By Peter Moran and Tim Seton -
Snapshot
- A fiduciary relationship does not arise merely by reason of the status of the relationship. It comes about due to what the solicitor agrees to undertake, or is deemed to have undertaken, on behalf of their client
- Until the content and duration of the duty is established, the question of whether there has been a breach of the fiduciary duty cannot be addressed
- It was found that, while the defendant owed a fiduciary duty to the plaintiff prior to termination of the retainer, the scope of the duty was informed by the limited role that he assumed on her behalf
- The extent of the fiduciary relationship depends, in part on the retainer. The retainer should be drafted carefully to ensure, so far as is possible, that the retainer is in place and clearly defined
- It is very unwise (as noted in the judgment) for a solicitor who is retained by multiple clients to act for one of the clients in a dispute between them
It goes without saying that the relationship between solicitors and their clients is a fiduciary one. Determination of the scope, content and duration of the fiduciary duty is not so straightforward.
What is often overlooked is that the fiduciary relationship does not arise merely by reason of the status of the relationship. It comes about due to what the solicitor agrees to undertake, or is deemed to have undertaken, on behalf of their client.
The significance of this distinction is that the scope, content and duration of the fiduciary duty owed by a solicitor needs to be ascertained by reference to the nature of the relationship between the solicitor and client, not its mere existence.
In the case of Marshall v Prescott (No 3) [2013] NSWSC 1949 (Marshall), the court was asked to consider the fiduciary duty owed by a solicitor to a former client. The case also raised questions as to the extent to which a solicitor’s fiduciary duty survives termination of their retainer.
In addition to confirming the well-established principle that the fiduciary relationship between solicitor and client comes to an end with the termination of the retainer, the court was also required to consider the scope of a fiduciary duty in the context of an atypical solicitor and client relationship. In that regard it provides a useful vehicle to highlight the types of the matters a court will take into account when determining the scope of a solicitor’s fiduciary duty.
