High Court finds no continuing contractual duty to correct investment advice

A recent decision of the High Court provides comfort to financial institutions and other professionals facing claims based on an alleged continuing contractual duty to correct earlier advice: Worthing and Another v Lloyds Bank plc [2015] EWHC 2836 (QB).

Where a claim is brought more than six years after an alleged breach of contract, and therefore (on the face of it) after expiry of the basic limitation period for contract claims, claimants may seek to bring themselves within the limitation period in a number of ways. One way is to plead a parallel claim in the tort of negligence, but that will only assist if the claimant did not suffer measurable damage until sometime later, or if time can be extended because the claimant lacked relevant knowledge about the claim at the relevant date.

Another common route is, as the claimants did in the present case, to argue that the defendant was under a continuing contractual duty to advise, and remained in breach of that duty, until a later date. Here the court found that the defendant was not negligent in giving the original investment advice, so there was no breach. However, even if the advice had been wrong, there was no continuing contractual duty for the defendant to correct it.

The decision helpfully confirms that, in a case where a defendant gives negligent advice, the cause of action accrues when the advice is given. The position may be different where there is a continuing failure to perform a contractual obligation, but that was not the case here. To read more about the decision, click here for our banking litigation e-bulletin on the case.