fbpx

Written by Peter Carter

May 25, 2014

How much allegiance can clients expect from their lawyer after their job is complete? That question was put to rest in April by three appeal judges considering the case of a regional solicitor representing an opposing party in a lawsuit against former clients, husband and wife home buyers.
Merimbula solicitor Hugo White had conducted a vacant lot of land conveyance for Eugene and Inge Maxwell-Smith in 1995. They subsequently retained builders SamBuild Pty Ltd to build their home. Unfortunately, the construction produced a litigated dispute in which White acted for the builder. The Maxwell-Smiths’ claims were sunk, they were ordered to pay costs and then faced bankruptcy proceedings SamBuild served to recover them.

White’s former clients then turned on him alleging he had acted under a conflict of interest and had thereby breached a “continuing” duty to them. They also alleged a “tort of collateral abuse of process” suggestive of a sinister purpose in White’s conduct of the building dispute for the opposing party. The District Court dismissed the claims. There had been no breach of duty in relation to the retainer, it ruled, and no tortious abuse of process in relation to the two bankruptcy notices.

The allegations went on appeal with Eugene and Inge arguing their case in person.

The Appeal Court judges unanimously upheld the lower court ruling. After a solicitor’s role in a transaction has come to an end, “there is no continuing equitable or contractual duty of the solicitor to a former client”, they held. There was no implied “duty of loyalty” and to act against a former client involved no “conflict of interest”.

The appeal judges also ruled that while a court may restrain a solicitor to protect confidences of a former client, in this instance there was no suggestion that White would breach their confidentiality or that “due administration of justice” would or might be prejudiced.

Likewise, in the absence of evidence that White had used court process for an improper purpose or engaged in some overt act or threat, distinct from initiating the proceeding itself, the tort claim was not made out.

Eugene and Inge were ordered to pay Mr White’s legal costs of the lower court hearing and the appeal. So the answer to our question: absolutely no loyalty at all. If allegiance is what a client requires, it appears they must pay up to  ‘retain’ the lawyer to be on call and to not act against them.

Maxwell-Smith v SamBuild Pty Ltd [2014] NSWCA 146, 14 April 2014 Beazley P McColl JA Barrett JA – read decision

Categories: Litigation & Law Practice , Solicitors

Was this article helpful?
people found this article useful

Get in touch with us