Retainers and the extent of a solicitor’s duty of care
BY GLENDA CARRY – OCT 06, 2023 8:35 AM AEDT
Snapshot
- The ACT Civil & Administrative Tribunal recently considered a solicitor’s duty of care when providing advice in conveyancing transactions and whether that duty extended to emphasising the need to obtain an asbestos report.
- The extent of a solicitor’s duty of care to a client depends on the circumstances, including the facts and the sophistication and understanding of the client.
In the recent case of Shields v Natlaw Pty Ltd & Anor (Civil Dispute) [2023] ACAT 44, the ACT Civil & Administrative Tribunal considered a solicitor’s duty of care in conveyancing transactions and whether that duty extended to emphasising the need to obtain an asbestos report.
The solicitors acted for the purchasers (first time buyers) of a 1950s property in the ACT. The purchasers had a building inspection carried out and obtained a building report. The building report contained a disclaimer to the effect that no assessment for the presence of asbestos had been carried out and no report was provided on whether asbestos might be present. The report included ACT Government fact sheets warning that houses built prior to 1985 were likely to contain asbestos.
It was common ground the solicitor took the purchasers through the contract documentation which included the building report containing the asbestos disclaimer and identifying possible additional reports that could, or should, be obtained.
Following settlement, the purchasers became aware the property contained asbestos in the cladding and sued the solicitors. The purchasers alleged the solicitors were negligent in not providing specific advice to obtain an asbestos report given the property was from the 1950s, the purchasers were first time buyers and were unfamiliar with some of the risks associated with the process. They alleged that general alerts about asbestos, among a host of other risks, were not sufficient especially in circumstances where they wanted to renovate the property.
The solicitors contended there was no breach of the duty of care because the purchasers’ attention was drawn to the asbestos risk and no persuasive evidence of loss had been shown.
The Tribunal’s decision
In dismissing the purchasers’ claim, the Tribunal noted the extent of a solicitor’s duty of care to a client, in any given instance, depends on the circumstances including the relevant fact matrix and the sophistication and understanding of the client.In observing the range of risks associated with buying a house, the Tribunal stated ‘I think a conveyancing lawyer’s responsibility would end with advising if the title search or contract threw up a legal obstacle to future renovations (such as, for example, the existence of an easement on the block)… I cannot see that planned renovations in the present matter could have been expected to prompt a conveyancing lawyer to urge that an asbestos report be obtained’ (at [36]).
The Tribunal concluded the solicitor’s duty of care did not extend beyond the general alert to asbestos and, specifically, it did not extend to providing more pointed advice that an asbestos report should be obtained.
Takeaway
This decision will provide comfort to conveyancing solicitors about the extent of the duty of care owed to clients in advising them about matters pertaining to the physical state of the property. In coming to its decision, the Tribunal was persuaded the solicitor had made it clear to the purchasers the risks associated with the physical property were for the purchasers to manage. A carefully drafted retainer setting out parties’ responsibilities and clearly explaining the retainer to the client would provide clarity.
This article originally appeared on lsj.com.au