Poor advice claim rejected

Shore v Sedgwick Financial Services (Court of Appeal - 23 July 2008)

In 1996 the claimant was an employee of Avesta Group, which was taken over by British Steel. The existing occupational pension scheme was to be wound up, although there was an option to take a British Steel pension that would be exactly equivalent to the Avesta scheme, and he took advice from the defendant in respect of his future pension provisions.

On the advice of the defendant, the claimant elected not to transfer to the British Steel scheme and entered into a pension fund withdrawal scheme.

The scheme did not prove to be financially beneficial to the claimant, and in 2005 he issued proceedings against the defendant for negligent advice.

The Court of Appeal upheld the first instance decision that the claim was time barred. The claimant was in a less advantageous position when he entered into the PFW scheme in April 1997, and the six-year primary limitation period commenced at that date. The claimant had wanted a secure scheme and the PFW carried a high degree of risk. It was not necessary to determine when the claimant actually became financially worse off, as the PFW scheme was less advantageous to him at the outset.

The court rejected the argument that 14A of the Limitation Act 1980 should assist him, under which he would have three years to bring a claim from the date when he had "both the knowledge required for bringing an action for damages" and "a right to bring such an action". The claimant argued he first appreciated that he may have a claim after meeting a solicitor in September 2004 and that the three-year period should run from that date. However, the court, applying the principles set out in Haward v Fawcetts (2006), held that the claimant should have been aware by May 2000 that he would receive an income lower than he would have received had he transferred to the British Steel scheme. He had sufficient knowledge to make it reasonable to investigate whether there was a claim against the defendant at that date.


This case will have the effect of barring some potential older claims and confirms the position established in Haward v Fawcetts that claimants need to take immediate action as soon as they are aware that they may have a potential claim against their financial advisers. - Max Ekstein, BLM Manchester.

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