Solicitors’ Liability Committee v Gray summarised by NSW Supreme Court judge

In Swart v Carr [2006] NSWSC 1302 (see next post) Palmer J summarised Solicitors’ Liability Committee v Gray insofar as it related to the construction of the term “the private practice of a solicitor” in the SLC’s professional indemnity policy:

“82 I come now to a case much relied upon by both parties, Solicitors’ Liability Committee v Gray (1997) 77 FCR 1. There, the question was whether the activities of certain solicitors in carrying on a business of syndicating purchases of commercial property in order to achieve tax advantages for the participants to the scheme fell within the scope of “the private practice of a solicitor” within the firm’s professional indemnity policy.

83 The following are, in my view, the critical facts of Gray:

– the claimants against the solicitors entered into a contract with the solicitors under which the claimants acquired from the solicitors the right to purchase certain real property for a lump sum;

– the claimants did not enter into any contract with the solicitors whereby the solicitors were to provide any services at all, let alone services which could only be performed by a legally qualified person or which were customarily performed by solicitors;

– the solicitors gave no tax, or any other technical or legal, advice to the claimants;

– different solicitors advised the claimants on the conveyances involved and did the conveyancing work;

– the claimants claimed against the solicitors for misrepresentation inducing them to purchase the real property and for failing to disclose matters material to their decision to purchase the property;

– the misrepresentations and failure to disclose concerned only the commercial viability of the scheme.

84 Having regard to these facts, it is not at all surprising that the Court found that the solicitors were engaged in entrepreneurial activity having no real nexus with the practice of a solicitor, as defined in the policy, so that the policy did not respond: see e.g. pp 48D-49D.”

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