Those who give investment advice may be ill-advised to take too much comfort from the decision in Worthing v Lloyds Bank. In that case, HH Judge Keyser QC stated obiter that even if Lloyds’ investment advice had been wrong (which was not the case), the claimants’ argument that the bank was under a continuing duty to correct the advice would have failed in any event.
From the judgment, it appears that the case advanced by the claimants at trial was that at all times after the claimants’ initial investment and until their portfolio was sold, Lloyds was under a continuing contractual duty – the parties entered into a written contract after the initial extra-contractual advice was given – to correct its initial default by either advising that the investment be transferred into a different profile or advising that it be sold.
However, if Lloyds’ initial advice had been wrong, could a differently formulated claim have achieved more traction, and a different result? Why should a party who assumes responsibility and gives bad advice upon which reliance is placed be excused from correcting its mistake subsequently? Why should a careless adviser be free of liability in the absence of a contractual obligation to correct earlier incorrect advice?
A duty to correct has been held to exist in a misrepresentation context. In FoodCo v Henry Boot Developments, a claim by the tenants of a motorway services facility for damages for fraudulent misrepresentation, Lewison J held that there was a duty to correct a false representation, albeit a duty that would only arise if the defendant knew that previous representations it had made had become false, or did not care whether previous representations had become false.
It is certainly arguable that if a person gives advice in a business context and a duty of care exists in respect of that advice, that duty should extend to the correction of mistakes. It remains to be seen whether a future case will impose such duty.
