By Jen McMillan -
In most legal files it is clear who the lawyer is acting for. The client can be readily identified from the costs agreement and retainer, and from other documents on file, and the usual expectation is that the lawyer is not acting for anyone else involved in the matter.
Sometimes in transactional matters, however, it may be asserted that the lawyer was acting for another party, and documents on the file may make it difficult for the lawyer to deny.
In McFee v Reilly [2018] NSWCA 322 a solicitor received instructions from a mother to transfer land belonging to her husband, for whom she held a power of attorney, to their four daughters.
A question arose as to whether the solicitor acted for the four daughters in relation to the transaction. In finding that he had, the Court took into account the fact that the solicitor had written on behalf of the daughters to the Office of State Revenue seeking a stamp duty exemption.
With the advent of electronic conveyancing, the need for parties to land transactions to instruct a PEXA subscriber can make acting for another party seem like a practical solution, but it is important to be mindful of the implications and risks.
Consider this situation: you are acting for an executor of an estate where the will leaves a property to a particular beneficiary. In order to administer the estate the property needs to be transferred to the beneficiary, but to effect the transmission the beneficiary needs to instruct a PEXA subscriber.
“There are real consequences that flow from a finding that there was a solicitor-client relationship.”
The beneficiary does not want to have to engage a separate solicitor. Your executor client wants to get on with finalising the estate.
You are a PEXA subscriber, so you offer to do it. The beneficiary needs to provide you with a Client Authorisation Form. Does that make the beneficiary your client?
Are you in a position of conflict if you act for both the executor and the beneficiary? This is likely to be a very low risk transaction, but are you exposed to liability if you do not provide advice to the beneficiary about some aspect of the property or the implications for them of the transmission?
There are real consequences that flow from a finding that there was a solicitor-client relationship. In the McFee case, the solicitor’s knowledge of a breach of fiduciary duty was imputed to the four daughters for the purpose of their liability as recipients of property transferred in breach of fiduciary duty.
In any event, from the solicitor’s perspective there are real differences between the duties owed to a client and any obligations they may have to a non-client. The duty to act in the best interests of the client in any matter in which the solicitor represents the client is a fundamental ethical duty.
If you are considering assisting another party in a transaction there are some things you might consider, including:
- entering into an expressly limited retainer with the other party and ensuring that there is disclosure to and informed consent from your existing client and the other party as required by Rule 11.3 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015, or
- referring the other party to another lawyer.
The first step is to be conscious that providing assistance to another party may give rise to further obligations, both to your existing client and that other party.
