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Clayton Utz is being sued for gross negligence by an Australian property developer who alleges that the firm failed to carry out basic title checks.
City Developments retained Clayton Utz's Darwin office on the purchase of 150 cabins on a lake south of Darwin in 1997 for A$630,000 (£255,300).
Developer George Milatos told the Supreme Court of the Northern Territory that he purchased the land on the understanding from his lawyers that the development would have access to the waterfront.
The court was shown an internal memo from Clayton Utz solicitor Guy Riley that revealed the waterfront land been set aside for recreational use. That hit the development plans and Milatos's bankrupt company now owes creditors some A$3m (£1.22m).
The court heard the memo and admitted that the firm had given incorrect advice, but Milatos alleged the firm acted for him for a further 15 months.
As The Lawyer went to press, the trial was continuing.