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 was against Mr Thornhill having a duty of care to the claimants due to an assumption of responsibility. In essence, Mr Thornhill was advising the promoters who were the opposite side of the transaction to the investors and even though there was no conflict as both sides wanted the tax benefits to be achieved, the investors were not Mr Thornhill's clients.
The investment memorandum had clearly advised the potential investors to consult their own tax advisors on the tax aspects and they could only participate in the schemes if they had warranted that they had only relied on their own tax advice. So, even though Mr Thornhill's advice had crossed the line, the Judge held that the factors against imposing a duty on Mr Thornhill outweighed the factors for imposing a duty. The Judge considered that the claimants could not reasonably rely on Mr Thornhill's advice without making their own enquiries. The promoters were acting on an execution only basis. The film schemes were only marketed via independent financial advisors so all the investors would have their own professionals to advise them. Permission to appeal was obtained and the appeal was heard on 20 March 2023. Judgment has been reserved until after Easter. An update on this issue may well be needed if the Court of Appeal does not uphold the reasoning of the first instance decision.
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