Is Your Client’s Backyard Above Board?

In Williamson v Carneys Lawyers [2015] NSWSC 1080, the plaintiff, sought damages for alleged negligence and breach of a solicitor’s retainer, alleging a failure to advise.

The case concerned a purchase of rural property neighboured by land which was later proposed to be developed into a quarry. The plaintiff contended that, had he known that a quarry development was proposed on a neighbouring property, he would not have purchased it.

In the proceedings, the evidence showed that the solicitor had gone through the contract with the plaintiff, and enquired as to whether the plaintiff had made enquiries about the local area, including whether he had spoken with the neighbours, the Council and those in the local area to find out what was generally happening. The solicitor advised the plaintiff that such inquiries ought to be made because they could affect the plaintiff’s enjoyment of the property.

In the proceedings, the plaintiff alleged the following causes of action:

  1. Breach of either an express or implied contract arising from an alleged failure to advise that due diligence be conducted;
  2. Breach of either an express or implied contract arising from an alleged failure to ensure that such due diligence was conducted;
  3. Breach of either an express or implied contract arising from an alleged failure to conduct the due diligence.

The Court ultimately accepted that the duty of care owed to the plaintiff neither required the solicitor to carry out the enquiries, nor to check with the plaintiff that he had conducted such enquires himself:

“the suggestion that a solicitor should check with a client to make sure that he or she has followed the solicitor’s advice (to conduct inquiries of the Council) presupposes a level of paternalism which is inconsistent with the usual relationship between a solicitor and a client, at least in circumstances where a client is not under a relevant disability”.

That being said, a recent decision in the Planning and Environment Court of Queensland now means that solicitors should consider the advice they give their clients in respect of the purchase of a property, not just in respect of external affectations, but the subject property itself.

Recent Decision

In Pike & Anor v Tighe & Ors [2016] QPEC 30, the Planning & Environment Court of Queensland held that as a development consent runs with land, any breach or non-compliance with conditions contained within that consent gives rise to a development offence at the time of any investigation or requisition by the local consent authority.

What this Means

The upshot of this decision is that when advising a client in respect of the purchase of a property, a solicitor need not only advise their client to make the usual enquiries of the property, and any affectations neighbouring the property, it potentially exposes a solicitor to liability if he or she does not advise their client to ensure that:

  1. There is no non-compliance by the vendor, or any predecessor in title with any development consent;
  2. The property does not breach any development consent.

Contracts for the sale of land generally require a purchaser to accept a property in an ‘as is’ condition. Without some form of contractual indemnity from a vendor for compliance with any development consents that may run with the land, a purchaser may be exposed to liability for any pre-existing development offences and in circumstances where it may be difficult or costly for a purchaser to verify compliance prior to the sale.

A failure to advise of this risk may then result in such liability being passed on to the advising solicitor.

In summary, a solicitor should advise their client, it’s caveat emptor, buyer beware, here, there and everywhere.

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