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L’IA générative
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High Court refuses strike out where advisor failed to notice error in original deed
Royaume-Uni | Publication | janvier 2023
In Honda Group-UK Pension Scheme Trustee Ltd v Mercer Ltd [2022], the High Court refused an application by the defendant advisers, for strike out of and summary judgment on parts of the particulars of claim relating to the drafting of a pensions scheme deed. While only an interim decision, this case is of interest as it concerns the issue of a professional's continuing duty in respect of prior errors.
The adviser had provided consultancy services to the scheme trustees in respect of a pension scheme. The trustees claimed that, among other things, the adviser had failed, when drafting a 1998 deed, to notice and bring to their attention a 1986 error. The adviser sought a summary judgment to strike out the 1986 error claim.
The principal question was whether there was an ongoing duty of care and, if so, whether it was realistic that the adviser should have noticed the 1986 error when drafting the 1998 deed, where the 1986 error meant that the 1998 deed had been incorrectly drafted. The adviser claimed that any act of negligence had crystallised when they produced their first draft of the 1998 deed (in October 1994) and was therefore statute barred and that they were not in continuing breach subsequently as they never had cause to revisit the issue.
In reaching his decision, Trower J noted:
- The authorities did not provide a clear answer to the issues posed.
- It was far from fanciful to contend that the adviser continued to be in breach of their duty to take reasonable care in the conduct of their retainer by proceeding throughout the drafting process on the basis of an assumption, in 1986, that the relevant benefit structure had previously been validly incorporated. The case against the adviser was not that they failed to revisit an issue, but that they had never considered it in the first place and that, until they did so, they were in continuing breach to the extent that they were still engaged in the drafting process.
- Where the issue of a duty to revisit arises, the Court must determine objectively, on the evidence, when the task is completed depending on what the task is, viewed in the context of the parameters of the retainer.
- A failure to take reasonable care in reviewing existing documentation was capable of being a negligent omission.
The decision in this case will cause alarm to advisers newly retained by clients.
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