Recently, the NSW Supreme Court ordered a large scale commercial law firm to pay John Symond, the founder of Aussie Home Loans, $4.9 million in damages for providing him with negligent advice about the tax consequences of a proposed business restructure.
It was found that the advice from Gadens Lawyers – that the transaction would be tax free – was wrong and did not meet the standard expected of a reasonably competent solicitor. The negligent advice received from Gadens resulted in Mr Symond having to pay a substantially higher amount of tax and other charges to the Australian Taxation Office.
This case is a timely reminder that professional advisors, including lawyers, have obligations to their clients to provide services with reasonable care, skill and diligence. If a lawyer breaches that obligation, or their conduct falls short of the standard of care required of them, they can be held liable for losses suffered by their client resulting from the negligent advice. Although in most cases the losses suffered are not as significant to that of Mr Symond’s, professional negligence can have detrimental ramification to individuals and businesses for many years to come.
Slater and Gordon acts for clients who have suffered losses as a result of relying and acting on negligent advice obtained from a former lawyer, or from other professional advisors. We recently acted for a client whose former lawyer advised on loans he made to a number of borrowers which were to be secured by mortgages. The lawyer prepared all the necessary loan and security documentation for the client. Some of the borrowers defaulted on the loans, and when the client attempted to enforce the mortgages, he discovered that the mortgages were unenforceable – the lawyer had failed to register the mortgages with the Land Titles Office.
As a result of the former lawyer’s negligence, Slater and Gordon’s client had little chance of recovering the loaned amounts from the borrowers. The client would never have loaned the money if it was not secured by registered mortgages. The client is now pursuing the former lawyer for the losses he has suffered as a result of entering into the loans without adequate security.
Slater and Gordon has acted in claims against accountants, financial advisors, engineers, architects and other professionals where their work has fallen below the standard of care required and financial losses have occurred as a result. Clients who seek advice from a professional have a right to be advised with care and expertise, and their affairs should be properly managed.
The contents of this blog post are considered accurate as at the date of publication. However the applicable laws may be subject to change, thereby affecting the accuracy of the article. The information contained in this blog post is of a general nature only and is not specific to anyone’s personal circumstances. Please seek legal advice before acting on any of the information contained in this post.