Key Facts
- •Mr. McHale invested £320,000 in Dolphin Trust loan notes via an SSAS, facilitated by Mr. Dunlop, an 'introducer'.
- •Mr. McHale claimed professional negligence and breach of fiduciary duty against Mr. Dunlop.
- •Mr. Dunlop received commission from Dolphin Trust for introducing investors.
- •Mr. McHale knew commission was paid but not the amount.
- •Dolphin Trust subsequently went into bankruptcy.
- •Mr. McHale claimed Mr. Dunlop misrepresented his FCA regulatory status and the safety/suitability of the investment.
Legal Principles
Duty of care in negligence requires assumption of responsibility, judged objectively.
Hedley Byrne, Caparo, NRAM Ltd v Steel, Manchester Building Society v Grant Thornton UK LLP, Khan v Meadows, Spire Property Development LLP v Withers LLP
The distinction between 'advice' and 'information' cases is a spectrum, not a binary classification.
SAAMCO, Hughes-Holland, Manchester, Adams
In 'half-secret' commission cases, a fiduciary duty must be established to obtain equitable remedies.
Hurstanger Ltd v Wilson, Medsted Associates Ltd v Canaccord Genuity Wealth (International) Ltd, Wood v Commercial First Business Ltd
A fiduciary's duty is one of loyalty; the scope of the duty is crucial, not just the label.
Bristol and West Building Society v Mothew
Outcomes
Negligence claim dismissed.
Mr. Dunlop did not assume a duty of care to advise on investment suitability; Mr. McHale was a sophisticated investor who had already decided to invest based on advice from Mr. Lockington.
Breach of fiduciary duty claim succeeded.
Mr. Dunlop breached his fiduciary duty by misrepresenting the commission payable. By offering to share commission, he created a fiduciary relationship and a duty to provide accurate information.