Shoal Bay Beach Constructions No. 1 Pty Ltd v Mark Hickey & the persons listed in Schedule A to the Notice of Appeal trading as Sparke Helmore

1. [1]

   GLEESON JA: I agree with the orders proposed by White JA for the reasons his Honour gives.

2. [2]

   Given that the cross-appeal by Sparke Helmore has been upheld, the appeal by the Developer challenging, among others, the finding of contributory negligence does not arise. I refrain from expressing a view on this contingent issue because it depends on the making of factual findings which are inconsistent with the outcome of the cross-appeal, including, the finding sought by the Developer in its notice of contention on the cross-appeal that the Developer had instructed Sparke Helmore to contact the Developer weekly to ascertain which contracts should be extended by agreement or notice. For the reasons given by White JA at [70]-[71], that contention should be rejected because the Developer’s “weekly” instruction case on appeal, had not been pleaded or run at trial.

3. [3]

   LEEMING JA: I agree with White JA that the cross-appeal should be allowed on the basis that there was no breach of duty for the reasons his Honour gives. I also agree with White JA for the reasons he gives it is not open to the appellant to seek to raise an alternative case on appeal. Because this Court has reached a different conclusion from the primary judge on the issue of breach, I provide the following (which presupposes familiarity with the White JA’s reasons for judgment) by way of elaboration.

4. [4]

   The appellants placed weight upon the instructions said to have been given on 22 March 2016. The direct evidence of this is a file note taken by Ms Murray and her unchallenged recollection of what was said, which White JA has reproduced. A fair reading does not convey any instruction to seek to negotiate or alternatively extend any contracts with sunset dates expiring after July 2016. The records of that telephone conversation must be construed in light of (a) the fact that Sparke Helmore had repeatedly explained that in order to exercise the contractual right of extension, notice had to be given a month before the completion date, and (b) the flurry of activity on 26 and 29 February – only three weeks earlier – in relation to the first two contracts to reach expiry. The only business conducted by the cross-respondent was the development and sale of this building. There is no reason to doubt that the development and sale of the building was a large component of the daily activities of the people involved, Messrs Mastronardo and Gazzard and Mirels.

5. [5]

   In the absence of any instruction, it was submitted that it was necessary for Sparke Helmore in order to discharge its duty to act with reasonable care and diligence to contact its client – again – reiterating that the August contracts needed to be renegotiated or extended contractually.

6. [6]

   Sparke Helmore submitted that the breach found by the primary judge at [183] (which White JA has reproduced) was outside the pleadings, and that this was a matter of some significance, having regard to the decision made on the second day of the hearing not to call Ms Murray. But assuming it was open, this Court was in the same position as the primary judge in determining the question of breach, a question which had been litigated without adducing any expert evidence. As White JA explains in detail, I do not think breach was made out. I would add that the decision whether to renegotiate the contracts was not black and white. It was a matter of business judgment, turning upon the true value of the bundle of rights represented by the contracts entered into “off the plan”, and the perceived value in the marketplace, which itself would be impacted in the event that there was unilateral extension pursuant to the contractual rights. The fact that one contract (No 40) sold to the Arlottas was in fact resold at a profit, as her Honour noted at [175], illustrates that the issue was one of business judgment. It was not negligent for Sparke Helmore not to remind the client of the need to make that decision.

7. [7]

   The conclusion that the cross-appeal must be allowed entails that the appeal against the damages awarded must be dismissed. It is unnecessary to consider the challenges to other matters, including contributory negligence which necessarily turns on findings contrary to the view taken in this Court as to breach. I agree with the orders proposed by White JA.

8. [8]

   WHITE JA: This is an appeal and cross-appeal from orders of the Common Law Division (Adamson J) of 26 November 2021 in which judgment was given in favour of the appellant against the respondents in the sum of $285,598.40. Those orders followed the publication of her Honour’s reasons for so deciding on 19 November 2021 (Shoal Bay Beach Constructions No. 1 Pty Ltd v Mark Hickey and the persons listed in Schedule A to this Statement of Claim trading as at all material times Sparke Helmore (No 5) [2021] NSWSC 1499).

9. [9]

   At the relevant time, the respondents were partners in a firm of solicitors trading under the name of Sparke Helmore. They were retained by a property developer, Shoal Bay Beach No.1 Pty Ltd, (“the Developer”), to provide legal services in connection with the construction and sale of units on land owned by the Developer in Shoal Bay. The Developer was wound up in insolvency by order of the Federal Court on 8 June 2018. On 13 March 2019, its liquidator assigned to the appellant the Developer’s interest in any claims available to the Developer, including any claim against Sparke Helmore.

10. [10]

    The Developer had entered into numerous contracts for the sale of units off the plan. The appellant’s claim arose from the rescission of two of those contracts by the purchasers of units called lots 50 and 52. The contract for the sale of lot 52 was entered into by the Developer as vendor and a Mr and Mrs Forbes as purchasers on 6 August 2015. A contract for the sale of lot 50 was entered into between the Developer as vendor and a Mrs Madeleine Forbes (Mr Forbes’ mother) as purchaser on 7 August 2015. Each contract provided either party with a right of rescission if conditions precedent to completion had not been satisfied before the “Registration Date”. The Registration Date was 12 months from the Contract Date.

11. [11]

    However, in certain circumstances, the Developer had the right to extend the Registration Date, provided it gave notice at least one month prior to the Registration Date (cl 43, see below at [21]). The appellant alleged that Sparke Helmore failed to advise the Developer that its right to extend the Registration Date was only exercisable a “minimum of one month prior to the Registration Date”, and that the purchasers could elect to rescind their contracts if the right were not exercised within this period. It alleged that Sparke Helmore failed to advise and seek instructions on those matters and, as a result, the purchasers, as they were entitled to do, rescinded the contracts. The appellant claimed that, in so failing to advise and seek instructions from the Developer on those matters, Sparke Helmore had breached its duty of care and its contractual duty to exercise reasonable care and skill. The primary judge upheld this claim, holding that Sparke Helmore ought to have sought instructions from the Developer prior to 6 July 2016 about its intentions with respect to the contracts to ascertain whether they should send extension of time notices to the purchasers’ solicitors (at [183]). Her Honour found that the Developer was contributorily negligent and reduced the damages that would otherwise have been awarded by 30% (at [195]).

12. [12]

    The appellant appeals against the reduction of damages on account of the finding of contributory negligence, which it says was erroneous. It also appeals against the judge’s assessment of damages in not awarding, as a component of damages, interest that it incurred at rates of not less than 11.95% and 12.95% per annum (applicable to different periods) on borrowings which would have been reduced had the sale of lots 50 and 52 proceeded to completion.

13. [13]

    Because the amount of the judgment fell well within the jurisdictional limits of the District Court, the primary judge made no order as to the costs of the proceedings (Shoal Bay Beach Constructions No. 1 Pty Ltd v Mark Hickey and the persons listed in Schedule A to this Statement of Claim trading as at all material times Sparke Helmore (No 6) [2021] NSWSC 1597). The appellant appeals from her Honour’s order that there be no order as to costs of the proceedings.

14. [14]

    The respondents cross-appeal from the finding of negligence and breach of contract. They contend that their retainer was limited to undertaking work pursuant to express instructions from the Developer from time to time, and that the acts and omissions alleged to constitute a breach of their retainer fell outside the scope of the retainer. They also contend that the appellant’s claim should properly be characterised as a failure to remind a client of advice previously given and that they were under no such duty to reiterate it. They contend that on numerous occasions they advised the Developer as to when the Developer was required to give notice extending the Registration Date if it wished to do so and of the consequences of not doing so. They challenge the primary judge’s findings that the relevant consultant acting for the Developer at the time, a Mr Mirels, did not understand the effect of the relevant contractual provisions.

15. [15]

    The respondents also contend that, had the Developer given an extension notice within time, the notice that would have been given probably would have been challenged by the purchasers, and would not have prevented rescission of the contracts. They contend that the primary judge erred in not discounting any award of damages on account of the contingency that service of the extension of time notice would not have prevented the rescission of contracts.

16. [16]

    The respondents also contend that, even if they were negligent, the primary judge ought to have reduced the appellant’s damages by more than 30% on account of the Developer’s contributory negligence.

17. [17]

    Logically, the issues raised on the cross-appeal should be considered first. For the reasons which follow, I would allow the cross-appeal and conclude that the appellant has not shown that Sparke Helmore was negligent in performance of its retainer for the purchase contracts for lots 50 and 52.

The purchase contracts

1. [18]

   The contract for the purchase of lot 52 was made on 6 August 2015. The purchase price was $800,000. The completion date was, relevantly, the later of 14 days after the vendor notified the purchasers that all conditions precedent in cl 42.1 had been satisfied, or 14 days after the vendor had served the purchasers with an occupation certificate in relation to the Property (cl 48.1).

2. [19]

   The conditions precedent to completion included, relevantly, the registration of the required “Strata Documents” to complete the sale of the property to the purchasers on or before the Registration Date. The Strata Documents meant the strata plan, the by-laws and any necessary s 88B instrument.

3. [20]

   Clause 42.2 and 42.3 provided:

4. [21]

   Clause 43 provided:

5. [22]

   The “Registration Date” was 12 months from the Contract date. The “Extended Registration Date” meant 18 months from the Contract date.

6. [23]

   The contract for the purchase of lot 50 was in relevantly identical terms, save that it was entered into on 7 August 2015 and was for a price of $725,000. The Registration Date for lot 52 was 6 August 2016 and for lot 50 was 7 August 2016.

The Retainer

1. [24]

   Prior to its retainer, Sparke Helmore submitted a fee proposal in which it said it was “…committed to working closely in partnership with Shoal Bay to provide timely, cost effective, commercially oriented and accessible services…[which] integrated services…are commercially focussed and client-specific”. In terms of the actual work to be done, the relevant part of the fee proposal was described as “Acting on Conveyances for Residential Apartments”. For this a fee of $1,200 per conveyance was proposed.

2. [25]

   There is no challenge to the primary judge’s description of Sparke Helmore’s retainer. Her Honour said:

The Developer

1. [26]

   Mr Adrian Mastronardo was in full control of the Developer. He made all the key decisions. The primary judge found that he was an experienced property developer. The primary judge accepted his evidence that his way of operating was to appoint people who were “very good” at what they did and that he relied on them to do their job. He did not read documents but managed the operation of the Developer by making sure he had the right people in the right place (at [10]). The experts whom Mr Mastronardo engaged included a Mr Geoff Gazzard and a Mr Ian Mirels. Mr Gazzard was an experienced chief financial officer and chief executive officer of a development company called Veritas. Mr Mirels had been a general manager of Veritas until he became chief financial officer of the Johnson Property Group. He reported directly to Mr Mastronardo, who expected him to liaise with Sparke Helmore. The primary judge found that, as far as Mr Mastronardo was concerned, Mr Mirels was the “key player in the contracts”. Mr Mastronardo described Mr Mirels’ role as being the “manager of the builder, the agent and the sales” (at [14]).

2. [27]

   The experts retained by Mr Mastronardo to manage the development were experienced in the property industry. Mr Mirels and Mr Gazzard were chartered accountants and presumably not unintelligent.

Sparke Helmore’s advice to the Developer on cl 43

1. [28]

   Sparke Helmore had provided advice to a Mr Ben Suttor, another person engaged by Mr Mastronardo, whom the judge said was very experienced in building construction development, when it provided drafts of the standard contracts for sale. At that time, Sparke Helmore summarised the effects of special conditions in cl 43. However, Mr Suttor was not involved later in the administration of the contracts. More relevantly, on 15 December 2014, Mr Mirels sought advice from a senior associate of Sparke Helmore, Mr Andrew Ferguson, in relation to the operation of cl 43. Mr Ferguson had provided a Sales Schedule to Mr Mirels specifying which units were subject to a contract for sale, the dates upon which contracts had been issued, and comments as to what deposits had been paid and any amendments to the standard contracts. The schedule included a column headed “Sunset Date (6 month extension is also available in addition)”. Mr Mirels asked Mr Ferguson:

2. [29]

   Mr Ferguson replied on the same day, saying that the dates did not include a six month extension. Mr Mirels asked whether “…we automatically get this extension or only under certain circumstances?”. Mr Ferguson replied:

Communications between Sparke Helmore and the Developer over extensions of registration dates

1. [30]

   On 17 March 2015, Mr Ferguson sent an email to Mr Mirels in which he confirmed Mr Mirels’ responses to questions that Mr Ferguson had raised. These included the following:

2. [31]

   The primary judge, understandably, but incorrectly, interpreted this correspondence as being a question asked by Mr Mirels of Mr Ferguson rather than vice versa (at [30]). (Neither Mr Ferguson nor Mr Mirels gave evidence).

3. [32]

   By 23 February 2016, Ms Helen Murray of Sparke Helmore had taken over the conduct of the file. On that day she sent an email to Mr Mirels attaching an updated sale schedule showing the “Sunset Date” relevant to all exchanged contracts. The “Sunset Date” was the same as the “Registration Date”. In her email, she stated:

4. [33]

   There followed a reference to apartment numbers, the names of purchasers, and the “Current Registration Date (Sunset Date)” for contracts whose Registration Date fell in April 2016.

5. [34]

   The earliest of the contracts had a Registration Date of 1 April 2016 so that any notice of extension of time would need to have been given by 29 February 2016.

6. [35]

   Mr Mirels responded to Ms Murray’s email of 23 February 2016 by asking her to call him. It appears from Sparke Helmore’s invoice that she had a telephone call with Mr Mirels on the subject of “EOT notice” that day. That evening, Mr Mirels sent an email to Mr Mastronardo copied to Ms Murray in which he said:

7. [36]

   The background to this was that Mr Mastronardo had terminated the services of the builder originally engaged and was yet to appoint a new builder. Mr Mirels was concerned that a notice claiming an extension of time on the basis of delays beyond the vendor’s control could affect its dispute with the builder.

8. [37]

   On 25 February 2016, Mr Mirels asked Ms Murray to finalise a letter that he would send to the superintendent (a Mr Todd Corbett) to sign. He advised that “We won’t be able to get current builder to sign, however hopefully we will have a new builder on site soon and will ask them for sign off for the upcoming expiring contracts for sale”. On the same day, Mr Hastie, a costs consultant and project manager (but not the builder), sent an email to Ms Murray suggesting that delay periods could be justified on the basis of inclement weather, plus one month due to supply delays and two months due to design changes. Later that night, Ms Murray forwarded a draft notice saying:

9. [38]

   She provided a draft notice of extension of time as follows:

10. [39]

    On 29 February 2016, Mr Corbett advised Mr Hastie, Mr Mirels and Ms Murray that, in his opinion, the works had been delayed by 85 days due to inclement weather and by:

11. [40]

    On 29 February 2016, Mr Corbett, in his capacity as superintendent and Technical Director Quantity Surveying, signed a letter with no addressee stating:

12. [41]

    A file note prepared by Ms Murray, dated 29 February 2016, reads as follows:

13. [42]

    By its Notice of Contention, the appellant relies upon the last part of the file note “ring each week + see if they should be extended!”. The appellant submits that this was a continuing instruction to Sparke Helmore that not only required it in February and March 2016 to see if notices of extension should be given in respect of contracts whose registration dates were imminent, but also extended to July 2016 in relation to the contracts for the purchase of lots 50 and 52. Neither Mr Mirels nor Ms Murray gave evidence. The respondents submit that that instruction related only to the contracts that had previously been identified with Registration Dates in April in circumstances where there was no current builder and there had been difficulties in obtaining a form of certification.

14. [43]

    The appellant did not plead that Sparke Helmore was in breach of its duty of care in not following any instruction given to it. Rather, its pleaded complaint was that Sparke Helmore was in breach of its duty by failing to proffer advice or seek instructions.

15. [44]

    On 18 March 2016, Sparke Helmore provided Mr Mirels with an updated sales schedule setting out the Sunset Dates for the contracts. These included lots 52 and 50 showing Sunset Dates of 6 August and 7 August 2016 and noting that “six month extension is also available in addition”.

16. [45]

    Ms Murray deposed:

17. [46]

    On 22 March 2016, Mr Gazzard sent an email to Ms Murray copied to Nicole Faulkner and Mr Mastronardo on the subject of “Extension of sunset date”. He wrote:

18. [47]

    Lots 50 and 52 had a Sunset Date in August 2016 not July 2016. Mr Gazzard did not ask Ms Murray to prepare a letter to send to the purchasers of those lots requesting an extension of the Registration Date for their contracts.

19. [48]

    On 24 March 2016, Sparke Helmore sent letters to purchasers of units whose Registration Dates fell in June or July 2016 advising that they were instructed that the vendor would not achieve completion of the project by the Registration Date, and whilst the vendor was able to make an extension of time claim pursuant to cl 43 of the Contract, it preferred to vary the Registration Date to a new Registration Date of 31 October 2016. Sparke Helmore sought the purchasers’ instructions.

20. [49]

    On 29 March 2016, Ms Murray sent an email to Mr Gazzard attaching a copy of the special conditions of contract and quoting cl 42.3. She advised that if the purchaser did not rescind under that clause within 7 days after the expiry of the Registration Date, then the purchaser’s right to rescind lapsed.

21. [50]

    On 13 April 2016, Ms Faulkner, a paralegal employed by Sparke Helmore, sent an email to Mr Gazzard attaching an up-to-date list “regarding extension letters”. The list recorded that agreement to extensions up to 31 October 2016 had been reached with six of the nine purchasers with Sunset Dates in 2016 but there were three purchasers whose responses were still awaited. These were for units 204 (Gough), 309 (Potter) and 406 (Walenjude Pty Ltd).

22. [51]

    On 4 May 2016, Ms Faulkner advised Mr Mirels that she had spoken with the solicitors for the three purchasers who had not yet responded. She attached a list of the purchasers to whom extension letters had been sent, noting that in the case of two purchasers, the solicitor was expecting confirmation. The attached list shows that the solicitors for two of the purchasers were expecting confirmation of the request for extension and, in the case of the third solicitor, was “obtaining response from client”.

23. [52]

    On 4 May 2016, Mr Mirels wrote to Ms Faulkner thanking her for the update and asking: “What’s the legal position with respect to the 2 that haven’t elected to extend? Are they locked in or are they still able to get out of the contract?”

24. [53]

    The primary judge observed (at [96]) that the evidence did not reveal Ms Faulkner’s response to that question. In fact it did. On 1 June 2016, she sent a revised list to Mr Mirels which listed all of the contracts for sale, not only those with Registration Dates in June or July 2016. Relevantly, the list showed that, in the case of the three purchasers who had not responded by 4 May 2016, the Sunset Date had been extended to 31 October 2016, evidently by agreement.

25. [54]

    On 31 May 2016, the real estate agent acting on the sales of units sent an advice to the purchasers, including the Forbes, that he had received from Mr Mastronardo, who had written:

26. [55]

    On 31 May 2016, Ms Faulkner provided an updated schedule of contracts which again recorded the Sunset Dates for Lots 52 and 50.

27. [56]

    Ms Murray went on annual leave from 6 June to 7 July 2016. The appellant submitted that, while she was away, Sparke Helmore dropped the ball.

28. [57]

    None of Mr Mirels, Mr Gazzard, Ms Murray, or Ms Faulkner gave evidence. So far as the documentary record reveals, no instructions were given to Sparke Helmore to issue letters to the Forbes requesting an extension of the Registration Dates for lots 50 and 52, or to prepare notices under cl 43 for the Developer to extend the Registration Dates. Nor was evidence adduced as to whether the dispute with the previous builder would or might have been prejudiced by the service of any such notice that would attribute the delay in completion to inclement weather or other delays beyond the vendor’s control. Sparke Helmore did not seek instructions on these matters.

29. [58]

    6 and 7 July 2016 came and went without the Developer serving a notice under cl 43.

30. [59]

    On 14 July 2016, Mr Gazzard sent an email to Ms Faulkner copied to Ms Murray, Mr Mastronardo, and Mr Mirels saying:

31. [60]

    The attached spreadsheet included lots 52 and 50, and showed Sunset Dates of 6 August and 7 August 2016.

32. [61]

    On 15 July 2016, Ms Murray sent an email to Mr Gazzard recommending that the “same Extension of Time Notices served earlier are now served on those purchasers with July, August and September Registration Dates”.

33. [62]

    On the same day Mr Gazzard advised Ms Murray that he had spoken with Mr Mastronardo and asked that she issue the notices.

34. [63]

    On 16 July 2016, Sparke Helmore served notices on the solicitors for the purchasers of lots 50 and 52, attaching a notice signed by Mr Maruzza of Fortis Development Construction Co certifying delays to the project of 146 days.

35. [64]

    The notices were not served within the time prescribed by cl 43. That objection was taken by the purchasers. The purchasers duly rescinded.

Communications with the purchasers over delayed completion

1. [65]

   On 29 March 2016, Mr Schmarr, the real estate agent acting for Mr Mastronardo, advised Mr Forbes that the projected construction completion date would be 30 June 2016, and that the builder was being replaced. Mr Forbes said that this sounded like bad news and asked a number of questions about the new builder, including whether the certification process would carry over from the previous builder and how the builder’s insurance cover would work. He also complained that he had already made arrangements for the removal of goods from storage with a view to moving in.

2. [66]

   On 30 March 2016, Mr Mastronardo wrote to Mr Schmarr saying:

3. [67]

   This email was copied to Mr Mirels.

Claim not pressed

1. [68]

   At trial, the appellant maintained a claim that Sparke Helmore was liable for costs it incurred and for which it was held to be liable in litigating the purchasers’ claims that they had validly rescinded the contracts. The primary judge rejected that claim and there is no appeal from that finding.

2. [69]

   The primary judge accurately summarised the appellant’s principal claim as being that Sparke Helmore failed to alert the developer as to the time by which valid Extension of Time Notices for lots 50 and 52 had to be served to extend the Registration Dates validly, failing which the purchasers would have a right to rescind (at [160(1)]).

Notice of Contention

1. [70]

   On appeal, the appellant contended that the primary judge should have found that, on or about 29 February 2016, Sparke Helmore was instructed to contact the Developer weekly to ascertain which contracts with Registration Dates in 2016 should be extended by agreement or notice, that they failed to do so, but had they done so, they would have been instructed to extend the Registration Dates in respect of lots 50 and 52 before 6 July 2016. It also contended that the primary judge should have found that, on 22 March 2016, Ms Murray was instructed to negotiate an extension for an agreed period of time with “each of the purchasers”, meaning, according to the appellant, with all purchasers including purchasers of lots 50 and 52, but failed to do so. (It did not rely on Mr Mirels’ instructions to Mr Ferguson of 17 March 2015 that “you need to extend one month prior to sunset date” (see [30] above).)

2. [71]

   The primary judge did not deal with these contentions. This was because no such case had been pleaded. At trial, the parties took forensic decisions as to the calling of witnesses. This led to Ms Murray’s affidavit (which had been served) not being read by Sparke Helmore, but parts of it being tendered by the appellant. Had the case contended for on appeal, that Sparke Helmore had disobeyed instructions, been pleaded, or even raised in opening submissions, the course of the trial might have been very different. It is not open to the appellant to raise this alternative case on appeal.

Primary Judge’s reasoning

1. [72]

   The primary judge concluded:

2. [73]

   In reaching this conclusion the primary judge found that, leading up to early July 2016:

3. [74]

   The primary judge also found that Mr Mirels was the main contact point for Sparke Helmore concerning the contracts and:

Consideration

1. [75]

   The primary judge’s finding at [170] informed the primary judge’s conclusion that Mr Mirels did not understand how cll 42 and 43 worked (although that was not the only basis for that conclusion). As Sparke Helmore submits, the primary judge misread the email of 17 March 2015. Contrary to the judge’s finding at [30], it was Mr Ferguson of Sparke Helmore who asked Mr Mirels whether an extension to dates would be needed. It was Mr Mirels who responded by saying that an extension to the dates was not yet needed, that completion was expected in December 2015, and that the “six month extension for delays is noted. Noted you need to exercise right to extend one [month] prior to Sunset Date”. It was Mr Mirels who “noted you need to exercise right to extend one [month] prior to Sunset Date”.

2. [76]

   The primary judge also found (at [174]) that “for all contracts with Sunset Dates in 2016, the Developer had given instructions to the defendants to try to extend the Registration Date by agreement, or to extend it by notice”.

3. [77]

   Contrary to this finding, the primary judge had earlier found (at [104]):

4. [78]

   These findings both relate to Ms Murray’s deposition of her conversation on 22 March 2016 with Mr Mastronardo or Mr Gazzard or both of them (see [45] above). As none of the parties to that conversation gave evidence, this Court is in as good a position as the primary judge in determining what instructions were given. Ms Murray’s evidence was that the only instructions given were that Sparke Helmore should draft letters inviting agreement to an extension of time for completion of the contracts to 31 October 2016 to those purchasers whose contracts were due for completion in June and July 2016. Either Mr Mastronardo or Mr Gazzard also said that they wanted to negotiate an extension for an agreed period with each of the purchasers, but their only instructions to Sparke Helmore were to prepare letters for purchasers whose contracts were due to complete in June or July 2016.

5. [79]

   The primary judge was correct in her finding at [104] that no instructions were given to Sparke Helmore prior to 6 July 2016 to give notice to the purchasers to extend the Registration Dates for lots 50 or 52 prior to 6 or 7 July 2016, but incorrect in her contrary finding at [174] that instructions had been given to Sparke Helmore to try to extend the Registration Date by agreement or otherwise by notice for all contracts with Sunset Dates in 2016. But the question remained whether, in exercising due care and skill, Sparke Helmore ought to have sought instructions in relation to contracts for the sale of lots 50 and 52 where, if notice of extension of time were to be given, notice would have had to be given before 6 or 7 July 2016.

6. [80]

   In Groom v Crocker [1939] 1 KB 194, Scott LJ said (at 222) of the implied terms in a solicitor’s retainer:

7. [81]

   In Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp (a Firm) [1979] Ch 384, Oliver J said (at 402-3) that the extent of a solicitor’s duties depends upon the terms and limits of his or her retainer and any duty of care to be implied must be related to what he or she is instructed to do. His Lordship warned against a court imposing upon solicitors, or other professionals, duties which went beyond the scope of what they were requested and undertook to do, and that the test was not whether a “…particularly meticulous and conscientious practitioner would, in his client’s general interests, take it upon himself to pursue a line of inquiry beyond the strict limits comprehended by his instructions” (at 403). Similar observations were made by McPherson AJA in Heydon v NRMA Ltd (2000) 51 NSWLR 1; [2000] NSWCA 374 at [364].

8. [82]

   The appellant pleaded:

9. [83]

   Sparke Helmore had advised the Developer of each of the matters alleged in para 26(a)-(d), and of the purchaser’s right to rescind if the Developer had not exercised its right to extend the Registration Date pursuant to cl 43 as alleged in para 26(f). The Developer was aware of the matters pleaded in para 26(e).

10. [84]

    Sparke Helmore relied upon what has been called a “general rule” that a solicitor is not negligent in failing to remind a client of advice already given or to advise the client of what the client already knows (Yager v Fishman & Co and Teff & Teff [1944] 1 All ER 552 at 558; Scottsdale Homes Pty Ltd v Gemkip Pty Ltd [2008] QSC 326 at [93]-[101]; Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) [2001] FCA 1628 at [175]; (2001) 188 ALR 566; Capebay Holdings Pty Ltd v Sands [2002] WASC 287 at [7], [97]-[98]; Nigam v Harm (No 2) [2011] WASCA 221 at [139]-[142]).

11. [85]

    The position is as expressed in R J Jackson QC & J L Powell (General Editors), Jackson & Powell on Professional Negligence (3rd ed, 1992, Sweet & Maxwell) at par [4-106]:

12. [86]

    The primary judge rejected Sparke Helmore’s reliance on these authorities on the basis that Sparke Helmore was aware that Mr Mirels, who was acting for the Developer, did not appreciate the effect of cll 42 and 43 of the contracts for sale, notwithstanding the advice which he had been given (at [169]-[170], [176]).

13. [87]

    Whatever his lack of understanding before receiving Mr Ferguson’s email of 15 December 2014 (see [29] above), Mr Mirels could have been in no doubt after receiving that email that a notice of extension would have to be given at least one month prior to the Registration Date. That advice was reiterated on 23 February 2016 (see [32] above). In so far as the primary judge relied upon Mr Ferguson’s email of 17 March 2015, her Honour erred in attributing the questions posed to Mr Mirels rather than to Mr Ferguson. Her Honour’s error is understandable as, when Mr Mastronardo was asked questions about the email correspondence in cross-examination, counsel for Sparke Helmore also attributed the questions to Mr Mirels. This was an evident mistake because Mr Ferguson’s shorter email of 17 March 2015 stated that he was “confirming Mr Mirels’ responses to the questions below”.

14. [88]

    Sparke Helmore was not negligent in failing to remind the Developer of the advice previously given or, what amounts to the same thing, in not seeking instructions prior to 6 and 7 July 2016. On 22 March 2016, Mr Gazzard had instructed Ms Murray to seek to negotiate an extension of the Sunset Date for those contracts with a Registration Date in June and July only (see at [46] above). This instruction was given after Sparke Helmore had provided a schedule on 21 March 2016 of contracts with upcoming Registration Dates. On 1 June 2016, Sparke Helmore provided a similar schedule of the forthcoming Registration Dates. As deposed to by Ms Murray (at [45]), Sparke Helmore was aware of Mr Mastronardo’s and/or Mr Gazzard’s expressed wish on 22 March 2016 to negotiate an extension for an agreed period of time with “each of the purchasers” and that they would “start by negotiating with the contracts that are due for completion in June and July 2016”. Although Sparke Helmore was engaged to negotiate such extensions for contracts due for completion in June and July 2016, there was no reason that the Developer could not itself negotiate extensions. Sparke Helmore was not asked to do so. It was reasonable for Sparke Helmore to proceed on the basis that if the Developer wanted it to negotiate extensions, or to serve a notice of extension, they would be instructed to do so.

15. [89]

    The appellant did not rely on the statement in Sparke Helmore’s fee proposal that it was “…committed to working closely in partnership with Shoal Bay to provide…commercially orientated and accessible services”. The fact that Sparke Helmore promoted itself on the basis that its services were easily accessible, as they had been during the course of the transaction, would support the reasonableness of its expectation that, if its services were sought, instructions would be given.

16. [90]

    For these reasons, I would uphold the cross-appeal. It follows that the appeal should be dismissed.

Other Issues

1. [91]

   I would add the following in relation to the other issues that were argued.

2. [92]

   Sparke Helmore submitted that it should not be concluded that, if it had sought instructions, it would have been instructed to give a notice of extension of time before 6 or 7 July 2016. It submitted that the only Extension of Time Notice that had been prepared had been signed by Mr Maruzza as Managing Director of Fortis Development and Construction Co, which was not the builder at the time he signed the notice.

3. [93]

   The notice signed by Mr Maruzza was undated. Fortis was appointed as the builder some time around April 2016. Although a notice issued by the Builder would be conclusive of the matters stated in it, it was not essential to the giving of a notice of extension. The notice of extension issued on 18 July 2016 was rejected by the purchasers of lots 50 and 52 on the basis that it was provided too late, but no objection was otherwise taken to it. When Ms Murray suggested (on 15 July 2016) that Extension of Time Notices be served on purchasers whose completion dates were in July, August and September, the Developer readily agreed.

4. [94]

   I would conclude that if Sparke Helmore had sought instructions prior to 6 July 2016, the Developer would have instructed Sparke Helmore to serve notices of extension of time and that the validity of those notices would not have been challenged. The primary judge was not satisfied that there was any real possibility that, had the notices been sent in time, the purchasers would otherwise have objected to the notices or rescinded on an alternative basis (at [201]). I agree with her Honour’s conclusion.

5. [95]

   If I am wrong in my conclusion that Sparke Helmore was not in breach of its retainer in not repeating its advice or seeking instructions, I would uphold its challenge to the primary judge’s finding that the damages for which it is liable should be reduced by one third on account of the Developer’s contributory negligence. I would assess the Developer’s contributory negligence at 80% rather than 30%. The appellant’s challenge to the finding of contributory negligence was based upon its contention that Sparke Helmore was obliged to telephone the Developer weekly to ascertain which contracts should be extended. The appellant relied upon the primary judge’s finding at [174] that the Developer had instructed Sparke Helmore to seek to extend the Registration Date of all contracts or otherwise extend the Registration Date by notice. The appellant submitted that, having given that instruction, it was not contributorily negligent in failing to give any further instruction.

6. [96]

   However, for the reasons above, I reject the submission that such an instruction was given.

7. [97]

   The appellant’s challenge to the primary judge’s findings on the assessment of damages raises complex questions of fact. The grounds of appeal are that the primary judge erred in failing to find that the funds for lots 50 and 52, had those contracts been completed, would have been applied to reduce the Developer’s indebtedness to one or other or both of two lenders called Balanced Securities Ltd and Optima Funding Pty Ltd. The primary judge ordered prejudgment interest at court rates rather than the higher rates applicable under the developer’s loans from those lenders. But the appellant could not identify what loss it had established if this ground of appeal were to succeed. It submitted that judgment should be given for it in a sum to be calculated.

8. [98]

   The Developer entered into loan agreements with Balanced Securities and Optima Funding on 30 March and 12 August 2015 and a further facility agreement with Optima on 7 July 2017. The interest rates were at 11.95% per annum (Balanced Securities) and 19.75% and 18.95% (Optima) with default rates of 19.95% (Balanced Securities) and 29.75% and 28.95% (Optima). The loan from Balanced Securities was for $13,000,000 and the two facilities provided by Optima were for $1,000,000 and $1,100,000.

9. [99]

   These loans were extended. But the facilities were not solely related to the Shoal Bay development. Sparke Helmore submitted that the loan from Balance Securities was reduced to nil in February 2017, being a date relatively contemporaneously with the date on which the contracts for the sale of lots 50 and 52 would have been due for settlement. It pointed to various unexplained matters in relation to the loans provided by Balanced Securities and Optima.

10. [100]

    It is unnecessary to decide these matters to dispose of the appeal.

11. [101]

    On these findings, the appellant’s challenge to the primary judge’s costs order does not arise.

Conclusion

1. [102]

   For these reasons I propose the following orders:

   1. (1)

      Appeal dismissed with costs.

   2. (2)

      Cross-appeal allowed with costs.

   3. (3)

      Set aside the orders of the court below of 26 November 2021 and 9 December 2021.

   4. (4)

      In lieu thereof, order that the proceedings be dismissed with costs.