Blue Chip court battle loss for pensioners

Judy and Bruce Bartle outside the High Court at Auckland. Photo / The Listener.

The High Court has dismissed a claim by Whangarei pensioners Judy and Bruce Bartle that GE Money (GE Custodians) was in breach of its duty of care by lending them around NZ$640,000, which they then used to buy a Blue Chip apartment.

GE Money is now able to enforce its mortgage over the Bartles' home.

The judgment by Justice Randerson will be a blow for many Blue Chip investors who had been working with Barrister Paul Dale to try to recover lost funds from international financing giant GE and others, arguing they should have been more careful before lending them money.

However, the judgment does leave open the option for Blue Chip investors to sue the legal advisors who helped them invest in apartments via Blue Chip.

"In the light of the authorities, I find that GE did not owe to the Bartles a duty of care of the kind pleaded. In order to protect its own interests, a lender will usually make inquiries to ascertain that it is commercially sensible to make the loan.

But it is not bound to do so and the nature and extent of any such inquiries is entirely a matter for the lender's own judgment. If it lends without making adequate inquiries, it only has itself to blame," Justice Randerson wrote in an interim judgment.

"Equally, a borrower must assume responsibility to protect his or her own position and take such advice as he or she considers appropriate. It would be a curious state of affairs if a borrower could seek funds from a lender and then complain that the lender had complied with that request.

It is a different matter of course if the borrower seeks advice from the lender and the lender then gives negligent advice. In such circumstances there may be an assumption of responsibility which does not ordinarily apply. But that is not the case here."

Justice Randerson said there were other problems with the case against GE. "These include the Fastdoc declarations made by the Bartles that they could comfortably afford all repayments and their acknowledgement that they were not relying on AMS/GE to verify or review their financial position," Justice Randerson said.

"Secondly, the Bartles were advised to obtain independent legal advice and did so. In these circumstances, the Bartles could not establish that they placed any reliance on GE or that GE assumed any responsibility towards them."

Meanwhile Justice Randerson ruled in favour of the Bartles' claim against lawyer Jonathan Mathias and reserved his judgment over damages.


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