Professional Liability Guide

PROFESSIONAL LIABILITY GUIDE

‘The scope of any retainer and the ambit of the implied duty to carry out the retainer with reasonable care depends upon the facts peculiar to the relationship between the solicitor and the client in each case: Larson v Lynch (2006) FCA 385 at 27. Reference was made in that case to the observations of Oliver J in Midland Bank Trust Company Limited v Hett Stubbs & Kemp (1979) 1 Ch 384 at 402: “There is no such thing as a general retainer in that sense. The expression ‘my solicitor’ is as meaningless as the expression ‘my tailor’ or ‘my bookmaker’ in establishing any general duty apart from that arising out of a particular matter in which his services are retained. It is well accepted that the duty of a solicitor arises from the relationship of solicitor/ client and from the work undertaken by the solicitor. In Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 at 188, the Court of Appeal (Spigelman CJ, Sheller, Stein JJA) observed: “Even in the case of a solicitor/client relationship, long accepted as a status based fiduciary relationship, the duty is not derived from the status. As in all such cases, the duty is derived from what the solicitor undertakes, or is deemed to have undertaken, to do in the particular circumstances. Not every aspect of a solicitor/ client relationship is fiduciary. Conduct which may fall within the fiduciary component of the relationship of solicitor and client in one case, may not fall within the fiduciary component in another”.’ 14 A solicitor was similarly unsuccessful in establishing a limited retainer in Robert Bax & Associates v Cavenham Pty Ltd. 15 That case involved the plaintiff’s extension of loans of approximately $2.2 million, in a series of four transactions, to the proprietors of a Gold Coast nightclub. The plaintiff had been informed that the borrower would register the first mortgage over its property to protect the plaintiff’s loans, but that did not occur. The nightclub went into receivership, the money was lost, and the plaintiff held its solicitor accountable for the loss. ‘The defendant was obliged to act generally in the plaintiff’s interests in relation to the proposed transactions. That extended to the defendant’s advising the plaintiff about the need for legal protection against contingencies which may arise. It was particularly relevant that the plaintiff was not well-versed in relation to these sorts of transactions, and the defendant should have taken the steps which overall would have led the plaintiff to some adequate understanding. The proper discharge of the defendant’s retainer did not depend on the plaintiff’s actively seeking advice. The defendant was obliged proactively to give the appropriate advice.’ 16 While, in appropriate circumstances, a limited retainer will be established, it may nonetheless be possible for a professional to be subject to a tortious duty of care to a client that extends beyond the strict scope of a retainer. This is explored further below. The Court of Appeal upheld the following finding of the primary judge that the solicitor’s duty extended beyond the express terms of the retainer to provide advice not specifically requested:

Where the retainer is oral (or partly oral and partly written), it may be necessary to examine the pre-contractual representations by both parties to ascertain the existence of any express terms.

In Howarth & Anor v Miotti & Anor, 17 the Supreme Court of Queensland found that an oral retainer was created with a solicitor for the purchase of an off-the-plan unit, for which the client purchasers paid a large deposit, which was ultimately lost when the developer disappeared. The clients claimed the solicitor had been retained to protect their interests in respect of the purchase but failed to give appropriate advice in relation to securing the deposit money paid.

14 Ibid [509]–[510]. 15 [2013] 1 Qd R 476. 16 Ibid 489. 17 [2009] QSC 96.

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