LPLC regularly receives calls from practitioners seeking guidance about a potential conflict when acting for both the vendor and purchaser of real estate.
LPLC also receives claims every year where a practitioner acted for more than one party.
In a recent claim a practitioner was instructed to just prepare a section 32 statement as the selling agent was instructed to prepare the contract of sale. The selling agent inserted a special condition at the request of the purchaser making the contract subject to the purchaser obtaining a planning permit.
After the contract was signed the practitioner commenced acting for the purchaser and continued to act for the vendor.
When the purchaser tried to end the contract relying on the special condition, the vendor argued that on their interpretation of the special condition the purchaser was not entitled to end the contract.
The vendor alleged that if the practitioner had properly advised the vendor on the effect of the special condition the dispute may have been avoided. They also alleged that by failing to properly advise the vendor the practitioner had favoured the purchaser’s interests over the vendor’s.
Although the parties agreed to cancel the contract, the vendor’s loss was the commission payable to the agent and the vendor sought payment from the practitioner.
The practitioner was exposed because they continued to act for both parties after an actual conflict occurred and also failed to:
- document the limited nature of their retainer
- advise the vendor of the consequences of the special condition.
When considering issues of conflict practitioners should refer to rule 11 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 which deals with a practitioner’s conflict of duties concerning current clients.