Duty of Care of Solicitors

Solicitors generally only have a duty of care to their clients, however is some cases a duty of care can extend to third parties.

“A solicitor will generally not be under a duty of care to a third party where performance of the duty would or could conflict with the solicitor’s obligations to a client. However, where performance of the duty involves carrying out the client’s instructions, no such potential for conflict arises”. {Hendriks v McGeoch [2008] NSWCA 53 at [72]}

A solicitor may have a duty of care even where a contractual relationship cannot be established: [69].

Astley v Austrust Ltd [1999] HCA 6197 CLR 1, applied.

{Austrust formerly called Elder’s Trustee and Executor Company Limited}.

In cases where a solicitor is preparing a will or advising on its execution the solicitor has a duty of care to the beneficiaries under the will (Ross v Caunters [1980] 1 Ch 297).

Ross v Caunters was a landmark case. The UK Courts finally agree it was unfair that Privity of Contract should prevent an intended beneficiary from taking legal action to recover losses they had suffered as a result of a Will being negligently prepared.

The Judge in Ross v Caunters concluded that it was only right and proper that a solicitor who prepares a will should owe a duty of care to intended beneficiaries to ensure that the testator’s instructions were properly implemented in a valid Will. If a solicitor failed to do so the beneficiaries should be entitled to seek recovery of their losses through the tort of negligence, even though there had been no direct relationship between the beneficiaries and the solicitor.

The House of Lords in White v Jones [1995] 1 All ER 691, [1995] 2 AC 207, [1995] 2 WLR 187, [1995] UKHL 5 affirmed the principles of Ross v Caunters.

As Lord Nolan said at the time:-

“The moral that solicitors, when preparing a Will, owe a duty to intended legatees as well as to the testator must by now have become familiar to them and to their insurers”

 

 

Ross V Cauthers has been cited in:

JD v East Berkshire Community Health NHS Trust and others, HL [2005] 23; [2005] 2 AC 373

Humblestone v Martin Tolhurst Partnership, ChD [2004] EWHC 151

Worby, Worby and Worby v Rosser, CA, [1999] EWCA Civ 1520

Walker v Geo H Medlicott & Son (A Firm) [1999] 1 WLR 727, [1999] WLR 727, [1999] PNLR 531, [1998] EWCA Civ 1806

Blackpool and Fylde Aero Club Ltd. v Blackpool Borough Council [1990] EWCA Civ 13, [1990] 3 All ER 25, [1990] 1 WLR 1195, [1990] WLR 1195

The House of Lords in JV v East Berkshire Community Health NHS Trust made reference at [135]

Ordinarily, when considering the imposition of a duty of care previously unrecognised by the law, the courts are astute not to create a conflict of interest. Lord Browne-Wilkinson’s speech in White v Jones [1995] 2 AC 207, 276 illustrates the point:

“Negligence in the preparation and execution of a will has certain unique features. First, there can be no conflict of interest between the solicitor and client (the testator) and the intended beneficiary. There is therefore no objection to imposing on a solicitor a duty towards a third party there being no possible conflict of interest.”

In Hill v Van Erp [1997] HCA 9; (1997) 188 CLR 159; (1997) 142 ALR 687; (1997) 71 ALJR 487, the High Court of Australia considered whether a solicitor who prepared a will on their client’s instructions was liable in damages to a third party beneficiary, where the will was not properly executed due to the negligent actions of the solicitor and where the beneficiary suffered a loss of their intended distribution under the will.

The Court held that the solicitor was in breach of the duty of care owed to the intended beneficiary and hence was liable in damages for the intended distribution.

Also refer to:

Abel v State Trustees Limited [2012] VSC 425

Johnson Tiles Pty Ltd and Ors v Esso Australia Pty Ltd and Esso Australia Resources Pty Ltd (No 2) [2001] VSC 292 {Economic loss}

Similarly where a solicitor is preparing a Trust Deed or Deed of Variation the solicitor the question also arises as to whether a solicitor has a duty of care to the beneficiaries to ensure that the Deed is properly drafted and proper advice is give to the trustee as to how the Deed or Deed of Variation can be properly executed.

Also refer to :

S A MacGregor Pty Ltd v Kouskousis (Legal Practice) [2012] VCAT 839

Professionals such as solicitors and accountants owe a concurrent contractual and tortuous duty to take reasonable care in the provision of advice and services to their clients. {Astley v Austrust Limited [1999] 197 CLR 1, 22-23 (Gleeson CJ, McHugh, Gummow and Hayne JJ), approving Henderson v Merrett Syndicates Ltd [1994] UKHL 5[1995] 2 AC 145, 193-194 (Lord Goff, Lords Keith, Browne-Wilkinson, Mustill and Nolan agreeing); Heydon v NRMA Ltd [2000] NSWCA 374(2000) 51 NSWLR 1 , 118 [365] (McPherson AJA) (‘Heydon’), Tasmanian Sandstone Quarries Pty Ltd v LegalCom Pty Ltd [2010] SASCFC 6 (19 July 2010) [78] (Gray J, Nyland and Kourakis JJ agreeing) (‘Tasmanian Sandstone Quarries’).} The contractual duty is implied by operation of law and the tortuous duty arises out of the relationship between the parties. The liability of professionals for a breach of their duty in contract and tort is a concurrent liability. Where a breach of the duty is alleged, the client is therefore free to choose under which (or both) heads the claim is to be brought. As the standard of the duty is to take reasonable care and is the same in both contract and tort, the issue of liability will be determined according to the same standard in both cases.

In Australia, it has been accepted that the standard of care to be observed by a person with some special skill or competence is that of the ordinary skilled person exercising and professing to have that special skill. {Rogers v Whitaker [1992] HCA 58(1992) 175 CLR 479.}

  1. In Heydon v NRMA Ltd this standard was applied to solicitors and barristers. It was held that, in determining whether a solicitor or barrister has exercised reasonable care in the provision of professional advice, the ‘standard of care and skill is that which may be reasonably expected of’ an ordinary skilled practitioner.
  2. The principles enunciated in this decision have been widely followed, including by judges of this court.
  3. When considering whether competent and professional legal or accounting advice has been given, the exercise of reasonable skill is the touchstone, not the wisdom of hindsight. That point was made by Megarry J in this oft-cited passage from the judgment in Duchess of Argyll v Beuselinck [1972] 2 Lloyd’s Rep 172, 185

There are few things that could not have been done better if done with hindsight. The advantages of hindsight include the benefit of having a sufficient indication of which of the many factors present are important and which are unimportant. But hindsight is no touchstone in negligence. The standard of care to be expected of a professional man must be based on events as they occur, in prospect and not in retrospect.

  1. It is likewise not negligent for a lawyer (or other professional) to commit a mere error of judgment. According to Bray CJ in Jennings v Zilahi-Kiss [1972] 2 SASR 493, 512.professional person ‘is only liable for the use of ordinary care and skill’ and ‘is not bound to guarantee against all mistakes or omissions’. To like effect it was held by Oliver J in Midland Bank Trust Company Ltd v Stubbs and Kemp [1979] Ch 384, 403 that the standard is not that of the ‘particularly meticulous and conscientious practitioner … [but] what the reasonably competent practitioner would do having regard to the standards normally adopted in the profession’
  2. In Hawkins v Clayton [1988] HCA 15; 164 CLR 539, per Deane J at [32]- [37], Mason CJ and Wilson J concurring (at [1]).the High Court suggested that the preferable approach is to focus on the law of negligence as the appropriate vehicle in relation to solicitors, given the complexities of the position under the law of contract, and the fact that the duties which exist under contract and tort are the same in any event.

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