The case of McClean and Others v Thornhill sheds light on how those providing advice may now protect themselves based on the technicalities of a disclaimer. Multiple investors found themselves with no recourse after having incurred heavy losses owing to reliance on a professional’s incorrect advice.
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A scheme was developed with the aim of providing investors with tax advantages. The tax specialist contributing to this conclusion was the renowned tax barrister Andrew Thornhill QC. A memorandum was circulated to potential investors which highlighted Mr Thornhill’s advice and noted that copies of this advice would be available on request. The memorandum did contain a caveat, advising would-be investors to seek independent advice from their own tax advisors before buying into the scheme. Ultimately, HMRC did not allow these tax advantages to go ahead and ten investors agreed to a settlement in which they paid back the majority of the tax benefit with interest.
All ten investors brought professional negligence claims against Mr Thornhill on the basis that they had all relied on his advice when investing in the scheme, and had suffered a loss on that basis.
Ultimately, the court ruled in Mr Thornhill’s favour, finding that there was no duty of care owed by Mr Thornhill to the claimants, and even if there was, no breach had occurred.
This is not to say that there was no potential for a duty of care to exist. Mr Thornhill had specific expertise and provided it to investors whom he knew would rely on it. His status as a tax expert would make investors more comfortable investing in the scheme, especially given his conclusion on the potential tax benefits. Finally, Mr Thornhill knew that his analysis related to what was arguably the focal point of the scheme: the tax advantages.
In spite of these points, the disclaimer in the memorandum was Mr Thornhill’s saving grace. Whilst the claimants were relying on the expert advice in the memorandum, it was never intended to be the only advice they relied upon. In addition, as the scheme was only marketed to high-net-worth individuals, by independent professional investors, all of the claimants had access to independent financial advisors to assist them. It was, therefore, reasonable to assume that the would-be investors would seek this independent advice, in addition to that of Mr Thornhill. It is for these reasons that the judge did not find a duty of care was owed to the claimants.
The Importance of Disclaimers
It is of the utmost importance to realise that the disclaimer in the memorandum is what pre-emptively defeated any successful claims of professional negligence arising against Mr Thornhill.
Keeping this in mind, it is essential that you are fully aware of what any professional advice you receive entails, and the extent to which it may seek to absolve itself. Our team of professional negligence lawyers look at the merits of your case and accurately advises the extent to which such advice may be binding on a professional.
It is equally important to note that the precedent set by McClean with regard to disclaimers will not always be deemed sufficient. One of the grounds for the decision was the fact that the investors were business-savvy investors who had recourse to multiple independent financial advisors. An uncommon occurrence, it is likely that you still have a case in light of McClean. Our highly-qualified team of professional negligence solicitors and barristers walk you through the complex rules and regulations applicable to your case, ensuring that you are able to successfully bring claims of professional negligence against professional advice that has caused you a loss.
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LIMITATION ACT 1980 – WARNING
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