Can executors of a deceased person sue a firm of solicitors for loss incurred by negligent advice given to the deceased person which saddles her estate with an inheritance tax liability? And can a legatee of the deceased sue the firm for the reduction to her inheritance caused by the inheritance tax liability created in such circumstances?
(1) CASE 1: THE EXECUTORS’ CLAIM
In the first case ([2013] CSOH 60), a claim was pursued by the executors of the deceased, alleging that the solicitors had caused loss to the estate as a result of their negligence, and that this loss was the result of a breach of a duty of care owed to the deceased. The issue facing the court was the question of whether loss caused to the estate but flowing from a reach of duty owed to the deceased could be claimed, given that no loss had been suffered until after the deceased's death, when the inheritance tax became payable. As the judge (Lord Tyre) noted:
"there is a lack of authoritative guidance on the question of whether an executor can sue as representative of the deceased where no loss arises until after the deceased's death"
He added that he was unable to find any reliable source of guidance from English law, because "there are certain statutory provisions applicable under English but not Scots law, but also because the law in England appears still to be in the course of development". on my first reading of the decision, it seems not to be not made clear what exactly these statutory provisions are (perhaps some list members may be aware?). He reaches the conclusion that:
"In the absence of any authority which might compel me to reach a different view, I am of the opinion that ... Where no loss has been sustained during the lifetime of the deceased, there is, in my opinion, nothing that could transmit to the executor and form the basis of an action by the latter. This approach appears to accord with the common law position regarding losses arising from negligent acts causing death, and it is not obvious to me why the rule should be different, depending on the cause of the loss."
So, there was no claim available to the executors for loss from a breach of duty owed to the deceased which only resulted in loss to the estate after the death of the deceased.
(2) CASE 2: THE LEGATEE’S CASE
In the second case ([2013] CSOH 61), the deceased’s niece sued the firm of solicitors in respect of loss constituted by the reduction in her legacy resulting from the inheritance tax payable as a result of the firm’s negligence. In respect of this claim, Lord Tyre felt that the ratio of White v Jones provided possible support for a claim by the niece: “it cannot be said at this stage that the circumstances are such that the defenders could not be held to have assumed responsibility to the pursuer to take reasonable care to avoid causing her loss through negligence in their advice to and actings on behalf of [the deceased]. These, in my opinion, are matters to be addressed after evidence has been led.” He thus held the claim to be a relevant one, and ordered a proof before answer on the matter (i.e. a hearing to determine the applicable facts, before a debate on the relevant law).
Interesting to see these two different claims both being attempted in relation to the same facts, something which suggests a degree of inventiveness and creativity on the part of the legal agents concerned with the litigation.