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Red Signal Halts Claim!

The High Court has recently struck out a claim brought by a claimant against his pensions advisor.  In so doing, the Judge stressed, “the signal importance of the retainer …”

In 2000 the claimant had instructed a company to provide pensions advice.  He became unhappy with the service provided and instructed the defendant to provide advice about his investments.  The retainer between the claimant and the defendant was limited to the defendant advising on and arranging deals in investments and contracts of insurance.  The retainer made it clear that the defendant was not authorised or qualified to provide legal advice.

The claimant complained to the Financial Services Ombudsman against the original company’s advice but they were out of time.  He began a claim against the original advisor but abandoned it.  He then sued the defendant claiming that it had not reviewed the advice given by the original advisor concerning the 2000 work and had not advised on a possible claim against the original advisor.  The claimant argued that if the defendant had acted properly, he could have sued the original advisor much earlier and obtained substantial damages. 

The defendant denied that he had any duty to advise the claimant and said that the issues which the claimant had raised were outside the scope of its instructions and it had no duty to advise him about a potential claim or any limitation issues which might affect such a claim.  The defendant was successful in an application to have the claim against it dismissed.

The judge said, “it is well established that, … the extent of any professional duty depends upon the terms and limits of the retainer.”  He quoted an earlier case where the court had said that it, “must beware of imposing upon solicitors or upon professional men in other spheres – duties which go beyond the scope of what they are requested and undertake to do”.  He considered a case in which the court had said that in unusual circumstances the terms of a retainer might not limit the scope of a professional’s duty but differentiated it from this case because: -


  1. in the earlier case the issue that the professional ought to have advised upon was something for which he was being paid;


  1. a professional will only assume responsibility to advise upon issues that were obvious and closely related to the retainer; and


  1. the earlier case did not apply where an advisor read a document that he had not been asked to read and as a result discovered a risk to the client.


The Judge found that there had been no instruction to the defendant to advise upon the issues about which the claimant complained and they had no substantive connection to the matters on which it had been asked to advise. 

The case is an important reminder of the significance of a professional’s retainer and as a useful clarification about the limited circumstances in which a Court might extend a professional’s duty beyond his retainer.

Further details from James Staton, Partner, Litigation


About the Author

James Staton


James is a Partner and Head of the Dispute Resolution team and primarily handles commercial…

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