Case Notes ~ Due Care & Skill
Due care and skill does not extend to directing purchasers to investigate risks
SHIELDS v NATLAW PTY LTD & ANOR [2023] ACAT 44
The purchaser of a house in Canberra sued her solicitor in negligence for failing to recommend she obtain an asbestos report prior to purchasing a 1950s property. The property was subsequently found to have asbestos cladding. The purchaser alleged she suffered loss by paying a higher price than she should have for the house, encountering prohibitive costs of asbestos removal for proposed renovations and, ultimately, selling the property for less than she could have if there had been no asbestos.
Accepting that solicitors owe a duty to their clients to exercise “due care, skill and diligence” at an appropriate level for a legal professional, the Tribunal considered the following:
Whether the duty extended to the kind of direct, perhaps even insistent, advice that the purchaser should obtain an asbestos report and, if so, whether the duty was breached.
Whether the purchaser suffered loss because of the presence of asbestos in the property.
If the duty was breached and loss was suffered, whether the loss was caused by the solicitors’ failure to advise the purchaser to obtain an asbestos report.
In finding the solicitor was not negligent, the Tribunal had regard to the fact that, in course of preparing to buy the property, the purchaser had access to the sale contract and a building report that outlined various risks, contained a prominent disclaimer with respect to asbestos (noting no assessment had been undertaken to determine the presence of asbestos) and recommended that prospective purchasers consider obtaining additional reports to inform themselves of the various risks. The report also attached ACT Government facts sheets about asbestos and warning that houses built before 1985 were likely to contain asbestos.
The Tribunal accepted the solicitor had taken the purchaser through the contract information, including the report and made it clear that risks associated with the physical property were matters for the purchaser to manage. The scope of a solicitor’s liability did not extend beyond the provision of legal advice on title and the contract and raising a general alert to asbestos. A solicitor’s duty does not require insistence that the purchaser obtain an asbestos report and the scope of the duty does not change because the purchaser is a first home buyer. Purchasers, not their lawyers, are responsible for managing risks associated with the physical property.
Negligence aside, the Tribunal noted that the purchaser could not have succeeded in her claim for damages, in any event, because she could not establish any loss. First, the purchase “was a contested process” suggesting a fair market price was paid. Second, no renovations were ever undertaken so no additional cost of asbestos removal was incurred. Third, the house was sold at a profit and there was no evidence the purchaser did not receive the best market price.