Professional Liability Guide

CHAPTER 1 – DUTIES

Courts have acknowledged that the existence of a contract for the provision of professional services, and the terms of the contract, may be implied or inferred. 39 However, an implied retainer will only arise where, on an objective assessment of all the circumstances, an intention to enter into a contractual relationship may fairly and properly be imputed to the parties. 40 In Steele v Marshan, 41 the New South Wales Court of Appeal was obliged to consider the question of the existence of an implied retainer in circumstances where a solicitor undertook professional work without entering into an express retainer. In rejecting the client’s appeal, the New South Wales Court of Appeal endorsed the judgment of the Local Court Magistrate, who, at first instance, had adjudicated the circumstances where a retainer would be implied. In this regard, the Magistrate relied upon the decision in Pegrum v Fatharly, in which it was held: ‘A contractual relationship of solicitor and client will therefore be presumed if it is proved that the relationship of solicitor and client existed de facto, between a solicitor and another person. Upon proof of that kind, it would not be necessary to prove when, where, by whom or in what particular words, the agreement of retainer was made. Applying the rule expressed by Thomas J in Australian Energy Limited v Lennard Oil NL, the de facto relationship of solicitor and client has to be a necessary and clear inference from the proved facts before a retainer will be presumed.’ 42 In contrast, in Meerkin & Apel v Rossett Pty Ltd, 43 the Supreme Court of Victoria declined to find the existence of an implied retainer. In that case, lawyers worked on behalf of developers of an office development and prepared leases for certain units in the development. The developers forwarded the draft leases to the owner of the units, who commented on the leases to the developer. The owner was subsequently fined when it was determined that certificates of occupancy had not been issued for the units. The owner sued the developer’s lawyers, alleging a breach of an implied retainer in failing to advise about the failure to secure the certificates of occupancy. The Supreme Court of Victoria found there was no implied retainer in circumstances where the owner had not consulted the developer’s lawyer at all but had consulted its own lawyer over matters involving the sale of the units. Similarly, in Townsend and Anor v Roussety and Co (WA) Pty Ltd and Anor, 44 the Court refused to find that a client impliedly retained a firm of accountants to act as its accountant and advisor for the acquisition of a business, notwithstanding the accountant had assisted the client to apply for finance to fund the acquisition. Tort (negligence) Professionals may come within the scope of a wide range of tortious liability (including trespass, nuisance and deceit); however, the tort most commonly coming to bear on professionals, and on which this Guide is focused, is the tort of negligence. Duty to clients Where a professional is the subject of a retainer, a tortious duty to exercise reasonable care will readily exist.

39 Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Australia) Pty Ltd (1988) 5 BPR 11,110. 40 See Burke v LFOT Pty Ltd (2000) 178 ALR 161; affirmed Burke v LFOT Pty Ltd (2002) 209 CLR 282.

41 [2012] NSWCA 141. 42 (1996) 14 WAR 92. 43 [1998] 4 VR 54. 44 (2007) 33 WAR 321.

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