Assumption Of Responsibility ' The Other Side Of The Fence

• Published date: 12 April 2023
• Subject Matter: Litigation, Mediation & Arbitration, Tax, Professional Negligence, Tax Authorities
• Law Firm: Herrington Carmichael
• Author: Mr Stephen Baker

The thorny issue of assumption of responsibility in professional negligence cases continues to tax the judicial system. The case of McClean v Thornhill centred around whether an eminent tax barrister was liable to a series of wealthy non-clients following advice he had given to the promoters of a film finance tax scheme. Mr Thornhill KC provided opinions on the tax consequences of the schemes to the promoters. The information memorandum put forward by the promoters to potential investors named Mr Thornhill as the tax advisor and stated that the opinions were available to investors if requested. The tax schemes ultimately failed and Mr Thornhill was sued on the basis that he owed the claimants a duty of care in respect of the advice. The claimants stated that Mr Thornhill knew the legal advice was made available to them and they relied on that advice when joining the schemes. None of the claimants were Mr Thornhill's clients but the question was whether he had "assumed responsibility". A number of factors were considered:

• Was it reasonable for the claimants to rely on his advice - Mr Thornhill was a person with specific skills and knowledge
• Did Mr Thornhill anticipate or "reasonably foresee" that the claimants would rely on his advice: - he would have known that potential investors would take comfort from his role as named Tax Advisor who had given positive advice - the advice would have assisted the potential investors in deciding on the likelihood of obtaining tax benefits
• Mr Thornhill allowed his advice to the promoters to be shared with the potential investors and didn't include a disclaimer.

Despite the above factors the Judge concluded that the balance of the various factors...