In Mehjoo v Harben Barker (a firm) and another, the defendant accounting firm was sued by an Iranian client for failing to refer him to specialised tax advice for non-domiciles, where such ‘non-domicile’ status carried potentially significant tax advantages for the client. The defendant claimed that it was not obliged to give such tax advice unless expressly asked to do so and that it was not obliged to refer the Plaintiff to a relevant specialist for such advice.
The defendant argued that its terms of retainer, which dated back to 1999, did not expressly require the defendant to refer its client to a specialist. The court looked outside the parameters of the express retainer and considered the parties’ relationship and dealings over a long period of time. From this it determined that there was a clear and mutually-accepted understanding that the defendant was at all times required to consider the Plaintiff’s tax position and provide appropriate advice, even where not specifically sought.
This case should alert all professional advisors to the need to refer clients to specialists when aware that specialist advice may be required. Professional advisors should also consider updating their engagement letters over time in circumstances where client relationships often tend to evolve beyond the scope of an initial retainer (“mission creep”).
The decision in this case was largely based on its own facts. Advisors should remain alert to their own particular circumstances. Advisors might also consider specifying in engagement letters precisely what it is not covered by their retainer as well as what is covered. In doing this, advisors should avoid leaving grey areas open to interpretation.