Family Feud: the survey says… not negligent!
The court dismissed a claim for negligence and unconscionable conduct by the plaintiff against the solicitors retained by her husband in relation to matrimonial property proceedings.
- Whether the solicitors retained for the plaintiff’s husband owed the plaintiff a duty of care.
- Whether the solicitors retained for the plaintiff’s husband acted unconscionably towards the plaintiff.
The plaintiff married Borce Trajovski (the husband) in 1992, and they separated in 2006. During their marriage, the plaintiff and the husband received legal representation from the defendants (Ian Simpson and his law firm, Simpson & Partners Solicitors Pty Ltd) in connection with the purchase of businesses and land by corporate entities controlled by the plaintiff and the husband.
After their separation, matrimonial property proceedings were brought in the Family Court. The defendants continued to act for the husband in those proceedings and the plaintiff retained her own solicitor. The proceedings concluded by way of consent order that required the husband to pay the plaintiff $850,000. In order to meet that order, the husband listed the couple’s matrimonial property for sale.
Despite allegedly retaining her own solicitor, the plaintiff (partly due to threats the husband made towards her) chose to act for herself in relation to the sale of the matrimonial property and the increase to loan facilities arranged by the husband on behalf of companies they controlled, which included attending the defendants’ office to sign the documents required to effect those transactions.
Rather than pay the plaintiff in accordance with the Family Court consent order, the husband used the proceeds from the sale of the matrimonial property and the loan facilities to fund his business activities. The plaintiff claimed damages in negligence against the defendants, on the basis they acted under a conflict of interest and failed to exercise reasonable care when acting in relation to the above transactions to ensure she received payment of the money to which she was entitled under the Family Court consent order. The plaintiff also alleged the defendants committed unconscionable conduct (in equity and under the Trade Practices Act 1974) in relation to the sale of the matrimonial property.
The court held that the defendants did not owe a duty of care to the plaintiff, nor did they act under a conflict of interest, because they were not retained by her in relation to the matrimonial property dispute. In reaching that conclusion, the court applied Hill v Van Erp (1997) 188 CLR 159 (196-197) in which Gaudron J stated that there can be no duty of care owed to a third party if the duty asserted is inconsistent with the duty owed to the client (the duty alleged by the plaintiff was inconsistent with the duty the defendants owed to the husband). As for the claim of unconscionable conduct in equity, the court held that because the defendants were not a party to the transaction, the plaintiff would need to establish the defendants were knowingly concerned in the husband’s conduct, which she failed to do. The claim of unconscionable conduct under the Trade Practices Act 1974 failed because the defendants did not “supply” any services to the plaintiff (which was required by the statute).
Implications for you
This decision is a reminder of the need for solicitors to be careful when dealing with unrepresented persons (whether as litigants or participants in transactions) such that they appreciate the solicitor is not acting for them. It is also worthwhile bearing in mind that a solicitor may be found liable for a client’s unconscionable conduct if they were knowingly concerned in that conduct.