Casaclan v Wealthsure Pty Ltd  FCA 761 is the
most recent decision involving Wealthsure Pty Ltd and their former
authorised representative Mr Colin Oberg following the High
Court's Selig & Another v Wealthsure Pty Ltd
(2015) 320 ALR 47 judgement.
The Claimants', a group of seven former clients of Mr Oberg
and Wealthsure, commenced separate actions alleging that Mr Oberg
misappropriated client funds during the period that he was an
authorised representative of Wealthsure (18 October 2004 to 30
September 2010) and the period after Wealthsure had terminated Mr
Oberg's representative status (1 October 2010 to 25 July 2011).
The claims alleged that Wealthsure was liable for the conduct of Mr
Oberg and sought to be compensated for losses suffered in both
Background to the claims
In or about September 2010 Wealthsure took steps to revoke Mr
Oberg's authorised representative status following the receipt
of complaints from his clients alleging that he was dealing with
funds without authority and concerns as to the suitability of
advice. Formal notice of revocation of Mr Oberg's authority was
sent to ASIC on 12 October 2010 with Wealthsure authoring a letter
to Mr Oberg outlining the steps that were to be conducted to
investigate the complaints, including a complete file audit, onsite
audit and a statement from Mr Oberg confirming the investments
recommended to his clients.
These steps did not take place and, after termination of Mr
Oberg, Wealthsure did not contact or notify his clients that Mr
Oberg's representative status had been terminated or the
reasons for the termination until mid-2011. In the period between
September 2010 to mid-2011 Mr Oberg misappropriated further funds
whilst giving the impression that he was still a representative of
His Honour Buchannan J reviewed the individual
circumstances of each of the claimants' allegations and
reviewed the liability of Wealthsure which can be summarised as
Losses up to 30 September 2010
Despite allegations of Mr Oberg's criminality (which
Wealthsure's suggested limited their liability pursuant to
s917F of the Corporations Act (the Act)) s917B of the Act
intended to operate so that a licensee was directly liable for the
conduct of their representative, regardless of whether the conduct
was within or without authority.1
Losses October 2010 and beyond
s917B of the Act assigns responsibility to Wealthsure for the
conduct of Mr Oberg whilst he was their authorised representative.
Although Mr Oberg's status as an authorised representative was
terminated, Wealthsure was also responsible for the subsequent
losses. Buchannan J considered that Mr Oberg was acting with the
'apparent' or 'ostensible' authority of the
licensee as the relevant test when considering apparent authority
requires an 'examination of the representation of authority
made to third parties by the licensee'.2 As
Wealthsure took no effective steps to revoke or deny Mr Oberg's
apparent authority (despite having knowledge that he was continuing
to advice his clients) WealthSure was 'estopped from denying Mr
Oberg's apparent authority pursuant to s
The Casaclan decision identifies circumstances that an
Australian Financial Services Licensee may be liable for the
conduct of their former authorised representatives after the date
that the advisor's representative status was terminated.
However, extending liability for post termination losses will
usually only occur in limited circumstances where the risk of loss
to the client was foreseeable.
1 Paragraph 199
2 Paragraph 194
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Solicitors should think carefully before disclosing sensitive information to experts in a letter of instruction.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).