In Carey v Freehills  FCA 954, the firm prevailed. Justice Kenny helpfully summarised the law in relation to the circumstances in which a solicitor will be found to have a duty of care to a person who has not retained him or her:
‘310 Generally speaking, solicitors do not owe a duty of care to persons who are not their clients: see, for example, Hill v van Erp (1997) 188 CLR 159 (‘Hill v van Erp’) at 167 (Brennan CJ). A solicitor owes a duty of care to a client who has retained that solicitor. Freehills owed a duty of care to WPC and WPM, who had retained Mr Shearwood; but neither company is a cross-claimant. In Hill v van Erp at 167, Brennan CJ said:
Generally speaking, … a solicitor’s duty is owed solely to the client subject to the rules and standards of the profession. That is because the solicitor’s duty is to exercise professional knowledge and skill in the lawful protection and advancement of the client’s interests in the transaction in which the solicitor is retained and that duty cannot be tempered by the existence of a duty to any third person whose interests in the transactions are not coincident with the interests of the client.
311 Where a solicitor’s conduct demonstrates an assumption of responsibility, with known reliance by the plaintiff, a duty of care may arise by reason of an implied professional retainer agreement: see, for example, IGA Distribution Pty Ltd v King and Taylor Pty Ltd  VSC 440 at  (Nettle J); Pegrum v Fatharly (1996) 14 WAR 92 (‘Pegrum v Fatharly’) at 95 (Ipp J), 101-102 (Anderson J, Kennedy J agreeing); and Meerkin & Apel v Rossett Pty Ltd  4 VR 54 at 62 (Charles JA, Callaway and Batt JJA agreeing).
312 There are, however, circumstances in which a duty of care on the part of a solicitor may arise independently of a retainer. Thus, a duty of care has been said to arise in the context of negligent misstatement causing loss: see Hedley Byrne & Co Ltd v Heller & Partners Ltd  AC 465 and Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241, at 252 (Brennan CJ). A duty of care has also been recognised as being owed by a solicitor to a beneficiary of a client’s will, in the absence of reliance by the third party beneficiaries: see Hill v van Erp at 166-168 (Brennan CJ), 172-173 (Dawson J), 234 (Gummow J). Significantly, however, there the High Court emphasised the coincidence of interest between the client and the beneficiaries. In Blackwell v Barroille Pty Ltd (1994) 51 FCR 347 (‘Blackwell v Barroille’) a Full Court of this Court held that a solicitor owed a duty of care to the client’s trustee in bankruptcy as a result of the reliance by the trustee on the solicitor. See further, Beach Petroleum NL v Kennedy and Others (1999) 48 NSWLR 1 at 45-48 - and Hawkins v Clayton (1988) 164 CLR 539 at 578 (although Deane J’s analysis there depended on treating proximity as a determinative factor, an approach that has since been rejected: see below).
313 Where a duty of care is claimed to have a risen in a new circumstance or with respect to a new category of relationships, Australian law now requires a multi-factorial approach in assessing whether a duty of care has indeed arisen. As the New South Wales Court of Appeal noted in Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 75 NSWLR 649 (‘Caltex v Stavar’) 675 , the High Court has rejected the doctrine of proximity as a determinative factor in deciding whether a duty of care existed, as well as “the two stage approach in Anns v Merton London Borough Council  AC 728 based on reasonabl[e] foreseeability, the expanded three stage approach in Caparo Industries Plc v Dickman  2 AC 605 [(‘Caparo v Dickman’)] and any reformulation of the latter two”. See, for example, Hill v van Erp at 210 (McHugh J), 237-239 (Gummow J), Perre v Apand Pty Ltd (1999) 198 CLR 180 at 193-194 - (Gleeson CJ), 197-198 - (Gaudron J), 208-213 -, 216  (McHugh J), 268 -, 273 , 285 - (Kirby J), 303 - (Hayne J), 319 , 324 -, 326  (Callinan J); Sullivan v Moody (2001) 207 CLR 562 at 577-580 - (Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ); Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 583  (McHugh J), 625 - (Kirby J); and Stuart v Kirkland-Veenstra (2009) 237 CLR 215 at 260  (Crennan and Kiefel JJ).
314 Caltex v Stavar has become an exemplar of the multi-factorial approach, partly because Allsop P helpfully set out, in a non-exhaustive list (at 676 ), the “salient features” in the evaluative task of imputing a duty of care in novel circumstances, including its scope and content. In Caltex v Stavar Allsop P said (at 675 ) that the current approach:
… recognises what has been said to be the use of foreseeability at a higher level of generality and the involvement of normative considerations of judgment and policy. This approach requires not only an assessment of foreseeability, but also attention to such considerations as control, vulnerability, assumption of responsibility and nearness or proximity.
His Honour continued (at 676 ):
This rejection of any particular formula or methodology or test the application of which will yield an answer to the question whether there exists in any given circumstance a duty of care, and if so, its scope or content, has been accompanied by the identification of an approach to be used to assist in drawing the conclusion whether in novel circumstances the law imputes a duty and, if so, in identifying its scope or content. If the circumstances fall within an accepted category of duty, little or no difficulty arises. If, however, the posited duty is a novel one, the proper approach is to undertake a close analysis of the facts bearing on the relationship between the plaintiff and the putative tortfeasor by references to the “salient features” or factors affecting the appropriateness of imputing a legal duty to take reasonable care to avoid harm or injury.
315 In connection with the “foreseeability” factor, Allsop P specifically said (at 677 ) that:
In a novel area, reasonable foreseeability of harm is inadequate alone to found a conclusion of duty. Close analysis of the facts and a consideration of these kinds of factors will assist in a reasoned evaluative decision whether to impute a duty. Whilst simple formulae such as “proximity” or “fairness” do not encapsulate the task, they fall within it as part of the evaluative judgment of the appropriateness of legal imputation of responsibility.
316 The list of “salient factors”, which Allsop P identified, was not intended to be exhaustive: Caltex v Stavar at 676 . See also Makawe Pty Ltd v Randwick City Council  NSWCA 412 at , -; Hoffmann v Boland  NSWCA 158 (‘Hoffmann v Boland’) at  (Basten JA), - (Sackville AJA, Barrett JA agreeing). It is unnecessary to make findings about all the factors in the list. This point was reiterated in Hoffmann v Boland at , where Basten JA said that Allsop P’s “salient features”:
… provide a valuable checklist of the kinds of factors which can be of assistance. They do not constitute mandatory considerations, failure to address which will constitute error of law; nor do they lead to a formula which will provide a result in a particular case. Each involves considerations of varying weight; some will be entirely irrelevant. What is necessary is to focus upon the considerations which are relevant in the circumstances of the particular case.
317 By reference to the factors mentioned in Caltex v Stavar and other relevant factors in this case, the Court must assess the circumstances in order to determine whether or not the law will impute a duty of care and, if so, its scope and content. I interpolate that, generally speaking, where the alleged duty of care owed by a solicitor to a non-client conflicts with a duty of care towards the client, a duty of care to the non-client is unlikely to be established. See, for example, Maronis Holdings Ltd v Nippon Credit Australia Pty Ltd  NSWSC 448 at .’
- Professionals’ duties of care to subsequent purchasers of commercial buildings
- Duty to follow client’s instructions implied into solicitor’s retainer
- English cases on auditors’ liability to third parties and on architects’ liability
- More on the solicitor’s ‘penumbral’ duty of care (or lack of it)
- Latest English solicitors’ liability newsletter