Reference no: EM132910843

Hello can you help me answer this problem scenario question using the IRAC method (Issue, Rules, Application, Conclusion).

This problem scenario question is based on: Tort of Negligent Misstatement

Answers needs to be supported with relevant statute / case law authority.

Problem scenario question:

Dani is currently studying business at university, but currently has little practical experience or skills in financial planning or management. To help support herself, and to gain extra experience, six months' ago she also took on a part-time job as an office assistant with a small local law firm.

Dani's grandfather has recently died, and bequeathed to her the sum of $280,000. Dani recognises that this is a significant sum of money that will need to be invested and managed properly in order for her to obtain the most benefit from her grandfather's legacy. Leaving it in a bank will not allow her the freedom to do what she wants to do with her life. She also realises that managing an investment portfolio like this is something that she is not capable of effectively doing herself.

One of Dani's daily tasks is to hand-deliver various forms and documents to the law firm's clients in the immediate area. On 10 July 2021, as she was leaving for the day, she was asked to deliver a package of taxation-related documents to the accountancy practice in the next building. On her way home Dani walked across to the accountant's office where she was greeted by Tyson, a trainee bookkeeper for the practice. Dani and Tyson knew each other as they had both started in their respective jobs at the same time, were roughly the same age and were both studying at the same university. Whilst she was there she took the opportunity to tell Tyson about her problem with investing her substantial inheritance, and asking him for advice on how to best invest this legacy to protect its value for her future. Tyson, eager to impress her, invited Dani into the accountant's meeting room so they could speak privately.

Tyson explained that he had just started a subject in his course called Fundamentals of Investing. He was really enjoying the subject and had started to follow the stock market results closely over the last few weeks. As a result of his amateur analysis, he came up with a select group of shares that, in his opinion, would be likely to perform well in the short to medium term. Based on the advice that she had received from Tyson at that meeting, Dani invested her money in two of the companies that he had recommended.

Her investment recouped a moderate return initially, with good performance from both of the companies in her portfolio. Over the next 18 months, however, Dani became increasingly distressed at the lack of performance of her shares.

One of the companies she had invested in was involved in a protracted legal matter involving patent infringement, that had been ongoing for many years. The legal costs in that matter all but sent the company into liquidation and it appears that it is going to be unable to trade out of its present position.

The second of the companies in Dani's portfolio suddenly closed its doors. It appears that it did not have the capital backing that it purported to have, and decided to discontinue operations and close its doors to save its directors from prosecution by ASIC for breach of Directors' Duties.

Dani has been told that both of these issues was well known in the industry, and would have been obvious to anyone performing adequate due diligence. She has now lost her full $280,000 inheritance in less than two years.

Does Dani have a cause of action against Tyson or the accountancy practice that employs him with regards to his negligent advice in this matter?