Professional negligence

Beary v Pall Mall Investments [2005] EWCA Civ 415; SJ 29 April

The court described as ‘breathtakingly ambitious, contrary to authority and wrong’ an attempt to extend the decision in Chester v Afshar [2005] 1 AC 134 (23/ LL p112) on clinical negligence to alleged negligent financial advice about the claimant’s pension. The claimant complained that the defendant had been negligent to recommend a drawdown contract rather than an annuity contract and that if he had been properly advised he would have purchased an annuity. The negligence lay in failing to advise on the possibility of an annuity, advice which the judge held would not have led the claimant to reject the recommendation of the fund. In such a case it was meaningless to ask what the defendant would have done if it had not been negligent. If the defendant had not been negligent, what it should have done and what it would have done were one and the same, namely to advise on the possible option of buying an annuity. The only issue for the judge on the annuity claim was whether, if the option of buying an annuity had been drawn to his attention, the claimant would have adopted that option. On the facts, there was no reason for not applying the conventional approach to causation, which the judge did. The principle in Chester should not be applied generally in claims for negligent financial advice.