High Court Finds No Duty Owed To Investors By Barrister Advising Scheme Promoter
Published date | 09 March 2022 |
Subject Matter | Insurance, Litigation, Mediation & Arbitration, Insurance Laws and Products, Trials & Appeals & Compensation, Professional Negligence |
Law Firm | Herbert Smith Freehills |
Author | Mr Will Glassey, Antonia Pegden, Paul Lewis and David Reston |
Judgment was handed down by Zacaroli J today in McClean & Others v Thornhill [2022] EWHC 457 (Ch).
The decision will be of interest to professional liability insurers, legal practitioners, and litigation funders, particularly those involved in tax-related professional negligence claims.
The investors in a series of film finance tax schemes sued the tax QC who had prepared Opinions for the promoter of the schemes, which were then shared with all prospective investors. The Claimants asserted that the tax QC assumed a third-party duty to them. The Court disagreed, finding the QC owed no such duty, and that even if he had, the views he expressed in the Opinions were not unreasonable.
The Court accepted that the Claimants had a credible starting point for an assumption of responsibility, because Mr Thornhill QC consented, unequivocally and in writing, to his opinions being shared with prospective investors. However, on proper analysis there was no assumption of responsibility: the prospective investors had been recommended to take (and all warranted that they had taken) their own advice; and in addition, they could only have gained access to the schemes through an IFA, and it was reasonable to expect that the IFAs would either have given or procured the necessary advice.
The judgment is striking for the Judge's tax analysis undertaken for the purposes of determining the breach issues. In Zacaroli J, the parties were fortunate to have a Judge who also sits in the Upper Tribunal (Tax and Chancery Chamber). He eschewed the Claimants' invitation to infer that Mr Thornhill QC's advice must have been wrong from the fact that the Claimants...
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