Bowen Buchbinder Vilensky

How Routine Form Filling can Become a Legal Issue

By Leslie Buchbinder, Director at Bowen Buchbinder Vilensky Lawyers

25 January 2014

Many companies delegate the filling in of ‘routine’ paperwork to junior staff.  This includes firms such as accounting practices, financial planners and others who may have comprehensive quality control policies, targeting complex and financially significant matters. Ironically, the more mundane matters can sometimes cause the greatest heartache.

One matter which came to the attention of an Australian court concerned a situation where accountants miscalculated the amount of depreciation allowable as a deduction and the mistake was then carried through in succeeding years.  The error resulted in an overstatement of the tax payable and no refund could be obtained for taxes that were paid more than 3 years ago because they were statute barred.   The client successfully sued the accountants, who were  found not only to have been negligent but also to be in breach of their contract. A significant amount of damages were awarded against them.

In a different case, a client provided a partially completed handwritten insurance proposal form which needed to be submitted to the insurance company.   It was later entered by his financial planner via an online platform.  In undertaking this task and providing answers in all the required fields, the employee of the financial planner who filled in the form inadvertently failed to notice  that the client had in the previous 2 years been declined by a number of other insurers.   A subsequent investigation revealed that the insurance policy that was issued to the client by the insurer was in fact based on material non-disclosure.  Instead of being paid out by the insurer, the client found himself being pursued by it for money they had already paid to the client on the grounds of material non-disclosure and fraud.   His response, in turn, was to take steps to recover the losses suffered from his advisers for negligence, breach of contract and potentially misleading and deceptive conduct,  because of the way they dealt with his proposal form.

While most professional service companies are aware of their duty of care obligations to avoid claims of Professional Negligence, it’s also helpful to bear in mind potential exposure to breach of contract. In particular, remember that your exposure to legal or disciplinary action does not always arise from the most complex or financially sophisticated aspects of your work.  Proper quality control processes are critical to ensure that routine form filling does not expose one to legal liabilities.

Click here for the full article in the BBV Media page.

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