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Solicitors, fiduciary duties, retainers and contributory negligence September 3, 2019

Rahme v Benjamin & Khoury Pty Ltd [2019] NSWCA 211

In relation to Question 1:

By signing the costs agreements with B&K, Mrs Rahme agreed to pay B&K’s past and future fees for it acting on her behalf as solicitor for the plaintiffs in the Bevillesta proceedings and she agreed to give security for that commitment. In these circumstances B&K owed Mrs Rahme fiduciary duties in relation to her entry into those agreements: [80]-[98].

Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165; [2001] HCA 31; Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36; Law Society of New South Wales v Foreman (1994) 34 NSWLR 408; United Dominions Corporations Ltd v Brian Pty Ltd (1985) 157 CLR 1; [1985] HCA 49, considered.

In relation to Question 2:

B&K breached its fiduciary duties because it entered into agreements with Mrs Rahme under which its interests conflicted with those of Mrs Rahme, and Mrs Rahme did not give her fully informed consent. To ensure that consent is fully informed, independent advice must be “meaningful” advice enabling the person who is advised to make an independent, intelligent choice concerning the transaction. Mrs Rahme did not receive from Mr Soulos sufficient advice to warrant the conclusion that she entered into the cost agreements with fully informed consent: [106]-[107].

Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23; Bester v Perpetual Trustee Co Ltd [1970] 3 NSWR 30, considered.

Moreover, Mr Soulos was not in the circumstances of the case “independent” in the relevant sense: [110]-[114].

In relation to Question 3:

Mr Khoury did not personally owe fiduciary duties to Mrs Rahme: [122].

In relation to Question 4:

Neither contributory negligence nor proportionate liability is a defence to a claim for breach of fiduciary duties: [124]-[137].

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