Did you receive inadequate pension advice on your divorce settlement?

The importance of ensuring that you obtain comprehensive advice in relation to your financial settlement in divorce was highlighted in Lewis -v- Cunningtons Solicitors [2023] EWHC 822 (KB).

In Lewis, the Court awarded Joanne Lewis £400,000 after finding that she had entered into an unfair settlement agreement with her former husband, Mr Mayne, because Cunningtons Solicitors failed to advise her to apply for a pension sharing order. The Court found that Cunningtons had a duty of care to Mrs Lewis to advise her that the agreement was unfair for three main reasons:-

• Cunningtons had information suggesting that a court was likely to make a pension sharing order;
• Lewis was vulnerable because of bullying and intimidation by her former husband; and
• The scope of Cunningtons’ retainer was not limited to simply drafting an agreement by consent.

What happened?

Mrs Lewis instructed Cunningtons to act for her in relation to her divorce and financial matters. In their initial letter to Ms Lewis, Cunningtons noted that Mr Mayne had a high value private pension that was set to pay him three lump sums totalling more than £187,000, plus annual payments of £22,000.

Mrs Lewis then asked Cunningtons whether she could agree a divorce settlement directly with Mr Mayne. Cunningtons said that this was possible, but that they would be unable to advise Mrs Lewis on whether the terms of such a settlement would be fair and reasonable as there had not been any financial disclosure. Mrs Lewis subsequently told Cunningtons that she had agreed a ‘clean break’ settlement agreement with Mr Mayne that consisted of her receiving a £62,000 lump sum. Cunningtons told Mrs Lewis that they could not comment on the fairness or reasonableness of this deal and asked her to sign a disclaimer, which Mrs Lewis then did.

Prior to formalising the agreement, there was an exchange of statements of financial information between Mr Mayne and Mrs Lewis. Mr Mayne’s financial information revealed that his pension had a cash equivalent transfer value of £540,712.60 and that his total asset position was £590,712.60. Mrs Lewis’ position, on the other hand, was valued in the negative, as -£4,525.03. This clearly indicated that Mr Mayne’s pension was by far the largest asset available for division.

Despite this, the agreement was drawn up, signed by Mrs Lewis and Mr Mayne and sealed by the Court.

The Court’s three key rulings

The Court ruled that the disclaimer that Cunningtons asked Mrs Lewis to sign did not relieve them of their duty to advise Mrs Lewis – Cunningtons “clearly could advise her and they should have done.” In fact, the Court found that not only was Mrs Lewis “not being offered the advice that she should have… about the reasonableness of the settlement” but that the disclaimer had the effect of making her feel like “it was [not] possible to ask for advice, even though she felt she needed it.”

The Court also ruled that simply advising that a pension sharing order was ‘possible’ was inadequate advice. Given the information available prior to the finalising of the settlement agreement, Cunningtons should have compared and advised Mrs Lewis about the differences between the  agreement she had reached with Mr Mayne and the likely order a court would make.

As a final point, the Court disagreed entirely with Cunningtons’ position that Mrs Lewis had contributed to the negligence herself in accepting that the representation that Cunningtons offered her was “low-cost” or “budget”.  The Court ruled that, while the extent of the duty of care owed by Cunningtons was informed by the scope of their retainer, the cost of representation does not lower the standard of care owed within that retainer.

How we can help

If you have received inadequate advice in relation to your divorce, or been required to sign a disclaimer that made you feel like you could not ask your lawyers for advice, then we may be able to assist you with bringing a professional negligence claim.

If you require advice and/or representation in respect of potentially negligent advice on your divorce settlement contact our specialist family law and civil litigation solicitors by sending us an email, completing our online enquiry form or calling on 020 3773 9173