Case note: Dunn v Perpetual Trustee Company [2025] VSC 799
An attorney appointed by Power of Attorney takes on a raft of legal obligations which are owed to the principal (the person granting the power). In the watershed case of Dunn v Perpetual Trustee Company [2025] VSC 799 (Dunn v Perpetual), the Court rejected an attempt to extend those duties to third parties — beneficiaries named in the principal’s will.
In Dunn v Perpetual, the plaintiff sought to establish a duty on the part of an attorney to ensure that a principal’s will was updated in the event that an asset intended to pass specifically under the principal’s will had to be sold by the attorney. This was alleged to be a duty owed by the attorney to a beneficiary under the principal’s will.
This was a novel proposition and a floodgates issue for all attorneys — in particular, trustee companies which act for thousands of clients as attorney. The concern was whether attorneys would be required to interfere in a principal’s testamentary arrangements every time a change of circumstances in their life meant that assets intended to pass by a will had to be sold. The case also had interesting technical aspects about the formulation of common law duties of care, as well as the role and impact of expert evidence.
Background facts
In summary:
- Perpetual was attorney for a client who needed to raise cash from her real property holdings in order to fund her aged care expenses.
- The principal had left the real property to specific individuals by her will.
- Perpetual, as attorney, sold real property and applied the proceeds to the principal’s care.
- As a result, the beneficiary who stood to receive the real property did not receive the gift.
- The disappointed beneficiary claimed that the principal lacked capacity to instruct Perpetual to sell the particular property.
- The disappointed beneficiary sued Perpetual, alleging that it had a duty to have a court-approved will made that would adjust distributions to restore, proportionately, the disappointed beneficiary’s share.
The case went to trial with three core issues for determination:
1. Did any such duty exist on the part of an attorney?
2. If so, was there a breach of the duty?
3. If so, did the breach cause any loss?
The Court’s findings — no duty owed to beneficiaries
After a thorough review of the authorities on novel duties of care, the Court rejected the assertion that such a duty is owed by an attorney. The exact expression of the alleged duty was also the subject of debate, dealt with at paragraphs 129 to 134 of the judgment. However, the outcome was clear and no such duty exists.
The finding is significant, as was the path to the finding. Adopting the ‘salient features’ test in the absence of an existing category of duty, the Court held that the alleged duty:
- was incompatible with duties arising under other principles of law (for example, if the duty existed, it would be owed to all beneficiaries, whose interests diverged — in which case furthering the duty to one would immediately breach the same duty to another);
- would involve the attorney impermissibly interfering with the autonomy and freedom of the principal (including her right to determine her own testamentary wishes);
- was inconsistent with, or at least did not sit well with, the terms, scope and purpose of statutes relevant to the existence of the duty);
- could not be owed where the beneficiary was not vulnerable to any specific act of the attorney (the beneficiary’s vulnerability was simply that which subsists in every situation where a testator decides to, or needs to, deal with an asset); and
- could not be owed where the attorney cannot have control sufficient to avoid the harm alleged to have been suffered (for example, an attorney could bring a statutory will application but could not control the outcome of such an application, the outcome being a matter for the Court).
Such a finding was sufficient to dispose of the plaintiff’s claim. However, the Court also made findings in relation to the other issues, because of the time devoted to these issues at trial. The Court held that even if such a duty existed, Perpetual had not breached it. Furthermore, even if there had been a breach, no loss had been caused.
Of particular note was a detailed file note in which the principal had told the attorney that she had a preference for a particular property to be sold and did not care if the intended beneficiary under her will consequently missed out on receiving it. This finding was not decisive on the issue of duty, but it was significant in considering whether there was any breach or whether such a breach caused loss. In considering a statutory will application, the views of the principal (or ‘propositus’) must be taken into account if they can be ascertained, even if that person’s capacity has been lost (this being a pre-condition for a statutory will application).
Ultimately, the Court found that even if an application for a statutory will had been made (or could have been made), it was unlikely that the Court would have found that any amendment to the will should be made for the benefit of the plaintiff.
The decision provides important clarity regarding the nature and scope of an attorney’s duties.
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