By Lucy Williams and Milica Vukancic -
Snapshot
- Recent Court of Appeal decision has confirmed the general principle that solicitors are not obliged to repeat advice previously given to a client.
- Solicitors should satisfy themselves that important advice and/or requests for instructions are properly understood by clients.
The recent New South Wales Court of Appeal decision in Shoal Bay Beach Constructions No. 1 Pty Ltd v Mark Hickey & Ors [2023] NSWCA 23 (‘Shoal Bay’) has confirmed the general principle that a solicitor is not obliged to repeat advice previously given to a client, or to advise on what a client already knows. However, solicitors should remain cognisant that the application of this principle will depend on the facts in each case.
Obligation to remind or repeat advice
Shoal Bay Beach No. 1 Pty Ltd (‘Developer’) was engaged in residential property development and retained a law firm to advise and assist in the sale of off-the-plan units. The contracts enabled the vendor or purchaser to rescind the contract if certain conditions precedent were not satisfied prior to the ‘Registration Date’ (Clause 42.2). In certain circumstances, the Developer was entitled to extend the Registration Date by giving one month’s notice to the purchasers (Clause 43).
The law firm repeatedly advised the Developer regarding the effect of Clause 43. That is, if it wished to extend the Registration Date, it needed to give the purchasers one month’s written notice. The law firm also provided multiple schedules to the Developer setting out the Registration Dates for various contracts.
Ultimately, due to constructions delays, the Developer did not satisfy certain conditions prior to the Registration Date for two properties. Pursuant to Clause 42.2, the purchasers rescinded their contracts. The plaintiff contended that the law firm failed to alert the Developer of the deadlines for exercise of its rights under Clause 43 or to seek instructions from the Developer to give notice extending the Registration Dates, and as a result, the purchasers rescinded the contracts.
In a unanimous decision, the Court of Appeal held that in circumstances where the law firm had given repeated advice confirming the Developer’s understanding of Clause 43, notwithstanding that this advice was not repeated closer to the Registration Dates, the law firm had no liability in negligence. Moreover, it was reasonable for the law firm to proceed on the basis that if the Developer wanted to issue a notice, it would provide those instructions.
