Question, answered. Does a Solicitor owe a duty to a disappointed beneficiary?

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The long awaited decision of Badenach v Calvert [2016] HCA 18 was handed down today by the High Court of Australia.  Does a solicitor owe a duty to an intended beneficiary?  Well, it depends, but in this case, the short answer is no.  And here’s why:

By way of background, the case of Calvert v Badenach caught the attention of many a lawyer (and many succession law nerds) when the Full Court in Tasmania found that a solicitor owed a duty not only to the client but also to an intended beneficiary for failing to advise the testator of a risk of a Testator’s Family Maintenance (TFM) claim by the testator’s daughter and advice in relation to what that testator could to potentially defeat or mitigate any possible claim.  The case involved a situation whereby the solicitor obtained instructions from the testator client ,Mr Doddridge, to draw a new will.  Mr Doddridge wished to leave his estate to his “son” Mr Calvert.  Mr Calvert was the son of Mr Doddridge’s late defacto partner.  Mr Doddridge also had a daughter to a prior relationship. The will was drawn up accordingly.  Following Mr Doddridge’s death later in that year, Mr Doddridge’s daughter successfully brought a claim against the estate pursuant to the TFM legislation. The estate was small and the success of the TFM claim depleted the estate value.

A disappointed Mr Calvert then sued the solicitor (and the firm) who drew the will for the late Mr Doddridge claiming that the solicitor was negligent in not advising Mr Doddridge that a claim could be made against the estate by the daughter and not advising him of options to avoid or mitigate the risk of a potential claim.  The ultimate question became whether a solicitor owed a duty to, not only a testator client but, an intended beneficiary in this case.  Mr Calvert’s argued that the deceased suffered a lost opportunity to take steps to avoid the TFM claim by the daughter; for example, changing the tenure of the property owned by the deceased and Mr Calvert from Tenants In Common to Joint Tenants to defeat the claim.

So, then what happened….

The case was first discussed in the Supreme Court of Tasmania where the Court found that the solicitor did owe such a duty but was not satisfied that such a line of questioning regarding the familial circumstances and risk of the TFM claim would lead to an enquiry by the testator as to how to protect the gifts to Mr Calvert.

The matter was then appealed by Mr Calvert and considered by the Full Court of the Supreme Court of Tasmania.  The Full Court found that the solicitor’s duty did extend as far as to the intended beneficiary (in addition to the testator client) and that the solicitor was negligent in not volunteering the advice as to how to defeat any potential TFM claim by the daughter.

The matter was then appealed to the High Court of Australia.

The solicitor’s duty is one protective of the client and his interests alone. [para 48].

In summary, here are a few key points I took away from the judgement:

  • The application of Hill v Van ErpThe Solicitor’s duty in the case of Hill v Van Erp did not apply in this case; The authority in Hill v Van Erp “is not authority for the proposition that a solicitor instructed to prepare a will always owes a duty of care to an intended beneficiary” [at para 84].   Further, the duty owed by the solicitor was to give effect to testamentary dispositions, whereas in this case, the duty asserted by Mr Calvert was to give advice regarding property interests and future estates. [para 45]
  • The duty to the client in this case
    • When speaking of whether the solicitor should have volunteered advice regarding the options available to the testator to avoid a TFM claim by the daughter, the Court said “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” [para 32].  The testator had not had any relationship with the daughter since separating from her mother in 1973. Further, the Court said: “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.” [para 32].
    • The retainer was to draw a will for the testator to bequeath the whole of the testator’s estate to Mr Calvert, not to provide estate planning advice (generally). [para 52]
    • There could be no duty of care to Mr Calvert as the interests of the testator and Mr Calvert were not the same, consistent or coincident. [para 74]
  • Causation:  
    • Mr Calvert failed to submit persuasive evidence that would prove that the testator would have taken the opportunity to take steps to avoid a TFM if advised of the risk and possible steps he could have to taken during his lifetime. [para 75]
    • Even if able to connect the dots, there was no way to quantify exactly what loss was suffered by Mr Calvert as there is no way to know what the testator would have done if he received the advice Mr Calvert claimed the Solicitor should have provided. [para 40]

You can read the case here.  Whilst there are 29 pages, I assure you they are all worth your while!

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