HCA: limits on advice affecting potential beneficiaries under a Will

Badenach & Anor v Calvert [2016] HCA 18

French CJ, Kiefel, Gageler, Keane and Gordon JJ

The appellant was a solicitor instructed to prepare a will for his client (“the client”) by which the entirety of the client’s estate was to pass to the respondent. The will was drawn according to the client’s instructions and was properly executed. A daughter of the client’s past marriage had no provision in the will. She successfully obtained a court order under the Testator’s Family Maintenance Act 1912 (Tas) (the TFM Act) which substantially depleted the client’s estate which the respondent was the beneficiary

The respondent brought proceedings against the appellant and the firm alleging that they had been negligent in failing to advise the client of the chance that his daughter may make a claim under the TFM Act. Particularly, the respondent alleged that the appellant failed to advise the client of the options available to him to avoid such a claim, namely, either by converting certain properties to joint tenancies or by making inter vivos gifts. The respondent claimed that these acts of negligence were breaches of the appellant’s duty to the respondent.

In the Supreme Court of Tasmania, Blow J held that the appellant owed the client a duty to enquire about the existence of any family members who could make a claim under the TFM Act. However, His Honour was unpersuaded that had the appellant given advice regarding a possible claim under the TFM Act, the client would have enquired about how to protect the respondent’s position. Consequently, Blow J found that the appellant was under no duty to volunteer advice regarding options to avoid a claim under the TFM Act and that it was unnecessary to decide whether the appellant owed the respondent any relevant duty.

The respondent successfully appealed to the Full Court. As stated by the plurality in the High Court (French CJ, Kiefel and Keane JJ), the Full Court found that:

[9] … [the appellant’s duty] extended not only to a duty to enquire of the client whether he had any children, and to advise of the potential for a claim under the TFM Act and the impact such a claim might have upon his estate, but also to a duty to advise of the possible steps he could consider taking in order to avoid that impact occurring even if the client did not make any enquiry about those steps.

The appellant appealed to the High Court. The plurality rejected the respondent’s argument that the appellant should have volunteered advice regarding a possible claim. The plurality said:

[32] The respondent’s case is that the solicitor should have volunteered this advice. However, it is difficult to see how the solicitor had a duty to do so merely because the solicitor has informed the client of the possibility that a claim could be made by the daughter but that, absent further information, he could not be any more certain about it occurring. It cannot be reasoned from the fact that the daughter later brought a claim that the solicitor should have appreciated that this was likely to occur. Even if he had done so, it is still difficult to see that the appreciation of this possibility would have warranted advice of this kind. Neither the solicitor nor the client could have known with any certainty whether the claim would be successful and, if so, the extent of the provision that might be made for the daughter from the client’s estate.

As to causation, the plurality was not satisfied that but for the appellant’s negligence, the respondent would have received the client’s estate:

[34] The respondent’s case faces another hurdle. Even if it be accepted that the solicitor came under a duty to advise the client in the terms alleged, it cannot be concluded, on the balance of probabilities, what course of action the client would then have taken

[35] Given these considerations, and the uncertainty that the daughter would make a claim, there is no reason to think that even if the client had been given the advice contended for, he would have been more likely to undertake transactions of this kind than, say, simply pursuing his original course of action, by which the respondent was to be the sole beneficiary under the client’s will. But of course had that occurred, and the daughter later made a claim, it could not be said that the solicitor had caused the respondent loss.

In finding for the appellant, the plurality distinguished Hill v Van Erp by stating that in that case the duty limited while the present case was a general duty to give advice as to the client’s property interests and future estate.

 

Gageler J also agreed with the plurality, finding that the duty to owed by the appellant to the respondent was not coextensive with the duty owed to the client therefore not within the appellant’s scope to the respondent. Similarly, Gordon J said:

[91] It follows that because the interests of the testator and Mr Calvert were not the same, consistent or coincident at the time of the alleged breach, the appellants did not owe Mr Calvert a duty of care, because if they had, it would not have been the same as, consistent with or coincident with the duty of care they owed to the testator. Mr Calvert was not an “intended beneficiary” in the same way as the third party was in Hill v Van Erp.

The appeal was allowed with costs and the orders of the Full Court of the Supreme Court of Tasmania set aside.

 David Cormack – Brisbane Barrister & Mediator

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