Dear Colleagues;
The High Court of Australia in Badenach v Calvert [2016] HCA 18 (11 May 2016) http://www.austlii.edu.au/au/cases/cth/HCA/2016/18.html today
upheld an appeal against a decision of the Full Court of the Supreme Court of Tasmania in a case dealing with the existence of a duty of care owed by a solicitor to an intended beneficiary of a client’s will. The Court also made some interesting comments in
passing about the test for causation in tort law.
The facts were that the testator left half shares in property he owned as tenant in common with C (his former de facto
wife’s son, with whom he was very close), to C; the will was later successfully challenged by the testator’s daughter, who had received nothing under the will, and the daughter received a $200,000 payment. C claimed
that the solicitor ought to have advised the testator to have arranged his affairs before death so that the daughter would not have been able to make such a claim (the most obvious technique would have been to transfer the property into joint tenancies so
that it would not have formed part of the estate.)
Over-ruling a trial decision by Blow CJ, the Full Court of the Tasmanian
SC held that there was a duty of care in the circumstances, and that it had been breached. They did not, however, order the payment of the full amount taken from the estate by the daughter; they all took the view that what B had made out was “loss of a chance”
to money, and hence that the matter should be sent back to a trial judge for calculation of the chance.
The High Court all held that the FC was wrong to find a duty of care here. They acknowledged that, of course, in the particular
circumstances where a beneficiary loses a direct gift that a testator has meant to provide due to a solicitor’s carelessness in execution of a will,
Hill v Van Erp (like other decisions at high levels in the common law world) holds that the solicitor can he held liable to the intended beneficiary. But they all said that this only flowed because the interests of the testator, and the intended beneficiary,
completely co-incided. Here the solicitor had done exactly what he had been asked to do, prepared a will leaving the property to C.
The HC suggested that the solicitor may have owed a duty to the client to advise about the possible impact
of a TFM claim by a family member. But they said that this duty did not extend to protect the interests of the
beneficiary. In particular it was not proven on the balance of probabilities that if the relevant warning had been given that the testator would then have done what it was claimed should have been done to protect the beneficiary. The daughter had not
seen the testator for some years, so it was not clear what attitude she would take or whether she would make a claim, still less whether the claim would succeed.
I thought that Gageler J’s concurring comments on the reasons why a solicitor does not have a duty to protect beneficiaries against all foreseeable outcomes of a gift quite persuasive.
[58]…..The duty plainly cannot extend to requiring the solicitor to take reasonable care for future and contingent interests of every prospective beneficiary when undertaking every action that might be expected of a solicitor in the performance of the solicitor's duty to the testator. If the tortious duty of care were to extend that far, it would have the potential to get in the way of performance of the solicitor's contractual duty to the testator. Extended to multiple prospective beneficiaries, it would be crippling.
On the issue of causation I found paras [40]-[41] interesting:
[40] It remains necessary to prove, to the usual standard, that there was a substantial prospect of a beneficial outcome[1]. This requires evidence of what would have been done if the opportunity had been afforded. The respondent has not established that there is a substantial prospect that the client would have chosen to undertake the inter vivos transactions. Therefore, the respondent has not proven that there was any loss of a valuable opportunity.
2 [41] The onus of proving causation of loss is not discharged by a finding that there was more than a negligible chance that the outcome would be favourable, or even by a finding that there was a substantial chance of such an outcome. The onus is only discharged where a plaintiff can prove that it was more probable than not that they would have received a valuable opportunity. To the extent that the majority in Allied Maples Group Ltd v Simmons & Simmons[2] holds that proof of a substantial chance of a beneficial outcome is sufficient on the issue of causation of loss, as distinct from the assessment of damages, it is not consistent with authority in Australia and is contrary to the requirements of s 13(1)(a) of the Civil Liability Act.
[1] Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 355, 367‑368.
[2] [1995] 1 WLR 1602; [1995] 4 All ER 907.
In a concurring judgement Gordon J at [99] also ruled that the majority comments in
Allied Maples were not good law in Australia.
Regards
Neil
Associate Professor Neil Foster
Newcastle Law School
Acting Assistant Dean, Teaching and Learning
Faculty of Business and Law
O: MC177, McMullin Building
T: +61 2 4921 7430
E: neil.foster@newcastle.edu.au
W: http://www.newcastle.edu.au/profile/neil-foster
Acting Assistant Dean, Teaching and Learning
Faculty of Business and Law
O: MC177, McMullin Building
T: +61 2 4921 7430
E: neil.foster@newcastle.edu.au
W: http://www.newcastle.edu.au/profile/neil-foster
The University of Newcastle (UON)
University Drive
Callaghan NSW 2308
Australia
CRICOS Provider 00109J
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