Case Note: Tekin v Stratford & Ors [2025] NSWSC 541 — Solicitor Negligence and Fiduciary Breach in Focus

Judgment Date: 29 May 2025
Court: Supreme Court of New South Wales
Judge: Justice Faulkner

Overview

The Supreme Court’s decision in Tekin v Sratford & Ors is a significant new authority on professional negligence ad fiduciary duty in the solicitor-client relationship. The case involved a law firm that failed to exercise reasonable care in litigation advice and documentation, acted in circumstances of a conflict of interest, and received undisclosed benefits through its handling of client financial arrangements.

The Court’s reasoning offers important guidance for individuals who have suffered loss due to their legal representative’s conduct – whether through poor advice, inaction, conflicts of interest, or improper withdrawal from proceedings.

Background

Mr Teki, a property developer, retained a law firm over several years to assist with property transactions and related litigation. The key events included:

• The firm drafted a Notice to Complete that was defective, ultimately triggering termination of a major sale contract;
• Despite the drafting error, the firm continued to act for Mr Tekin, even when its own negligence became an issue;
• The firm failed to advise Mr Tekin to seek independent legal advice
• The firm arranged refinancing and received monetary benefits in circumstances involving a conflict of interest.

Mr Tekin brough claims in negligence and for breach of fiduciary duty and also sought an account of profits for the firm’s financial gain.

Key Issues

1. Whether the firm breached its duty of care in the drafting and litigation advice;
2. Whether the firm’s breaches caused the client’s losses, including a claimed loss of opportunity;
3. Whether fiduciary duties were breached by continuing to act despite a conflict between their own interest and those of the client and by failing to disclose financial benefits;
4. Whether the firm was liable to account as a constructive trustee; and
5. The appropriate remedies, including compensatory and equitable relief.

Findings

Justice Faulkner found that:

• The firm was negligent in preparing the Notice to Complete and failed to properly advise on the consequences;
• It continued to act for the client despite a clear conflict of interest;
• The firm failed to disclose or account for monetary benefits received in relation to the client’s refinancing;
• The claimed lost opportunity damages were not recoverable due to a lack of evidence of a firm offer;
• However, damages for the lost deposit were recoverable; and
• The firm was liable to account for profits received in breach of its fiduciary duty.

Orders Made

• $300,000 in compensatory damages for the lost deposit;
• Interest on damages under s 100 of the Civil Procedure Act 2005 (NSW);
• Equitable compensation of $127,398.17 for fiduciary breaches;
• Compound interest on equitable compensation from 2015 under the Civil Liabilty Act 2005 (NSW); and
• Costs awarded to the plaintiff.

Broader Implications for Clients Affected by Solicitor Misconduct

Tekin is an important decision for anyone who has experienced adverse outcomes due to solicitor conduct, particularly in litigation settings. The case highlights several recurring issues:

• 1. Failure to Exercise Reasonable Skill and Care

Clients are entitled to assume that their legal representatives will act competently, particularly in litigation involving complex procedural and evidentiary steps. Failure to prepare, advise on risk, comply with court orders, or gather necessary expert evidence may constitute actionable negligence.

• 2. Conflicts of Interest and Fiduciary Obligations

Solicitors must not allow their personal or financial interests to conflict with their duty to the client. Where allegations of negligence arise, continuing to act without disclosure or consent may amount to a breach of fiduciary duty. Similarly, receiving undisclosed financial benefits while acting for a client may require the solicitor to account for those gains.

• 3. Withdrawal Without Proper Notice

Improper withdrawal from proceedings—especially close to hearing—without ensuring the client has alternative representation or the means to present their case, may attract judicial scrutiny and legal consequences.

• 4. Causation and Evidence of Loss

The decision in Tekin highlights that causation is not assumed; there must be a clear link between the solicitor’s breach and the loss suffered. Courts will closely examine whether the loss—particularly a lost opportunity—would likely have eventuated but for the solicitor’s conduct.

Key Takeaways

• Solicitors must act with diligence and competence, particularly when advising on litigation or preparing key documents;
• Clients must be advised of any actual or potential conflict, and solicitors must not proceed where their own conduct is under question;
• Financial benefits obtained in connection with legal work must be fully disclosed;
• Both compensatory damages and equitable remedies such as account of profits or equitable compensation may be available;
• Clients should seek independent legal advice if they suspect their previous legal representatives acted improperly or against their interests

If you believe your legal matter was mishandled, or you were left without proper representation during critical stages of your case, you may have a claim in professional negligence or breach of fiduciary duty Contact the team at The Law Office of Conrad Curry for an obligation-free discussion about your legal rights and options.

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.