Professional negligence

You’ve been served! Or have you? An analysis of how the courts deal with the failure to serve a claim form in the prescribed way
13 November, 2017

The recent decision in Barton v Wright Hassall LLP [2016] EWCA Civ 177 provides a cautionary tale, emphasising the importance of complying with the Civil Procedure Rules (CPR) when serving a claim form.  

There are strict requirements that must be met before a claim form can be served by fax or other electronic means such as email (CPR 6.15 and CPR PD 6A). In the event that a claimant fails to comply with the CPR, the court has discretion to allow the service of documents by alternative means, if steps have been taken to bring

the claim form to the defendant’s attention (CPR 6.15 (2)). Nevertheless, this case demonstrates that this order may be of limited use to litigants who have missed the deadline for serving documents in the correct manner. In Barton, the claimant tried to argue that his service of the claim form by email should constitute good service, despite non-compliance with the CPRs. His appeal was unsuccessful. 

In deciding whether an order to validate service will be made, the court will ask two questions:

  • Why was the claim form not served in the ordinary way during the period of validity?

A critical factor for the court to consider is whether the claim form came to the defendant’s attention. The court emphasised that even if the defendant does become aware of the contents of the claim form, this does not, by itself, constitute enough for an order to be made that the claim form had been served.

The court will also look at the reason for the failure to serve the claim form in the prescribed way. An acceptable reason for such a failure might be something outside the control of the defaulting party, such as incapacitation or the recipient being particularly obstructive and un-cooperative. The court was unequivocal in finding that ignorance of the legal procedures under the CPR is not a satisfactory reason for the claim form not being served in the ordinary way.

If the court is satisfied that the claimant has a good answer to question one, it will consider question two.

  • Is there a good reason to make the order sought?

The court will consider the defendant’s conduct as a factor when deciding whether to grant an order. In Power v Meloy Whittle Robinson [2014] EWCA Civ 898, the fact that the defendants were having discussions and corresponding with the claimant’s solicitors as if the claim form had been served correctly, was deemed enough of a good reason to grant the order.

However, the court in Barton made clear that the defendant has no obligation to inform the claimant if the service of the claim form is not valid. They are entitled to wait until the deadline for service has expired.


The decision reiterates the importance of obtaining specialist legal advice at an early stage. Lord Justice Moore-Bick in R (Hysai) v Secretary of State for the Home Department [2015] 1 WLR 2472 emphasised that although the CPR are widely accessible online, it is essential that ordinary people seek professional help to fully understand and interpret the rules about how proceedings are conducted.

Hollywood’s failed Eclipse and its £100million lawsuit
13 November, 2017

As the news brims with tales which could be lifted from a blockbuster film; the old adage ‘all publicity is good publicity’ is being reconsidered.

A recent bump on the rocky Hollywood road relates to a ‘film scheme partnership’ Eclipse 35; between 2005 – 2007 individuals invested in this scheme, which provided a tax efficient and apparently legitimate opportunity to minimise their taxable income

(by purchasing films and renting them back to the relevant studio at a loss).  In April 2017 the Supreme Court confirmed the decisions of the first tier tax tribunal, the upper tribunal and the Court of Appeal: Eclipse 35 is a tax avoidance scheme, which means its investors may face punitive tax bills.

A number of the investors, who include many high profile individuals, claim they were misled about Eclipse 35 and are bringing a £100 million legal case against Disney, HSBC, Barclays and the Bank of Ireland.  HSBC’s private banking unit structured the scheme, and the other banks in question funded the schemes, lending money enabling investors to maximise their investment. Disney was the studio selling and then leasing back its films. 

Previously, successful cases have only been brought against the financial advisers who directly advised on these investments; it is yet to be seen whether this case will extend the recourse options for misled investors and penalise the institutions which developed, promoted and financed various schemes. It will be an uphill struggle for the investors to persuade the courts that in absence of a direct contractual relationship that the banks/Disney can be held responsible.

If you are concerned you have, or may, sustain losses following unreliable financial advice or services please contact Pradeep Oliver at or on 01892 765 453 for a no-cost initial consultation.

FSCS pays out over £100 million to victims of unsuitable SIPP investments
21 July, 2017

Over the last year the Financial Services Compensation Scheme (FSCS) has paid more than £105m in self-invested personal pension (SIPP) claims in 2016/17 – an increase of 35% on the previous year.

The FSCS confirmed that the increase was due to failed advice from firms that transferred savers out of occupational schemes into risky SIPP investments.

The FSCS recorded a total of 3,565 clients that were “wrongly advised” to shift their retirement from occupational schemes into risky assets held within SIPPs in 2016-17. It said: “Their riskiness means some investments inevitably fail and become illiquid. This trend began two years ago and has continued this year, with claims


against an increasing number of failed life and pensions advisers.”

There has been a myriad of esoteric, speculative and illiquid investments marketed to ordinary retail customers as suitable pension investments over the last few years. The list is endless, but has included exotic property developments, ostrich farms, green oil, diamond trading, carbon credits and storage pods.

Typically, these investments are promoted by unregulated firms who utilise the services of regulated financial advisers to provide the investment with a veneer of legitimacy for both the client and the SIPP operator.

Most IFAs would not touch these investments with a bargepole; however, other firms have put the pursuit of profit above the needs of their financially unsophisticated clients. By the time the investments have failed, the advisory firm has closed down without any insurance to meet its liabilities.

Even though the amount of compensation paid out by the FSCS is an eye-wateringly large figure, the position is far from satisfactory for clients or advisory firms. There is a distinct feeling of injustice on both sides.

The amount lost by the victims of poor advice is bound to be far more than the compensation reported by the FSCS. Whatever the value of the lost pension fund, each complainant is limited to a maximum award of just £50,000.

Similarly, it is the “good” advisory firms that are punished by being forced to pick up the tab due to the ever increasing FSCS levies.

The only winners are the snake oil salesman, who have long disappeared into the sunset contemplating the next “fantastic investment opportunity”.

The solution is not an easy one, perhaps compulsory run off insurance is an option. In the short term this would lead to an increase in insurance premiums across the sector, however over time premiums would fall for the advisers who had a demonstrable low complaints record.

Insurers would also be forced to take a more active role in assisting firms to manage risk rather than simply collecting premiums and then being able to wash their hands of a firm that has been forced into liquidation as a consequence of its poor practices and leaving the FSCS to foot the bill.  

If you have suffered losses as a consequence of defective financial advice or services please contact Pradeep Oliver at  or call 01892 765453 for a no obligation consultation.


Alan Shearer resolves dispute with his Financial Adviser
21 June, 2017

Alan Shearer famously donned the striped shirt of Newcastle United. It appears, however that when it came to his pension, things were far from black and white.

Earlier this week Shearer reached a settlement with his former independent financial adviser and pension provider Suffolk Life. The terms of the settlement are not known.

Shearer alleged that he had received negligent advice in connection with a pension investment in British Virgin Islands fund Fortress International Fund Ltd. The claim was apparently valued at £9m.

As has been seen in the widely reported film tax deferral/avoidance scheme cases, being a celebrity or a high net worth individual does not necessarily mean that you are financially sophisticated. Such individuals are as reliant on the quality of their advisers as anyone else.

The Match of the Day pundit claimed that his adviser gave negligent advice and took advantage of his “limited knowledge or experience” of investing.

Under the rule 9.2 of the Conduct of Business Rules contained within the FCAs Handbook. A recommendation from an adviser to make an investment must be suitable for the client.

As part of the assessment of suitability, an adviser must not solely focus on whether the client has the ability to bear a loss. The assessment must also take into account the client’s understanding of the risks involved in the transaction with particular reference to their relevant knowledge and experience.

If you have suffered losses as a consequence of defective financial advice or services please contact Pradeep Oliver at or call 01892 765453 for a no obligation consultation.

What’s in my Pension? – The role of DFMs in pension fraud
20 June, 2017

Customers who have their pension funds held under management

with Strand Capital Limited will be understandably concerned at the recent collapse of the discretionary fund manager (DFM). The reasons for Strand’s collapse have not yet been confirmed. However it serves as a timely reminder for financial advisers and wealth managers to ensure that proper due diligence is undertaken on the DFMs that they are recommending to their clients.

The role of DFMs in pension fraud has been highlighted by the FCA earlier this year. The FCA warned advisers that pension scams had evolved to become increasingly sophisticated. The alert identified that “Third-generation scams now use the services of a discretionary fund manager to create an investment portfolio that does not require the direct input of the investor; this portfolio then invests in special purpose vehicle (SPV) bonds. The reason for this evolutionary process appears to be to obscure the nature of the ultimate underlying investment”.

The FCA explained the evolutionary process that pension liberation has undergone.

First-generation schemes offered unregulated physical assets (such as commercial property for direct investment).

Second-generation schemes obscured those underlying unregulated physical assets by creating a special purpose vehicle (SPV) to acquire them using funding raised by the issue of corporate bonds.

It appears that now discretionary fund managers are being used to hide the fact that an investment portfolio can be concentrated in high risk and illiquid assets. A client would not necessarily know what underlying investments are held in his or her pension, particularly as the pension valuations often provide very little detail other than to identify that a portfolio is under the management of a DFM.

If you have suffered losses as a consequence of defective financial advice or services please contact Pradeep Oliver at  or call 01892 765453 for a no obligation consultation.

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