Solicitors' Duties To Third Parties - A Taxing Issue

Does a solicitor owe duties of care to third parties when advising a client? This question was considered in the well-known House of Lords' decision in White v Jones1. A solicitor provided negligent advice to a testator in connection with the preparation of a will, causing a beneficiary under that will to suffer loss. There was no contractual relationship between that beneficiary and the solicitor. Nevertheless, in a decision underpinned by social justice considerations, such as the importance of testamentary freedom, the House of Lords held that the solicitor did owe a duty of care to the beneficiary, partly since the absence of any other remedy against the solicitor gave rise to an "undesirable lacuna" in the law.

Claimants have since sought to extend the White v Jones principles to a wider range of circumstances. One example concerns the negligent provision by a solicitor of inheritance tax (IHT) planning advice. There is uncertainty as to precisely who can bring a claim against the solicitor in such circumstances, as is readily apparent from the recent decision of Morgan J in Alan Michael Rind v Theodore Goddard2.

The factual background to Rind is complex. The claimant's mother, Mrs Rind, instructed solicitors to provide IHT planning advice with a view to minimising the value of her estate for IHT purposes. However, following a series of transactions, Mrs Rind unintentionally reserved a benefit in certain assets. Those assets therefore remained part of her estate for IHT purposes. Following Mrs Rind's death, a claim was brought against the solicitors by the claimant, a residuary beneficiary under Mrs Rind's will, in respect of the increased IHT liability of the estate.

The solicitors sought summarily to dismiss the claim, primarily on the basis that no duty of care was owed to the claimant as a beneficiary. This was an unsurprising argument; on the claimant's own case, the solicitors had been retained by Mrs Rind, not the claimant. The solicitors sought to distinguish White v Jones, partly on the basis that the sufferance of loss by the claimant had not been foreseeable on the facts, but also because there was no "undesirable lacuna". The additional IHT liability had been incurred by Mrs Rind's estate. The estate therefore possessed a cause of action against the solicitors. On an application of the test in White v Jones, therefore, there was no need to extend a duty of care to the claimant.

Such arguments appear to be logical. The key...