Trusts

Pensions - mutual society wrongfully advising pensioner to invest in personal pension plan - pensioner suffering loss - pensioner receiving shares on demutualisation of society - value of shares not to be taken into account when assessing lossNeedler Financial Services Ltd v Taber: ChD (Sir Andrew MorrittV-C): 31 July 2001The defendant suffered loss when, in reliance upon advice given by a representative of the claimant, he transferred his deferred pension benefits in an occupational pension scheme into a personal pension plan issued by a mutual society.The defendant's complaint to the Personal Investment Authority Ombudsman was upheld.

The claimant sought a determination of the High Court on whether, in assessing the compensation payable to him for breach of statutory duty, negligence and/or breach of contract, it was necessary to take into account as a credit to the defendant the value of shares he received on the demutualisation of the society.George Bompas QC and Charles Marquand (instructed by Reynolds Porter Chamberlain) for the claimant; Richard Gordon QC and Sarah Asplin (instructed by Norton Rose) for the defendant.Held, answering the question in the negative, that to determine the question it was necessary to assume that, instead of complaining to the ombudsman, the defendant had brought proceedings under section 62 of the Financial Services Act 1986 or for breach of contract and negligence; that the basic rule was that the defendant should be put in the position he would have been in had he not received the wrongful advice; that in deciding whether the demutualisation shares should be taken into account the relevant question was whether the negligence which caused the loss also caused the profit; that since there was no connection between the wrongful advice given to the defendant and the shares subsequently allocated to him it was not permissible to take the value of the shares into account when assessing the compensation payable.