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The court considered whether a pensions adviser owed a duty to review advice given by a previous adviser in the case of Denning v Greenhalgh Financial Services Ltd [2017] EWHC 143 (QB).

Background

In 2000 the Claimant instructed Alexander Forbes Financial Services Ltd (AF) to provide pensions advice. Ultimately, AF advised the Claimant to transfer his occupational pension to another provider (the 2000 Transfer).

In 2008 the Claimant, who had become dissatisfied with the service provided by AF, instructed the Defendant to provide advice as to the management of his investments.

The Defendant's retainer was limited to advising on and arranging deals in investments and contracts of insurance. The Defendant also made it clear that it was not authorised or qualified to give legal advice. 

In 2009 and 2010 the Claimant made complaints to the Ombudsman regarding AF's advice. The Ombudsman found that the Claimant was out of time in respect of one complaint regarding the 2000 Transfer.

In 2013 the Claimant pursued a claim against AF which was eventually abandoned on the grounds that it was out of time. The Claimant then issued a claim against the Defendant. The Claimant alleged that the Defendant had failed to: (i) review the advice given by AF concerning the 2000 Transfer and (ii) advise on a potential claim against AF in respect of that advice. The Claimant alleged that but for the Defendant's negligence, he would have issued a claim against AF in 2008 and would have received substantial damages.

The Defendant denied the Claimant's allegations. The Defendant said that it owed no duty to advise on the 2000 Transfer, which had no bearing on the advice it had been instructed to provide and, further, it owed no duty to advise the Claimant about a potential claim against AF or in respect of limitation periods for such a claim. The Defendant made an application to strike out the Claimant's claim as well as an application for summary judgment.

The judgment

Green J found that the Defendant owed no duty to advise on the possibility of a claim against AF and that the claim had no real prospect of success.

In his judgment, Green J considered the Defendant's retainer in detail by reference to recent case law, in particular the decision in Credit Lyonnais SA v Russell Jones & Walker [2002] EWHC 1310 (Ch). The judgment in Credit Lyonnais established that in unusual circumstances, the terms of a retainer might not limit the extent of the scope of a professional's duty. Green J considered that in Credit Lyonnais, a case which concerned a professional's failure to read and provide advice in respect of the terms of a lease, the professional was in receipt of the information that would have enabled him to give the advice that he allegedly failed to give.

Green J made three observations about Laddie J's decision in Credit Lyonnais:

  • The issue that the professional ought to have advised upon was something for which the professional was being paid;
  • The professional would only assume a responsibility to advise upon issues that were obvious and closely related to the subject matter of the retainer; and
  • The Credit Lyonnais decision was not referring to cases where a professional reads documents that he was not asked to read and by doing so, discovers a risk to the client.

Green J concluded that for there to be an extended duty to advise, there would need to be a close relationship between the agreed retainer and the matter that it is alleged that the professional had failed to advise upon.

He also found that at no point was the Defendant instructed to advise upon the merits of AF's advice in respect of the 2000 Transfer. At the date of the Defendant's instruction, the 2000 Transfer had no substantive connection to the matters on which the Defendant was instructed to advise, nor did the Claimant provide the Defendant with information which would have enabled the Defendant to advise on the 2000 Transfer.

Comment

The judgment is a useful reminder of how important it is for the terms of a professional's retainer to be clear, especially in circumstances where there is a risk that a professional may be expected to advise on historic matters. The judgment also clarifies the limited circumstances in which a court might be willing to extend a professional's duty beyond the scope of its agreed retainer.