Case No: A50MA133
Neutral Citation Number: [2016] EWHC 3287 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MANCHESTER DISTRICT REGISTRY

Date: 19/12/2016

Before :

MR JUSTICE NORRIS

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Between :

	ANGELA LENDERINK-WOODS	Claimant	
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	(1)	ZURICH ASSURANCE LIMITED
(2)	ZURICH ADVICE NETWORK LIMITED
(3)	CHERRY LENDERINK	Defendant	

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Richard Oughton (instructed by Bendles) for the Claimant
Gerard McMeel (instructed by DAC Beachcroft LLP) for the First and Second Defendants
The Third Defendant in person 

Hearing dates: 18-21 July 2016

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Judgment
Mr Justice Norris : 
1.	Angela Lenderink-Woods (“Mrs Lenderink-Woods”) was born in 1920 in England. In 1944 she married a Dutch naval captain and under the law then current thereby acquired a domicile of dependency in the Netherlands. She moved to Holland and since 1948 she has never resided in the United Kingdom. Since 1980 she has lived in Costa Rica. She had four daughters – Amanda, Cherry, Annabelle and Birgit. There is a wide age gap between the first two, and the second two: and family circumstances meant that they were brought up separately. Mrs Lenderink-Woods had an investment portfolio (inherited from her mother in 1966) that was managed by the National Westminster Bank. By 2001 it had a value of £567,700 and (by virtue of its location in the United Kingdom and irrespective of Mrs Lenderink-Woods’ domicile) carried a potential inheritance tax burden (said in this action to be £130,300 in amount).  
2.	In the spring of 2001 (aged 80) she was introduced by Amanda to Huw Davies (“Mr Davies”) a financial planning consultant representing Allied Dunbar. On the advice of Mr Davies Mrs Lenderink-Woods converted her investment portfolio into three types of product marketed by Allied Dunbar, namely “a Gift and Loan Trust scheme”, an offshore “Investment Bond” and “a Portfolio Bond” (the assets within which were managed by a discretionary fund manager). Mrs Lenderink-Woods says that these products were unsuitable for someone who was not domiciled in the United Kingdom. She says that the charging structure is unnecessarily burdensome, and that she was told by Mr Davies that it would be 2%; whereas, taking account of Mr Davies’ commission, Allied Dunbar’s charges, and the discretionary fund manager’s charges, it has over the years been far more.  
3.	In December 2014 she commenced proceedings seeking damages for negligence and misrepresentation. She was assisted in the bringing of her claim by Mr Joseph Willows (“Mr Willows”), a director of Integer Financial Management Limited, independent financial advisers. 
4.	Mrs Lenderink-Woods accepts that in 2001 she wanted to alter the arrangements with the National Westminster Bank in some way, so she claims either (i) the difference between what she says would have been a sensible financial rearrangement (a balanced portfolio of equity and fixed interest funds held offshore) with the actual position that obtains under her Gift and Loan Trust and Bond arrangements (“the reconstruction basis”): or (ii) compensation for the excessive charges (“the re-imbursement basis”). 
5.	The issues that arise for decision on her claim are:-
(a)	Is she entitled to bring the claim if it is tainted by champerty?
(b)	Is her claimed barred by limitation?
(c)	Did Mr Davies give negligent advice or make negligent misstatements?
(d)	If so, to what compensation is she entitled? 
6.	Mrs Lenderink-Woods was aged 96 when she gave her evidence: although given by video-link (and hence subject to a time lag and to occasional breaks in transmission)  her evidence was in general  impressively clear about the events of 2001 and subsequently until about 2009 (when she suffered a slight stroke); there were some deficiencies in her short-term memory. The other witnesses called on behalf of Mrs Lenderink-Woods were entirely sincere, straightforward and reliable. The evidence of Mr Davies required careful consideration: he is clearly not the man he was in 2001, and due allowance must be made for that. But his recollection of the events of 2001 and thereafter was plainly coloured by a desire to justify his decisions, and some of his rationalisation of his advice did not withstand scrutiny. These are the facts as I find them.
7.	In 2001 Mrs Lenderink-Woods inherited investment portfolio was managed by the National Westminster Bank Ltd. It contained gilts and blue-chip equities (such as Shell, Marks & Spencer, Glaxosmithkline, BAE, RIT Capital Partners and other quality investment trusts). Mrs Lenderink-Woods was happy with it. The size of her portfolio derived in part from her careful and cautious approach to money. She ensured that she drew only income but (as she put it) “the principal had grown beyond my expectations”: and she wanted to continue that, but without the need for her constant involvement. Since 1980 she had lived in Costa Rica, and communication with the bank was difficult. The post took up to a fortnight to arrive: and Mrs Lenderink-Woods was not computer literate. So Mrs Lenderink-Woods wanted someone local to London “to take responsibility if it should be necessary”. But beyond purely administrative arrangements, Mrs Lenderink-Woods was also concerned about the inheritance tax liability she believed her daughters would suffer on the portfolio when she died.
8.	Mr Davies was an appointed representative of Allied Dunbar (having had a career in the Army and then running a mountaineering/skiing business). As such he was a “tied adviser”, able only to recommend Allied Dunbar products. If there was no suitable Allied Dunbar product to offer then Mr Davies was bound by the requirements of the Personal Investment Authority, his regulator, to make no recommendation, but only to introduce his client to an Independent Financial Adviser. 
9.	Mr Davies became Amanda’s lodger. He helped Amanda to obtain a bridging loan. He became Amanda’s friend (of about 10 years’ standing at the time of his introduction to Mrs Lenderink-Woods) and attended her wedding. So Amanda introduced Mr Davies to Mrs Lenderink-Woods, and they met for the first time in May 2001. On 26 April 2001 Mr Davies prepared a “Pre-review Statement”, in which he identified his role as financial adviser in these terms:-
“I advise you of potential problems or challenges, after finding out your needs and objectives for now and the future. I then present all the available alternatives to solve or achieve them. Further, I will point out what I believe is the best for you with explanations of why.”
In my judgment that may safely be taken as defining the nature of the retainer in the present case.
10.	The Pre-Review Statement was endorsed with an Agenda in these terms:-
“1. Reduce inheritance tax
  2. Improve tax-free growth and income
  3. Offshore banking 
  4. AOB….”
It is probable that this derived principally from Amanda communicating what she believed her mother’s wishes to be. In my judgment that may safely be taken as a defining the “needs and objectives for now and the future” in the present case (subject to any modification at the meeting itself arising from the fourth item on the agenda). In relation to these Mr Davies was to advise of potential problems or challenges, present all available alternatives to solve or achieve them and explain what was best.
11.	The meeting itself appears to have taken place on 2 May 2001 at Amanda’s house. Mrs Lenderink-Woods proved her identity by producing a Dutch passport. Immediately after the meeting Mr Davies prepared a Personal Financial Plan which identified as Mrs Lenderink-Woods’ main financial objectives:-
“1. Invest capital for income now
 2. Invest existing capital for growth
 3. Reduce Inheritance Tax
 4. Set up Bank Accounts.”
In my judgment this may safely be taken as recording the outcome of the meeting and as further defining the objectives to which Mr Davies’ advice was to be directed, and the matters in relation to which he would consider all available alternatives, and advise what was best for Mrs Lenderink-Woods with explanations of why. It is likely that the first two items reflect Mrs Lenderink-Woods’ attitude to investment (which I have summarised in paragraph [7] above).
12.	Mr Davies insisted in oral evidence that it was a principal objective of Mrs Lenderink-Woods to obtain a regular income, and that she did not like the sporadic nature of dividends and coupons. I do not accept this evidence. It is not to be found recorded in any contemporaneous document. It is an after-the-event rationalisation aimed at presenting as attractive the 5% per annum withdrawal facility provided by the Bonds (which was, in any event, a withdrawal from capital, not a regular income). The point was not put to Mrs Lenderink-Woods: and her evidence in cross-examination was entirely to the contrary effect, namely:-
“I wanted someone in London to watch my interests, not to change my investments. They were very good.”
13.	At the meeting Mr Davies identified that Mrs Lenderink-Woods had a gross estate of £586,677 for inheritance tax purposes. It is very difficult to see where that figure came from given the terms of the Investment Analysis which Mr Davies prepared. It is £72,000 less than Mrs Lenderink-Woods’ total estate as estimated by Mr Davies in the sum of £658,677, whereas the nil rate band was then £242,000: but it undoubtedly includes within the scope of the potential charge to UK Inheritance Tax at least some of Mrs Lenderink-Woods’ offshore assets. However it was accepted at trial that in 2001 there was a potentially sizeable bill for inheritance tax about which Mrs Lenderink-Woods was concerned. At the time Mr Davies advised that that potential bill was £137,871: subsequently a lower figure of £130,300 has been suggested. How either estimate was calculated is not apparent. But £130,300 has been agreed between experts.
14.	As the inclusion of Mrs Lenderink-Woods’ offshore estate in the inheritance tax calculation shows, Mr Davies proceeded on the footing that Mrs Lenderink-Woods was domiciled in the UK. Indeed, Mrs Lenderink-Woods says (and I accept) that Mr Davies told her that because she was born in Britain she could never escape death duties, but that she could avoid paying income tax if her money went offshore: and that advice informed her own view. Mr Davies says that he took that view about domicile (and indeed his whole strategy) because the daughters were worried that Mrs Lenderink-Woods might have to return to the UK: he at one stage said that this was because she might need to rely on the National Health Service. But as his 'fact-finding' itself shows, Mrs Lenderink-Woods had adequate health cover (in fact because of her Dutch naval pension she had access to the Dutch health service and to medical treatment in Costa Rice). If Mr Davies had taken instructions from his client, Mrs Lenderink-Woods, it would have been made plain to him that she did not intend to leave Costa Rica; and that if she did, the return would be to the Netherlands and not to the UK. She had written from Costa Rica to her grandson Oliver shortly after her husband’s death in 1998:
“As for me, I plan to stay here where I have more friends close by than anywhere else in the world. However I am now free to travel and look forward to seeing you all again when the opportunity arises.”

15.	Mr Davies’ insistence in oral evidence that every piece of advice he gave should be read as if qualified by the words “in case she comes back” is an after-the-event rationalisation. He simply did not consider domicile an issue relevant to financial planning for Mrs Lenderink-Woods, and proceeded without examination or enquiry to advise on the footing that she had a UK domicile.
16.	On 2 May 2001 Mr Davies gave his advice and made his recommendations to Mrs Lenderink-Woods. He wrote:-
“I recommend you place offshore all your investments and savings less requirements for the UK (Tessa retained), Holland and in Costa Rica to take the maximum tax advantages of being a UK domiciled expatriate… Based on my recommendations your daughters inheritance tax will be enhanced immediately by £24,800. This can progressively be increased in the next few years, by using your capital gains tax allowance; currently £7500, by selling stocks and shares…..”
He recommended the creation of trusts and the purchase of Allied Dunbar bonds. He did not say what alternatives he had considered or why this scheme had been selected above others. As Mr Davies was to confirm during 2012, this advice was given very early in the days of him selling such investments and so he relied on supervision from his managers. None of the managers picked up the facts (a) that Mrs Lenderink-Woods’ portfolio seems to have contained exempt gilts (which could safely be left on-shore); (b) that it was unnecessary to move assets to the value of the nil-rate band of £242,000 off-shore; and (c) that the advice about capital gains tax was nonsense. 
17.	I refer to “the creation of trusts” because it is unclear precisely what Mr Davies’ initial advice was. It appears that as well as recommending a “Gift and Loan” trust he also recommended the adoption of a product called “an Access Trust”: but he could remember nothing of this product. At all events, Mrs Lenderink-Woods appears originally to have accepted advice about the “Access Trust”, then to have thought better of it and to have preferred a “Gift and Loan Trust”, so that in July 2001 a “Gift and Loan Trust” was prepared and backdated, circulated and signed; and “the Access Trust” (if ever created) was simply ignored. At trial Mr Davies’ advice was analysed by reference to its final form.
18.	Mr Davies recommended the use of the “Gift and Loan Trust”. This is a product which enabled UK-domiciled settlors to shelter the growth on their investment portfolio from charges to inheritance tax. The settlor establishes a small discretionary trust for the benefit of a class (consisting principally of those whom the settlor intends ultimately to benefit). The settlor then lends a large sum to the trustees. The trustees invest the loan, generally in an investment bond (usually on the life of the settlor but sometimes on the life of a beneficiary) targeted at growth. The bond contains a withdrawal facility, limited to 5% per annum. The trustees avail themselves of that facility, and then use the withdrawals to repay the loan advanced by the settlor. The loan balance and any repayments (unless spent) remain part of the settlor’s estate for inheritance tax purposes: but any growth in the bond belongs to the trustees and is outside the settlor’s estate.
19.	In subsequent justifications of his advice Mr Davies has asserted that he advised the creation of trusts as an inheritance tax mitigation measure so as to take advantage of the rules relating to Potentially Exempt Transfers and to start a seven-year period running. Thus, for example, he wrote on 22 November 2011:-
“Two Life Assurance Investment Bonds were invested offshore in the Isle of Man and were placed into trusts to mitigate Inheritance tax via seven-year Potential Exempt Transfers. Both have now passed the PET rules. No inheritance tax will be due from the proceeds, as long as they remain in trust.”
If that is what he thought then it seems to me that his strategy had an entirely false foundation. The only “gift” element in the scheme was the gift of £5 pounds to create the discretionary trusts: that gift was not relevant for inheritance tax purposes (since it fell within the annual exemption, if nothing else). The purchase of the Bonds was not a relevant event, since these were purchased by the trustees of the discretionary trust with the benefit of the loan from Mrs Lenderink-Woods. The establishment of trusts in 2001 did not facilitate the making of gifts later in 2003: the gifts could have been made as (if not more) easily without any trusts. 
20.	Mr Davies also recommended an Investment Bond and a Personal Portfolio Bond. 
21.	The Investment Bond was designed as an investment vehicle for the medium to long term. It was a single contribution, unit linked, whole of life assurance plan on the life of the proposer or someone else. The contribution was allocated to a selected offshore fund which had 6% bid/offer spread. The selected fund was the subject to management charges, and the bond itself subject to an administration charge of 1.5% per annum.
22.	The Personal Portfolio Bond was a single contribution, unit-linked, whole of life assurance plan into which the proposer could transfer existing assets. Once the plan was opened the proposer could then select a range of investments, and either administer those investments herself or appoint an investment adviser. Withdrawals of capital could be made either on request or regularly. There was provision for an Establishment Fee of 2% of the original investment for the first year, and then 1% for the next four years. There was an annual charge of 0.5% of the fund value for administration plus individual custody fees, dealing fees and transaction fees. The investment adviser’s fees were payable on top of this. There were also the internal management charges levied by the managers of the funds in which the portfolio was invested.
23.	It is unlikely that, when tendering this advice, Mr Davies provided Mrs Lenderink-Woods with any illustrations. An internal memorandum of Allied Dunbar records that the illustrations for the Bonds were dated after the applications were signed and that this was a breach of the sales process.
24.	Mrs Lenderink-Woods appears to have accepted the advice because by 4 May 2001 Mr Davies was informing her daughters other than Amanda (namely Cherry, Annabelle and Birgit) that their mother was distributing her disposable assets so as to maximise gross income (sic) as a UK expatriate: and that in addition the exercise would be reducing her eventual inheritance tax ‘via trusts’. (Amanda would have known this since she would have been present at the meeting). He circulated (in blank) a Gift and Loan Trust form, an International Access Trust form and an Investment Bond form, requesting their signature. These documents were later “cancelled” and different backdated documents prepared. He did not then circulate for signature documents relating to the Personal Portfolio Bond (whatever the date eventually borne by the signed documents).
25.	Mr Davies was very cavalier with the dating of documents, with procuring their signature in blank (so that he could later complete them) and also with the appending of his signature as a witness (notwithstanding that the document may have been signed in the United States, Holland or Costa Rica). So it is not possible to trace the exact course of events. What eventually emerged was (a) an application for an offshore Investment Bond (01741) in the sum of £61,669 odd on the life of Amanda dated 7 May 2001 and proposed by Mrs Lenderink-Woods and Cherry; (b) a related Gift and Loan Trust dated 7 May 2001 constituting Mrs Lenderink-Woods, Amanda, and Cherry trustees of a £5 fund; (c) a loan agreement dated 7 May 2001 by Mrs Lenderink-Woods advancing £61,669 to herself, Amanda and Cherry; (d) an application for an offshore Personal Portfolio Bond (01728) for an unstated amount (but relating to a portfolio of “stocks and shares and gilts” identified on an accompanying transfer authority and eventually resulting in an initial investment of £456,843 to which later transfers were added) signed by Mrs Lenderink-Woods and dated 7 May 2001; (e) a related Gift and Loan Trust, by inference from other documents in the same terms as that relating to the Investment Bond; (f) a loan agreement dated 7 May 2001 by Mrs Lenderink-Woods advancing £61,690 (sic) to herself, Amanda, and Cherry (the loan amount is plainly a mistake). Mr Davies got a commission of 2.5% - something of the order of £15,000. I should note that the experts agreed during the trial that the value transferred into the Investment Bond was £465,517. This would make the total invested in the two Bonds £527,186. The Gift and Loan Trusts excluded Mrs Lenderink-Woods from all benefit under their terms.
26.	Before Allied Dunbar would permit these arrangements to be entered into it required confirmation from Mrs Lenderink-Woods that she had received both professional legal and tax advice. Mrs Lenderink-Woods never gave that confirmation. Instead Mr Davies wrote on 28 July 2001 to “confirm” that she had received both professional legal and tax advice. Surprisingly Allied Dunbar accepted this. Mr Davies was entirely unable to give any satisfactory explanation of why he had written that letter. Mrs Lenderink-Woods had not had any independent tax advice: the only tax advice had come from Mr Davies (whose franchise manual specifically warned him that “taxation is a very complex topic and specialist advice is always recommended even if you have a professional background in any of these fields”).  Mrs Lenderink-Woods had not had independent legal advice: Mr Davies’ assertion in oral evidence that “the lawyer went to see Mrs Lenderink-Woods in Mandy’s house to give advice” was simply untrue. Mrs Lenderink-Woods had no English lawyer until Mr Davies selected one for her on 16 August 2001, after she had entered into the transactions on Mr Davies’ advice.
27.	Whilst Allied Dunbar were considering such application forms as Mr Davies had submitted to them Mr Davies gave further advice to Mrs Lenderink-Woods. On 5 June 2001 he wrote his second “recommendation letter”, which addresses the Personal Portfolio Bond. The terms of the letter suggest that there had been an earlier discussion relating to this (though whether that earlier discussion took place on 2 May or on some subsequent occasion cannot be determined).  The letter recorded that Mrs Lenderink-Woods’ objective was “to make a gift”, and that she had a balanced attitude to risk. Where the stated “objective” came from is entirely unclear: I am satisfied that in 2001 Mrs Lenderink-Woods’ only objective as far as making a gift was concerned was to make a gift of her estate on her death. Having made his recommendation Mr Davies concluded:-
“As your financial adviser I want you to feel confident that the plans and services you buy will be right for you. You have the reassurance of knowing that my advice is backed by the Allied Dunbar Guarantee… Allied Dunbar are committed to ensuring that the plans and services of the Allied Dunbar… Group which I recommend will be those best suited to your objectives at that time, given the information you provide during your financial review. If this proves not to have been the case, Allied Dunbar Guarantee to put it right”
28.	Mrs Lenderink-Woods had evidently prepared for a discussion about the Personal Portfolio Bond. The aide memoire she wrote for herself has survived. Two of the questions she wanted answered were “Do I keep my present investments in the Bond?”  and “What do the advice fees amount to per annum?”.
29.	I accept the evidence of Mrs Lenderink-Woods that she asked what the charges were for the advice she was receiving and the arrangements that were being made; and that she was told they were “2%”. She accepts that she might have asked “2% of what?”. But her understanding was that the charges would be 2% of “the profit on her investments”; by which I understood her to mean the annual return i.e. the yearly capital growth and income. She says that had she understood that the charge was 2% of the fund value per annum (regardless of how well or badly it was doing) she would have obtained a second opinion elsewhere.
30.	As I have indicated, Mrs Lenderink-Woods accepted the advice of Mr Davies. The scheme was completed by 25 July 2001. It is common ground that she trusted him entirely, and so did Cherry, Annabelle and Birgit. Amanda was already a client of Mr Davies and a social friend. As Cherry put it in evidence, Mrs Lenderink-Woods “followed Mr Davies blindly”.
31.	Mr Davies recommended a discretionary fund manager for the International Bond. He initially suggested a Mr Seymour who was with Brewin Dolphin: but he thereafter recommended Seven Investment Management, who took over in the autumn of 2002. Mr Davies advised that it was important that Mrs Lenderink-Woods made a will governing her Bonds and all her bank accounts “because you are deemed as ‘UK domiciled’ as you were born in the UK”. Mr Davies recommended a probate solicitor (Fiona Heald of Barker Son & Isherwood at Andover). Between September 2001 and January 2002 Ms Heald took instructions for, and prepared, an English will. A copy of this will was not available at trial. Mrs Lenderink-Woods made a further will on 30 July 2006 (to cancel a legacy to the Bahai Faith, of which she remained an adherent). The 2002 will was probably in substantially the same terms. 
32.	The 2006 will was witnessed by Mr Davies. It (and probably the 2002 will also) contained a declaration that Mrs Lenderink-Woods was domiciled in England. It provided that after the payment of inheritance tax there would be an equal division between the daughters. It is likely that the will was read over to Mrs Lenderink-Woods before she signed it. Mrs Lenderink-Woods says (and I accept) that the declaration as to domicile meant nothing to her, since it accorded with the advice which Mr Davies had given to her, and he was sitting alongside her as she made the will. It is clear from the retainer letter that Ms Heald received no instructions as to the size or nature of Mrs Lenderink-Woods’ estate, and made clear that she did not offer advice on foreign assets.
33.	By October 2003 Mrs Lenderink-Woods had decided that she wished her daughters to obtain some immediate benefit from her estate. What occurred has been treated in correspondence as “gifts” by Mrs Lenderink-Woods, although it is not clear what the precise mechanics were. The trustees of the Gift and Loan Trust required partial repayment of the Personal Portfolio Bond, and the proceeds were either sent by the trustees to the daughters (as discretionary distributions from the trust), or sent by the trustees to Mrs Lenderink-Woods in partial repayment of the loan, and she then gave the loan repayments to her daughters. Significant “gifts” were made to the daughters during 2003, 2004 and 2007. Mrs Lenderink-Woods also made gifts of £5000 to each of her grandchildren on the occasion of their marriage. Between 2003 and 2008 about £164,000 was distributed from the trust. Mrs Lenderink-Woods appears to have initiated this in the belief that she was worth about £800,000 (a figure Mr Davies had at one time given), based on the aggregate value of the Bonds, overlooking (as did everybody else) that her estate consisted only of the unpaid balance of the two loan agreements, and not the benefit of the Bonds themselves (which belonged to the Trustees).
34.	In 2009 Mrs Lenderink-Woods suffered a stroke. Birgit (who was a US-based carpenter, but not then currently in work) agreed to stay in Costa Rica to look after her mother. As the temporary ripened into the long-term Birgit started to deal with getting the funds to run the household, the expenses of which had increased on account of the extra care needed for Mrs Lenderink-Woods. 
35.	The first concern was with currency conversion costs, which Birgit felt depleted the sums received from the Dutch pensions under arrangements overseen by Mr Davies. She then had to consider how to increase Mrs Lenderink-Woods’ income to cover the increased costs, whilst preserving the capital. She arranged for an £800 per month payment to be made from the Bonds to Mrs Lenderink-Woods. In both contexts she had to deal with Mr Davies and with her sisters. To gain an understanding she had to ask questions and to seek information. This created difficulties, to the extent that Mr Davies said that he could not deal with Birgit, who was not his client, but only with Mrs Lenderink-Woods and the trustees. The difficulties were not all of Mr Davies’ making. First, Birgit had no financial skills and misunderstood some of what Mr Davies was saying. Second, the dynamics within the family meant that Amanda sided strongly with Mr Davies; many of his responses were “run past” Amanda. 
36.	There ensued (from perhaps January 2011) a prolonged and tense email correspondence. At an early stage in it Mr Davies thought of telling Mrs Lenderink-Woods that she could complain about him and of providing her with details of how to do so. But he changed his mind (as is apparent from a comparison of a draft e-mail prepared on 6 February 2011 and the final version sent on 21 February 2011). In the result he continued to act and to regard himself as acting as Mrs Lenderink-Woods’ financial adviser until Mrs Lenderink-Woods actually made her complaint in March 2012.
37.	In these exchanges Birgit became aware of the 5% withdrawal option: she asked whether that was within the safe range to prevent capital erosion. Mr Davies did not explain that every bond withdrawal constituted “capital erosion” so far as Mrs Lenderink-Woods was concerned because her estate consisted only of the fixed interest-free loan balance: and every repayment reduced that.   But the answer she did receive from Mr Davies still caused her alarm because it calculated the 5% by reference to the size of the original portfolio and not by reference to its (much smaller) current value as she understood it to be. When she raised this, Mr Davies simply said that “each encashment [had], of course, effected (sic) growth, drastically”. Annabelle then joined in to say that she thought such withdrawals from capital were “most definitely not a good idea”, and expressed concern that the figures being used were “almost double what’s actually there”: but she said she was more confused than ever and had been hoping that Mr Davies would have provided an overview of the account and from where (capital or income) the withdrawals had come. Mr Davies responded by saying that the erosion was caused by the gifts and withdrawals. He also said that “Life Assurance investment bonds taxation is totally different to Any Other Investments. They are in effect not taxed at all as long as the rules are obeyed…”: and added that if withdrawals were restricted to 5% and growth was 5% then the fund would remain the same (an observation that ignored the effect of charges, and ignored that fact that Mrs Lenderink-Woods could not benefit from the growth).  
38.	Birgit then became concerned to discover what charges had been and were being levied. Mr Davies referred to his normal 0.5% annual fee on the value of the investment at the date of payment, and to the fact that Seven Investment Management charged fees (though he did not say what). He made no mention of the level of the Allied Dunbar management charge. On 23 August 2011 he condescended to greater detail, but he stated every figure incorrectly and failed to mention many of the ancillary charges. (Zürich admit that the charges payable under the Bonds for the first year were about 4 ½%, that thereafter there were charges of at least 2.3% per annum over a ten-year period, and that in addition substantial initial charges were payable along with other ancillary charges). Indeed, nobody knew the actual charges being made until Zurich answered on 11 January 2012 the questions Birgit had been raising.
39.	Mrs Lenderink-Woods was initially not supportive of Birgit. As she put it:-
“I had placed my faith with Mr Davies: and it took me some time to realise she was right.”
Cherry was also of the view that Birgit’s concerns were creating an unnecessary fuss. But she consulted her son Oliver about the investment performance of Mrs Lenderink-Woods’ investments. Oliver had a Masters degree in economics, a background in private banking, and was based in Dubai. He appears to have been given one monthly income statement from Seven Investment Management. He was unclear whether that firm was an investment manager or operated a “fund of funds”. He was asked by Cherry to explain what Mrs Lenderink-Woods was invested in, but said that he could not really help because he had very limited information. All he could do was express the view that the performance was disappointing, and that he thought the risk profile was on the high side for an 80-year-old widow. He was not qualified to consider, and did not consider, any “estate planning” aspects.
40.	In 2011 Annabelle (who was based in California) asked her tax accountant (Mr Markle) for some general comment about Mrs Lenderink-Woods’ investments, but without providing him with detailed information (which she herself lacked). Later that year she took some material that Mr Davies had provided to her mother to an investment adviser (Mr Beresh) who worked in the same offices as Mr Markle. Mr Beresh explained that as a US-based investment adviser he was not qualified to advise on British investments but could give general views: he expressed the view that comparative performance of the investments did not seem favourable and that the risk profile would not (according to US practice) be regarded as sensible. Upon considering the material that Mr Davies had provided Mr Beresh thought that the erosion of capital meant that inheritance tax was no longer relevant: no significant tax was payable because there were no longer any significant assets.
41.	In the light of his comments Annabelle asked Mr Davies what estate tax laws applied to Mrs Lenderink-Woods. The reply from Mr Davies indicated that one would not know the answer to that question until Mrs Lenderink-Woods died.
42.	By early 2012 Cherry was coming round to the view that maybe Birgit’s and Annabelle’s concerns about Mr Davies may be right, though Amanda remained resolutely allied with Mr Davies. On 1 January 2012 Cherry sent Birgit an Internet link to an article in the “Daily Mail” about the need for transparency in investment charges. This opened up a source of information for Birgit. Through further Internet searches she identified Mr Willows as an independent financial adviser. Amanda and Cherry were strongly opposed to his involvement. 
43.	On 16 February 2012 Birgit sent Mr Willows some investment statements and some of the correspondence with Mr Davies. Mr Willows’ immediate reaction was to say that he had questions regarding Mrs Lenderink-Woods’ residence, ordinary residence and domicile status and also about any other assets which she owned. But he expressed the preliminary view that Mrs Lenderink-Woods’ portfolio had been depleted by (i) withdrawals (ii) poor investment performance and (iii) excessive charges.
44.	When Mr Willow’s questions about domicile were answered in short form he wrote on 20 February 2012:-
“I don’t know Mr Davies and wish him no ill but my appraisal of the situation is that the arrangement was and is unsuitable, based on incorrect advice… UK inheritance tax and any measures, such as the use of trusts, to mitigate it are not relevant to Angela as she is not UK domiciled…. Mr Davies has made the fundamental error of assuming (incorrectly) that as Angela was born in the UK she must be permanently UK domiciled… Non-UK domiciled individuals only have a potential UK inheritance tax liability on certain UK assets (not their worldwide assets) in excess of the prevailing threshold – but as some UK government securities, authorised unit trusts and open ended investment company shares are classed as exempt property Angela could quite readily have continued to keep her investments in the UK or alternatively moved some offshore but without the need for any form of trust wrapper….”
45.	Mr Willows was not in favour of litigation, but was in favour of utilising Zurich’s internal complaints procedure. By 7 March 2012 Mrs Lenderink-Woods had retained Mr Willows to act for her in relation to the advice she had received from Mr Davies. In her letter of instruction, after thanking Mr Willows for agreeing “to act on my behalf regarding my concerns” she said
“if you are successful in obtaining redress from Zürich for the loss I may have sustained I agree to pay a fee of 20% of the redress sum. If no redress is obtained no fee will be payable.”
46.	On 3 April 2012 Mr Willows wrote to Zurich to raise what he regarded as a fundamental point for complaint, which was the unsuitability of the trust and bond arrangement per se. He pointed out that this type of arrangement was usually entered to mitigate a potential liability to UK inheritance tax and to provide a source of tax-free income: but, he suggested, UK inheritance tax and measures to mitigate it were not relevant to Mrs Lenderink-Woods as she was not UK domiciled; and he argued that Mr Davies had made a fundamental error of assuming incorrectly that as Mrs Lenderink-Woods was born in the United Kingdom she must be permanently UK domiciled. He said:-
“Non-UK domiciled individuals only have a potential UK inheritance tax liability on certain UK assets (not their worldwide assets) in excess of the prevailing threshold  - but as some UK government securities, authorised unit trusts and open ended investment company shares are classed as exempt property Mrs Lenderink-Woods could quite readily have continued to keep her investments in the UK or alternatively moved some offshore but without the need for any form of trust wrapper.”
Subject to a point about the availability of exempt authorised unit trusts and open ended investment company (“OEIC”) shares in 2001 the general analysis put forward by Mr Willows was at trial accepted as broadly correct.
47.	On 30 July 2012 Zürich made an open offer of redress in the sum of £459,567. This represented a refund of the payments which Mrs Lenderink-Woods had made into the plan, less the total withdrawals made and the total regular income received. To the remaining balance was added interest net of tax at base rate +1%.
48.	 On 29 August 2012 Zürich then withdrew that offer. Zurich said that they had reviewed the mix of assets that Mrs Lenderink-Woods owned and were now satisfied that these were potentially liable UK IHT (a point they had previously overlooked)  so that:-
“Given Mrs Lenderink-Woods’ tax position, there was clearly a need for her share portfolio to be invested offshore, in order to avoid any future IHT liability. We have found no evidence to suggest that these Bonds were not suitable products to meet her objectives at that time.”
It will be noted that Zurich did not suggest that the Gift and Loan Trust arrangement was suitable: internally Zürich recognised that there was no benefit in using such an arrangement to mitigate IHT, and although it might facilitate the growth in the bond being given to the beneficiaries, this was not a consideration for Mrs Lenderink-Woods at the time. 
49.	Zürich’s internal Subject Expert also expressed the view that looking at the documentation Mr Davies did not appear to understand some of the key fundamentals of the advice given (although he observed that that did not make Mr Davies advice automatically wrong). He also expressed the opinion that whilst the charges associated with the bonds were probably presented to Mrs Lenderink-Woods, some care had to be taken in relying on this point, as being aware of charges did not necessarily make the advice to incur them appropriate if they did not need to have been incurred. 
50.	Simon Godsave who was Zürich’s UK Compliance Officer stated that he was feeling “increasingly uncomfortable with the wider risks” of taking the course of entirely withdrawing the offer: and in this he was joined by Nicola Green, Zürich’s media relations manager, who wrote:-
“From a media perspective, I too feel very uncomfortable about this and think that if they went to the media it would result in very negative coverage. Although it seems that legally we may not have done anything wrong, morally I think we’re on extremely dodgy ground. The media would find it inexcusable that we have not been able to clarify the tax position much earlier – if we had we would have been able to avoid all of this and not had to make an offer which we later withdrew. The fact that she is so elderly certainly does not go in our favour!”
Mrs Lenderink-Woods was by then 92.
51.	These wise words did not prevail and Zurich has defended this claim vigorously, including an attempt to strike it out.
52.	In the light of the response from Zürich Mr Willows took the matter to the Financial Ombudsman.  As an adjudicator explained:-
“in order to uphold the complaint I would need to be satisfied that the advice was flawed, not simply that alternatives existed which may have constituted a more suitable recommendation or one that subsequently turned out to provide a better return. In short, if the advice given was reasonable and suitable, a complaint of this kind is less likely to succeed.”
53.	The Financial Ombudsman’s Final Decision was given on 24 January 2014 in these terms:-
“…Whilst I accept that the adviser was mistakenly recommending the use of this trust arrangement, I have not seen evidence that this has in itself caused [Mrs Lenderink-Woods] any financial loss or other detriment …. By placing the investments in the offshore bonds, this had the effect of removing the potential future tax liability. Overall, given [Mrs Lenderink-Woods’] requirements to mitigate her tax liability whilst retaining access to her capital and also receiving an income, the advice seems to have largely met her needs.”
In expressing himself in this way the Financial Ombudsman appears to have assumed that the Gift and Loan Trust and the bonds were simply pieces of paper that had to be signed to secure a tax advantage, and that really nothing had changed. Of course in truth Mrs Lenderink-Woods had converted her absolute ownership of her share portfolio into an interest-free loan obligation owed by two of her daughters. She did not have “access to her capital”, nor did she receive “income”. She would get loan repayments if she demanded them and if her daughters agreed to withdraw part of the capital value of the bonds to satisfy the demand. She would never get access to that part of her “capital” representing the growth in the original portfolio.
54.	Mr Willows has continued to assist Mrs Lenderink-Woods. His original agreement entitled into a share of any redress made by Zürich as a result of the complaint which he made. There is no formal agreement in place relating to the assistance he has rendered in connection with this action. Mr Willows does not expect to be paid anything until after the action is over, and even then he does not expect to be paid for giving evidence. He regarded himself as obligated to come and answer questions. For her part Mrs Lenderink-Woods says that if she wins she will give Mr Willows 20% of any compensation: but the manner in which she told me conveyed the sense that she regards this as the honourable and moral thing to do, and not because she is legally obliged to do so.
55.	Mrs Lenderink-Woods commenced proceedings on 10 December 2014. She alleged that Mr Davies was negligent because
a)	a reasonably competent financial adviser would have advised her to obtain the advice of a solicitor in relation to her domicile (Zürich say that she had that opportunity when she made her 2001 Will with Ms Heald);
b)	a reasonably competent adviser would have advised her to invest in exempt gilts or offshore unit trusts (as to which Zürich agree but say that a reasonably competent financial adviser could equally have given the advice which Mr Davies gave);
c)	a reasonably competent financial adviser would have advised her not to proceed with the Gift and Loan Trust scheme (which Zürich deny in their pleaded case);
d)	a reasonably competent financial adviser would have advised her that the Bonds were inflexible with limits upon the amounts which could be withdrawn each year and penalties upon surrender (as to which Zürich say that they were suitable and appropriate for mitigating IHT and for securing capital growth and income);
e)	a reasonably competent financial adviser would have advised her that the Bonds involved unnecessary individual management of investments and that a portfolio of unit trusts would achieve the desired returns with much lower charges (which Zürich deny);
f)	a reasonably competent practitioner would not have described the charges as “only 2%” (a statement which Zurich deny was made).
56.	To this claim Zurich raise two general defences.
57.	The first general defence is that the claim is brought pursuant to an arrangement between Mrs Lenderink-Woods and Mr Willows’ firm, that they have agreed to divide the spoils of litigation in which Mr Willows has no legitimate commercial interest, and that accordingly the entire action is tainted with maintenance and/or champerty and should be struck out. 
58.	Counsel for Zürich argued that a commonsense reading of Mr Willows’ retainer letter suggests that the arrangement there set out includes a share in the fruits of litigation. I do not accept this submission. I hold that the agreement evidenced by the letter of 7 March 2012 upon its true construction relates only to redress obtained by Mr Willows from Zürich as a result of acting on behalf of Mrs Lenderink-Woods in relation to the Zürich formal complaints process. It does not extend to any damages ordered to be paid by a Court as the result of solicitors and Counsel acting on behalf of Mrs Lenderink-Woods: and the fact that Mr Willows gave evidence makes no difference.
59.	I find that there is no legal obligation binding upon Mrs Lenderink-Woods to make any payment to Mr Willows out of any damages awarded in this action (though she may feel morally obligated to give him something, given the open offer of redress that he secured for her, albeit that such offer was withdrawn before she had accepted it). Zürich placed some reliance upon the terms of a Costa Rican will made by Mrs Lenderink-Woods on 18 March 2014. The seventh clause of that document appointed Mr Willows executor “for the estate and trust located in the Isle of Man and the litigious rights in England” and said that he would not earn any fees for so acting “in view of the commission contract…. according to which Mrs Lenderink-Woods] shall pay to Mr Willows 20% of all sums recovered by means of the settlement signed by [Mrs Lenderink-Woods] with… Zürich”. In my judgment this is clearly a reference to the arrangement contained in the letter of 7 March 2012: it does not evidence any new agreement relating to an entitlement to share in the fruits of litigation which had then yet to be commenced. 
60.	I therefore find that there is no champertous agreement. I hold that even if there were such an agreement it would not afford a defence to the claim. In Martell v Consett Iron Co Ltd [1955] 1Ch 363 Jenkins LJ said of what was then the crime and tort of maintenance:-
“It is well settled that the illegal maintenance of the plaintiff in an action is no defence to the action” (at p.421).
	This is still the law: see Abraham v Thompson [1997] 4 All ER 362 at 377g following per Millett LJ. 
61.	That this was the true position at law was only conceded by Counsel for Zurich during his closing speech. It is regrettable that Zurich took the point at all; and even more regrettable that when Zurich acknowledged the point to be unsound they then said that they reserved their right to seek a third party costs order against Mr Willows. Such behaviour has a chilling effect on those who advise clients who are pursuing claims against large providers of financial services.  
62.	The second general defence is limitation, Zürich assert that Mrs Lenderink-Woods had the requisite knowledge (within section 14A of the Limitation Act 1980) to bring the action prior to 10 December 2011), in particular because Burkett had raised complaints as early as 2009.
63.	In paragraph 37 of her Reply Mrs Lenderink-Woods pleads:-
“   (a)……
(b) Any complaints, if any, by the Claimant made to the Second Defendant’s appointed agent in 2009, or subsequently, were in relation to investment performance of the Bonds, not in relation to the decision to embark upon the Loan Trust Scheme
(c) The Claimant first had knowledge that the advice to enter into the Loan Trust Scheme was the cause of the losses when Mr Joe Willows… sent an email to the Claimant… on 20 February 2012 following a conversation on 16 February 2012…
(d) The Claimant continued to seek, receive and rely upon advice from Huw Davies up to and beyond 10 December 2011”. 
She must establish these matters on the balance of probabilities.
64.	It is too late to bring any proceedings grounded in contract. But as to tort, Mrs Lenderink-Woods’ case is that she has commenced the present action within three years of “the starting date” identified in section 14A of the Limitation Act 1980. I have set out the principles that I intend to apply in addressing this case in paragraphs [14], [15], [17] and [31] of my earlier judgment in this case: see [2015] EWHC 3634 (Ch). The key question remains whether Mrs Lenderink-Woods had the knowledge required for bringing this action before 10 December 2011.
65.	The starting point is the nature of Mrs Lenderink-Woods’ case. I have summarised this at paragraph [55] above. At what point did she acquire sufficient knowledge of the elements of this case?
66.	It is common ground that Mrs Lenderink-Woods did not herself have actual knowledge of any relevant facts and matters.   She completely trusted Mr Davies and knew only what he told her. He himself was ignorant of the domicile issue (which made only the location of the investments relevant). He never accurately stated the level of charges. Mrs Lenderink-Woods simply had no clue: she did not even know the basic facts (cf Howard v Fawcett [2006] UKHL 9 at para.[64]) so the question whether she had broad knowledge sufficient to justify embarking on the preliminaries to the issue of a writ does not arise.
67.	Mrs Lenderink-Woods’ affairs were (following her stroke) in the hands of her daughters. Amanda and Cherry had formal control of the trust investments (i.e. the Bonds) and operated the Gift and Loan Trusts: Birgit had practical control of such cash as was remitted to Mrs Lenderink-Woods. At trial it was accepted that the actual knowledge of Birgit should be treated as the actual knowledge of Mrs Lenderink-Woods. I find and hold that neither Birgit nor any other daughter had actual knowledge that Mrs Lenderink-Woods’ domicile might be relevant to the form of IHT mitigation she undertook until Mr Willow’s so advised in March 2012. I further find and hold that neither Birgit nor any other daughter had actual knowledge of why the charges appeared to be so high until Mr Willows pointed out that there were Zurich charges (which included Mr Davies’ trail commission), discretionary fund manager charges (by Seven Investment Management) and internal management charges in the underlying collective investments. Birgit (and also Annabelle) did their level best to find out from Mr Davies what the actual position was as regards investment of the fund and the charges levied upon it: but his answers were opaque or inaccurate. In the result they lacked broad knowledge sufficient to justify embarking on the preliminaries to the issue of a writ.
68.	As to “constructive” knowledge (for shorthand) I find and hold that Mrs Lenderink-Woods could not reasonably be expected to acquire knowledge about the significance of domicile to the appropriate lifetime and estate planning or about the appropriate charging structures from facts or matters ascertainable by her. She was a woman in her 80s who (typically for her generation and upbringing) lacked business acumen and was inexperienced in the world of investment, reliant upon financial advice from trusted advisers. Mr Davies fulfilled that role until two of her daughters took it into their own hands to seek advice elsewhere: until that point the whole tenor of his correspondence was of injured innocence that so valued a client as Mrs Lenderink-Woods should be in the least dissatisfied with the arrangements he had put in place. She received no advice to counter Mr Davies’ views.
69.	I do not think that the “constructive” knowledge of members of Mrs Lenderink-Woods’ family is relevant: though Counsel for Mrs Lenderink-Woods was inclined to concede that it might be.  In the event that it is I find and hold that neither Birgit nor any other daughter could reasonably be expected to acquire knowledge of the relevance of domicile from facts or matters ascertainable by them. I further find and hold that neither Birgit nor any other daughter had “constructive” knowledge of why the charges appeared to be so high until Mr Willows pointed out that there were Zurich charges (which included Mr Davies’ trail commission), discretionary fund manager charges (by Seven Investment Management) and internal management charges in the underlying collective investments. Birgit was a US resident carpenter: it is unreal to treat an understanding of domicile or of investment charges as a characteristic of such a person. Annabelle works as a farm manager in California. Birgit and Annabelle did their level best to find out from Mr Davies what the actual position was. They sought help where they could, not because they necessarily thought there was anything wrong with the advice they had received from Mr Davies but simply to understand what the true position was and whether it could be improved. They asked because they wanted to find out how the system operated, not because they were critical of it. But none of Oliver, Mr Markle or Mr Beresh appear to have known of the gift and loan structure or of English inheritance tax or the point of an off-shore insurance bond: their attention was focussed upon identifying the investments and assessing performance.
70.	In my judgment there is no limitation bar.
71.	This brings me to the question of liability for the breaches alleged (and summarised above).
72.	The Claimant called no direct expert evidence as to practice (although I had given permission for such). Counsel for Zurich submitted that in these circumstances it was not possible for me to find negligence (though misstatement as to charges might be a separate question). He described it as a “gaping hole” in the case that was “fatal” to it.
73.	In addressing this issue it is well to begin with three general observations.
74.	First, when assessing the conduct of Mr Davies the relevant test is the standard of the ordinary skilled man exercising and professing to have the special skill of financial adviser: he will not be guilty of negligence if he has acted in accordance with the practice accepted as proper by a responsible body of his profession. This is the Bolam test.
75.	Second, that test must be applied to the retainer upon which Mr Davies was engaged. Did he discharge that retainer with the competence of the ordinary skilled financial adviser? It is meaningless to think of Mr Davies simply as Mrs Lenderink-Woods’ “financial adviser” divorced from the context of what he actually undertook to do. Compare the observations of Oliver J in Midland Bank v Hett, Stubbs and Kemp [1979] Ch 384.
76.	Third, as the Court of Appeal observed in Sansom v Metcalfe Hambleton [1998] PNLR 542 at 549:-
“…a court should be slow to find a professionally qualified man guilty of a breach of his duty of skill and care towards a client… without evidence from those within the same profession as to the standard expected on the facts of the case and the failure of the professionally qualified man to measure up to that standard…”
77.	Amongst the established categories of case in which a finding of negligence may properly be made whatever the state of the expert evidence are (a) cases in which there is no logical basis for the body of opinion in accordance with which the defendant acted; (b) cases in which the expert evidence called by the defendant is in reality no more than the personal opinion of an expert witness as to what he would have done in the position of the defendant (subject to scrutiny as to whether such evidence is that of a skilled witness giving evidence is to practice); and (c) cases in which it is not necessary to apply any particular professional expertise because the mistake was glaring or obvious. (There is a treatment at this subject in Jackson and Powell on Professional Liability 7th edition at paragraphs 6–008 to 6-0011). 
78.	In light of those principles I address the evidence.
79.	Zürich’s expert was Mr David Morrey. He is a partner in Grant Thornton working on regulatory and risk management in the insurance industry, and is a conduct regulation specialist who has conducted Skilled Person Reviews under section 166 FSMA for the Prudential Regulation Authority, and has calculated redress. He has not practised as an independent financial adviser.  His report reflected his expertise. He expressed the opinion:-
“that a reasonably competent financial adviser at the time could have advised the Claimant to enter into the recommended arrangements”. 
He also said:-
“I am satisfied that the adviser obtained sufficient details… to enable a suitable recommendation to be made. The recommended package met the objectives that are recorded within the various documents completed around the time of the sale. It is apparent that the claimant had a potential IHT liability and the advice enabled her to remove her inheritance tax liability, enable (sic) her to take regular withdrawals and met her objectives of providing capital growth and income. In my view this was a suitable recommendation for the claimant based on her objectives and circumstances”
When he characterised an arrangement as “suitable” he accepted that he meant that it did the job even if there were cheaper and better alternatives because “suitable” did not mean “optimum” in the industry. 
80.	The opinions expressed are, of course, the very questions I have to decide in this action. They are not on that account simply to be disregarded, for it may be possible to treat the views expressed as those of a skilled witness as to relevant practice: Kennedy v Concordia [2016] UKSC 6 at [66]. But the opinions expressed proceed upon a certain view of the facts: and it may be that the views implicitly expressed about the relevant practice do not in the end assist on the facts as found.
81.	In cross-examination Mr Morrey tended to take on the role of an advocate for the insurance industry: but he frankly acknowledged (a) that domicile was a critical factor in understanding tax liabilities (and hence in shaping mitigation measures); (b) that he would have expected a competent financial adviser either to know the rules of domicile or to refer within the office to someone who did; (c) that the Gift and Loan Trusts were a “complication” that constituted a “theoretical detriment” ; (d) that there would be penalties for early surrender of bonds which reduced flexibility but that again was “a theoretical and not an actual detriment”; (e) that “conceptually” if Mrs Lenderink-Woods was advised to enter into the bonds unnecessarily that that was detrimental to her; (f) that because Mrs Lenderink-Woods had converted her entire investments into two loan obligations she should have been told where to keep the loan documentation in order to ensure that the situs of the obligations remained offshore, because otherwise the scheme was “contentious” and not within Mrs Lenderink-Woods’ risk appetite; (g) that just disclosing the charges did not make unsuitable advice “suitable”. 
82.	However, he insisted that asking whether the package of Gift and Loan Trusts and Investment and Portfolio Bonds recommended by Mr Davies was “best suited to [Mrs Lenderink-Woods’] objectives” was to ask the wrong question: and that the right question was to ask whether the outcome was within the range of what was “suitable”. He also insisted (without elaboration) that “offshore bonds” were popular with non-residents because they were “simple” when completing tax returns.
83.	As I have said, Mrs Lenderink-Woods did not call any direct expert evidence as to practice. But she did call expert evidence as to quantum which indirectly addressed practice: and she did call a witness of fact whose opinion was sought in cross-examination.
84.	Mrs Lenderink-Woods called Mr David Squire, a partner in a financial advisory business who had worked in the financial services profession and provided financial advice to individuals and businesses for over 20 years, and who had been a chartered financial planner for 10 years. He was instructed to give an opinion as to the rate of return which Mrs Lenderink-Woods might reasonably have obtained on a portfolio of investments from a competent adviser in 2001. But as part and parcel of the reasoning in his report Mr Squire gave the opinion that Mrs Lenderink-Woods could not receive competent advice from a tied adviser, and that if competent advice was to be given an adviser would have needed to be independent and able to recommend products and funds from across the marketplace: a conclusion he based on Mrs Lenderink-Woods’ age, domicile, residence, inheritance tax planning needs and the overall value of the assets being advised. This was not challenged.
85.	Mrs Lenderink-Woods called Mr Willows to give evidence as to the nature of the enquiry originally made of him, and of his reaction to it and what he did.  In cross-examination Counsel for Zürich sought the opinion of Mr Willows on various issues. Counsel for Mrs Lenderink-Woods objected that this was to treat him as an expert whereas he was tendered as a witness of fact. I ruled that Counsel for Zürich must be permitted to take his course. In answer to subsequent questions Mr Willows expressed the view (as an ordinary financial adviser) that having three levels of charges (a financial adviser receiving commission, a discretionary fund manager charging a management fee for investing the funds in collective investments which also charged management fees) was “duplicative and unnecessary”. He also said that when first instructed he immediately spotted that the Gift and Loan Trust scheme was not appropriate for non-domiciled clients, and that he had never before encountered its use in that context: but it seemed to him that Mrs Lenderink-Woods could have achieved everything she wanted by simply asking NatWest to move the management of her funds from London to the Isle of Man, or by retaining an IFA on an annual fee of about £1000 either to monitor collective investments or to hold the feet of a discretionary fund manager to the fire. When pressed with the idea that Mr Davies’ advice had achieved the desired inheritance tax saving Mr Willows responded:-
“Well she has no IHT liability because she has no money left. It is not as if anybody benefited – apart from those who levied charges”.
86.	I find and hold that Mr Davies was negligent in the discharge of his retainer. In his own words that retainer was this:-
“I advise you of potential problems or challenges, after finding out your needs and objectives for now and the future. I then present all the available alternatives to solve or achieve them. Further, I will point out what I believe is the best for you with explanations of why.”
Whether that was within or outside the terms of his remit from Zurich is not an issue in this action. It is what he undertook to do: and he had to bring to its performance the degree of skill and care to be expected of a reasonably competent financial adviser.
87.	The retainer was limited in two ways. First, Mr Davies was not undertaking a general survey of Mrs Lenderink-Woods’ financial affairs: his advice was centred upon investing present capital for income and growth, and reducing inheritance tax (with some advice about off-shore banking). Second, Mr Davies was a tied adviser: if a reasonably competent financial adviser placed as Mr Davies was placed had felt either that he lacked the skill and competence to present all available alternatives or that the products available to him did not accord with what was best for Mrs Lenderink-Woods then he would fulfil the retainer by telling Mrs Lenderink-Woods to take advice from an independent financial adviser.
88.	Mr Davies fell well short of a competent discharge of this retainer. The expert evidence establishes that a competent adviser knows that domicile is a critical issue in tax planning and ought either to know the rules or seek advice as to the rules (or tell the client to do so). Every word Mr Davies wrote or uttered on the subject demonstrated that he did not know the rules and was completely out of his depth. His unaccountable false statement to his supervisors that Mrs Lenderink-Woods had taken independent tax advice prevented her from being advised to obtain a second opinion. The serious management lapse of his supervisors, in requiring confirmation from Mrs Lenderink-Woods that she had received independent tax advice but then accepting the word of Mr Davies on the subject, compounded the problem. 
89.	As a result Mrs Lenderink-Woods received advice that misunderstood the critical issue. Furthermore, every tax-based reason that Mr Davies gave for his advice was wrong; save for one (that going off-shore would avoid tax). I do not need expert assistance to see that. Zurich’s internal review itself showed that Mr Davies did not understand some of the key fundamentals. Of course, as every first instance judge knows, it is possible to reach the right answer for the wrong reasons. So it is possible that despite ignoring the critical issue and giving entirely wrong reasons for the course he did choose and not understanding the fundamentals, Mr Davies may have reached an outcome within the range of possible outcomes produced by a competent performance of the retainer. He may have been lucky.
90.	Zurich and its expert agree that the Gift and Loan Trusts were pointless, achieving nothing, but requiring Mrs Lenderink-Woods to convert a diverse range of assets (income producing, with the potential for capital growth and in her absolute control) into a single asset class (non-income producing, fixed in value and dependent upon the co-operation of her trustee-daughters). Even if this consensus were absent, no Chancery judge needs expert evidence to guide him or her to that conclusion: it is glaringly obvious. I do not accept the submission of Counsel for Zurich that the Gift and Loan Trusts performed a “belt and braces” function covering the possibility of a resumption of UK domicile by Mrs Lenderink-Woods (in which case they would have sheltered investment growth). This was not anyone’s objective at the time. 
91.	In my judgment the other element of Mr Davies’ scheme (the “bond wrapper”) was also pointless. It is apparent from the product description that the “bond wrapper” is a vehicle to enable a UK tax payer to draw down 5% of the bond value per annum free of tax. Mrs Lenderink-Woods did not want regular fixed withdrawals of capital from an income-accumulating fund (although Mr Davies has subsequently sought to say that that was one of the attractions of the scheme for her). I consider that there is no logical basis for the view expressed by Mr Morrey that “bond wrappers” might be attractive to non-residents because a “bond wrapper” makes the completion of tax returns simpler. Once her assets were off-shore Mrs Lenderink-Woods (as a non-domiciled non-resident) would not be completing UK tax returns: and there was no evidential basis for the suggestion that an offshore “bond wrapper” made the completion of her Costa Rican tax returns simpler. I cannot see the basis upon which a tied financial adviser who was retained by a non-domiciled non-resident client to exercise reasonable skill and care in the consideration all alternatives for the achievement of income and capital growth and to select and advise on the best course could with reasonable competence have advised the purchase of a “bond wrapper”. Mr Davies’ explanations (to the extent that he gave any) were not coherent and Mr Morrey’s were not logical. 
92.	I am entirely unpersuaded that Mr Davies performed his retainer by charging  Mrs Lenderink-Woods for doing her no harm (which was the tenor of Mr Morrey’s evidence). As Mr Willows said in cross-examination she got nothing out of the arrangements that could not have been achieved by moving the current administration of her fund offshore and/or by retaining an IFA at a fixed fee: whereas Mr Davies’ scheme involved layers the were “duplicative and unnecessary”.    
93.	I am also unpersuaded by Mr Morrey’s suggestion that if someone undertakes to consider all alternatives and to select and advise on the best he is required to consider only what products are available to him and to select from amongst them something that is “suitable” although not optimum.  The professional’s duties are determined by the terms of his engagement: and those terms are not to be re-written by reference to his regulatory code. Of course he does not undertake to perform a faultless consideration nor does he guarantee that his selection will in fact be the best. He engages only to apply reasonable skill and care to the process. But Mr Davies evidently did not: and I do not need an expert to tell me so (though Mr Morrey does).
94.	I reach my view on liability notwithstanding the views of the Ombudsman that the arrangements “largely” met Mrs Lenderink-Woods’ needs. Counsel for Zürich submitted that in no case had a professional who had complied with his statutory code been held to be negligent. But I am not dissuaded from my view by that submission. I consider the issue to have been addressed in Gorham v British Telecom [2000] 1 WLR 2129. At p.2141 Pill LJ is reported as holding (in the context of considering a third party claim to recover for admittedly negligent advice):-
“In my judgment, the stress placed upon the statutory code as a decisive ground for refusing a remedy is misplaced. [Counsel] rightly accepted the pressing need which developed in the 1980s for a statutory framework within which financial services could be provided. I do not however discern a Parliamentary intention to eliminate the power of the courts to decide whether a duty of care arises in a particular situation and, if so, what its extent is. Had Parliament not intervened, remedies for abuses which existed in this field would almost certainly have been developed by the courts. The courts now do so in the context, and with the benefit of, rules and codes of practice laid down by those concerned with the maintenance of proper standards. The courts can be expected to attach considerable weight to the content of codes drafted in these circumstances but are not excluded from making their own assessment of a situation.”
95.	To the same effect Schiemann LJ held (at 2144H):-
“… the fact that the duties imposed by statute on various classes of advisers vary does not affect the duty imposed by common law. Restrictions imposed by statute on what products the adviser can recommend do not have the effect of relieving him of the duty not to recommend his principal’s products unless they are suitable.”
96.	I also hold that Mr Davies was careless in his description of the charges incurred by Mrs Lenderink-Woods under his scheme. No reasonably competent financial adviser would have said (as Mr Davies did say) that they were “2%”.
97.	This brings me to the final issues: what (if any) damage has been caused by Mr Davies’ negligence? And how is any compensation to be assessed? 
98.	I can at the outset express profound disagreement with Mr Morrey’s assertions that any damage suffered by Mrs Lenderink-Woods was “technical”, “theoretical” or “conceptual”. This is true only if the Gift and Loan Trusts were shams (as everyone was tempted to treat them) and if no competent financial adviser would have recommended what was best for Mrs Lenderink-Woods. 
99.	Mrs Lenderink-Woods was deprived of independent legal and tax advice and advised to enter Gift and Loan Trust schemes which utilised the Bonds, each element of which was unnecessary for the achievement of the objectives of affording the possibility of income and capital growth and saving inheritance tax. What damage was thereby caused?
100.	Counsel for Mrs Lenderink-Woods submits that everything that flowed from that original advice (including investment performance) was caused by that original advice. Counsel for Zürich submits that the underperformance of Mrs Lenderink-Woods’ investment portfolio in the hands of Seven Investment Management was not “caused” (in the sense of legal causation) by the advice of Mr Davies to adopt his scheme and to purchase his products. I agree with this submission. The annual rate of return achieved by Seven Investment Management was about 2.8%. This was 3% below the benchmark for a balanced fund, and 4% below Allied Dunbar’s own collective investment funds targeted at balanced growth. But the selection of investments was not within the scope of Mr Davies’ retainer; and he does not stand charged with negligently choosing a poor discretionary fund manager or with negligently failing to monitor their performance. To adopt the reconstruction basis (which compares the actual fund performance with the performance of a fund notionally invested in a mixture of appropriate unit trusts and gilts) compensates Mrs Lenderink-Woods for this underperformance for which Mr Davies is not responsible.
101.	What Mr Davies’ advice caused was the conversion of Mrs Lenderink-Woods’ income producing portfolio with its potential for growth of both capital and income, and in her absolute ownership, into an investment in a single asset class (personal loans) that were fixed in value and non-income producing, the repayment of which required the co-operation of her daughters; and the structure employed to achieve this incurred unnecessary and duplicative costs (which would otherwise have remained within the fund and themselves grown in value), the amount of which Mr Davies misstated.
102.	The expert evidence on quantum has its limitations. 
103.	Mrs Lenderink-Woods tendered the evidence of Sally Longworth, an experienced forensic accountant. She had undertaken a meticulous analysis of all dealings and approached the question of quantum on both the “reconstruction basis” and the “reimbursement basis”. But she had made certain assumptions that were the subject of agreement and revision in the meeting of joint experts and during the trial itself, and it is difficult for me to revise her report in the light of those amendments. Mrs Lenderink-Woods also tendered the evidence of David Squire (to whom I have earlier referred) to opine on the rate of return which Mrs Lenderink-Woods might reasonably have obtained from alternative investment proposition in 2001. As the nature of the question indicates, this was directed principally at the “reconstruction” basis: though it impacts also on the return element on overcharges on the “reimbursement basis”. He assumed a fund weighted 25% to bonds and 75% to equities: and he selected representative collective funds in order to produce an average annual return. For the period from May 2001 (taken as the date when the funds were invested in the Bonds) to June 2014 (when Mrs Lenderink-Woods exited from such of Mr Davies’ products as she could) the annual compound return was 7.32% net of charges and with income re-invested.
104.	For Zurich Mr Morrey dealt both with liability and with quantum questions.  When addressing the question of rates of return Mr Morrey utilised the FTSE Wealth Management Association Stock Market income total return (“WMA index”). This is an index compiled from other indices representing a basket of investment returns and shows “a mediumly average return across various asset classes” (as Mr Morrey put it). The annual compound return was of the order of 5.15%. It is, however, fair to say that it includes asset classes inappropriate for a “balanced fund” of the type required by Mrs Lenderink-Woods (e.g. hedge funds and alternative investments) and excludes others that plainly are appropriate to her risk profile (e.g. corporate bonds). Mr Morrey’s position was that in any event the annual compound return actually achieved by Seven Investment Management should be used in any growth calculations. His calculations also made certain assumptions that were the subject of subsequent agreement and revision. 
105.	My task is to assess (not to compute) damages for the loss caused to Mrs Lenderink-Woods. I do not aim for spurious precision. All the work of the experts (for which I am grateful) enables me to reach broad conclusions even if I cannot myself  undertake calculations.
106.	The experts were agreed that the sum invested in Mr Davies’ scheme was £527,186: and that the trustees have withdrawn £495,875 over the years, which they have used either to make loan repayments to Mrs Lenderink-Woods or to make distributions to beneficiaries. It was assumed that the former mechanism was adopted. The experts agreed that the funds remaining with Zurich relating to the Bonds totalled £27,913. These funds may become available to Mrs Lenderink-Woods since her withdrawals do not yet match her loans to the trustees. So the total of the funds withdrawn and remaining is more or less the same as the total originally invested.
107.	The conclusion I draw from this is that overall the average growth achieved within the Bonds (at 2.8% actual for the Portfolio Bond) has been matched by the average charges levied in respect of the Bonds. That explains why the finishing sum is the same as the starting sum after 15 years.
108.	By the end of the expert evidence the experts were agreed that the best way of calculating the charges levied by Zurich was to look at what Zurich was entitled to charge: though I consider that the conclusion I have drawn above provides an equally valid means of estimation.
109.	The consensus of the experts was that a normal wealth management charge for a fund of about half a million pounds would be 1% per annum with the charge applied quarterly (whatever precise arrangements were made). Whether one looks at the schedule of Zurich’s charges or conducts the comparative exercise I have, the charges levied under Mr Davies’ scheme exceed that consensus rate. This excess consists of the unnecessary and duplicative charges which the Davies’ scheme entailed.
110.	Mr Morrey has calculated the excess and the lost growth in value by reason of the levying of those charges. In respect of the Portfolio Bond (a) on the assumption that the excess charges had not been taken but had grown at the same rate as the actual fund he calculates the loss to be £21,815; (b) on the assumption that the excess charges had not been taken but had grown at the annualised WMA rate he calculates the loss to be £178,384. In respect of the International Bond on the assumption the excess charges had not been taken but had grown at the annualised WMA rate he calculates the loss to be £24,522.
111.	In relation to this evidence I find as follows:-
(a)	I do not consider it appropriate to use the actual growth rate achieved. The charges would have been taken from income and there is no reason to think that unspent income would have been invested in further purchases of existing selected investments. Seven Investment Management may be expected to make a competent choice of new investment. 
(b)	I do not consider it appropriate to use the WMA rate. It is an index of indices and therefore reflects only the markets i.e. passive tracker equivalents: and its asset base does not wholly reflect the asset classes in which Mrs Lenderink-Woods was or should have been invested.
(c)	I do not consider it appropriate to adopt Mr Squires’ figure of 7.32% based on his selected funds. I have no doubt that he selected them in good faith as in his view typical: but statistically each is above the median fund in its class, and the selective approach of itself involves “survivorship bias” i.e. the choice of funds that are still around today and the exclusion of funds that would have appeared equally good in 2001 but which have now for one reason or another failed or been absorbed.
(d)	I would propose to take an assumed annual compound rate of 5.65%. That is a 10% uplift on the WMA rate and in the quartile above the median for the categories of funds selected by Mr Squire. This is below the actual rate of return achieved by Zurich’s internal balanced funds. 
(e)	Because there are multiple elements to the calculation, to some of which adjustments made immediately before and during the trial, I must take these figured as general guides to be assessed against my general sense of the degree of loss suffered (including the impression derived from Ms Longworth’s calculations after adjustment to account for the modifications to her position).
112.	On that basis I assess the damages in the sum of £223,000 representing the impact upon fund value (down to July 2016) of the unnecessary charges occasioned by the adoption of Mr Davies’ scheme which with competent advice Mrs Lenderink-Woods would have avoided.  Because actual fund growth and actual charges levied more or less cancelled each other out the award of this sum also compensates Mrs Lenderink-Woods for the loss of investment growth of which it was the object of Mr Davies’ scheme to deprive her.
113.	I will hand down this judgment in London. I do not expect attendance on that occasion.