Professions and Financial Lines Brief: latest decisions December 2026

A roundup of the latest court decisions touching on the following issues:

Dishonesty, client categorisation under COB 3.5, withdrawal of a Part 36 offer and S.423 relief under the Insolvency Act, 1986

Deliberate misleading under a CFA: clarifying the evidential threshold

Harrison Bryce Solicitors Limited v Abdul Shamaj [31.10.25]

Mr Abdul Shamaj instructed Harrison Bryce Solicitors Ltd (“HB”) under a conditional fee agreement (CFA) to pursue a road traffic accident claim (“the underlying claim”). Shortly before trial, HB took the view that the underlying claim was dishonest and purported to terminate the retainer. They did not, however, advise Mr Shamaj of the need to pay the trial fee.  The underlying claim was subsequently struck out.

Mr Shamaj brought proceedings alleging professional negligence for failure to pay the fee or warn him of the consequences. HB denied liability and counterclaimed for fees and disbursements, alleging that Mr Shamaj had deliberately misled them (in breach of the CFA). The County Court dismissed both claims. HB appealed the dismissal of the counterclaim.

Relying heavily on the Supreme Court decision of Perry v Raleys, HB argued that the burden lay on Mr Shamaj to prove that he would have made an honest claim. HB also argued that the County Court Recorder (the Recorder) had incorrectly focused on whether the accident was staged, rather than on whether the claim for damages was honest. They submitted that the finding of several heads of loss being “demonstrably false” meant the underlying claim could not honestly be pursued. Once dishonesty in the underlying claim was established, it necessarily followed that Mr Shamaj had breached the CFA by misleading his solicitors.

Mr Shamaj argued that the Recorder had correctly distinguished the genuineness of the accident from whether the solicitors had been deliberately misled. He submitted that the CFA required proof of intentional deception when instructions were given. The mere fact that certain heads of loss were unsustainable did not establish deliberate misleading, particularly where errors could be explained by misunderstanding, poor communication, or inadequate case preparation.

Mrs Justice Dias dismissed the appeal and rejected the argument that the Recorder had failed to draw the correct distinction. Although HB’s case at trial had focused largely on allegations that the accident was staged, the judgment demonstrated that the Recorder had also addressed whether HB had been misled about the damages claim (and found that they had not).

Secondly, the judge held that, a claim which could not honestly be pursued, did not automatically establish the client had deliberately misled his solicitors. These were conceptually distinct questions. Under the CFA and retainer, HB had to prove intentional or fraudulent misleading, not merely that the claim was dishonest or unsustainable when assessed with hindsight. The Recorder’s conclusion that HB had not been misled was a finding of fact.  As such, there was no basis for reversal of the judgment. Importantly, the High Court confirmed that the burden of proof lay with HB. The approach in Perry v Raleys, which places the burden on a claimant to prove an honest underlying claim, did not apply to a solicitor’s counterclaim alleging deliberate deception by a client. 

This decision emphasises that the bar for establishing dishonesty is a high one and serves as a reminder to claimants that the burden of proof rests with them.

Authors: Emma Howard and Nicholas Read

Court of Appeal Clarifies Elective Professional Client Rules in Linear Investments v FOS

Linear Investments Ltd v Financial Ombudsman Service Ltd [29.10.2025]

This case concerns Linear Investment Ltd’s (Linear) client, a retail investor and academic, who completed Linear’s onboarding documentation, “ticking boxes” to claim prior CFD (contract for difference)-trading experience and requesting to be classified as an “elective professional client” under the Financial Conduct Authority (FCA) rules.  The client’s portfolio subsequently lost a substantial part of its value. The Financial Ombudsman Service (FOS) concluded that Linear had wrongly treated him as a professional, and that the firm’s client-classification assessment failed the relevant FCA Conduct of Business (COB) tests. Relying on an untested “tick-box” certification rather than supportive documentation to prove the client’s CFD-trading experience was held to be insufficient. Furthermore, the firm’s submission form recorded past “trade size” in generic “lots”, but did not specify which markets the trades were on, or the lot-size conventions. There was also no trading history or statements demonstrating that the client had executed such trades.

Linear appealed to the Court of Appeal and sought judicial review, challenging (1) the finding as to mis-classification, (2) the benchmark used to calculate redress, and (3) the failure to reduce the award to reflect the client’s own misstatements.

The Court of Appeal upheld the FOS ruling that Linear’s client classification assessment was inadequate in respect of both the quantitative and qualitative tests. The Court of Appeal also dismissed Linear’s second ground of appeal. The third ground of appeal was, however, allowed and a partial quashing order, limited to the quantum of the FOS’s award, was made.

The judgment clarifies that classification under COBS 3.5 is not a mere formality: firms cannot rely solely on client tick-boxes or self-certification when onboarding for high-risk products. The qualitative and quantitative tests must be met with objective, evidence-based assessment, and appropriate documentation. The judgment also places a higher burden on firms to probe clients for further information, where a client’s statements are inconsistent or unsupported, before treating them as professional investors.

This ruling ultimately raises the bar for a firm’s client onboarding processes, especially in respect of leveraged or complex financial products. Furthermore, for a firm’s clients, it reinforces the importance of accurate and honest disclosure of previous experience.

Authors: Jennifer Ferguson, Camila Bishop

No Take-Backs: The High Court Reinforces Part 36 Certainty

Chinda v Cardiff & Vale University Health Board [24.10.25]

The underlying personal injury claim arose from a delay by the defendant health board in diagnosing the claimant’s spinal tuberculosis, which resulted in the claimant suffering permanent neurological injury. The defendant admitted breach, judgment was entered for the claimant and a trial on quantum was set to take place in October 2025. A round table meeting (RTM) took place but no settlement was reached. The following day (2 July), the claimant’s solicitors made a Part 36 offer based on the claimant’s offer made at the RTM.  This included a retained lump sum, variable periodical payments, and provisional damages. Less than week later, the claimant sought to withdraw that offer, citing fatigue, pain, and difficulty processing the relevant period.  The defendant subsequently accepted the offer on 22 July 2025 (within the relevant period), and the claimant then applied for permission under CPR 36.10(2) to withdraw it.

The test to be applied for permission to withdraw a Part 36 offer is whether there has been a sufficient change of circumstances to make it just to withdraw. The Master refused the application, stating that there had been no such change of circumstances - the claimant’s decision to withdraw the offer was a change of mind, rather than a change of circumstance.

The court considered whether the claimant’s vulnerability meant the offer should be withdrawn. However, vulnerability is only relevant where it affects a party’s ability to participate in proceedings or give instructions, and it must be identified at an early stage. No such concerns had been raised, and the claimant had been represented throughout by specialist solicitors who were aware of his medical condition. Crucially, the court emphasised that Part 36 is a self-contained procedural code, and that certainty and predictability are fundamental to its operation. Allowing withdrawal on the facts would undermine those principles and introduce unacceptable uncertainty.

This judgment is an important procedural decision with wider relevance for those involved in professional liability and financial lines claims. It reinforces the narrow scope for departing from the Part 36 code and the high bar required to demonstrate a “change of circumstances” under CPR 36.10.

For professionals, insurers and claims handlers, this case highlights the need to:

1. Ensure clients understand the binding nature of Part 36. Once an offer is made, and once accepted within the relevant period, the court will be slow to interfere or allow withdrawal
2. Recognise that the usual Part 36 consequences will only be displaced in truly exceptional circumstances. For insurers, this provides reassurance that personal reasons or changes of mind will not unsettle the certainty Part 36 is designed to provide
3. Appreciate that Part 36 remains a valuable tool for defendants and insurers because of its predictable costs consequences. The certainty that acceptance within the relevant period will stand, absent a truly material change in the case, enables insurers to manage exposure confidently and to use Part 36 tactically in settlement strategies.
   
   Overall, the judgment strengthens the principle that Part 36 operates as a strict, self-contained code, giving insurers greater confidence that well-timed offers will carry their intended costs protection and cannot easily be unpicked.

Authors: Anais Doyle, Remi Brookes-Coker

High Court declines to grant relief despite finding transaction defrauding creditors

Credit Suisse Virtuoso SICAV-SIF & Anr -v- Softbank Group Corp. & Ors [15.10.25]

The High Court has delivered a rare judgment in which it dismissed Credit Suisse’s full claim of USD440 million claim under section 423 of the Insolvency Act 1986, despite finding that every statutory element of s.423 was satisfied.

This dispute stemmed from the collapse of the Greensill group and its financing of the US construction company Katerra. Credit Suisse had invested in securitised loans notes worth USD440 million, supported by rights held by Greensill under a receivables purchase agreement. As part of Katerra’s restructuring in late 2020, Greensill entered into two transactions that released Katerra from its USD440 million debt in exchange for shares that were ultimately transferred to SoftBank. These steps stripped Greensill of its sole significant asset and left Credit Suisse unsecured when Greensill collapsed in 2021.

Credit Suisse issued proceedings claiming remedies under s.423, which addresses transactions at an undervalue made with the intention of defrauding creditors. They sought an order to restore the position to what it would have been had the impugned transactions not been entered into.

In his judgment, Lord Justice Miles held that:

1. The relevant transactions were the two impugned transactions.
2. The two impugned transactions were indeed at an undervalue.
3. That Greensill had the requisite statutory purpose under s.423.

Whilst the statutory conditions for a s.423 claim were fully established, the judge declined to grant relief. He held that SoftBank had acted in good faith and that ordering relief would exceed what was necessary to fulfil the restorative and protective purpose of s.423. In exercising his discretion, he concluded that no remedy should be ordered.

Although this a highly fact-specific outcome, the decision highlights the court’s discretion to refuse relief where the beneficiary is innocent and value has been eliminated by events outside their control. The judgment acts as confirmation that the recipients culpability is taken into account when exercising powers of relief from transactions defrauding creditors. It remains to be seen whether there will be an appeal.

Authors: Jing De Su, Magnus Walker