The New South Wales Court of Appeal recently handed down its decision in Fussell v Hanrahan [2025] NSWCA 173. The case concerned claims of professional negligence against solicitors in the context of a long-delayed property settlement.
The case highlights the importance in professional negligence cases against solicitors of not only proving a solicitor’s breach of duty but also establishing that the breach caused actual loss.
Background
In 2012, the purchaser (Mr Fussell) entered into a contract to buy an industrial property. Settlement was deferred for five years, with a commercial lease running in the meantime. The contract also contained two unusual features:
- A clause granting the vendor a life estate over the home on the property; and
- A rescission clause (cl 33.2) allowing either party to walk away from the deal if one of them died before settlement.
When settlement fell due in May 2017, the purchaser’s bank raised concerns about the registration of the life estate. Settlement was delayed and, only two days later, the vendor passed away. Acting as executor, the vendor’s solicitor rescinded the contract under clause 33.2.
The Negligence Claim
The purchaser sued his solicitors, alleging that they:
- Failed to properly advise him about the operation of the rescission clause; and
- Failed to warn of the risks around registering the life estate.
At first instance, the trial judge accepted that the solicitors had breached their duty of care.
However, the claim failed because the purchaser could not show that these breaches actually caused his loss.
Appeal Decision
The Court of Appeal dismissed the purchaser’s appeal. Key points included:
- No causation: Even if the solicitors had advised differently, there was no evidence the vendor would have agreed to remove the life estate or the rescission clause.
- Financing issues were decisive: The purchaser’s inability or unwillingness to settle on time. due to his own financial circumstances, was the true cause of the contract’s collapse.
- Breach ≠ liability: A solicitor’s breach of duty, on its own, does not entitle a client to compensation. The client must prove a real causal connection between the breach and the loss.
Key Takeaways for Clients
- Early advice matters: Unusual clauses, such as life estates and rescission rights, can have major consequences. Independent legal advice at the contract stage is essential.
- Causation is critical: In professional negligence claims, you must show not only that your lawyer made a mistake, but also that the mistake directly caused your financial loss.
- Evidence is everything: Courts will closely examine whether different legal advice would realistically have changed the outcome.
Why This Case Matters
Fussell v Hanrahan is a strong reminder that professional negligence claims rise or fall on causation.
For clients, it reinforces the value of obtaining careful legal advice before entering complex or unusual property arrangements. For practitioners, it is a cautionary tale to explain contractual risks clearly—and to document that advice.
DISCLAIMER
This article reflects the current law at the time of publication. It is intended for informational purposes only and does not constitute legal advice. The actual decisions in each case are summarised for general understanding. For specific legal guidance in relation to your situation, please consult with a qualified legal professional.