Professional Negligence
Exposure to Advisors

professional negligence alfred leung YTL LLP tax specialist

Assumption of responsibility. Money Worth? If you are an affected investor, you may wish to consider going after the deep pockets

On 28 April 2023, the the UK Court of Appeal (Civil Division) in David McClean and Others v Andrew Thornhill KC [2023] EWCA Civ 466, held that a UK tax barrister who had provided advice to the promoters of a film finance tax avoidance scheme, that it would achieve the tax reliefs intended, did not owe a duty of care to investors to whom his advice had been made available by the promoters.

The appellants (some of the investors who subscribed for membership of LLPs) appealed against the dismissal of their claims in negligence against the respondent, Andrew Thornkill, a well-known King Counsel, who specialized in tax in respect of failed film finance tax schemes.  Mr. Thornkill KC was engaged by the promotor to advise on devising and setting the LLPs and on the tax consequences of the schemes.  Mr. Thornkill KC did so in a series of opinions.   The schemes had been marketed to potential investors on the basis that they would be entitled to tax relief against their income or capital gains for trading losses. They involved the establishment of three limited liability partnerships to acquire and exploit film distribution rights. The appellants had become members of those LLPs between 2003 and 2004. He had been engaged to advise the schemes’ promoters on the tax consequences of the schemes. He provided various opinions to them, and consented to being named as their tax adviser and to the opinions being made available to potential investors. Each scheme was promoted to investors via an information memorandum which identified the respondent as the promoter’s tax adviser but advised prospective members to consult their own tax advisers. In their subscription agreements, investors warranted that they had taken appropriate professional advice and were aware of the risks attached to becoming a member.

General rule:  a lawyer (whether a solicitor or barrister) owes a duty of care to the party for whom they are acting, but not to the opposite party.  As stipulated in Steel v NRAM Ltd, two elements would need to be met if for a duty of care may to arise (1) whether it is reasonable for a representee to have relied on a representation; and (2) whether the representator should reasonably have foreseen the reliance was likely.  Objective test would be applied when assessing the reasonableness of reliance. 

Applying the general rule to the facts of this case, it was held that there was nothing to suggest that the Thornhill KC had stepped outside his role as adviser to the promoter and had taken on some independent expert role advising both the promoter and the investors.  Further, it was held that the scheme documents supported that investors would make their own assessment of the risks of the transaction. 

In all circumstances, and especially in the current economic downturns, a professional adviser (accountants, valuers, financial advisers, consultants) should be ensure that there should not be any unnecessary and/or unwanted existence of duty care.  On the other hand, if an investor is considering avenue to recover its losses suffered from an investment (especially, during the economic downturn), one may wish to consider going after adviser(s) with deep pockets that might have inadvertently given advice to investors. 

If you wish to find out more about this article or how we can help, please contact:

Alfred Leung, Partner (email:; phone: 852 3468 7202)


YTL LLP is a law firm headquartered in Hong Kong, China.  This article is general in nature is not intended to constitute legal advice.