Two law firms acting one after the other for a Mudgeeraba unit developer have failed in an appeal against a December ruling that holds them liable for losses incurred on 14 apartment deals crashed by off-the-plan buyers because of failure to strictly comply with since-repealed PAMDA provisions.

 

The 14 buyers terminated their purchases in early 2009 as the Gold Coast was beginning to suffer the worst of the GFC, on grounds that their “attention had not been directed” in the solicitors’ correspondence returning to them the signed contracts, to a written ‘cooling off’ statement.

Naturally enough the developer SDW Projects sought advice from a third lawyer that verified the consequences of the slip up and decided not to pursue the recalcitrant investors for performance of their contracts.

In November 2012 SDW sought court declarations of PAMDA compliance errors on the part of Gold Coast Solicitors and the Clements law firm but – in the face of determined resistance and liability denials –  decided it would be prudent to also include as respondents, to be sure it did not fall between two stools, the third law firm and the barrister it had engaged.

That such course was considered necessary itself raises many issues – for example, what lawyer will henceforth be prepared to venture an opinion; how will this affect legal charges for advising on this subject – but mostly it speaks volumes of the wanton absurdity of the PAMDA monster and the bucket loads of money it has so wastefully gobbled up out of the pockets of developers, agents, lawyers and consumers.

And that the particular provision was in fact repealed in October 2010 did not mitigate the liability of the arguably inattentive solicitors who now – in the absence of any further defence on their part – find themselves on the wrong end of a potentially million dollar claim for what the developer proves its losses to be.

The appeal judges ruled, upholding the lower court decision, that the correspondence returning the contract booklets to the buyers’ solicitors – not referring in any way to the warning statement – fell foul of the circuitous PAMDA “attention directing” statement requirement.

The ruling leaves the way open for the developer, in a further action, to recover its proven losses from the first two solicitors or their insurers.

Modi & Clements v SDW Projects Pty Ltd & Ors [2013] QCA 221 Brisbane Holmes and Gotterson JJA and Boddice J 9/08/2013


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