6, 7, 8, 9, 12, 13, 14, 15, 16, 19, 22 and 23 April 2010
JUDGMENT DATE :
17 December 2010
JURISDICTION:
Common Law
JUDGMENT OF:
Hall J at 1
DECISION:
Solicitors formerly acting for the vendor company (ABC) were in breach of their duty of care under the retainer with ABC in relation to the transaction for sale of the Bankstown property. ABC suffered loss and damage as a result of NOT Lawyer’s breach of duty of care to ABC. NOT Lawyers have established a limitation of action defence under s.14 of the Limitation Act to ABC’s claim in the proceedings. Accordingly, the proceedings by ABC against NOT Lawyers are statute-barred and therefore are not maintainable. Harris & Company, in breach of their duty of care to ABC, failed to commence proceedings against NOT Lawyers within the six year period prescribed by s.14 of the Limitation Act 1969. Harris & Company do not have a basis for and, accordingly, have not established the advocate’s immunity defence pleaded by them. The claim against Harris & Company is an apportionable claim pursuant to the provisions of s.35 of the Civil Procedure Act. The appropriate apportionment of liability is determined to be: (1) Harris & Company - 60% (2) Mr White - 40%. Artistic’s claim against NOT Lawyers for costs and counsels’ fees is dismissed.
CATCHWORDS:
PROFESSIONAL NEGLIGENCE – solicitor’s negligence – sale of commercial property by company on basis of a deferred part payment to a nominee company or alternatively option of units in new development – real estate securities accepted as security – development proposal failed – securities proved valueless - DUTY OF CARE OF VENDORS’ SOLICITORS – instructed to act for two companies (here referred to as company A and company B) - scope of retainer of firm of solicitors – duty to protect vendor’s interests – advice on need for valuation of securities and of amounts owing under mortgages on properties proposed as securities – solicitor’s failure to obtain informed instructions on inquiries necessary to verify securities – failure by solicitor to provide advice as to steps required to protect vendor - CAUSATION – notional question as to what vendor would have done if properly advised – company A as vendor alleged to have had a “no transaction” case on the basis that no transaction would have been entered into if given appropriate advice including on the lack of verification in relation to the proposed securities – nature of the evidence required on the issue of causation – evidence required to establish that question – state of mind of vendor - LIMITATION OF ACTION DEFENCE – time commenced to run from date of settlement not a later date when rights conferred under a trust exercised by nominee company – proceedings against solicitors who acted for the vendor company (company A) stated barred – failure to bring proceedings in name of company A…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Artistic Builders Pty Ltd v Nash [2010] NSWSC 1442
Case
[2010] NSWSC 1442
Decision Date
CaseChat Overview and Summary
In Artistic Builders Pty Ltd v Nash, Artistic Builders sued for professional negligence related to a property sale. The sale involved deferred payment to a nominee company or an option for units in a new development. The dispute arose when the development proposal failed, rendering the securities valueless. The central issue was whether the solicitors who acted for the vendor companies (referred to as company A and company B) owed a duty of care to protect the vendors' interests and if they failed in this duty.
The court examined the scope of the solicitors' retainer and their duty to advise on the need for a valuation of the securities and the amounts owing under the mortgages. The key legal issue was whether the solicitors' failure to obtain informed instructions on verifying the securities and providing appropriate advice led to a breach of duty. The court also considered the causation, determining if the vendors would have avoided the transaction if they had received proper advice. Additionally, the limitation of action defence was addressed, with the court finding that the proceedings against the solicitors were barred as they were not brought in the name of company A. The advocates' immunity defence was also examined, concluding that it was not available to the solicitors who acted for company B. Finally, the court considered the apportionment of liability under the Civil Liability Act.
The court found that the solicitors did owe a duty of care and breached this duty by failing to provide adequate advice. Regarding causation, the court held that the vendors would likely have avoided the transaction if they had received proper advice. The limitation of action defence was upheld, barring the proceedings against the solicitors. The advocates' immunity defence was not applicable. The court apportioned liability between the solicitors who acted for company B and the counsel who advised on the mortgages.