Thompson v Schacht

In *Thompson v Schacht*, the Court of Appeal of New South Wales considered an appeal concerning damages awarded for professional negligence against solicitors. The dispute arose from the solicitors' failure to properly prepare a financial agreement between spouses, rendering it not binding. Subsequently, the client compromised matrimonial litigation on terms less favourable than those stipulated in the defective agreement. The primary judge had awarded damages for negligence based on the difference between the client's actual financial outcome and the outcome that would have been achieved had the agreement been valid. The appeal questioned whether certain components of this damages award were wrongly included.

The central legal issues before the Court of Appeal were the correct measure of damages for the solicitors' negligence and, specifically, whether the primary judge had erred in including certain components in the calculation of those damages. This involved determining the appropriate benchmark against which the client's loss should be assessed, considering the compromised terms of the matrimonial litigation and the hypothetical benefit of a binding financial agreement.

The Court of Appeal reasoned that the damages should reflect the loss suffered by the client as a direct consequence of the solicitors' negligence. The legal principle applied was that damages in tort are intended to place the plaintiff in the position they would have been in had the tort not occurred. However, the Court found that the primary judge had incorrectly included certain components in the damages calculation. The Court allowed the appeal, set aside the original order, and ordered judgment for reduced damages. The parties were directed to confer to resolve outstanding issues and provide consent orders, with a process outlined for further submissions if agreement could not be reached.