Hunstanton businessman’s daughters lose court case over �1m inheritance tax bill

Four daughters of photographic tycoon Christopher Swain have lost their legal battle over a �1m inheritance tax bill.

In a cautionary tale for wealthy people engaged in tax planning for the benefit of their families, had Christopher Swain died just three weeks earlier than he did, his loved ones would have been saved �1.2m in inheritance and capital gains taxes.

But his untimely death after what should have been a low-risk heart operation in Thailand has left his daughters facing massive legal costs bills after they lost their marathon legal fight to hold solicitors to account for the tax loss.

Describing legal bills run up in the dispute as 'very significant indeed', top judge, Lord Justice Davis, lamented the sad outcome of Mr Swain's attempt to do the best he could for his daughters, Abby, Claire, Christa and Gemma.

He told London's Civil Appeal Court: 'The trial, and its outcome, will have been disastrous for them, not only in costs terms but also, it is not difficult to apprehend, in terms of anxiety, pressure and emotional upset.

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'One feature, at all events, that seems to me to shine through the evidence is Mr Swain's evident long term wish, as a father, to make as handsome financial provision as he could for his daughters.

'I anticipate that this will not, in the result, have been achieved: his wish will have been frustrated.'

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Photographic supplies entrepreneur, Mr Swain, 61, was an 'overweight' diabetic and had already suffered a previous cardiac arrest, when he died 'immediately after' a four-hour investigative operation on February 17 2007.

Living in Thailand at the time, and separated from his third wife, a Thai, there was never a post mortem to explain the 'catastrophic circulatory collapse' that killed him after the surgery, which was said to carry only a 1 in 1,000 risk of fatality.

Mr Swain left behind an estate which included his �1.5m home and about �5m he reaped from a management buyout of his Hunstanton, Norfolk-based business, Swains International PLC, on January 31 2007 - just over two weeks before his death.

Whilst still coping with their grief, Mr Swain's daughters were handed a �1m bill by the taxman to cover the inheritance tax due on his profits from the shares sale.

If Mr Swain had died still owning the shares, they would have been free from inheritance tax, as they would have been covered by business property relief.

Mr Swain's death also meant his daughters lost out on capital gains tax relief worth �200,000.

Abby Swain, 36, Claire Swain Mason, both of Hunstanton, Christa Swain, 33, and Gemma Swain, sued solicitors Mills & Reeve, claiming they ought to have advised their father he was taking a �1m gamble by not delaying the sale of his shares until after the operation.

But Lord Justice Davis, sitting with the Master of the Rolls, Lord Neuberger, and Lord Justice Richards, today cleared the law firm of all blame for the debacle.

The judge said the firm had only learnt of Mr Swain's impending operation 'by chance', when one of its staff was blind-copied into an email he sent to his daughters, and the businessman had not sought any advice on the issue.

The daughters' lawyers argued the solicitors knew their father had a history of ill-health, but the judge said: 'That may be so; but there was nothing to indicate to them that the procedure mentioned in the email carried any significant risk.'

He added: 'There was, in fact, unchallenged medical evidence at trial that the risk of death from such a procedure was of the order of one in 1,000. Mr Swain had himself apparently been advised that the risk was less than 1pc.

'Mr Swain's own concerns and anxieties may have been significantly greater. But he never expressed such concerns to Mills & Reeve, let along sought advice about any implications.'

Arguments that the businessman was 'down-playing' his illness so as not to alarm his daughters was no more than 'impermissable speculation', the judge added.

Their damages claim dismissed, Mr Swain's four daughters must now pay their own heavy legal costs of the case, as well as the lion's share of those run up by Mills & Reeve, a 'full service' law firm with offices in Norwich, Cambridge and elsewhere.

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