A leading tax silk may still face a Court of Appeal hearing over advice he gave about film distribution schemes, though the High Court today refused permission to appeal against the dismissal of the claim by investors.
Andrew Thornhill QC, 78, was sued by more than 100 people over his advice that three similar schemes – advertised by Scotts Private Client Services, which engaged the barrister to provide advice – would provide tax benefits.
The schemes were later shut down by HM Revenue & Customs causing ‘dire financial consequences’ for investors, the High Court heard last year.
Ten claimants had their cases tried as sample claims as they tried to recover their losses from Thornhill, who testified that he ‘did not make any mistakes’ while his counsel described the claim as ‘a classic piece of reverse engineering’.
Mr Justice Zacaroli dismissed the claim in March, ruling that Thornhill ‘owed no duty of care to the claimants in respect of the advice he gave in relation to the schemes’ and noted that investors were expressly advised to take independent advice about the purported benefits.
He also held that, even if Thornhill had owed a duty of care, ‘he would not have breached that duty in providing his opinion that the schemes would achieve the tax benefits’ and rejected the claimants’ case on causation and reliance.
The claimants sought permission to appeal, arguing the judge was wrong to find Thornhill did not owe a duty of care as he was ‘essential to the selling of the tax benefits’.
Anneliese Day QC also argued that ‘any competent tax silk’ in Thornhill’s position would have advised that ‘at the very least … there was a significant risk’ the tax benefits would not be available.
Zacaroli refused permission, saying there was no real prospect the Court of Appeal would find the relationship between Thornhill and investors was ‘anything other than [as between] buyer and seller’.
However, the judge said his approach on issues of causation and reliance may have been different if he had decided otherwise on duty – and Day said the claimants will apply directly to the Court of Appeal.
The claimants were also ordered to make a payment on account of Thornhill’s costs, which the Gazette understands is over £1.5m.
Tom Adam QC, for Thornhill, told the court his client had made a ‘drop hands’ offer – at which point Thornhill’s costs were around £750,000 – and that ‘the claimants could have got out of this way before trial without having to pay any of Mr Thornhill’s costs at all’.
The court heard Thornhill’s total costs were around £2.3m including over £100,000 since the court’s ruling was handed down, mainly spent on instructing specialist costs lawyers.
The claimants said any payment on account should be £1.14m, a figure based on the deed of indemnity provided by Thornhill’s insurers as security for costs – but Adam said the claimants’ ‘hard-nosed insurers’ had negotiated a ‘substantial’ discount with their lawyers, which should be taken into account.
‘They are backed by a heavyweight commercial litigation funder [Vannin Capital], Adam said. ‘This is their business, this is what they do – they paid money, they hope to get large chunks of damages out – losing is an occasional hazard.’
Zacaroli ruled Thornhill had been ‘overwhelmingly successful’ at trial and ordered a payment on account of the vast majority of his costs, allowing 28 days for payment of the sum after hearing that Vannin needs to go through ‘various internal fund procedures’ to arrange the payment.