ARTISTIC BUILDERS PTY LIMITED & ANOR v NASH & ORS [2010] NSWSC 1442

New South Wales Supreme Court

CITATION : ARTISTIC BUILDERS PTY LIMITED & ANOR v NASH & ORS [2010] NSWSC 1442

HEARING DATE(S) : 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

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. DECISION : 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 as well as the proceedings brought by company B - ADVOCATES' IMMUNITY DEFENCE - advocates immunity defence not available to the solicitors who acted for company B in proceedings concerning mortgages – priorities – and against first mortgagee of the property sold - as failure to bring proceedings by company A cannot be "work connected" with proceedings by company B concerning the abovementioned mortgages - APPORTIONMENT – under Civil Liability Act (s.35) – between solicitors who acted for company B in the abovementioned proceedings - and counsel who was briefed to advise and draft proceedings