Denning v Greenhalgh Financial Services Ltd

A professional adviser’s duty ordinarily depends on the terms and limits of the retainer. An extended duty may arise only in an obvious case where, while performing the retainer, the adviser becomes aware of a closely connected risk which the client may not appreciate. The court will not impose a general or roving duty to investigate historic transactions outside the retainer, particularly where the necessary information is unavailable, the work was not requested or paid for, and the proposed advice involves legal as well as professional issues. On a summary judgment application, a claim should proceed only where it has a real prospect of success, supported by more than speculation. Issues of limitation and causation involving disputed facts may be unsuitable for determination at an early stage.

The claimant alleged that the defendant financial adviser negligently failed, after being instructed in 2008, to review pension-transfer advice given by unrelated advisers in 2000. He alleged that the defendant should have identified a possible professional-negligence claim, advised on limitation, and preserved a claim against the former advisers.

The defendant applied under CPR 3.4(2)(a) and CPR 24.2(a)(i), arguing that no such duty was owed and that the claim had no real prospect of success on duty, limitation, loss or causation. The central issue was whether the 2008 retainer extended to advice about the historic transfer.

1. Disposition. The claim was struck out and summary judgment was entered for the defendant because no contractual or tortious duty arose to advise on the 2000 pension transfer. The alternative issues of limitation and causation were not struck out at that stage.
2. Scope of retainer. The ordinary rule is that the scope of a professional duty is determined by the terms and limits of the retainer. The court should be cautious before imposing duties beyond what the professional was requested and undertook to do. There is no general roving duty to investigate all aspects of a client’s affairs.
3. Exceptional extension. An extended duty may arise where, in performing the retained work, the professional encounters an obvious and closely connected problem or risk which the client may not know about. The principle in Credit Lyonnais SA v Russell Jones & Walker [2002] EWHC 1310 was confined to such circumstances. It did not extend to reading historic documents not required for the retainer and discovering a remote risk.
4. Application. GFS’s retainer was prospective. The claimant had not asked it to review the 2000 advice, had not agreed or paid for that work, and had not supplied the information needed to assess it. The proposed advice also involved legal questions about negligence and limitation, outside GFS’s agreed role. The historic transfer had no sufficiently close commercial or factual connection with the work undertaken.
5. Alternative grounds. The claimant’s limitation and causation arguments involved factual issues. Although the defendant had the stronger arguments, the court could not conclude at that stage that no further evidence could assist the claimant. Those issues were therefore left open, subject to a later application for summary relief.