La Trobe Asset Management v Hajar [2009] NSWSC 1413

A young man was charged with embezzling $485,000. He had a meeting with his lawyer and they discussed the fact that he owed her $100,000 legal fees for defending him from the criminal charges. The lawyer suggested that he obtain finance and referred him to a friendly finance broker. Unfortunately, the young man had no property of his own against which to borrow. To solve this problem he and the broker arranged for the loan secured over his future father and mother-in-law’s Lakemba property. The parents brought a Contracts Review Act defence and La Trobe cross-claimed against the solicitor. La Trobe alleged that the solicitor was aware that the broker had made representations to it that the purpose of the loan was for “investment”, in circumstances where the solicitor knew that no investment was to be made by the parents-in-law. There was said to arise a duty, under s.42 of the Fair Trading Act, by the solicitor not to remain silent. The solicitor sought to strike out the pleading on the grounds she didn’t actually make any representations and therefore could not have breached s.42. The court disagreed holding that silence may constitute misleading conduct. Accordingly, La Trobe was allowed to pursue its claim against the solicitor.

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