A property-owner has failed in her bid to have the demerger of the family business overturned after she accused the company’s accountant of breach of fiduciary duty and professional negligence.
Six years later Carmela brought an action to have the demerger set aside. She claimed the assets she received were worth less than those she had given up, that the demerger happened due to the undue influence of her brother and alleged that the company had profited by £6.7 million at her expense.
As part of her claim, Ms De Sena alleged breach of fiduciary duty and negligence by the company’s accountants, Bishop Fleming. Ms De Sena said that a ‘fiduciary relationship of trust and confidence’ had developed between her and Bishop Fleming. She claimed the firm’s presence at shareholders meetings and the fact that it had prepared papers for the demerger indicated that it was acting for her personally in addition to advising the company.
The judge ruled that as Bishop Fleming was acting for the company, it could not also have a fiduciary duty to Ms De Sena as an individual shareholder. She had also been advised by Bishop Fleming to seek independent advice which she chose not to do. As a result, Bishop Fleming could not be found negligent as it did not owe a duty of care to Ms De Sena.
James Burgoyne, Director – Claims & Technical, Brunel Professions says the case will be reassuring not only to accountants but also other professionals owing fiduciary duties. “This judgment shows the Court is unlikely to rule that firms have a duty of care to individual shareholders, when they are retained by a company. In essence, owing a fiduciary duty to one party is likely to preclude owing duties to another – a situation which would be likely to represent a conflict of interest for the professional in any event. The case also provided clear guidance about when a firm owes a fiduciary duty to a client.”
Brunel secures competitive professional indemnity insurance cover for financial services professionals. To find out more visit the Brunel website or call Mark Sommariva on 0203 475 3275