Vinton & Ors v Fladgate Fielder (a firm) & Anor

At the strike-out and summary-judgment stage, a claim should proceed where the pleaded facts disclose a real prospect of establishing that solicitors assumed responsibility for inheritance-tax planning and negligently implemented it. A testator’s estate may sustain substantial loss on death even where the testator suffered no measurable loss during life. The law concerning duties owed to personal representatives and intended beneficiaries remains capable of development, particularly where existing authority leaves a remedial gap. A potential conflict between the interests of a company and those of a shareholder or beneficiary does not automatically prevent a duty arising where the pleaded facts suggest a unity of interest in achieving tax-efficient capital raising. Summary judgment is inappropriate where the evidence raises a genuine issue as to the identity and scope of the retainers.

The claimants, members of the Dugan-Chapman family and representatives or beneficiaries of the estate of Mary Dugan-Chapman, sued the defendants, the family solicitors, for losses arising from inheritance-tax planning connected with share issues by Wilton Antiques Ltd. Most of the shares acquired shortly before Mrs Dugan-Chapman’s death did not qualify for business property relief, resulting in a tax liability.

The defendants applied to strike out the claim under CPR 3.4(2)(a), alternatively for summary judgment under CPR 24.2. The issues included whether the solicitors owed contractual or tortious duties to the deceased, her personal representatives, prospective executors, and residuary beneficiaries, whether a duty could arise under the principle in White v Jones, and whether the evidence established that the only retainer was from Wilton.

1. Applications dismissed. The defendants failed to show that the claim disclosed no reasonable grounds or that it had no real prospect of success. The claimants were awarded their costs, subject to assessment if not agreed.
2. The contractual claim by the deceased’s personal representatives had a real prospect of success. Following Otter v Church Adams Tatham & Co, a negligent mistake which causes only nominal loss during the client’s lifetime may cause substantial loss on death by diminishing the estate.
3. The tort claim by the personal representatives was likely to face the difficulty identified in Daniels v Thompson, namely that the testator does not personally suffer the inheritance-tax loss suffered by the estate. Nevertheless, the issue was purely legal and might merit reconsideration in light of Otter v Church Adams Tatham & Co and Carr-Glynn v Frearsons. It was therefore inappropriate to strike out the claim.
4. There was a real prospect that personal representatives could sue for negligent failure to protect the estate from an unnecessary tax charge. The law was developing, and the difficulties concerning the identity of the person owed the duty did not justify summary disposal.
5. The beneficiaries’ claim under White v Jones was not confined to will-making. The principle was being explored case by case and could potentially extend to inheritance-tax advice. The pleaded facts also suggested that Wilton’s need for capital and the Widow’s desire for tax-efficient planning were not necessarily conflicting interests.
6. The evidence raised a real issue as to whether Fladgates acted under several retainers, including a retainer to advise the Widow on trust and tax matters, rather than solely under Wilton’s corporate retainer. The documents, bills and witness statements made the claim non-fanciful.
7. For the tort claims, the court applied the guidance in Customs and Excise Commissioners v Barclays Bank PLC: the duty-of-care tests are not discrete enquiries and must be considered in the detailed legal and factual context. The reliance claims also could not be shown to be fanciful at this stage.

The judgment records that the claimants had challenged HMRC’s determination before the Special Commissioner, who rejected the treatment of the relevant subscription as a rights issue: Re The Executors of Mary Dugan-Chapman Deceased [2008] WTLR 1359. The present judgment concerned the defendants’ interlocutory applications in the ensuing professional-negligence proceedings.