Claim of breach of fiduciary duty unsuccessful

The High Court ruled against a woman who claimed breach of fiduciary duty by a solicitor because he acted for both her and her husband, who she claimed forced her to sign a guarantee against her will.

In this case¹, a loan was made to a company, and guaranteed by a husband and wife. Both the husband and wife were advised by the same solicitor when they signed the guarantee. When the company defaulted on the loan and the lender obtained judgment against the husband and wife pursuant to the guarantee, the wife claimed that her husband forced her to sign it, using physical violence, verbal abuse and threats.

The wife alleged that the solicitor was aware that her husband was forcing her to sign the guarantee, that this was a conflict of interest and that, accordingly, he breached his fiduciary duty to her.

The High Court determined that:

• although the solicitor did not obtain the wife's informed consent before acting for both guarantors, this did not cause any loss because she still would have signed the guarantee;
• it was unlikely that somebody of the solicitor's experience and unblemished record would have proceeded to witness the wife's signature if he believed there was any pressure from her husband to sign it; and
• it would not have accepted an alternative submission that the guarantee was unenforceable because the lender was on notice of potential undue influence because the solicitor's certificate showed that the guarantors were not independently advised.

¹ Rawleigh v Tait, High Court, Wellington, CIV 2003-485-1924

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