Shoal Bay Beach Constructions No. 1 appealed a November 2021 judgment from NSW Supreme Court Justice Christine Adamson finding Sparke Helmore acted negligently and in breach of its retainer with the developer by not alerting it to the deadline for an extension of time notice for the sale of two units in the coastal town of Shoal Bay, arguing the law firm should be on the hook for a higher damages bill.

Justice Adamson ordered Sparke Helmore to pay $229,250 in damages plus $56,348 in pre-judgment interest for its negligence, but declined to order costs against the law firm because the suit had been filed in the wrong court.

On Wednesday, the NSW Supreme Court of Appeal found Justice Adamson had erred in finding Sparke Helmore negligent over its failure to advise Shoal Bay of the impending deadline.

The appeals court found the developer had been advised of the deadline several times, and that the law firm was entitled to rely upon the proposition 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.”

“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,” said Justice Richard Weeks White.

“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.”

Justices Mark Leeming and Fabian Gleeson agreed with Justice White’s findings.

On appeal, Shoal Bay challenged the judge’s reduction in damages for its contributory negligence, which was found to have offset the damages by 30 per cent, her rejection of the damages claimed, and the denial of its costs.

In its cross-appeal, Sparke Helmore successfully argued that it was not required to go beyond the scope of the developer’s express instructions under its retainer .

On appeal, Shoal Bay pressed its contention that Sparke Helmore was instructed in February to contact the developer weekly in order to determine which contracts needed to be extended, citing a file note prepared by the solicitor with carriage of the matter, Helen Murray. In it, Murray noted an instruction given by Shoal Bay representative Ian Mirels to “ring each week [and] see if [the contracts] should be extended”.

During the trial, Shoal Bay told the court no such calls were made and Justice Adamson ruled it was not enough to simply inform the client of the relevant dates and clauses, given the developer relied exclusively on Sparke Helmore for legal advice and had engaged the firm to monitor and manage such matters.

“It was not a question of a solicitor being required to remind a client of something which had already been imparted. The terms of the contract were not straightforward to non-lawyers; those associated with the developer had already demonstrated that they did not understand how cll 42 and 43 worked; and the updated schedule highlighted the sunset date but not the date by which notice of extension was required to be given,” Justice Adamson said.

But the appeals court found no such instructions were given, in circumstances where the law firm was retained only to undertake work according to express instructions from time to time.

“The primary judge was correct in her finding…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 … 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,” Justice White said.

The appeals court also found that Justice Adamson’s finding that Mirels did not understand how the terms of the contract operated was based upon a misreading of the evidence, namely a confusion as to which party said what in an email exchange.

The appeals court found that Mirels “could have been in no doubt” after receiving a December 2014 email from Sparke Helmore senior associate Andrew Ferguson that notice of extension needed to be given at least one month before the registration date, advice the appeals court found was reiterated on February 23, 2016 by Murray.

Justice White further said that if he was incorrect in his finding that Sparke Helmore was not negligent, he would have assessed Shoal Bay’s contributory negligence at 80 per cent, rather than 30 per cent, as assessed by Justice Adamson.

SBBC No. 1 Pty Ltd is represented by David Weinberger, instructed by Di Girolamo Lawyers. Sparke Helmore is represented by Andre Zahra SC with Jonathan Burnett, instructed by YPOL Lawyers.

The case is Shoal Bay Beach Constructions No. 1 Pty Ltd v Mark Hickey and the persons listed in Schedule A to this Statement of Claim t/as at all material times as Sparke Helmore.

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