London — Lawyers in Mayer Brown’s professional liability team in London secured a comprehensive High Court victory on behalf of Andrew Thornhill QC in a claim brought by investors in a tax avoidance film scheme.
Allegations were made against Mr Thornhill QC that in 2003/2004, he assumed a duty of care to potential investors in respect of tax advice he gave to the sponsor of the Scotts Atlantic Distributors film schemes, and that he breached that duty in advising the sponsor that the film schemes were trading, commercially, with a view to profit. The Claimants, 110 wealthy individuals who had invested in the film schemes via IFAs, argued that Mr Thornhill’s consent to allowing a copy of his opinions to be made available to potential investors amounted to an assumption of a duty of care to them, and he breached that duty, causing them to lose the majority of their investments when HMRC later rejected the film schemes.
The claims were dismissed in their entirety. The Judgment can be read in full HERE. The Judge, Mr Justice Zacaroli, found that no duty of care was owed by Mr Thornhill QC to potential investors. In the circumstances, it was not reasonable for investors to rely on Mr Thornhill instead of their own professional advisers, and it was not reasonably foreseeable by Mr Thornhill that they would do so. Even if a duty had been owed, the Judge held that such a duty had not been breached, and Mr Thornhill’s advice had not been negligent. The claims also failed on causation and, in respect of a large number of the claims, limitation grounds.
The trial, which proceeded by way of ten Sample Claimants’ claims which determined common issues binding on all Claimants, took place in person in November and December 2021. It involved 11 witnesses of fact, all of whom gave their evidence to the Court in person. Tom Adam QC and Max Schaefer, both of Brick Court, were instructed by Mayer Brown.
The Mayer Brown team was led by Litigation and Dispute Resolution Partner, Will Glassey (now at Herbert Smith Freehills), supported by Helen Kerr (Senior Associate), Dany Bitar (Associate) and Alex Scott (Trainee, now Associate).
Helen Kerr said: “The Judge’s findings on duty and the assumption of responsibility are comprehensive, and will be welcomed by other professional advisers who are the subject of similar claims. Mr Justice Zacaroli did not shy away from conducting a thorough analysis of the tax issues which lay at the heart of the allegations of breach. It was a hard-fought piece of litigation, and we are delighted by the strength of the judgment and the result.”