THE LAWYER’S DUTY TO THE WILL MAKER TO ADVISE ON POTENTIAL FAMILY PROVISION CLAIMS AFTER CALVERT V BADENACH

John Armfield – Barrister

 

“Drafting wills is a learned, practical skill – but it has to be learned very fast, as there is little scope for error. The underlying difficulty is that once the will has been prepared, executed and filed in safe custody, there is little likelihood that any errors it might contain will be discovered until after the testator’s death, when it is too late to correct them”

– Hutley’s Australian Wills Precedents.

 

Duty of care – to whom is it owed?

  1. A solicitor who is retained to prepare a will for a client owes the client a co-extensive duty to exercise reasonable skill in the performance of the retainer which arose both by reason of an implied term in the contract – Astley v Austrust [1999] 197 CLR 1 and the co-extensive duty to take care owed in tort – Hawkins v Clayton [1988] 164 CLR 539.
  2. A solicitor is liable to a person who does not receive an intended benefit under a will due to the solicitor’s negligent preparation, drawing or execution of the will. Liability in this situation has been justified in part on the basis that the law of negligence must fill a lacuna in the law: but for the existence of a duty of care to the beneficiaries, the only person who might have had a valid claim (the testator and subsequently the estate) has suffered no loss, and the only person who has suffered a loss has no claim. The existence of a duty is supported by the fact that there can be no conflict of interest between the solicitor and client, on the one hand and the intended beneficiary on the other.
  3. Certain limitations on the duty are clear. First a solicitor is not liable to a potential devisee under a will for negligence when acting for the testator in an inter vivos transaction affecting the subject matter of the devise. Secondly no liability arises when the defect in the will comes to light before the death of the testator, so as to be remediable. Thirdly the solicitor’s duty is circumscribed by the terms of the retainer and the instructions of the client to whom the primary duty is owed – Vagg v McPhee [2013] NSWCA 29 at para 47-49 per Tobias AJA.

 

Hill v Van Erp (1997) 188 CLR 159 – a disappointed beneficiary recovers damages

  1. In Van Erp a solicitor prepared a will for her client Mrs Currey. The will included a gift of Mrs Currey’s house in the Brisbane suburb of Paddington to her son and her friend Mrs Van Erp as tenants in common in equal shares. The solicitor brought the will to Mrs Currey’s house, read it to her and arranged for Mrs Currey to execute it in the presence of herself and Mrs Van Erp’s husband. The consequence of Mr Van Erp being an attesting witness, as the law then stood, was that s15(1) of the Queensland Succession Act rendered the gift to Mrs Van Erp void with the consequence that it fell into residue.
  2. The High Court’s decision in Van Erp is the seminal Australian decision which recognised a duty in tort to an intended beneficiary who suffers loss.
  3. Factors which led to the Court concluding that such a duty ought be imposed include the following. If during her life Mrs Currey had sued her solicitor for negligence she could have, at best, recovered the cost of preparation and execution of a new will or re-execution of the existing one. Likewise if her estate had sued the solicitor after her death it could have recovered no more than nominal damages because it suffered no loss – per Dawson J at p173. Brennan CJ at p165 cited English authority that made the same point and explained the need for there to be no lacuna in the law.
  4. The recognition of the duty assisted in giving effect to the client’s wish to confer a particular testamentary benefit on the intended beneficiary. There is no conflict of interest between the solicitor and the testator and the intended beneficiary – per Gummow J at p236.
  5. In the result the High Court by a majority, McHugh J dissenting, dismissed the appeal. The consequence was that the solicitor was held liable to Mrs Van Erp for damages of $163,471.50 representing the value of the half interest in the Paddington property which she otherwise would have received had the gift in the will not been void.

Postscript

  1. Most jurisdictions have now repealed the statutory provisions which disentitled a beneficiary to take a gift in a will if their spouse was an attesting witness. The current statutory regime is to be found in the following provisions: s10 Succession Act 2006 (NSW), s15 Wills Act 1968 (ACT), s12 Wills Act (NT), s11 Succession Act 1981 (QLD), s17 Wills Act 1936 (SA), s12-14 Wills Act 2008 (Tas), s11 Wills Act 1997 (Vic).

Maestrale v Aspile [2012] NSWSC 1420 – solicitor held liable to beneficiary for his loss of a chance to obtain a benefit under a will

  1. Mr Biagio Maestrale died on 15 July 2002 from acute myeloid leukaemia. On 8 July 2002 he gave instructions to a solicitor, Mr Aspile, to prepare a new will for him in substitution for a will that had been drawn in 1982. The existing will relevantly provided that his children receive his estate in equal shares. Under the intended will Mr Maestrales’ children other than the plaintiff (who was a son of Mr Maestrale) were to receive legacies of $150,000 each (with one child to receive an additional legacy of $10,000) and the plaintiff receive the residue of the estate.
  2. The plaintiff alleged that the meeting of 8 July 2002 when instructions were given was the culmination of repeated requests to Mr Aspile over the preceding three to four weeks that he attend on Mr Maestrale for the purpose of him giving instructions for the preparation of a new will. The plaintiff also alleged that between 8 July and Mr Maestrale’s death on 15 July the plaintiff telephoned Mr Aspile and left messages and an SMS message to enquire as to the preparation of the new will and the need for Mr Aspile’s urgent attention to it because of Mr Maestrale’s rapidly failing health.
  3. Mr Aspile disputed the plaintiff’s version of events. He gave evidence that the plaintiff first raised the question of Mr Maestrale making a will in mid June 2002 during a conference in respect of his own legal affairs and thereafter he waited to hear from the plaintiff as to a time when a meeting could be arranged with Mr Maestrale. He denied that he was told then or at any other time that Mr Maestrale’s death was imminent. He understood that Mr Maestrale had been diagnosed with cancer and that his doctors believe that he had about six months to live. Mr Maestrale gave him the same information at the meeting on 8 July. He said that the contact after 8 July related to litigation that his firm was conducting on behalf of the plaintiff and the plaintiff’s sister.
  4. The proceedings were heard and determined by Fullerton J. Her Honour rejected the plaintiff’s evidence as to the contact that he alleged that he had with the solicitor prior to 8 July. Her Honour accepted the solicitor’s evidence that at the meeting on 8 July he was neither aware at that time that there was a risk of his client dying before a formal will was prepared. In those circumstances Her Honour held that the solicitor did not owe the client a duty to advise him of the option of making an informal will that would have given effect to his testamentary wishes pending the execution of a formal will.
  5. Her Honour found that the relevant breach of duty was a failure to respond to the plaintiff’s calls for urgent attention on 12 and 13 July when the solicitor must have known or suspected that the calls related to his client’s health and the unexecuted will.
  6. The solicitor’s counsel submitted that his client did not owe the plaintiff a duty of care because whilst the solicitor had received instructions to prepare a will Mr Maestrale had not reviewed it, much less indicated a preparedness to sign it. Her Honour rejected this submission and held that Mr Maestrale had given clear and unambiguous instructions to prepare a will under which he intended that the plaintiff would benefit to a material degree differently to his other children.
  7. By accepting the instructions and in pursuance of carrying them out Mr Aspile owed the plaintiff a duty to ensure that in the event of any change in his father’s health or capacity he would make prompt arrangements to attend with a formal will or with the file notes and have them signed so as an informal will might be created.
  8. Her Honour categorised the plaintiff’s damages as representing the loss of the chance of obtaining a benefit under the intended will. She calculated damages as representing the difference between what the plaintiff would have received under the old will and the intended will. On the facts of the case the amount was the difference between what the plaintiff had in fact paid to retain the family home and what he would have paid had the intended will been executed less an amount representing the fact that if the intended will had been executed in all probability the plaintiff’s sister Graziella would have succeeded in obtaining an order for increased provision under the Family Provision Act 1982.

Practical Points

  1. The case raises the following important points:
  • The obligation of a solicitor in appropriate circumstances to advise a client that they could give effect to their testamentary intentions by executing an informal will and if necessary to arrange for such a document to be executed.
  • The need to attend promptly to any request to attend a client when their health deteriorates and the likelihood of a breach of duty being committed in the event that this did not occur.
  • The relevance of successful family provision proceedings which might operate to reduced the quantum of damages.
  • The importance of contemporaneous file notes.
  1. An appeal was taken from this decision to the Court of Appeal – Maestrale v Aspite [2014] NSWCA 182 on the question of the quantum of damages and costs. The appeal was allowed but the decision on appeal does not affect the matters of principle determined by the trial judge.

Fischer v Howe [2013] NSWSC 462- solicitor held liable for failing to have the testatrix execute an informal will

  1. Mrs Marie Fischer was born on 12 January 1916 and died on 6 April 2010 aged 94. During her lifetime she made at least 9 wills.
  2. On 25 March 2010 the solicitor had a conference with Mrs Fischer. During that conference she instructed him that she wanted a new will prepared because she had lost confidence in her accountant who was one of her executors. She gave instructions that she wished to leave various bequests and that the residue of her estate should be divided as to 50% to the plaintiff, 25% to her granddaughter and the remaining 25% to her grandson. She also gave instructions that she did not wish to leave anything to her daughter
  3. At the conclusion of the conference the solicitor told Mrs Fischer that he would be away over the Easter break. On that night Mrs Fischer became unwell. Her general practitioner saw her on 26 March, 30 March, 1 April and 6 April. She died on 6 April. Her general practitioner Dr Zwi gave evidence that she was “absolutely shocked” because she did not expect Mrs Fischer to die that day.
  4. Proceedings were instituted by Mrs Fischer’s son alleging that the solicitor was negligent for failing to make an informal will that expressed his mother’s instructions as to a new will. The plaintiff claimed the difference between the 50% of residue which he would have received but for the alleged negligence and the 25% that he actually received by way of distribution under a will that Mrs Fischer made in 2009.
  5. Adamson J held that the solicitor was negligent. Her reasoning process may be summarised by the following extracts being paragraphs 90 – 97 of her judgment which were on the following terms:

90. I consider that the defendant’s retainer was to give legal effect to the deceased’s testamentary intentions, and not merely, as the defendant contended, to prepare a formal will and arrange for its execution. Where the law provides, as in s 8 of the Succession Act, for an avenue for giving legal effect to testamentary intention in addition to making a formal will, its “informality” is no reason to disregard the availability of that avenue. The making of an informal will is merely another way of achieving a particular legal effect and is, in my view, relevantly analogous to the procedure considered in Summerville of a solicitor signing a will on behalf of a client as provided for by s 7 of the Wills Probate and Administration Act.

91. In the circumstances of the instant case the duty the defendant owed to the plaintiff as an intended beneficiary required him to procure an informal will on 25 March 2010.

92. The deceased had a settled dispositive intention in respect of the whole of the estate and also, importantly, wanted to change her executors. I accept Ms Suttor’s evidence that such a change is a matter of importance and the defendant ought to have regarded it as such. I reject the defendant’s submission that “merely getting rid of an executor in whom you had lost confidence is no big deal”. The deceased’s statement to the plaintiff not long after the conference: “the dispositions are done” is a powerful indication that she regarded the dispositions about which she had instructed the defendant as being settled and not the subject of further consideration in the foreseeable future. Her statement to that effect also highlights the purpose of the conference at which Dr Zwi, Mr Hanrahan and the defendant were to be present: namely to ensure that the best assessment of her testamentary capacity was available to defend her will against a potential challenge by her daughter.

93.  In the instant case the defendant did not even give consideration to the making of an informal will. At the time of the conference on 25 March 2010 the solicitor knew each of the following:

(1)     the deceased was at least in her nineties since her two children were in their seventies;

(2)     she had difficulties with her mobility and required a carer;

(3)     some years previously she had fallen down some stairs in her unit and broken her hip which required her hospitalisation and residence in a nursing home before her return to her unit;

(4)     she was at greater risk of falling and sustaining serious injury or having a stroke or other cerebral event or other incident that would compromise her testamentary capacity than had she been younger;

(5)     she was adamant that she wanted to change the identity of her executor because she had lost faith in him;

(6)     she wanted to change the dispositions;

(7)     any prevarication expressed as to the quantum of the bequests to her carer and Medicins Sans Frontieres was resolved in the course of the conference; and

(8)     the reason for the delay in preparation of the formal will for execution was because of the defendant’s own commitments.

94    Although the defendant did not know how substantial the change in the dispositions was, he made no enquiry as to this matter. It was therefore not reasonable for him, in the absence of enquiry, to assume that they were other than substantial and of importance to his client.

95. The deceased’s preference for the conference, at which the formal will would be available, to be timed so that the plaintiff, Dr Zwi and Mr Hanrahan could be present indicates to me that she was concerned to fortify her new will against attack from her daughter, either on the grounds of testamentary capacity or on the basis that no provision had been made for her. It did not, in my view, signify any uncertainty as to her testamentary intentions or as to her desire that they be legally effective.

96. The defendant admitted that there was no practical impediment to his drawing up an informal will on 25 March 2010. He said:

“If I had any reason to believe that Mrs Fischer was in such poor health when I spoke with her that she was at risk of imminent death, I could and would have prepared a manuscript will for her there and then and had her execute that will, if she was willing to do so.”

97.  I consider that the defendant was negligent in failing to procure an informal will at the conference on 25 March 2010. He could have done so. His failure to do so was a breach of his duty to exercise reasonable care. Although the deceased may not have been at risk of imminent death as Dr Zwi understood the term, being at risk of dying within hours or within a day, she was, by reason of her age, lack of mobility, need for care and infirmity, susceptible to a not insignificant risk of losing her testamentary capacity in the period of about a fortnight between the initial conference and the proposed conference. There was no reason for her, or her intended beneficiaries, to be subjected to that risk in light of her settled testamentary intentions, both as to dispositions and as to her desire to change her executors, and the circumstance that it was the solicitor who was responsible for the delay.

Howe v Fischer [2014] NSWCA 286 – the solicitor bites back

  1. The solicitor appealed from Adamson J’s decision.
  2. The solicitor contended that Her Honour erred in making the following findings of fact:
    1. That, by the end of the conference, Mrs Fischer had a settled dispositive intention as to the whole of her estate and there was no uncertainty as to her testamentary intentions;
    2. That Mrs Fischer’s purpose in wishing the respondent (her son), Doctor Zwi and Mr Hanrahan to be present when the appellant returned was “to ensure that the best assessment of her testamentary capacity was available to defend her Will against a potential challenge by her daughter”;
    3. That there was “a not insignificant risk” that MRs Fischer would lose testamentary capacity in the period of some two weeks between the conference on 25  March 2010 and the end of the week immediately after Easter (9 April 2010);
    4. That the appellant was (or ought to have been) aware of that risk;
    5. That there was no rational distinction between, on the one hand, the situation of a client who is dying in a hospital bed or about to make an overseas trip and, on the other, Mrs Fischer’s situation; and
    6. The reason for the delay in the preparation of a formal Will was the appellant’s own commitments and he was responsible for the delay.
  3. The solicitor also challenged the finding that the retainer was a retainer “to give legal effect to the deceased’s testamentary intentions” and the finding that the care that the solicitor was called upon to exercise required him to “procure” that Mrs Fischer execute an informal Will.
  4. The solicitor succeeded on all the grounds of appeal.
  5. The Court of Appeal consisting of Beazley P, MacFarlane JA and Barrett JA unanimously allowed the appeal. Barrett JA delivered the main judgment. Beazley P and MacFarlane JA agreed with his judgment.
  6. The Court overturned Adamson J’s finding that the solicitor’s retainer was to give legal effect to Mrs Fischer’s testamentary intentions. The Court held that the retainer was to prepare a formal will and arrange for its execution according to the agreed timetable. The solicitor was under an implied obligation to avoid any reasonably foreseeable frustration of this objective, however this did not require the signing of an informal will in the circumstances – paragraph 67-70 of the judgment.
  7. On the formulation of the retainer adopted by the Court of Appeal any duty to call attention to the possibility of making an informal will would only have arisen if the solicitor was aware of some factor which, as a matter of reasonable foresight, might cause to be frustrated Mrs Fischer’s objective of making effective testamentary dispositions by means of a formal will in about two weeks’ time.
  8. The only relevant factor would have been that Mrs Fischer might be expected to die or lose testamentary capacity in the relevant period of about two weeks. The Court concluded that there was no basis on which the solicitor should have been held to be so aware, as a matter of reasonable foresight. There was accordingly no breach of retainer. Since there was no failure on the part of the solicitor to perform his retainer, there was no breach by him of the duty of care he owed the beneficiary.
  9. The Court also considered the question of whether expert evidence was needed in a case such as this. It held that it was not needed because the Court itself is sufficiently equipped to form an opinion as to what is accepted professional practice or conduct in the circumstances.

Postscript: Solicitor Victorious

  1. An application for special leave to appeal to the High Court was filed. That application has now been dismissed. The result is that the solicitor’s successful appeal in the New South Wales Court of Appeal now stands as representing the law on this part of the topic in New South Wales.

Queensland Art Gallery Board of Trustees v Henderson Trout (a firm) [2000] QCA 93 – no settled instructions from client with the consequence that no duty of care was owed

  1. The position in Maestrale v Aspile and Fischer v Howe should be contrasted with the situation in Queensland Art Gallery Board of Trustees v Henderson (a firm). In that case the Art Gallery sued the solicitors for damages representing the value of an art collection which they alleged would have passed to it had a will been prepared.
  2. In that case the Queensland Court of Appeal held that there was no duty owed to the Art Gallery because the deceased had remained unsettled in her own mind as to whether the Art Gallery would receive a benefit. The Court said that in the circumstances and in particular in the absence of an indication from the testatrix that she wished to finalise the matter, at least to the extent of executing a will that would secure a particular benefit to the Art Gallery no duty of care arose on the solicitor’s part in favour of the Art Gallery.

Vagg v McPhee [2013] NSWCA 29 – alleged failure to advise a client that a joint tenancy could be severed – held: no liability because the client never wished to sever the joint tenancy

  1. Mrs Vagg (the testatrix) owned a property at Winmalee as joint tenants with her husband. At the time she made her will in January 2005 she received advice from her solicitor that the property was held as joint tenants and she appreciated that when one joint tenant died the interest of the deceased joint tenant would pass to the survivor.
  2. The testatrix instructed the solicitor that she wished to include in her will a request that the property be sold and the money received “be given to our children for their education to enable them to pay any HECS debts that they may have or incur”.
  3. The testatrix’s children brought proceedings after her death against the solicitors alleging that they were negligent in failing to advise the testatrix that she could unilaterally sever the joint tenancy with the consequence that one half of the property would have formed part of the testatrix’s residuary estate,
  4. Schmidt J at first instance dismissed the proceedings. Her Honour held that no instructions had ever been given by the testatrix to the solicitors that there should be a disposition of a half share in the property. Further, Her Honour held that there was no duty on the solicitors to seek further instructions from the testatrix or persuade her to pursue a course which the beneficiaries perceived might have been to their financial benefit. The relevant duty was to take reasonable care to give effect to the client’s intention as to a stated testamentary disposition in favour of a particular beneficiary – para 39 of the judgment of the Court of Appeal.
  5. On appeal, the beneficiaries argued that the solicitor’s retainer included not only the preparation of the testatrix’s will but also the giving of advice as to what could be done to avoid the inevitable operation of the right of survivorship upon her death as a consequence of the property being held by the testatrix and her husband as joint tenants.
  6. The Court of Appeal unanimously dismissed the appeal.
  7. Basten JA held that no duty of care arose because on the beneficiaries’ case the estate had a good cause of action against the solicitor, whereas in the decided cases a remedy had only been granted against the solicitor when the estate had none. At para 20 His Honour held that the “request” in the testatrix’s will revealed that the testatrix understood that she could not (even assuming that she wanted to) dispose of her half interest in the property. The question whether she wished to get in her half interest so as to be able to dispose of it was not integral to the terms of the will and involved a separate and discrete question, not covered by the principle in Hill v Van Erp. Assuming that a testatrix instructed the solicitor to take steps to acquire certain property (not then owned by her) to be disposed by bequest in a proposed will, which requests due to unwarranted delay were not effected before her death, it would require a significant extension of current principle to hold that the prospective beneficiary could sue the solicitor in negligence for the value of the acquired property.
  8. Tobias AJA, relying on the absence of any evidence that the testatrix had ever discussed leaving her children a half share in the property and the evidence that she did not wish to sever the joint tenancy held that there was no breach of duty. His Honour concluded that the testatrix understood the clause inserted in her will had no legal effect and would not have the result she desired unless her husband agreed. She executed the will with this knowledge. Accordingly it was doubtful that the testatrix would have pursued any legal avenues available to her to ensure that the property formed part of her residuary estate even if she had been informed that this could be achieved by severance of the joint tenancy. Ward JA agreed with both Basten JA and Tobias AJA.

Carr-Glynn v Frersons [1999] Ch 326

  1. The decision in Vagg should be contrasted with the decision in Carr-Glynn v Frersons. In that case the deceased wished to leave an interest that she held in a property to her niece. The solicitors knew that the property was held by the deceased and her nephew as joint tenants and foresaw a problem if no steps were taken to sever the joint tenancy. Chadwick LJ said that the service of a notice of severance was, on the facts of this case an integral part of the will making process. This is because in the absence of a severance the asset could not fall into the deceased’s estate and thus give effect to the testatrix’s instructions that she wished her share in the property to pass to her nominated beneficiary. Accordingly the solicitors were held liable.
  2. See also Smeaton v Pattison [2003] QCA 341 where the Court of Appeal of Queensland held a solicitor liable for failing to advise the deceased that in order to sever the joint tenancies in properties which he wished to leave to his children that he must within his lifetime execute a transfer of his interest, give a copy of the instrument to his second wife and secure its registration.

Miller v Cooney [2004] NSWCA 380 – solicitor not liable for failure to make further enquiries to ascertain whether the deceased was the registered proprietor of properties

  1. Mr and Mrs Lalor were the registered proprietors as joint tenants of a property at Kalateenee and another property at Kempsey. They had made wills in 1989. Mrs Lalor made another will in 1993. In 1998 Mr and Mrs Lalor instructed some solicitors to make some changes to their wills. Mrs Lalor gave instructions to alter the beneficiaries in her previous will.
  2. Mrs Lalor died on 19 August 1999 and the two properties passed by survivorship to her husband. Some of the disappointed beneficiaries instituted proceedings against the solicitors. The alleged negligence was the failure to verify whether Mrs Lalor was the sole registered proprietor of the properties, failing to ascertain her interest in the properties and failing to advise her to sever the joint tenancy in the properties.
  3. The proceedings were heard in the District Court by Certoma ADCJ. His Honour held that Mrs Lalor’s instructions were limited to deleting some beneficiaries and adding others. Two experts gave evidence before the trial judge. His Honour accepted the evidence of an experienced solicitor, Mr Neville Moses, that the usual practice of a prudent and competent solicitor would be to carry out the instructions of the client accepting as given that the existing Wills reflected the legal position with regard to the properties referred to in the Will of Mrs Lalor and that the question of the ownership of the property had been taken into account when those Wills were previously drafted.
  4. In those circumstances the trial judge entered a judgment for the defendant solicitors.
  5. On appeal the trial judge’s decision was affirmed and the leading judgment was given by Sheller JA. His Honour said at para 31:

31. “Again the duty depends in part upon the solicitor’s knowledge of a particular and significant matter. Mr Cooney was presented with two wills that Mr and Mrs Lalor wished to change by substituting different beneficiaries and adding a further residuary beneficiary. The terms of those wills as presented to him expressly represented that the first property was Mrs Lalor’s farm property and the second property was her house property. Further, the form of the gifts proceeded on the basis that those representations were correct. The evidence of Mrs O’Loughlin was that Mrs Lalor always and adamantly described the farm property as “her farm” and the house as “her house”. There is no reason to suppose that, if Mr Cooney had asked Mrs Lalor whether she indeed owned the two properties, she would not have answered in the affirmative. No doubt, that is what Mrs Lalor told the solicitor who drafted her earlier will which she presented to Mr Cooney. There was nothing to suggest to Mr Cooney that this was incorrect and nothing was put to Mr Cooney in cross-examination that there was any evidence of a nature that might have led him to suspect that Mrs Lalor was not capable of understanding what property she owned

  1. His Honour expressed his conclusion at par 36 of his judgment in the following terms:

36.  “In my opinion, it was open to the trial Judge to prefer the opinion expressed by Mr Moses. On Mrs Lalor’s instructions merely to change some of the beneficiaries from those in a previous will, which had obviously been prepared by a lawyer, and in the circumstance that the dispositions under the wills of Mrs Lalor and her husband were not inconsistent with the subject properties being owned by Mrs Lalor, it was also open to the trial Judge to find that the solicitor acted reasonably and was not in breach of his duty of care to draw an effective will by failing to inquire further about Mrs Lalor’s ownership of the properties. I agree with his Honour’s conclusion. The appeal should be dismissed with costs.

Calvert v Badenach [2014] TASSC 61

  1. The solicitor took instructions from a client named Jeffrey Doddridge to prepare a will. The Will was prepared and executed by the client. By that Will the client left his entire estate to the Plaintiff, Mr Calvert, whom he treated like a son.
  2. After the client’s death his daughter made an application for provision under the Testator’s Family Maintenance Act 1912 (Tas) (“the TFM Act”). The daughter received provision in an amount of $200,000 out of the estate and there were orders that the costs of both parties be paid out of the estate.
  3. The client could have arranged his affairs during his lifetime so as the assets of his estate were far less than $200,000. His principal assets were his interest in two properties which he owned as tenant in common with the Plaintiff. If he had made arrangements to transfer the properties to himself and the Plaintiff as joint tenants or transferred the properties to the Plaintiff they would not have formed part of his estate. There are no notional estate provisions in the TFM Act so the properties would not have been available to satisfy an order for provision. The client was terminally ill at the time that he gave instructions to the solicitor and the solicitor knew this.
  4. The Plaintiff contended that the solicitor and his firm were negligent because they:
    1. Failed to advise the client of the risk of his daughter making a claim under the TFM Act; and
    2. Failed to advise him of the options available to him to arrange his affairs so as to reduce or extinguish his estate, so as to avoid or partly avoid any claim that could disturb his testamentary wishes.
  5. The proceedings at trial were heard by Blow CJ who accepted that the extent of the solicitor’s duty to a client depends on the scope of the solicitor’s retainer. In this case he held that there was no evidence that the solicitor was engaged to advise in relation to estate planning or other collateral matters – paragraph 7 of the judgment.
  6. The Chief Justice proceeded on the basis that when a solicitor is instructed to act on the making of a will the solicitor will owe and intended beneficiary a duty to take reasonable care to give effect to the client’s testamentary wishes – paragraph 9 of the judgment.
  7. At paragraphs 25 – 29 his Honour said:

25.    The solicitor had been retained by the testator to prepare his will. The solicitor knew that the testator was elderly, and that he wished to give the whole of his estate to a man who was not a relative. In those circumstances, I accept that he owed his client a duty to enquire as to the existence of any family members who could make a claim under the TFM Act, with a view to the testator’s reasons for making no provision for them possibly being included in the will. There is no evidence that the client had engaged the solicitor to provide advice as to anything other than the making of the will. I infer that, if the solicitor had enquired about family members as he should have done, then the testator would have disclosed the existence of his daughter, and the solicitor would have advised as to the risk of successful proceedings under the TFM Act. The testator might or might not then have enquired whether there was anything that could be done to protect the plaintiff against that risk. Any such enquiry would have widened the scope of the solicitor’s retainer. If such an enquiry had been made, it would have been the solicitor’s duty to advise the testator that, if the plaintiff was agreeable, it could be arranged that he and the plaintiff could hold their two properties as joint tenants, with the consequence that, provided the testator died first, they would pass to the plaintiff and not be available to satisfy a claim under the TFM Act. But I am not satisfied on the balance of probabilities that a conversation about the daughter and a possible TFM claim by her would have triggered an enquiry by the testator about ways of protecting the plaintiff’s position. And I am not satisfied that the solicitor owed the testator, let alone the plaintiff, a duty to provide advice about creating joint tenancies in the absence of such an enquiry.

26. Counsel for the defendants submitted that, for public policy reasons, a testator’s solicitor could not have a duty to advise as to steps that could be taken to circumvent the provisions of the TFM Act. He argued that coherence between the law of tort and the TFM Act required that no such duty should be held to exist. I think that submission should be rejected in the light of the High Court’s decision in Barns v Barns (2003) 214 CLR 169. That was a case concerning mutual wills. A husband and wife agreed by deed with their son and with each other that they would make, and not revoke, wills in a particular form. Following the death of the husband, the couple’s daughter applied to the Supreme Court of South Australia for provision out of the estate under the equivalent of our TFM Act, and for a declaration that the deed was void, and of no effect as against her claim. When the case was before the Full Court of the Supreme Court of South Australia, that Court rejected an argument that the deed was void on public policy grounds: Barns v Barns [2001] SASC 303(2001) 80 SASR 331. The High Court did not disturb that conclusion, but held that the deed did not operate so as to prevent provision being made for the daughter out of her father’s estate. Two of the judges made comments suggesting that, since the statute in question applied only to the estate as at the time of death, there were no public policy consequences attaching to a disposition that depleted the estate. At [38], Gleeson CJ, who was one of the majority, said:

              “If the deceased had divested himself of all his assets before he died, then there would have been no estate within the meaning of s 7. In a colloquial sense, that might be described as defeating the operation of the Act; but in a legal sense that would simply produce a state of affairs upon which the Act would operate according to its terms. Unlike some corresponding legislation, the Act does not provide for a notional estate. The legislative purpose does not extend beyond dealing with a deceased’s estate. A transaction which produces the consequence that a deceased person has no estate means that there is nothing that falls within the legislative scheme.”

27.  At [159] Callinan J, dissenting, said:

              “… legislation is essentially no more than the enactment of desirable social policy as it is perceived by the legislators of the day who have a right, subject only to constitutional inhibitions, to change it as society changes, or as any imperfections in it manifest themselves. Generally speaking, the Parliament, rather than the courts are [sic] better able to appreciate and to give effect to social policy.”

28. In the Full Court decision, Lander J, with whom Prior and Wicks JJ agreed, said at [72]:

              “There is no doubt that the Act provides a safeguard to those persons who might be overlooked by a deceased person in the disposition of his estate by his will. The Act, however, is not designed to require a person to accumulate assets or indeed to die with an estate. A person is quite entitled to dispose of his or her estate by waste, gift or any other way before that person’s death. The Act, at least in this State, does not provide any protection to the person otherwise entitled if the deceased dies without an estate in those circumstances.”

29. The Full Court held that it was not contrary to public policy for parties to enter into a deed that had the effect of disentitling a person from making a claim under a TFM statute. Nothing in the High Court judgments is inconsistent with that proposition, nor is that proposition plainly wrong. I think it must follow that there is no public policy reason why a testator’s solicitor should not owe a testator, or even a beneficiary, a duty, when appropriate, to advise as to steps that may be taken to frustrate a TFM claim by depleting or extinguishing the testator’s estate.

  1. His Honour expressed his conclusion at paragraphs 33-34 in the following terms:

For the reasons stated above, my conclusions are as follows:

a.   I accept that the solicitor owed the testator a duty to take instructions in relation to a possible claim under the TFM Act, and that he breached that duty.

b.  I am not satisfied on the balance of probabilities that, had the solicitor discharged his duty to the testator, the testator would have joined with the plaintiff in creating joint tenancies in place of the tenancies in common, or taken any other steps to deplete his estate and frustrate a possible claim under the TFM Act.

c.  I therefore need not decide whether the solicitor owed the plaintiff, as an intended beneficiary, any duty to advise as to the risk of a claim being made under the TFM Act or the steps that could be taken to reduce or extinguish his estate in order to avoid the consequences of such a claim.

It follows that the plaintiff’s claim must fail, whether or not the solicitor owed the plaintiff, not just the testator, a duty to advise the testator as to the steps that could be taken to place assets beyond the reach of the TFM Act. There will be judgment for the defendants.

Calvert v Badenach [2015] TASFC 8

  1. The unsuccessful Plaintiff appealed to the Full Court of the Supreme Court of Tasmania. That Court consisting of Tennent, Porter and Estcourt JJ unanimously allowed the appeal and remitted the matter to a judge other that the Chief Justice on the basis that judgment was entered for damages to be assessed.
  2. Tennent J at paragraphs 20-23 said:

20. What can be distilled from the discussion in Renkon is that, in determining the scope of a solicitor’s duty of care to a client in contract, some regard should be paid to the particular client and, what I might describe as, the dynamics between the client and the solicitor. In the present case, the first respondent was a very experienced practitioner. He was dealing with an elderly and terminally ill man who had been his client for a number of years. During the course of that relationship, the respondents had acted in various transactions for the testator. There is no suggestion the testator had any legal training or particular knowledge about the potential for TFM claims. Further, the testator’s instructions were that he wished to leave the entirety of his estate to someone to whom he was not related by blood. That had been his consistent instructions over 25 years. The testator’s estate as at 2009 when his wishes were last expressed included interests in two properties. It is reasonable to infer that the testator’s intention was that the appellant have the entirety of his interest in those properties and his estate generally, not that estate less any amount which might need to be paid to a successful TFM claimant.

21. Against that background, in my view, the duty of care owed by the respondents to the testator was much more extensive than that which the learned trial judge set out. The first respondent owed a duty of care to the testator to, not only enquire of him whether he had any children, but also to advise him why that enquiry was being made, the potential for a TFM claim, the impact that could have on his expressed wishes, and of possible steps he could consider to avoid that impact. It did not need to extend to ensuring any such advice was accepted and acted upon.

22.  That duty to the testator was one owed in contract and tort. The appellant was, of course, not in any contractual relationship with the respondents. Any duty of care to the appellant could only be owed in tort. As the learned trial judge found at [6] of his reasons, such a duty can exist. The issue he raised was how far that duty extended. There can be no basis for suggesting that any duty owed by a testator’s solicitor to an intended beneficiary in tort should be something less than a contractual duty owed by a solicitor to that testator. When regard is had to the nature of the duty as I have outlined it in the previous paragraph, there can be no reason to suggest that, in that context, the interests of the testator in this case and the appellant were not effectively the same.

23. It must follow that I accept that the respondents not only had a duty to the appellant to advise the testator in the manner I have identified, but that they breached that duty. Grounds 1 and 4 of the notice of appeal should therefore succeed. In terms of whether this appeal generally should succeed or not, the above finding is enough to dispose of that question.

  1. Porter J at paragraphs 69-72 said:

69. In this case, even ignoring imputed knowledge of Ms Doddridge, my view is that the solicitor was under a duty to enquire about the existence of family for whom no provision had been made, to advise of the possibility of claims under the Act, and, as a necessary concomitant to that, advise as to what steps may be available to deal with assets before the testator’s death in a way which would better fulfil the testator’s intentions.

70. It is unrealistic and unreasonable to suggest that the duty to advise as to available measures would only arise if a testator were to ask the specific question. In such circumstances it would be artificial to confine the scope of the retainer to the client’s express instructions. At the same time I accept that, as advanced by the respondents, proper advice would be wide ranging. As acknowledged by Mr Park, the solicitor called by the appellant, advice would include a discussion about moral obligations in light of the operation of the Act and the possible consequences of doing nothing, as well as what steps might be taken to put assets out of the reach of such a claim. The client’s choice should be a fully informed one. The outcomes may be quite different, depending on what, if anything, is done by the testator.

71. The trial judge accepted that there was a duty to enquire as to the existence of family members who could make a claim under the Act with a view to the reasons for making no provision possibly being included in the will, and that if an enquiry had been made in this case, the solicitor’s duty was to advise that if the appellant was agreeable, joint tenancies could be created. In my view the duty is not so limited or segmented, and it was unhelpful to describe the postulated duty in the terms his Honour did; that is, a duty to give advice as to the depletion of the testator’s estate.

72. I would hold that the solicitor’s duty to give proper effect to the testator’s intentions extends, as contended for by the appellant, to enquiries and advice about the possibility and ramifications of claims under the Act, and includes the provision of advice about, amongst other things, what dealings with presently held assets might be appropriate. I do not believe that this imposes any undue burdens on practitioners. Supported by the evidence in this case, I think it would be common practice. I would also think that many practitioners explain to clients that until death a will has no effect, and that the client is free to deal with his or her assets as they see fit.

  1. Estcourt J at paragraph 116 said:

116. In the present case the respondents’ client was an elderly and terminally ill man, and there is no suggestion other than that he was fully reliant upon the first respondent to implement his testamentary wishes as fully as possible. In those circumstances, absent some clarification or limitation of the scope of the retainer, it is my view that the first respondent’s duty extended to not only asking questions that might elicit the existence of a potential claimant under the TFM Act, but also to providing, basally at least, advice that possible mechanisms existed to minimise the estate available to meet any claim made.

  1. The Court considered that damages should be assessed on the basis of the value of the loss of the chance that had the client been properly advised the client might have ensured that the two properties were, or would be, transferred to the Plaintiff or might have taken some other steps to minimise any diminution of his estate as a result of a claim under the TFM Act.
  2. An application for special leave to appeal to the High Court has been filed. At the present time the application has not been determined.

The significance of the judgment of the Full Court

  1. The judgment of the Full Court is authority for the proposition that a solicitor who is retained to prepare a will is under a duty to the client to enquire about persons for whom no or inadequate provision has been made and to advise the client as to what steps the client might take to minimise or eliminate a claim.
  2. Porter J considered that providing such advice was within the general retainer of a testator’s solicitor, or alternatively instructions should be taken and advice given as soon as the solicitor is aware that there is a person for whom no provision is made and who may have a claim under the legislation – paragraph 68.  In the event that this duty is breached the solicitor may be liable to a beneficiary, such as the Plaintiff, whose interest in the estate is reduced as a result of a successful application for provision.
  3. The case represents a significant development in relation to the content of the duty of a solicitor who accepts instructions to prepare a will. It imports in the general retainer an obligation to give estate planning advice as to how a family provision claim might be reduced or minimised. In my view, generally the retainer is to be preparing a formal will in accordance with the client’s instructions. Such a formulation of the retainer is that which was adopted by the New South Wales Court of Appeal in Howe v Fischer supra at paragraph 30 above. It may be that this retainer is expanded or diminished depending on the particular circumstances. By way of example, if the client expressly sought advice as to what steps were available to frustrate or minimise a family provision claim it is clear that the retainer would extend to giving such advice. However, the imposition of such a duty as part of the general retainer is, in my opinion, an extension of the law and imposes a significantly greater obligation and duty than was previously thought to be the case. If the decision is not overturned on appeal it may well have the practical effect of increasing the cost of preparing wills or leading solicitors to record the nature and extent of their retainer in writing.
  4. The decision imposes an obligation to take instructions as to potential family provision applicants and advise as to the options of minimising or frustrating a claim. The options available may have tax ramifications, for example, stamp duty and capital gains tax. They may also have implications as to the desirability or prudence of the client transferring assets so as they do not form part of his estate. Proper advice would involve advice as to the revenue implications and the risk to the client of disposing of assets before death.
  5. In New South Wales the decision may potentially impose a duty as to what steps may be available to avoid the operation of the notional estate provisions of the Succession Act 2006. These provisions enable a Court to designate property which would otherwise not form part of the deceased’s estate as notional estate and make an order for provision. The assets that are commonly designated as notional estate include property which was the subject of a joint tenancy in which the deceased was a joint tenant, the deceased’s superannuation, property held in a discretionary trust which was controlled by the deceased.
  6. Blow CJ and the Full Court did not think that it was contrary to public policy for a solicitor to owe a testator or a beneficiary a duty to advise as to steps that may be taken to frustrate a claim for provision. Whilst this is probably correct it is quite different to saying, as the Full Court did, that public policy does not militate against it being part of the solicitor’s general retainer when taking instructions to prepare a will.
  7. The general policy of the law is that family provision legislation confers a right on eligible persons to seek and in appropriate cases obtain an order for provision. It is one thing to say that it is not against public policy for a client to retain a solicitor to advise as to lawful ways to frustrate or minimise a potential application. In my view it is quite another thing to say that such an obligation is an incident of the general retainer to prepare a will, the breach of which gives a cause of action against damages against the solicitor at the instigation of a beneficiary whose share in the estate is diminished by an order for provision.

Special leave granted to the solicitor

  1.  On 26 October 2015 the High Court consisting of Kiefel and Keane JJ granted the solicitor special leave to appeal – Badenach v Calvert [2015] HCA Trans 279.
  2.  On the special leave application the following were the major matters raised in argument as justifying leave to appeal being granted.

The scope of the duty was incorrectly extended

  1. The submission was that Van Erp held that there was a duty to give effect to testamentary intention in the context of compliance with the formalities relating to the execution of a will. Calvert extends the duty by imposing an obligation to give advice with respect to the rearrangement of the testator’s assets inter vivos.

The decision of the Full Court imposed a duty to the beneficiary which gave rise to conflict or potential conflict with the duty owed to the testator

  1.  In Van Erp there was no conflict because it was in the interest of both the testator and the beneficiary that the Will be executed in a manner that ensured that the beneficiary received the gift that the testator intended she receive.
  2.  In Calvert it could not be said that it was in the economic interest of the beneficiary (to whom a duty was said to be owed) that the testator make a gift to his daughter. If a duty was imposed requiring the solicitor to advise the testator as to how he might rearrange his assets such a duty must comprehend advice which would not be in the interest of the beneficiary.
  3.  In order for the solicitor to discharge his duty he would need to engage directly with the beneficiary. If he did not he would not be able to give proper advice either to the beneficiary or the testator. Assuming that the testator decided to transfer a property into his name and that of the beneficiary as joint tenants it was necessary that the solicitor take instructions from the both the testator and the beneficiary. In particular the solicitor would have to explain to the beneficiary the consequences of the creation of the joint tenancy.
  4.  Such a position could well lead the solicitor having to breach his duty to the testator by disclosing to the beneficiary privileged information.
  5.  It was also possible that the testator and the beneficiary might not agree on the proposed course of action that should be taken to avoid a family provision claim.

The Full Court’s decision imposes a duty to the beneficiary on the solicitor in circumstances where the solicitor has no control over the beneficiary

  1. In Van Erp the solicitor had control over the process relating to execution of the will. In Calvert the solicitor could speak to the testator but the ultimate decision belonged to the testator.

That importing a duty to advise the testator how to avoid a family provision claim would lead to incoherence in the law and be impractical

  1.  Whilst it may not be contrary to public policy for a solicitor to give advice as to how a family provision claim might be frustrated, to impose such a duty as part of the general retainer would lead to incoherence in the law and be impractical.

If a duty exists, does it involve the solicitor having to give advice as to the alternative means of avoiding a claim, and in the event that the solicitor gives wrong advice, is that negligent?

  1. There may well be in a given situation a number of alternative means of avoiding or minimising a claim. Would the imposition of a duty of the type contended for involve the solicitor in explaining each and making a prediction as to the prospects of each of them succeeding. In the event that the solicitor’s prediction turned out to be wrong, would that involve the solicitor being negligent?

Damages

 It was submitted that the Full Court had merged the test of causation with the test for measure of damage.

  1.  At the present time, the appeal has not been heard or determined.

Assets held in other entities

  1. When preparing a will a solicitor should ascertain whether the assets which the client wishes to leave to a beneficiary are in fact owned by the client. An obvious example is assets which may be owned by a company. The general rule is that if the asset is owned by the company it cannot be disposed of by will. In certain cases the courts have been prepared to construe the will so as to effectively dispose of the property. Thus in Ireland v Retallack [2011] NSWSC 846 Pembroke J was prepared to hold that where a testator and hence his executor controls a company then by reason of that control the executor is in a position to give effect to the manifest intention of the testator and the executor may be under a legal duty to do so. See also Re Bowcock (deceased); Vox v Bowcock [1968] 2 NSWR 697 and Re O’Callaghan [1972] VR 248. Notwithstanding this special care should be taken to ensure that the will is effective to devise the relevant asset to the intended beneficiary.

Wills which are drawn in a manner that do not express the intention of the deceased but are capable of being rectified by the Court

  1. If the solicitor has been negligent by drawing a will that fails to carry out the testator’s instructions the solicitor may be liable under the general law. However if the disappointed beneficiary can prove as part of his or her case that someone else was not intended to be the beneficiary, the statutory power to rectify the will may be availed of so as to secure the gift for the correct beneficiary. The solicitor may however still be liable for the costs of the rectification proceedings and any other loss – see Taylor v Haygarth; Estate of Haygarth (Hodgson J 7 October 1994) and Application of Spooner; Estate of Davis (Hodgson J 28 July 1995).

Conclusion

The following broad propositions appear to arise from the authorities:

  • The law now clearly recognises the right of a disappointed beneficiary to sue a solicitor to recover an intended benefit which the beneficiary has lost as a result of the solicitor’s negligent preparation, drawing or execution of the will.
  • The solicitor’s duty is circumscribed by the terms of the retainer and the instructions of the client.
  • Some of the authorities have expressed the content of a solicitor’s general retainer in wider terms than was previously thought to be the case – e.g. Fischer v Howe supra, at first instance and Calvert v Badenach in the Full Court. The time has probably arrived when solicitors should set out in writing the content of their retainer and any exclusions, for example preparing informal wills or giving advice as to how to minimise or frustrate a family provision claim.

J E Armfield
Second Floor Wentworth Chambers
180 Philip Street, Sydney
Ph: 9232 8803
Fax: 9232 8018
Email: armfield@me.com