position that the amount owed under the Westpac loan would have been about $50,000 and the aggregate amount owed under the two Commonwealth Bank Loans would have been somewhere between $200,000 and $240,000.

• [146] I have not found it necessary to form a final view on whether the plaintiffs failed to act reasonably in not selling the investment properties at either time identified by Interprac. That is because Interprac's submissions focus on the reduction of the plaintiffs' reliance loss which, if the plaintiffs' claims were not statute barred, I would not have allowed.
• [147] As to the claim I would have allowed, I am not satisfied that, if the plaintiffs had sold the investment properties at either time identified by Interprac, there would have been any significant reduction in Mr Knowles' opportunity loss. Mr Knowles would still have transferred his existing superannuation benefits into the SMSF. His ongoing superannuation contributions would have been paid into the SMSF and used to repay the Westpac loan until Unit 26 was sold. Those amounts would have been lost whenever Unit 26 was sold. Mr Knowles would have been left without any superannuation. He might subsequently have recommenced making contributions into a retail superannuation fund, but the investment returns would have been significantly lower given that his total superannuation would have been reduced to a base of zero. There is no evidence from which I could determine by what, if any, amount Mr Knowles' opportunity loss would have been reduced if the plaintiffs had sold the investment properties at either time identified by Interprac.
• [148] For these reasons, if the plaintiffs' claims were not statute barred, I would not have reduced Mr Knowles' opportunity loss by reason of any failure by Mr Knowles to mitigate that loss.

• [149] Like mitigation of loss, I address this issue on the basis that if the plaintiffs' claims were not statute barred the only claim I would have allowed is Mr Knowles' claim for opportunity loss.
• [150] A finding of contributory negligence turns on a factual investigation of whether the plaintiff contributed to his or her own loss by failing to take reasonable care of his or her person or property.[37] A plaintiff is guilty of contributory negligence when the plaintiff exposes himself or herself to a risk of injury which might reasonably have been foreseen and avoided and suffers an injury within the class of risk to which the plaintiff was exposed.[38]
• [151] Interprac submits that there are two ways in which Mr Knowles failed to take precautions which a reasonable person in his position would have taken. The first matter is Mr Knowles' conduct in causing the second plaintiff to purchase Unit 19 and Unit 23 by way of finance from the Commonwealth Bank. The second matter is the same as that which Interprac relies upon in its submissions on mitigation of loss, being the plaintiffs' failure to sell one or more of the investment properties at an earlier time.
• [152] It is not necessary to address Interprac's submissions on the first matter in detail. If those submissions were accepted they could only result in a finding that the plaintiffs' contributed to the reliance loss suffered by Mr Knowles and the second plaintiff relating to Unit 19 and Unit 23. There would be no basis for a finding that, by his conduct in causing the second plaintiff to purchase Unit 19 and Unit 23, Mr Knowles failed to take reasonable care for his superannuation benefits in the SMSF. Mr Knowles was exposed to the risk of losing his superannuation benefits by following Mr Grosskreutz's advice to establish the SMSF, transfer his existing superannuation benefits and purchase Unit 26, financed by the Westpac loan, through the SMSF. He would have been exposed to that risk even if he had not caused the second plaintiff to purchase Unit 19 and Unit 23. I am not satisfied that this first matter demonstrates contributory negligence on Mr Knowles' part in respect of his opportunity loss.
• [153] As to the second matter, for the reasons set out in addressing mitigation of loss, I am also not satisfied that the plaintiffs' failure to sell Unit 26 at an earlier time contributed to Mr Knowles' opportunity loss.

• [155] Like mitigation of loss and contributory negligence, I address this issue on the basis that if the plaintiffs' claims were not statute barred the only claim I would have allowed is Mr Knowles' claim for opportunity loss. In that context, the issue can be disposed of briefly.
• [156] Although Interprac makes detailed submissions about what constitutes an apportionable claim for the purpose of the Civil Liability Act, it accepts that Mr Knowles' makes his claims for loss arising from the advice to purchase Unit 26 through the SMSF as a consumer.[39] Consequently, the statutory scheme for proportionate liability does not apply to those claims: s 28(3)(b) of the Civil Liability Act.
• [157] In those circumstances, if the plaintiffs' claims were not statute barred, I would not have reduced Mr Knowles' claim for opportunity loss on the basis that it was an apportionable claim.

• [158] As I have found that the plaintiffs' claims are statute barred those claims will be dismissed. I will hear the parties as to costs.

[1] Transcript 1-51:44 to 1-52:6; 1-54:1-14.

[3] See s 10(1)(a) of the Limitation of Actions Act 1974 (Qld).

[5] Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 (Wardley), 527.

[6] Wardley, 532; HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640, 655 [29].

[7] Hawkins v Clayton (1988) 164 CLR 539, 543, 587, 599-600; Commonwealth v Cornwell [2007] HCA 16; (2007) 229 CLR 519, 523 [6]; Winnote Pty Ltd (in liq) v Page [2006] NSWCA 287; (2006) 68 NSWLR 531 (Winnote), 539 [40].

[10] Segal (t/a Segal Litton & Chilton) v Fleming [2002] NSWCA 262 (Segal), [27].

[11] Winnote, 542 [59] citing Wardley, 528 and D W Moore & Co Ltd v Ferrier [1988] 1 WLR 267, 279.

[12] Hutchinson v Equititour Pty Ltd [2010] QCA 104; [2011] 2 Qd R 99 (Hutchinson), 107 [35], 110-112 [50]-[57].

[14] Mr Lethbridge, the forensic accountant called by the plaintiffs, stated in paragraph 4.15 of his report dated 5 March 2025 (Exhibit 7) that the fourth plaintiff suffered no loss. Accordingly, no cause of action ever accrued to that plaintiff. This is consistent with the plaintiffs having amended their statement of claim to remove the earlier allegation that the fourth plaintiff had suffered loss and damage as a result of the alleged negligence and failure to comply with ss 945A and 945B of the Act.

[16] ABN AMRO Bank NV v Bathurst Regional Council [2014] FCAFC 65; (2014) 224 FCR 1, 219-220 [1106].

[18] Filmalter v Swenson [2025] QSC 32 (Filmalter), [218].

[19] Dean v Pope [2022] NSWCA 260, [317] cited with approval in Filmalter, [225].

[21] For example, see paragraphs 8.4.2 to 8.4.5 of Mr Green's report dated 21 October 2024.

[23] See paragraphs ES7 to ES9 of Part A and paragraphs 26 to 32 of Mr Richards' report dated 6 December 2024.

[26] Transcript 3-28:15 to 3-29:17; 3-34:39-45.

[27] Transcript 2-73:28 to 2-74:21; 2-91:18-29.

[28] Transcript 2-92:1 to 2-93:3 (Mr Green) and 3-33:28-35, 3-38:1-43 (Mr Richards).

[30] Transcript 4-23:8-26; 4-27:36 to 4-28:7.

[34] Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, 502-503_; Equiticorp Finance Ltd (In liq) v Bank of New Zealand_ (1993) 32 NSWLR 50, 132-133.

[35] For the purposes of the statutory regime, a person made a financial investment if that person gave money to another person which was used (or intended to be used) to generate a financial return or benefit and the investor did not have day-to-day control over the investment (s 763B).

[36] Plaintiffs' written closing submissions, paragraph 89.

[37] Astley v Austrust Ltd (1999) 197 CLR 1, 14 [30].

[38] Joslyn v Berryman [2003] HCA 34; (2003) 214 CLR 552, 558 [16].

[39] Defendant's outline of submissions at [313](a).