Earlier this month, the High Court, in its judgement in Badenach v Calvert  HCA 18, clarified the scope of duty of care which a solicitor owes towards an intended beneficiary of his client’s will.
A solicitor prepared a will for his client, who died shortly after executing the will. Under the will, the entire estate of the client was to pass to a sole beneficiary. Unbeknownst to the solicitor, the client had previously been married and had a daughter for whom no provision was made in the will. After his death, the daughter successfully brought a family provision claim against the estate. Combined with a further order as to costs, the effect of that claim was to substantially deplete the estate assets to the beneficiary’s disadvantage.
The claim of beneficiary against the solicitor
The beneficiary contended that, before preparing the will, the solicitor ought to have inquired about eligible persons who could claim provision from the estate after client’s death. Accordingly, he should have also advised the client on how he may protect the beneficiary’s interests by taking appropriate steps, including converting co-ownership of his real estate assets to joint tenancies or transferring assets during his lifetime to the beneficiary.
The trial judge accepted that the solicitor owed the client a duty to inquire about the existence of any family members who could make a family provision claim. However, Blow CJ was not satisfied that the duty extended to “volunteer advice” to the client about how to protect the beneficiary’s position under the will. On appeal, the Full Court of the Supreme Court of Tasmania found in favour of the beneficiary. In their view, the duty not only extended to inquiry of any children and to advise of a potential claim against the estate along with explaining its probable impact, but also to advise of possible steps that the client could consider to avoid that result.
The High Court disagreed and allowed the appeal. It was only concerned with the solicitor’s responsibility of advising the client about the potential family provision claim after having made relevant inquiries as to eligible persons. It was not prepared to hold the solicitor responsible for not advising the client of ways to protect the beneficiary’s interests under the intended bequests. In so doing, the High Court distinguished the case of Hill v Van Erp (1997) 188 CLR 159 which was heavily relied upon by the Full Court to extend a solicitor’s duty, as owed to his client, to an intended beneficiary. The High Court clarified that such result may only be achieved where interests of the client and the intended beneficiary are aligned under the will. In the present case, the alleged advice which the solicitor ought to have given would have made it unnecessary for the client to make any provision for the beneficiary under the will. Further, it is uncertain as to what steps, if any, the client would have taken even after obtaining such advice from the solicitor.
What to look for?
Under section 57 of the Succession Act (NSW) 2006 there are certain ‘eligible persons’ who can claim against your estate - a spouse (including de facto partner), people with whom you had a relationship of domestic support and personal care, a child, a former wife/husband, a household member or a grandchild who was dependant on you.
While we commit to our professional obligations and provide you with proficient legal advice to meet your objectives, it is crucial that you also give us a holistic picture of your family and support network so we are able to understand your needs and offer the advice that can best protect your intentions. As apparent from the High Court judgement, intended beneficiaries may not always have the assurance of having their issues addressed retrospectively.
Although excluding eligible persons or providing little for them is a risk ought to be avoided, we advise that should you decide to go down that path after having carefully considered and discussed with us your intentions, you leave your detailed reasons in writing so it may be used as an evidence, where relevant, to defend a potential claim against your estate. This gives you the chance to explain your position even though (by definition) you are not in the court room!