Solicitors Duty of Care to Intended Beneficiaries

Recently the High Court of Australia handed down their decision in the case of Badenach v Calvert [2016] HCA 18.  This is a significant decision for solicitors, those who may wish to execute a Will and also those who may have already executed their Will and are considering altering their testamentary intentions.

Badenach has now clarified the duty of care that is owed between a solicitor and a client when making a Will.  The High Court held that a solicitor does not owe a duty of care to a beneficiary under a Willto advise the testator of the options available to them in limiting the chances of a family provision claim being made.

BACKGROUND

Badenach was a partner in a law firm, who prepared the Will of Jeffrey Doddridge.  Under Mr Doddridge’s Will, the whole of his estate was to pass to Roger Calvert.  Mr Calvert was not the son of the testator.  However, he was treated as such since his mother was the de facto partner of the testator for many years.  The net value of the estate was $612,448.69, which mostly consisted of two properties which he owned as tenants in common in equal shares with Mr Calvert.

Doddridge failed to make provisions in his will for his daughter from a previous marriage.  Following his death, his daughter made a family provision claim and was successful in obtaining an order that she be given a portion of the estate.  In addition, the legal cost of the claim was to be funded by the estate – this substantially depleted what was not a large estate to begin with.

Mr Calvert brought an action against Badenach and his firm arguing that they were negligent in failing to advise Doddridge of the options available to limit the possibility of a claim on the estate.  More specifically, Mr Calvert argued that the Badenach should have advised that the interests in the two properties be converted to joint tenancies. This would have meant that upon Doddridge’s death his interest would have passed to Calvert automatically by way of survivorship.  Alternatively, intervivos gifts could have also been made.  Calvert alledged that by failing to advise of such an option and also the potential claims that could be made against the estate, Badenach breached his duty of care to the intended beneficiaries.  The Supreme Court of Tasmania and the Full Court agreed that Badenach had breached his duty of care to the beneficiaries under Doddridge’s Will.

HIGH COURT’S DECISION

Badenach appealed to the High Court where they overturned the decision of the Full Court. They confirmed that a duty to intended beneficiaries only arises where the interests of the testator and the beneficiary are aligned and where instructions evidencing such were given to the solicitor.  Here, the interests of Mr Doddridge were not coincident with Mr Calvert and as such the solicitor did not owe a duty to the beneficiaries under Doddridge’s Will.  Furthermore, even if a duty was found to exists, there was a lack of causation since no evidence could be adduced of what Doddridge would have done had the solicitor given him the advice.  Thus, the solicitor’s duty is one that is protective of the client’s interest and the client’s interests alone.

Therefore, it is important that when looking to make a Will or alter a previous Will, clients consider all possible scenarios that could arise.  Furthermore, it is important that you make all your testamentary intentions and concerns clear to your solicitor to ensure that your wishes are carried at easily and at little expense to your estate.  If you are seeking any advice in relation to creating a Will or you wish to alter/create a new Will, please do not hesitate to contact our office and schedule an appointment.