The judgment in Lumley Baxter Asset Management LLP v Aviva Life and Pensions UK Ltd, handed down by His Honour Judge Pema at the County Court at Huddersfield last month, is interesting for anyone in financial services who relies on a third-party platform, or who supplies one. It shows how a firm can win the legal argument and still come away with almost nothing, because winning on liability and proving loss are two very different exercises.
Lumley Baxter is a three-partner advice firm with around 700 clients, of whom roughly 109 used Aviva's online adviser platform to buy and manage ISAs, pensions and general investment accounts. In 2017 Aviva brought in third-party technology firm FNZ to rebuild that platform. The new version went live on 17 January 2018 after a planned six-day outage, having already been delayed once.
The problems are alleged to have started almost immediately. Allegations included; clients received incorrect or entirely unrequested withdrawals from their pensions and ISAs. ; Drawdown quotes stopped generating automatically, so advisers had to phone in instead, sometimes waiting over an hour and getting cut off before anyone answered; Automatic portfolio rebalancing broke down for so long that final checks for 79 of the firm's clients weren't completed until 2020; Fund valuations came through late or wrong, and a routine "Bed and ISA" transaction, selling an investment and immediately buying it back inside a tax wrapper, stopped working as a single instruction, leaving clients out of the market for up to ten days at a stretch.
Aviva ran a voluntary compensation scheme for affected advisers and offered Lumley Baxter around £19,000. The firm wanted more than £96,000. Talks broke down and the case went to court, where the numbers kept moving: issued at just over £200,000, the claim grew to close to £2 million once expert accountants got involved, before settling back to around £1.2 million by the time the trial started.
Before the judge could get near the money, he had to settle two contractual points that will matter to any insurance firm running or using an intermediary platform. The first was whether Aviva's wide exclusion clauses, tucked into a schedule to its standard terms, actually protected it from claims like this.
HHJ Pema found they did not. The clause Aviva relied on most heavily was headed "Downloads" and, properly read, only ever covered software a customer installed on its own systems, not a purely web-based platform. Even leaving that aside, the judge found Aviva had failed to show the clauses were reasonable under the Unfair Contract Terms Act 1977.
Lumley Baxter had no real bargaining power, the terms were offered on a take-it-or-leave-it basis, and there was no evidence that insurance existed against the risks the clauses tried to exclude. The judge pointed out that Aviva, as the party that built and controlled the platform, was better placed than anyone to insure against that risk itself.
The second question was whether there was an implied term that the platform would be reasonably fit for purpose. Again the judge said yes, drawing a comparison with the Post Office Horizon litigation, Bates v Post Office, where a similarly one-sided IT relationship gave rise to an implied duty of fitness and "error repellency." Aviva's own marketing for the upgrade had promised a platform that was more flexible, faster to use and better value for money, which sat awkwardly with any argument that no particular standard applied to it at all.
On the facts, the judge found Aviva in breach on almost every point Lumley Baxter had raised: the withdrawal errors, the missing drawdown quotes, the rebalancing failures, the wrong valuations, the broken Bed and ISA process. Only a complaint about slow-answered phone calls fell outside the scope of the implied term.
Establishing breach was the easy part. Lumley Baxter still had to show that those breaches had actually cost it money, and each of the three ways it tried to do that ran into serious problems at trial.
The first was a claimed shortfall in new-business fee income of around £325,000 to £335,000, based on a dip in revenue between 2018 and 2020. The firm's own lawyers conceded in closing submissions that their forensic accountant's methodology had unravelled under cross-examination. A fallback argument, leaning on the defence expert's concession that platform disruption was a "possibility," was rejected too: fee income had actually held up reasonably well through the worst of the disruption, then dropped sharply in 2023 and 2024, years after the platform problems had eased, with nothing put forward to explain that later fall.
The second head of loss concerned two specific prospective clients the firm said it had lost the chance to sign because its senior partner was too busy dealing with Aviva's platform to chase them up. One was said to be worth up to £158,000 in initial fees plus £39,500 a year in renewals, the other up to £80,000 initial and £120,000 a year. Both were personal friends of the senior partner, and neither gave evidence. The judge drew an adverse inference from that gap. In one case, a contemporaneous meeting note recorded the prospective client saying he planned to sit on his hands for another 17 months before deciding anything, which the judge thought hard to square with the idea of an opportunity slipping away in real time.
The firm also tried to recover the cost of employing the senior partner's son as an investment analyst, arguing his father needed the extra help to cope with the platform disruption. But a committee note written just eight days before the son started work referred only to a need for additional investment expertise, with no mention of Aviva at all.
The judge preferred that contemporaneous record to family recollections given years later, concluding the hire looked far more like ordinary succession planning than a cost caused by the breach.
The largest claim was for staff time diverted to dealing with Aviva's problems, valued at a notional £250 an hour and totalling up to £225,000. It also drew the most detailed criticism. The underlying spreadsheet grew from 646 claimed hours in the original compensation-scheme submission to 915.5 hours across 88 clients by trial, using a flat 15-minute unit for every interaction, however brief.
The judge found short, routine emails repeatedly billed at 15 minutes or more, entries duplicated across different clients, time logged for meetings unconnected to the platform, and a single query about tax certificates billed twice over, against two different clients' files. After stripping out secretarial time, duplication and exaggeration, he arrived at roughly 456 hours spread across two years and several staff, under five hours a week between them and nowhere near enough to count as the "significant disruption" the law requires.
Even that residual time couldn't be turned into lost revenue at £250 an hour, which the judge said confused a billing rate with actual cost. On the firm's own figures, its secretary would have cost the business more than twice as much per hour as its qualified investment analyst, a comparison the judge said simply wasn't credible.
For any business that provides technology to intermediaries, the liability findings are the ones to pay attention to. Broad exclusion clauses tucked into a schedule and offered on a take-it-or-leave-it basis to smaller firms are unlikely to survive the reasonableness test in the Unfair Contract Terms Act, and an implied duty to keep a platform reasonably fit for purpose now looks well established for any provider that requires intermediaries to transact through it.
For brokers weighing up a similar claim, the loss side of the judgment carries the bigger warning. Proving that a system failed and that staff spent time cleaning up after it is only half the job. Courts still want a properly evidenced link between that disruption and an actual financial cost: enquiry logs, conversion data, contemporaneous notes and independent witnesses, rather than recollections reconstructed years later. Lumley Baxter had the first half of that case. It didn't have the second, and that gap is why a firm that won on every substantive legal point ended up with a judgment worth a single pound.
