The claimant said that the defendant had given him negligent advice on pensions, failing to say that he should stay within his occupational scheme. The defendant pleaded limitation.
Held: The claimant suffered damage when he made the transfer in April 1997. There was a clear distinction between transactions which give rise to pure contingent liabilities and transactions where the claimant has ‘obtained less than she should have got’. Accordingly the claim was time barred.
Dyson LJ referred to a submission by the claimant that he had not yet suffered the damage and said: ‘First, it is common ground that the benefits surrendered in the Avesta scheme were properly valued at andpound;637,507. Secondly, that sum was used to invest in the PFW scheme. The price paid for this investment was its then current market price. That price reflected the market perception of the risks inherent in the PFW scheme. The performance of the scheme was subject to the vagaries of the market and the investment skills of the managers of the fund as well as the amount drawn down as income by Mr Shore. The amount available for drawdown as income would depend on the figure at which the GAD rates were fixed triennially as well as the performance of the fund. Mr Soole submits that all these risks were reflected in the price that Mr Shore paid. It is, therefore, irrelevant that the PFW scheme was riskier than the Avesta scheme. To adopt the example suggested by Keene L.J. in the course of argument, if a person invests andpound;100 in shares rather than in Government bonds, he does not suffer any loss when he buys the shares, because when he pays andpound;100 for the shares, that is what they are worth in the market.’ He rejecte dthe submission saying: ‘It is Mr Shore’s case (assumed for present purposes to be established) that the PFW scheme was inferior to the Avesta scheme because it was riskier. It was inferior because Mr Shore wanted a secure scheme: he did not want to take risks. In other words, from Mr Shore’s point of view, it was less advantageous and caused him detriment. If he had wanted a more insecure income than that provided by the Avesta scheme, then he would have got what he wanted and would have suffered no detriment. In the event, however, he made a risky investment with an uncertain income stream instead of a safe investment with a fixed and certain income stream which is what he wanted.’
Dysn LJ continued: ‘Mr Shore obtained a bundle of rights which, from the outset, were less advantageous to him than the benefits that he enjoyed under the Avesta scheme. On the facts of this case, it was not necessary to wait to see what happened to determine whether Mr Shore was financially worse off in the PFW scheme than he would have been in the Avesta scheme.’ So far as the analogy with a share purchase was concerned he said: ‘In my judgment, an investor who wishes to place andpound;100 in a secure risk-free investment and, in reliance on negligent advice, purchases shares does suffer financial detriment on the acquisition of the shares despite the fact that he pays the market price for the shares. It is no answer to this investor’s complaint that he has been induced to buy a risky investment when he wanted a safe one to say that the risky investment was worth what he paid for it in the market. His complaint is that he did not want a risky investment. A claim for damages immediately upon the acquisition of the shares would succeed. The investor would at least be entitled to the difference between the cost of buying the Government bonds and the cost of buying and selling the shares.’
Dyson LJ
[2008] EWCA Civ 863, [2008] PNLR 37, Times 12-Aug-2008
Bailii
Financial Services Act 1986
England and Wales
Cited by:
Cited – Pegasus Management Holdings Sca and Another v Ernst and Young (A Firm) and Another ChD 11-Nov-2008
The claimants alleged professional negligence in advice given by the defendant on a share purchase, saying that it should have been structured to reduce Capital Gains Tax. The defendants denied negligence and said the claim was statute barred.
Cited – Axa Insurance Ltd v Akther and Darby Solicitors and Others CA 12-Nov-2009
The court considered the application of the limitation period to answering when damage occurred when it arises under an unsecured contingent liability. The claimant insurance company had provided after the event litigation insurance policies to the . .
Lists of cited by and citing cases may be incomplete.
Financial Services, Professional Negligence, Limitation
Updated: 11 November 2021; Ref: scu.271028