About Life Pty Ltd v Maddocks Lawyers

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

About Life Pty Ltd v Maddocks Lawyers [2021] NSWSC 1370

Hearing dates:

2 – 5 March 2021; 8 – 12 March 2021; 15 – 19 March 2021; 24 – 26 March 2021; last submissions received 19 April 2021

Date of orders:

28 October 2021

Decision date:

28 October 2021

Jurisdiction:

Equity - Real Property List

Before:

Rees J

Decision:

Judgment for damages for professional negligence, being $13 million payable to the client company and $344,000 payable to the company’s directors.

Catchwords:

PROFESSIONAL NEGLIGENCE – solicitors – retained to act for company on sale of business including assignment of lease – company had granted a right of first refusal to Woolworths – sophisticated client – urgent transaction – client in financial distress – solicitor gave ‘high level comments’ – comprehensive instructions not sought until shortly before exchange – enquired by email on number of matters including whether there were any “side deeds” – client’s instructions non-responsive – contracts exchanged – Woolworths injuncts sale – proceeds of sale received 6 months later – company goes into administration.

WORDS AND PHRASES – ‘side deed’ – see [67].

DAMAGES – loss of chance at [505]-[512] – time at which damages should be assessed at [624] – non-binding indicative offers as evidence of value at [632] – costs as damages at [643] – whether onus on plaintiff to show reasonableness of settlement – whether necessary for law firm to plead failure to mitigate.

CONTRIBUTORY NEGLIGENCE – corporate memory and document storage – client failed to take reasonable care by checking records in respect of an asset before, or while, instructing solicitors on sale of the asset – damages reduced by 20%.

CONCURRENT WRONGDOERS – whether breach of director’s duties in expanding the company – principles at [681] – no breach of director’s duties.

DUTY OF CARE TO THIRD PARTIES – whether solicitor also owed duty of care to client’s directors – principles and case law review at [702]-[711] – client and directors’ interests coincident – client and directors’ liability to disappointed purchaser was the same – directors entitled to be reimbursed by company had it not gone into external administration – directors’ liability alone arose from company going into external administration

MISLEADING AND DECEPTIVE – whether law firm liable to directors in misleading and deceptive conduct – principles at [727]-[731] – whether incomplete advice is “conduct”.

Legislation Cited:

Australian Consumer Law, ss 18, 236, 237

Civil Liability Act 2002 (NSW), ss 5A, 5B, 5C, 5D, 5R, 5S, 35, Pt 4

Competition and Consumer Act 2010 (Cth), s 4

Conveyancing Act 1919 (NSW), s 52A

Conveyancing (Sale of Land) Regulation 2010 (NSW), reg 16; sch 3, cl 8, pt 1

Corporations Act 2001 (Cth), s 180

Law Reform (Miscellaneous Provisions) Act 1965 (NSW), s 9

Cases Cited:

ACN 092 675 164 Pty Ltd v Suckling (2018) 56 VR 448; [2018] VSC 620

Argy v Blunts (1990) 26 FCR 112

Argyropoulos v Layton [2002] NSWCA 183