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

Supreme Court New South Wales

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; (2002) 36 MVR 432 Astley v Austrust Ltd (1999) 197 CLR 1; [1999] HCA 6 Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345; [2012] HCA 17 AVWest Aircraft Pty Ltd v Clayton Utz (A Firm) (No 2) [2019] WASC 306 AWA Ltd v Exicom Australia Pty Ltd (1990) 19 NSWLR 705 Badenach v Calvert (2016) 257 CLR 440; [2016] HCA 18 Bartier Perry Pty Ltd v Paltos [2021] NSWCA 158 Berry v British Transport Commission [1962] 1 QB 306 Berry v CCL Secure Pty Ltd [2020] HCA 27; (2020) 381 ALR 427 Blatch v Archer (1774) 1 Cowp 63; 98 ER 969 Brownie Wills v Shrimpton [1998] 2 NZLR 320 Burger King Corporation v Hungry Jack's Pty Ltd [2001] NSWCA 187 Cadoks Pty Ltd v Wallace Westley & Vigar Pty Ltd [2000] VSC 167 Caltabiano v Electoral Commission of Queensland (No 1) [2010] 1 Qd R 100; [2009] QCA 182 Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 75 NSWLR 649; [2009] NSWCA 258 Cam & Bear Pty Ltd v McGoldrick [2018] NSWCA 110 Carey v Freehills [2013] FCA 954; (2013) 303 ALR 445 Coles Supermarket Australia v Bridge [2018] NSWCA 183 Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 119; [1991] HCA 54 Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594; [1990] HCA 17 Coshott v Prentice (2014) 221 FCR 450; [2014] FCAFC 88 Daniels v Anderson (1995) 37 NSWLR 438 Delaney v Short [2001] NSWCA 138 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 Doolan v Renkon Pty Ltd (2011) 21 Tas R 156; [2011] TASFC 4 Dual Homes Victoria Pty Ltd v Moores Legal Pty Ltd (2016) 50 VR 129; [2016] VSC 86 Golledge Pty Ltd v Ballard (2012) 82 NSWLR 231; [2012] NSWCA 376 Gray v Sirtex Medical Ltd (2011) 193 FCR 1; [2011] FCAFC 40 Groom v Crocker [1939] 1 KB 194 Hill v van Erp (1997) 188 CLR 159; [1997] HCA 9 In the matters of Earth Civil Australia Pty Ltd, RCG CBD Pty Ltd, Bluemine Pty Ltd, Diamondwish Pty Ltd and Rackforce Pty Ltd (all in liq) [2021] NSWSC 966 Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 6) [2007] NSWSC 124; (2007) 63 ACSR 1 Johnson v Gore Wood & Co [1999] PNLR 426 Johnson v Mackinnon [2021] NSWCA 152 Johnson v Perez (1988) 166 CLR 351; [1988] HCA 64 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563; [1995] HCA 68 Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 Lucantonio v Kleinert [2011] NSWSC 753 Lucantonio v Stichter [2014] NSWCA 5 Macquarie Bank Ltd v Myer [1994] 1 VR 350 Malec v JC Hutton Pty Ltd (1990) 169 CLR 638; [1990] HCA 20 March v E & M H Stramare Pty Ltd (1991) 171 CLR 506; [1991] HCA 12 Masters Home Improvement Pty Ltd v North East Solution Pty Ltd [2017] VSCA 88; (2017) 372 ALR 440 Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384 Minkin v Landsberg [2016] 1 WLR 1489 MMAL Rentals Pty Ltd v Bruning (2004) 63 NSWLR 167; [2004] NSWCA 451 Morley v Australian Securities and Investments Commission [2010] NSWCA 331; (2010) 274 ALR 205 Ng v Filmlock Pty Ltd (2014) 88 NSWLR 146; [2014] NSWCA 389 Nikolaou v Papasavas, Phillips & Co (1989) 166 CLR 394; [1989] HCA 11 Olympic Holdings Pty Ltd v Lochel [2004] WASC 61 Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd [2011] WASCA 76; (2011) 248 FLR 193 Paltos v Bartier Perry Pty Ltd [2020] NSWSC 705 Payne v Parker [1976] 1 NSWLR 191 Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALJR 492 Principal Properties Pty Ltd v Brisbane Broncos Leagues Club Ltd [2018] 2 Qd R 584; [2017] QCA 254 Rail Corp of New South Wales v Fluor Australia Pty Ltd [2009] NSWCA 344 RHG Mortgage Ltd v Rosario Ianni [2015] NSWCA 56 Richtoll Pty Ltd v WW Lawyers Pty Ltd (in liq) [2016] NSWCA 308 Richtoll Pty Ltd v WW Lawyers Pty Ltd (in liq) [2016] NSWSC 438 Scottsdale Homes Pty Ltd v Gemkip Pty Ltd [2008] QSC 326 Sellars v Adelaide Petroleum (1994) 179 CLR 332; [1994] HCA 4 Sharif v Garrett & Co [2002] 1 WLR 3118 Short v Delaney [1999] NSWSC 1293 South Western Sydney Local Health District v Gould (2018) 97 NSWLR 513; [2018] NSWCA 69 Talacko v Talacko [2021] HCA 15; (2021) 389 ALR 178 Thompson v Schacht [2014] NSWCA 247; (2014) 53 Fam LR 133 Trentelman v The Owners - Strata Plan 76700 [2021] NSWSC 155 Trentelman v The Owners – Strata Plan No 76700 [2021] NSWCA 242 Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603; [1998] HCA 38 Verryt v Schoupp [2015] NSWCA 128 Vieira v O'Shea [2012] NSWCA 21 Visbord v Federal Commissioner of Taxation (1943) 68 CLR 354; [1943] HCA 4 Vrisakis v Australian Securities Commission (1993) 9 WAR 395 Wallace v Kam (2013) 250 CLR 375; [2013] HCA 19 Wilson v Rigg [2002] NSWCA 246; (2002) 36 MVR 451 Woolworths Limited v About Life Pty Limited [2017] NSWSC 1117 Yager v Fishman & Co [1944] 1 All ER 552 Yakiti Pty Ltd v MacDonald [2019] NSWSC 1772 Yokogawa Australia Pty Ltd v Alstom Power Ltd [2009] SASC 377; (2009) 262 ALR 738 Texts Cited: Christopher Rossiter, Principles of Land Contracts and Options in Australia (2003, LexisNexis) Rupert Jackson and John Powell, Jackson & Powell on Professional Negligence (3rd ed, 1992, Sweet & Maxwell) William Duncan and Sharon Christensen, Commercial Leases in Australia (9th ed, 2020, Lawbook Co) Category: Principal judgment Parties: About Life Pty Limited (First Cross-Claimant) Tammie Phillips (Second Cross-Claimant) Michael Green (Third Cross-Claimant) Thomas Beecroft (Fourth Cross-Claimant) Maddocks Lawyers (Cross-Defendants) Representation: Counsel: Mr T Faulkner SC / Mr D Lloyd SC / Mr M Kalyk (Cross-Claimants) Mr A Leopold SC / Ms A Horvath / Ms K Lindeman (Cross-Defendants)