Business Law Case Study: Analyzing Hawkins v Clayton Decision

This case study examines the landmark business law case of Hawkins v Clayton, focusing on the issues of negligence and duty of care. The case revolves around a solicitor's responsibility for safekeeping a client's will and the subsequent economic losses suffered by the executor due to the solicitor's failure to locate and inform them. The analysis delves into the facts of the case, the arguments presented by both the plaintiff and the defendant, and the court's decision, which found the defendant firm liable for the economic losses. The court applied the proximity test to establish a duty of care, considering the solicitor-client relationship and the foreseeable economic harm. The ruling had significant implications for solicitors' responsibilities regarding wills and the development of negligence law, particularly concerning pure economic loss. The document explores the legal principles and reasoning behind the court's judgment, highlighting the importance of professional responsibility and the potential for liability arising from omissions.

Running head: BUSINESS LAWS
Business Laws
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Author note

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Case introduction
Generally facilities are provided by the solicitors to the clients for the purpose of safe keeping
and storing their wills. The decision of the court provided in the case of Hawkins v Clayton -
[1988] HCA 15 attracted a considerable amount of attention. In this case it was held by the High
Court through the ratio of 3:2 that the defendant firm who had the responsibility of safekeeping
the will of one of its clients was liable for the economic losses suffered by executor of the
clients’ estate as there was a failure on the part of the firm to locate the executor for 6 years and
make him aware about the existence and content of the will. The decision provided by the court
had serious implications in relation to those solicitors who written the custody of wills provided
by the clients. In addition the decision made by the court also was a considerable step with
respect to the development of the law of negligence in this area. The purpose of the paper is to
identify the facts of the case along with the issues and argument raised by the plaintiff and the
defendant and analyse the decision of the court in relation to its appropriateness.
Facts of the case
The defendants in this case what the solicitors who had prepared and retain the will of a
longstanding client for safekeeping and execution. According to the will the plaintiff in this case
was the souled beneficiary and executor of the testatrix's estate. The form did not take any steps
in relation to contacting the plaintiff so that he could be informed about testatrix’s death and the
fact that he was the main beneficiary and executive of the estate until 1981 march. Meanwhile
our house which was the main asset of the estate had remained unoccupied for a significant
period and had also fallen into despair. A grant of probate has been obtained by the plaintiff in
1981 after changing solicitors and the estate had been duly administered. An action has been

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brought by the plaintiff in the year 1982 against the defendant solicitors in the areas of contract
law and negligence so that he could recover the lost his which had been suffered because of the
delay caused by the defendant in identifying the plaintiff and subsequently taking possession of
the estate as the executor by the plaintiff. The action had been dismissed by the Supreme Court.
The plaintiff brought the action in the Supreme Court based on the fact that the defendant owed a
duty of care to the plaintiff in personal capacity and there was a contract between the defendant
and the plaintiff. The Supreme Court held that there was no duty of care owed by the defendant
firm to the executor and there was no contract between them as well. The defence provided by
the firm based on Limitations of Actions Act 1969 had not been considered by the court. The
Appeal of the plaintiff to the court of appeal had also been dismissed by the court. In this case
the plaintiff made a claim that the defendant owed him a duty of care in his representative
capacity. In this case it was held by the court that although the plaintiff had a good claim the
claim has been barred by the virtue of section 14 (1) of the LAA.
Issues raised by the plaintiff and defendant
The primary issue which has been raised by the executor in this case before the court was
divided into two segments. The first part of the claim raised an issue that defendant firm had a
duty of care towards him not only in personal capacity but also in representative capacity. The
second part of the claim raised an issue that that defendant form had a contract with the plaintiff
which had been breached by them.
On the other hand it was argued by the defendant that they did not have any duty of care towards
the plaintiff either in personal capacity on representative capacity. The defendant firm had also
made an argument that they did not have any contractual obligation owed to the plaintiff in the

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given situation. In addition it had been submitted by the defendant that the claim made by the
plaintiff is time barred under the provisions of section 14 (1) of the LAA.
Arguments raised by the defendant and the plaintiff
It has been claimed by the plaintiff that because of the failure on the part of the solicitors he had
to incurred a late lodgement fees in relation to their death duty return and also because the
original will have been lost by the defendant an additional cost had to be incurred by the plaintiff
for getting a grant of probate in relation to a copy of the will.
An argument has also been provided by the plaintiff that in relation to the house involved in the
estate that he had lost the opportunity in relation to collection of rent and was also denied of the
financial advantage he would have had by residing in such house due to the failure on the part of
the defendant.
The defendants in this case stated that they do not have any liability in relation to the claims
made by the plaintiff as they did not owe any contractual duty on duty of care under negligence
to the plaintiff.
The judgement of the court. Why the Court ruled in favour of the plaintiffs.
It was stated by the court that the faith of the contractual came in relation to the case can
be addressed briefly. The argument raised by the plaintiff that the solicitors had violated the
contractual right owed to the plaintiff had been rejected by the High Court. It was stated by the
plaintiff that even when there was an absence of communication between him and the solicitors
he had acceded to the request made by the solicitors for paying a service fees for the services
rendered by them on behalf of testatrix. It was argued by the plaintiff that under these

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circumstances a contract between him and the defendant should be inferred. It was stated by the
court in relation to such argument that these circumstances cannot be used for the purpose of
inferring a contract between the defendant and the plaintiff by the virtue of which they had taken
a responsibility of performing the professional services which had been performed by them
before getting instructions from the plaintiff. The claim for a contractual relationship based on
the plaintiff being the representative of the testatrix had also been rejected by the court.
However as discussed above the claim made by the plaintiff in relation to negligence and
duty of care had been successfully held by the court rejecting the decision of the court of appeal.
For the first time the High Court had allowed a person to recover pure economic loss which
resulted out of the negligent omission.
Indications had also been made by the court in the case of San Sebastian Pty Ltd v
Minister - [1986] HCA 68 and Shire of Sutherland v Heyman - [1985] HCA 41 that negligent
emissions resulting in a pure economic laws also have the potential of creating liability for the
wrongdoer. The court in this case had applied the proximity test to determine whether there was
a duty of care which the defendant had towards the plaintiff. This approach had been taken by
the court in the case of Jaensch v Coffey [1984] HCA 52. Prior to this case a relationship of
Reliance was taken as a crucial factor for determining whether a pure economic loss can be
recovered by the existence of a duty of care or not. However it was a difficult task for the court
in this case to determine proximity where the element of Reliance was absent.
In the case of San Sebastian Pty Ltd v Minister it had been stated by the court that a duty
of care can also arise where there is an act or omission which is outside the scope of a negligent
misstatement in relation to a pure economic loss. The court found that there was sufficient

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proximity between the plaintiff and defendant based on a totally different factor of proximity as
compared to Reliance. The court in this case took into consideration the solicitor client
relationship for the purpose of identifying liability on the part of the defendant and allow the
plaintiff to recover losses. The court in this case also took into account to the primary
relationship between the defendant solicitor and testatrix, and than identified appropriate
proximity factors such as the associated element of Reliance and assumption of responsibility.
The judges held at these factors provided the general relationship between the client and the
solicitor the nature of proximity in relation to foreseeable economic losses. This proximity was
found to be extending towards the loss incurred by the state of the testatrix after his death. Deane
J stated that physical proximity is not required in all cases. The court found that the relationship
of proximity can also be identified along with the presence of a duty of care towards a group of
person including members who have not been born or who may be identified by any future
capacity or character which they are yet to possess. Deane J stated that in the present case where
pure economic loss has been identified in relation to the estate of an immediate party to the
relationship, is a clear example of this kind of proximity relationship. Subsequently it was stated
by the judge that the solicitor in the present case can have a duty of care to the client as well as
their future representatives in relation to foreseeable economic losses.
However in the case of Shire of Sutherland v Heyman it was made clear by the court that
only the presence of foreseeability of harm is not enough to find the common law duty of taking
positive action. This made the court address the question that weather sufficient proximity of
relationship was present which would give rise to a liability in relation to and omission. In this
situation also the relationship between a solicitor and the client has been taken into consideration
by the court. In relation to this context it was concluded by the judge that the relationship

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between a solicitor and the client is a relationship of proximity and of a nature which may very
well result in a duty of care with respect to the solicitor according to which they have an
obligation of taking positive steps exceeding the professional function on task which has been
specifically agreed for the purpose of avoiding a real foreseeable risk of economic loss to the
client. It had been added by the judge that the issue of whether duty of care arises out of the
relationship with respect to taking positive action is dependent upon the characteristic of the
specific professional function or task which is present along with the situation of the case. The
judge identified the acceptance of the will by the defendants in this case as a critical factor. It
was stated by the court that by making such acceptance of the responsibility with respect to the
custody of the clients will, after her death the defendant had assumed the custodianship of the
clients’ testamentary intentions. Therefore the particular nature of relationship between the client
and the solicitor has the ability to create a common law duty which is more than the contractual
obligations of the defendant.
Conclusion
In this case the High Court ruled in favour of the plaintiff and was held through the ratio
of 3:2 that the defendant firm who had the responsibility of safekeeping the will of one of its
clients was liable for the economic losses suffered by executor of the clients’ estate as there was
a failure on the part of the firm to locate the executor for 6 years and make him aware about the
existence and content of the will.

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References
Hawkins v Clayton - [1988] HCA 15
Jaensch v Coffey [1984] HCA 52
Limitations of Actions Act 1969
San Sebastian Pty Ltd v Minister - [1986] HCA 68
Shire of Sutherland v Heyman - [1985] HCA 41