Badenach v Calvery  HCA 1815 June 2016 | Professional Indemnity & Financial Lines
Robert Badenach (the Solicitor) was a solicitor and partner in the firm Murdoch Clarke Solicitors (the Firm).
In March 2009, the Solicitor took instructions from Jeffrey Doddridge (the Deceased), who was elderly and terminally ill, to prepare his will. The Deceased’s instructions were that the entirety of his estate was to pass to Roger Calvert (the Stepson). The Deceased’s principal assets were two properties which he owned as a tenant in common in equal shares with the Stepson.
The Solicitor subsequently prepared the will in accordance with the Deceased’s instructions. The deceased died in September 2009 without revoking that will.
The Deceased had a daughter (the Estranged Daughter) but no provision was made for her in the will. Following the Deceased’s death, the Estranged Daughter made an application under the Testator’s Family Maintenance Act 1912 (the TFM Act). Her application proceeded to a trial and it was ordered that $200,000 plus interest be paid to her from the Deceased’s estate. It was also ordered that the Estranged Daughter’s costs be paid out of the Deceased’s estate on a solicitor and client basis. The effect of the orders was that the Deceased’s estate was substantially depleted.
The Stepson alleged that the Solicitor and the Firm breached the duty of care owed to the Deceased, and to the Stepson as an intended beneficiary, by failing to make enquires about the Estranged Daughter, failing to advise the Deceased that the Estranged Daughter may make a successful claim under the TFM Act and failing to provide the Deceased with options to arrange his affairs during his life time so that his testamentary wishes were fulfilled. Relevantly, the Stepson alleged that the Solicitor should have recommended that the Deceased transfer his interest in the two properties to be held as joint tenants (and therefore the two properties would pass automatically to the Stepson upon the Deceased’s death and cease to form part of his estate).
The Solicitor and the Firm contended that they had no duty to provide such advice. There was no evidence that the Solicitor knew of the Estranged Daughter, although the Deceased’s May 1984 will (which was prepared by and still held by the Firm) contained information that the Estranged Daughter existed.
Decision of the Supreme Court of Tasmania
The Supreme Court of Tasmania determined that the Solicitor owed a duty to the Deceased to enquire as to the existence of any family members who could make a claim under the TFM Act. If the Solicitor had made these enquires, the Deceased would have disclosed the existence of the Estranged Daughter, and the Solicitor would have advised of the risk of proceedings under the TFM Act. Accordingly, the Supreme Court held that the Solicitor breached that duty to the Deceased.
However, the Supreme Court was not satisfied on the balance of probabilities that a conversation about the Estranged Daughter and a possible TFM Act claim would have triggered an enquiry by the Deceased about ways to protect the Stepson’s position. In the absence of such an enquiry, there was no duty to give advice of this nature.
As causation was not established, the Supreme Court did not make a finding as to whether the Solicitor and the Firm owed a duty to the Stepson.
Decision of the Supreme Court of Tasmania - Full Court
The Stepson appealed to the Full Court of the Supreme Court of Tasmania.
The Full Court confirmed that the Solicitor owed the Deceased a duty to enquire as to family members who could make a claim under the TFM Act and advise of the risks
The Full Court also determined that the Solicitor’s duty of care extended to advising the Deceased of possible steps to avoid a potential TFM claim that may impact his testamentary wishes. The Full Court considered that the Solicitor’s and Firm’s duty extended to the Stepson as the intended beneficiary to the Deceased’s will.
The Full Court was satisfied that there was a “more than negligible chance” the Deceased would have taken action to circumvent a possible TFM Act claim had the Solicitor provided appropriate advice.
Accordingly, the Full Court quashed the judgment of the Supreme Court and ordered that judgment be entered in favour of the Stepson with damages for loss of opportunity to be assessed by a single judge.
High Court Judgement
The Solicitor and Firm were granted special leave to appeal to the High Court.
The High Court noted that neither the Solicitor nor the Deceased could have known with any certainty whether the Estranged Daughter would choose to make a TFM claim, whether a TFM claim would be successful and, if so, to what extent provision might be made for the Estranged Daughter from the Deceased’s estate. The fact that the Estranged Daughter later brought a TFM claim does not mean that the Solicitor should have appreciated that this was likely to occur.
The High Court confirmed that the Solicitor’s and the Firm’s duty extended to ensure that the Deceased gave consideration to the possibility that TFM claim/s might be made upon his estate. However, the Solicitor’s and the Firm’s duty did not extend to provide advice about how to avoid such TFM claim/s by transferring property interests. The High Court asserted that from the Solicitor’s perspective, it could not be assumed that the Deceased would need advice of this nature.
The High Court determined that even if it was accepted that the Solicitor had a duty to advise the Deceased about all lawful steps to defeat a possible TFM Act claim, it could not be concluded, on the balance of probabilities, what course of action that the Deceased would have taken. The High Court did not consider there was a substantial prospect that the Deceased would have chosen to transfer his interest in the properties.
Therefore, the High Court determined that the Stepson had not proven that he had suffered any loss of a valuable opportunity.
The High Court ordered that the appeal to the High Court be allowed with costs and the orders of the Full Court be set aside.