Are Your Insureds Exposed To Greater Risks By Ill-Defined Retainers?

• Jurisdiction: European Union
• Author: Deborah Sullivan
• Law Firm: Weightmans
• Published date: 11 April 2023

We discuss a recent case, which explored whether the professional was under a continuing duty to detect a pre-existing error.

The scope and duration of retainers are recurring themes in professional negligence claims. The stakes are often high - where a claimant establishes that a duty of care spanned several years, it can operate to defeat a limitation defence. We consider the recent case of Honda Group-UK Pension Scheme Trustee Ltd v Mercer Ltd [2022] EWHC 3197 (Ch), which explored whether the professional was under a continuing duty to detect a pre-existing error and which serves as a helpful reminder of the importance of firms effectively delineating the boundaries of retainers.

Continuing duty of care: a recap

The general position adopted by the courts is that, ordinarily, professionals have no continuing duty to review their completed work for latent errors.

Honda Group-UK : an overview

In Honda Group-UK, the Claimants were the trustee, current principal, and participating employers of the Honda Group-UK Pension Scheme ("the Scheme"). The Defendants were pension advisers tasked with providing consultancy services to the Claimants. The Defendants recommended the drafting of a consolidating deed, to replace a deed drafted in 1986 by the Claimants' previous advisers ("the 1986 Deed"). The Claimants accepted the Defendants' proposed fixed fee of '12,000, for producing a first draft of the consolidating deed and having it checked by their in-house barrister. By a letter...