Firm to pay $427k to former client for negligence, breach of duty

Although Justice Tim Faulkner of the NSW Supreme Court said Tekin’s alleged loss was not as extensive as he claimed, the former client still suffered “some loss” and was entitled to be paid damages.

“It is a case where there is no dispute that some negligence occurred and no serious dispute that thereafter the firm had a conflict of interest yet continued to act,” Justice Faulkner said in his reasons.

“The real issues in the proceeding are questions of causation of loss and receipt of monetary benefits by the firm when acting under conflict.”

Tekin had worked with one of the firm’s senior lawyers, Phillip Stratford, on property matters for over two decades.

The property at the centre of the dispute contained four parcels of land in Castle Hill, which Tekin intended to sell from September 2014 to repay debts. Originally, there was a contract for Upside Property Group Limited to purchase the land for $7.8 million.

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Solicitors for Upside wrote to Stratford in late November to request an extension. Later, the company’s owner emailed to suggest not completing the $7.8 million purchase, but to instead refinance so they could have more time to locate a third-party purchaser.

By the time the contract’s deadline came and went without the purchase being completed, the Supreme Court believed Tekin had reconsidered his options because he was “alive to the possibility that he could sell the land for more than $7.8 million”.

In that context, a notice to complete was issued.

The notice did not comply with the contract because only 13 days were specified for completion of purchase, rather than the 14 required. It was also issued at a time when Tekin himself was in breach of the contract for a failure to answer requisitions.

Tekin told the court he believed the contract came to an automatic end after the 14-day extension elapsed but said he realised this was wrong when Stratford allegedly advised him he could not issue a new contract to a potential purchaser the following March.

After researching whether the notice of completion might be “stale”, Stratford told Tekin they could either issue a new notice to complete or issue a termination notice with or without forewarning, according to the Supreme Court. Tekin chose termination without warning.

Upside objected to this and commenced proceedings but lost.

Stratford and colleague Gary Doherty – who took on the litigation for Tekin – said they did not consider there was a conflict of interest after the defect in the notice of complete came to light. The Supreme Court found neither told Tekin about the conflict, any potential liability of the firm, or suggested that he get independent advice.

The firm did not bill Tekin for his defence.

Although largely successful in the Upside proceedings, Tekin had already repaid a $300,000 deposit made by the company.

Justice Faulkner said it followed that by reason of the negligent drafting and issuance of the notice to complete – and the invalid termination thereafter – Tekin suffered a loss of $300,000.

Tekin also made several other claims of loss, but these fell short, including his ability to sell the land while the Upside proceedings were on foot and adverse economic consequences.

In February, prior to the notice of termination, Tekin approached a lender for refinance, but would go on to enter an agreement with Balmain NB Commercial Mortgages. The latter had been introduced and arranged with assistance from Doherty.

After Tekin entered into the arrangement with Balmain NB, the firm received a payment of $127,398.17.

When Tekin failed to repay the loan by mid-2016, Balmain NB caused the land to be sold for $6.85 million. After repayments and selling costs, Tekin received just over $2 million.

Justice Faulkner determined that none of the money provided to the firm by Balmain NB could be considered fees for legal services performed in relation to the loan. Further, “consultancy expenses” were not paid to the firm, but to a private company.

Because of this, the receipt of the sum meant the firm was subject to a conflict when acting for Tekin on the refinance transaction.

“In the context of a client bring asked to pay fees to a solicitor the receipt of which would otherwise be a breach of the solicitor’s fiduciary duty, these are all matters which would have had to be disclosed to Mr Tekin before he could give fully informed consent.

“The firm has not discharged its onus to demonstrate that Mr Tekin gave fully informed consent,” Justice Faulkner said.

Allegations relating to advice given to Tekin on Balmain NB was tossed out.

The case: Tekin v Stratford & Ors [2025] NSWSC 541 (29 May 2025)