Professional Liability Guide

PROFESSIONAL LIABILITY GUIDE

In Astley v Austrust , 19 a case involving a professional negligence claim against a solicitor, the majority (GleesonCJ, McHugh, GummowandHayne JJ, withCallinan J dissenting) acknowledged the existence of concurrent liabilities of professionals in both contract and tort. 20 They said the implied term of reasonable care in a contract of professional services arises by operation of law. It is one of those terms the law attaches as an incident of contracts of that class. It is part of the consideration that a professional pays in return for the express or implied agreement of the client to pay for the services provided. It would appear, therefore, that a client may sue a solicitor in either contract or tort (or both) and that, where concurrent liability exists, the client has the right to assert the cause of action most advantageous in respect of any particular legal consequence. 21 There are subtle yet important differences between an action in contract or tort, such as limitation of actions, remoteness of damage and measure of loss, and the existence and efficacy of contractual limitations or exclusions of liability. These can become important in determining which cause of action a client may pursue. In this respect, the existence of concurrent duties is of undoubted benefit to a client. Since Astley , an implied term to exercise reasonable care has been found to exist in retainers of barristers, 22 accountants, 23 financial advisors, 24 engineers, 25 architects 26 and medical practitioners. 27 The principle is likely now to apply in other professional retainers. Given the courts’ readiness to imply such a term into a contract for professional services, it is now becoming increasingly common for professionals to take the proactive step of including a comparable duty as an express term of the retainer, reflecting the common law position. A preparedness to recognise the existence of the duty could be seen as a matter of client service offering. In some cases, the dividing line between a contractual promise to do something and a promise to do it with reasonable care will be a fine one. That dividing line was discussed in Midland Bank Trust Co Ltd v Hett Stubbs & Kemp as follows: ‘The classical formulation of the claim in this sort of case as “damages for negligence and breach of professional duty” tends to be a mesmeric phrase. It concentrates attention on the implied obligation to devote to the client’s business that reasonable care and skill to be expected from a normally competent and careful practitioner as if that obligation were not only a compendious, but also an exhaustive, definition of all the duties assumed under the contract created by the retainer and its acceptance. But, of course, it is not. A contract gives rise to a complex of rights and duties of which the duty to exercise reasonable care is but one.’ 29 It should, however, be noted that the majority in Astley acknowledged the ability of a professional to ‘ bargain away or limit ’ the existence or scope of the contractual duty, if they so choose. 28

19 (1999) 197 CLR 1. 20 Ibid 22. 21 Carmody v Priestly & Morris Perth Pty Ltd (2005) 30 WAR 318, 335.

22 Smith & Anor v McCusker QC & Anor [2000] WASCA 320. 23 Carmody v Priestley & Morris Perth Pty Ltd (2005) 30 WAR 318. 24 Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) (2012) 301 ALR 1. 25 De Pasquale Bros Pty Ltd v Cavanagh Biggs & Partners [2000] 2 Qd R 461. 26 Oaktwig Pty Ltd v Glenhaven Property Holdings Pty Ltd [2007] NSWSC 1533. 27 Bergman v Haertsch [2000] NSWSC 528.

28 (1999) 197 CLR 1, 22. 29 [1979] Ch 384, 434.

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