COCKBURN and ORS v GIO FINANCE LTD and ANOR [1996] NSWCA 109

COCKBURN and ORS v GIO FINANCE LTD and ANOR [1996] NSWCA 109

GIO was on notice of the risk of undue influence of the plaintiff by his father and thus equity prevented enforcement of security documents against the plaintiff; the solicitor’s certificate as to capacity referred to legal capacity only, so was not misleading in a broader sense; however, Colemans were in negligent breach of their retainer for failing to provide skilled, independent and sufficient advice in the circumstances, thus liable in damages to the plaintiff.

Parties
Plaintiff: Michael Eric McNally; First Defendant: GIO Finance Ltd; Second Defendant: Coleman and Greig (Colemans); Third Defendant: Verekers
Jurisdiction
Australia
Judgment Date
02 February 1996
Procedural Posture
Appeal / Court of Appeal Decision
Outcome
Appeal allowed in part; cross-appeal allowed in part; orders varied.
Legal Topics
Solicitors' Professional Liability, Undue Influence, Fiduciary Duty, Breach of Retainer, Legal Capacity, Fair Trading
Equity Contract Tort Solicitors' Professional Liability Undue Influence Fiduciary Duty Breach of Retainer Legal Capacity +1 more

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Parties

Michael Eric McNally

Plaintiff

GIO Finance Ltd

First Defendant

Coleman and Greig (Colemans)

Second Defendant

Verekers

Third Defendant

Procedural Posture

Appeal / Court of Appeal Decision

Legal Issues

  1. 1 Whether GIO was bound by equity due to notice of undue influence by the father over the plaintiff in financial transactions resulting in loss of the plaintiff's assets.
  2. 2 Whether the solicitor (Colemans) was liable to the plaintiff for negligent breach of their retainer in advising on the mortgage and guarantee transactions.
  3. 3 Whether the solicitor's certificate regarding the plaintiff's 'capacity' was misleading or gave rise to liability under the Fair Trading Act 1987 (NSW) s42.

Ratio Decidendi

GIO was on notice of the risk of undue influence of the plaintiff by his father and thus equity prevented enforcement of security documents against the plaintiff; the solicitor’s certificate as to capacity referred to legal capacity only, so was not misleading in a broader sense; however, Colemans were in negligent breach of their retainer for failing to provide skilled, independent and sufficient advice in the circumstances, thus liable in damages to the plaintiff.

Court Disposition

Appeal allowed in part; cross-appeal allowed in part; orders varied.

Orders

  • Order 1, 2, and 3 of Cohen J (setting aside mortgage and awarding $1,000 in damages, reserving claim for further damages) undisturbed.
  • Order 4 (dismissing claim against Colemans) set aside; plaintiff to have judgment against Colemans for breach of retainer, damages to be assessed.