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Excessive Court docket finds no obligation owed to traders by barrister advising scheme promoter

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Judgment was handed down by Zacaroli J right this moment in McClean & Others v Thornhill [2022] EWHC 457 (Ch).

The choice will likely be of curiosity to skilled legal responsibility insurers, authorized practitioners, and litigation funders, significantly these concerned in tax-related skilled negligence claims.

The traders in a collection of movie finance tax schemes sued the tax QC who had ready Opinions for the promoter of the schemes, which have been then shared with all potential traders. The Claimants asserted that the tax QC assumed a third-party obligation to them. The Court docket disagreed, discovering the QC owed no such obligation, and that even when he had, the views he expressed within the Opinions weren’t unreasonable.

The Court docket accepted that the Claimants had a reputable place to begin for an assumption of duty, as a result of Mr Thornhill QC consented, unequivocally and in writing, to his opinions being shared with potential traders. Nonetheless, on correct evaluation there was no assumption of duty: the possible traders had been really useful to take (and all warranted that that they had taken) their very own recommendation; and as well as, they may solely have gained entry to the schemes via an IFA, and it was affordable to count on that the IFAs would both have given or procured the mandatory recommendation.

The judgment is putting for the Choose’s tax evaluation undertaken for the needs of figuring out the breach points. In Zacaroli J, the events have been lucky to have a Choose who additionally sits within the Higher Tribunal (Tax and Chancery Chamber). He eschewed the Claimants’ invitation to deduce that Mr Thornhill QC’s recommendation will need to have been improper from the truth that the Claimants felt obliged to settle with HMRC in 2017; and as an alternative, re-immersed himself within the contemporaneous 2002 – 2004 frequent regulation jurisprudence (and HMRC’s strategy to movie finance tax schemes); that being the context wherein these schemes have been conceived by Scotts and Mr Thornhill QC suggested. It’s trite that that have to be the Court docket’s position in assessing the reasonableness of recommendation given practically 20 years earlier, however it’s reassuring for defendant professionals to see that job faithfully carried out in follow.

Herbert Smith Freehills Companion Will Glassey (while a companion at his earlier agency Mayer Brown) acted for the profitable Defendant Andrew Thornhill QC. His full case be aware will be accessed right here.

Counsel instructed on behalf of Mr Thornhill QC have been from Brick Court docket Chambers, led by Tom Adam QC.  Mr Adam QC’s junior at trial was Max Schaefer.  The Brick Court docket group additionally included Daniel Piccinin and Chintan Chandrachud, and additional specialist tax enter was additionally supplied by Conrad McDonnell of Grey’s Inn Tax Chambers.

For any inquiries about points regarding attorneys’ skilled negligence within the UK, please contact Will Glassey, Paul Lewis, David Reston or Antonia Pegden, or your normal Herbert Smith Freehills contact.

 

Will Glassey

Antonia Pegden

Paul Lewis

David Reston

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