RegulationApr 27 2016

Court of Appeal overturns £2m judgement against IFA

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Court of Appeal overturns £2m judgement against IFA

Court of Appeal judges have thrown out an earlier ruling against advice firm TBO Investments, on the grounds the High Court’s treatment of the case was too rigorous.

Andrew and Kirsty Mohun-Smith accused TBO Investments of professional negligence and filed a case in 2013.

According to a statement from August 2014 on the website of law firm Raworths, which represented the couple, Mr and Mrs Mohun-Smith claimed negligent recommendations were made to them by TBO in 2007 and 2009.

Although Mr and Mrs Mohun-Smith had asked TBO to recommend cautious investments from which they could draw an income, TBO instead put in place numerous high risk investments which were not properly explained to them, the statement read.

However, at the hearing in June 2014, the director of TBO Investments Scott Robinson was unwell and unable to attend court. TBO asked for an adjournment, stating Mr Robinson was “the only feasible witness” able to stand on behalf of the firm.

But the High Court judge dismissed the application for an adjournment, and ordered TBO to pay Mr and Mrs Mohun-Smith damages amounting to £2.1m.

TBO subsequently took the case to the Court of Appeal, which heard the case on the 11 April this year.

Court of Appeal Judge, Lady Justice Macur, allowed the appeal because the defendent had “good reason” for not attending the trial, adding the judge adopted a “draconian” approach.

She said TBO Investments had been prompt in making its application, adding the Court needed to keep in mind the necessity to deal with cases “justly”.

“It is apparent that the judge was wrong in that he did not adopt a ‘less rigorous’ approach when evaluating the sufficiency of the reason given for Mr Robinson’s non-attendance,” Judge Macur said.

“A critical analysis of the judgment below does not support the argument [...] that the judge found that the defendant had failed to establish a genuine reason for non-attendance.”

The Court of Appeal has therefore referred the multi-million pound professional negligence claim back to the High Court.

According to Shakespeare Martineau, the legal firm acting for TBO Investments, the ruling has helped to make a clear distinction between the legal tests a judge should use when considering an application to adjourn a case on medical grounds.

Mark Beesley, litigation partner at Shakespeare Martineau, said TBO can “now move forward” now the case can go back to the High Court for a “definitive resolution”.

In 2008, the Financial Services Authority said TBO had failed to obtain sufficient information about customers’ financial objectives.

According to the financial regulator, this led to an unacceptable risk of unsuitable investment advice being provided to customers.

katherine.denham@ft.com