Tuesday, December 16, 2014
CONDITION FOR REMOVAL FROM ROLL: PROVEN CRIMINAL MISCONDUCT
The Council of the New South Wales Bar Association v Franklin (No 2) [2014] NSWCA 428 (12 December 2014) (Beazley P at [1]; Meagher JA at [2]; Leeming JA at [48])
This decision has a headnote.
CatchwordsLEGAL PRACTITIONERS - removal from roll of local lawyers - application to have lawyer's name removed from roll - where lawyer convicted of criminal offences including aggravated sexual assault - where lawyer denied that he committed the offences of which he was convicted, both at trial and at sentencing hearing - whether of good fame and character - whether guilty of professional misconduct - whether presently a fit and proper person - Legal Profession Act 2004 (NSW), s 32
Supreme Court of Victoria
DURA (AUSTRALIA) CONSTRUCTIONS PTY LTD v HUE BOUTIQUE LIVING PTY LTD (NO 5) [2014] VSC 400 (15 December 2014) (DIXON J)
CatchwordsPractice and Procedure – Overarching obligation not to make a claim or a response to a claim without a proper basis – Whether breached by solicitor for losing party – Liability of solicitor for wasted costs – Requirement that solicitor’s conduct be unreasonable – Briefing of experts – Preparation of witness statements – Investigation of factual basis for a claim - Discretionary considerations in wasted costs jurisdiction – Discretionary considerations under s 29 Civil Procedure Act – Whether solicitor entitled to benefit of a doubt because claims of client legal privilege not waived – Whether relevant privileged communication established – ss 18, 22, 23, 29, 42 Civil Procedure Act 2010 (Vic) – r 63.23 Supreme Court (General Civil Procedure) Rules 2005. Legal Practitioners – Overarching obligation not to make a claim or a response to a claim without a proper basis – Whether breached by solicitor for losing party – Liability of solicitor for wasted costs – Requirement that solicitor’s conduct be unreasonable – Briefing of experts – Preparation of witness statements – Investigation of factual basis for a claim – Discretionary considerations in wasted costs jurisdiction – Discretionary considerations under s 29 Civil Procedure Act – Whether solicitor entitled to benefit of a doubt because claims of client legal privilege not waived – Whether relevant privileged communication established – ss 18, 22, 23, 29, 42 Civil Procedure Act 2010 (Vic) – r 63.23 Supreme Court (General Civil Procedure) Rules, 2005.
Wednesday, November 26, 2014
SOLICITORS NOT ALLOWED TO ACT WHEN HE IS A WITNESS OR POTENTIAL WITNESS TO THAT CASE:
NSW Court of Appeal warning about acting in a case where legal practitioner is a material witness
Posted by Greg Carter | November 21, 2014 | Professional conduct | No Comments
0
The NSW Court of Appeal has issued a warning about legal practitioners acting in cases where the practitioner is or is likely to be a material witness. The case is Barrak Corporation Pty Ltd v The Kara Group of Companies Pty Ltd [2014] NSWCA 395 (delivered 19 November 2014).
Facts
Mr Barrak, a legal practitioner, was the sole director and shareholder of the appellant (the plaintiff below) for which he was the solicitor on the record in a proceeding against the respondent for negligence. Mr Barrak was also the principal witness for the appellant.
During the proceeding below Mr Barrak was cross-examined about the effect of (then) Rule 19 of the NSW Professional Conduct and Practice Rules 1995 which relevantly provided:
“Unless there are exceptional circumstances justifying the practitioner’s continuing retainer by the practitioner’s client, the practitioner must not act or continue to act in any case in which it is known or becomes apparent that the practitioner will be required to give evidence material to the determination of the contested issues before the court.”
The cross-examination proceeded as follows:
“Q. Are you familiar with that rule [rule 19]?
A. Well, not specifically, but you’ve read it out to me.
Q. This is coming as news to you this –
A. No, no, I consider what you have just read out to be a normal vicissitude of practice in law, and I don’t think that what you’re saying applies to this particular case, because if it did a solicitor could never, ever act for any matter in which he has an interest, and that’s simply – I reject that.
Q. You don’t accept that that’s the position?
A. No I don’t.
Q. Or the effect of the rule?
A. No, well I can assure you I’ve acted in, for my own company every single time it has been involved in any litigation, and I’ve never encountered any objection of the kind that you’re now raising
…
Q. Mr Barrak, did it not concern you that you might be breaching the professional rules by which you are bound as a solicitor?
A. It would always concern me if I thought that I was breaching any professional rule as a solicitor. I do not consider that my conduct breaches any professional rule as a solicitor.
Q. Did it not concern you at any point that there was a risk that your personal interest in the outcome of this case might conflict with your duties as an officer of the court?
A. No, certainly not.
Q. You have prepared the affidavits of the other witnesses in the case?
A. Yes I have.
Q. Did it not concern you that the objectivity and independence required in performing those tasks might be jeopardised by the fact that you have a personal interest in the outcome of the case?
A. No, it did not concern me. The affidavits which I drafted are in accordance with the versions of events as described to me by each particular witness, and I followed those instructions.
[Original emphasis]
Of this exchange Adamson JA said:
“[46] Mr Barrak’s answers set out above indicate not only that he was ignorant of Rule 19 but also that it was his invariable practice to be the solicitor on the record in matters in which the appellant was a party. He also appeared to be unperturbed by the general prohibition on witnesses conferring about matters the subject of evidence, which necessarily occurred when he conferred with witnesses to prepare their statements. The significance of that prohibition was greater in the present case, given that Mr Sarikaya [one of the other defendants] swore an affidavit after the proceedings against him were settled on the basis that he agreed to sign affidavits as reasonably requested by the appellant … That affidavit was read in the appellant’s case.
[47] It is necessary to emphasise the risk posed to the administration of justice in New South Wales by solicitors remaining on the record when they are, or may be, witnesses in proceedings. This risk is heightened when they have a personal interest in the outcome of litigation beyond recovery of their fees. Courts rely on legal practitioners to discharge their duties to remain objective and professional in the preparation and presentation of proceedings. Such duties are susceptible to compromise where a practitioner is also a witness and even more so when he or she has a financial interest in the outcome: see, for example the observations made by Brereton J in Mitchell v Burell [2008] NSWSC 772 at [20].”
Barrett and Sackville JJA agreed with Adamson JA’s comments concerning Mr Barrak’s conduct.
The present Rule in NSW (which came into force after the trial in this matter had been determined) is rule 27.2 of the NSW Professional Conduct and Practice Rules 2013:
“In a case in which it is known, or becomes apparent, that a solicitor will be required to give evidence material to the determination of contested issues before the court the solicitor, an associate of the solicitor or a law practice of which the solicitor is a member may act or continue to act for the client unless doing so would prejudice the administration of justice.”
Adamson JA observed:
“The effect of the amendment is to change the rule from a prohibition qualified where there are “exceptional circumstances justifying the practitioner’s continuing retainer by the … client” (Rule 19) with a qualified permission that allows a solicitor to continue to act for the client unless doing so would prejudice the administration of justice (Rule 27.2). I do not discern any change in the purpose of the provision, which is to protect the administration of justice by circumscribing the circumstances in which a solicitor who is, or may be, required to give evidence in proceedings is permitted to act.” [emphasis added]
A copy of the appeal judgment was forwarded to the Legal Services Commissioner for consideration as to whether a complaint should be made in relation to Mr Barrak’s conduct (at [50]).
Comment
Whilst the facts of this case appear exceptional it does serve as a reminder of the importance of protecting the administration of justice by, as Barratt JA put it:
“eliminating a particular form of influence or interest that, of its nature, might compromise the practitioner’s ability to discharge [his/her primary duty to the Court]” (at [2]).
To posit another scenario which sometimes occurs, imagine that a document drafted by a firm is litigated, in which case the question arises as to whether and in what circumstances the firm’s litigators can act for the client where the contract drafter may be a material witness in the proceeding. This not entirely straightforward scenario appears to be addressed by rule 42(2) of the Legal Profession Conduct Rules 2010 (WA):
42. Practitioner as material witness in client’s case
(1) A practitioner must not act for a client in the hearing of a case in which it is known, or becomes apparent, that the practitioner will be required to give evidence centrally material to the determination of contested issues before the court.
(2) In the circumstances provided for in subrule (1) an associate of the practitioner’s law practice may act for the client if:
(a) in the practitioner’s reasonable opinion there are exceptional circumstances that justify the associate acting; and
(b) the client, having been given an opportunity to obtain independent legal advice concerning the issue, consents to the associate acting.
Two other Rules are set out below, by way of example and contrast:
Vic Professional Conduct and Practice Rules 2005 (Vic)
13.4 A practitioner must not unless exceptional circumstances warrant otherwise in the practitioner’s considered opinion:
13.4.1 appear for a client at any hearing, or
13.4.2 continue to act for a client,
in a case in which it is known, or becomes apparent, that the practitioner will be required to give evidence material to the determination of contested issues before the court.
Australian Solicitors Conduct Rules 2012
27. Solicitor as material witness in client’s case
27.1 In a case in which it is known, or becomes apparent, that a solicitor will be required to give evidence material to the determination of contested issues before the court, the solicitor may not appear as advocate for the client in the hearing.
27.2 In a case in which it is known, or becomes apparent, that a solicitor will be required to give evidence material to the determination of contested issues before the court the solicitor, an associate of the solicitor or a law practice of which the solicitor is a member may act or continue to act for the client unless doing so would prejudice the administration of justice.
Friday, October 17, 2014
Uniform Legal Services Council appointed
Wednesday, October 15, 2014
The practice of Law CAN NOT be licensed by any state/State. (Schware v. Board of Examiners, 353 U.S. 238, 239) The practice of Law is AN OCCUPATION OF COMMON RIGHT! (Sims v. Aherns, 271 S.W. 720 (1925))
Jurisprudentia Menu
THE BAR CARD
AS PER THE UNITED STATES SUPREME COURT; The practice of Law CAN NOT be licensed by any state/State. (Schware v. Board of Examiners, 353 U.S. 238, 239) The practice of Law is AN OCCUPATION OF COMMON RIGHT! (Sims v. Aherns, 271 S.W. 720 (1925))
The "CERTIFICATE" from the State Supreme Court: ONLY authorizes, To practice Law "IN COURTS" as a member of the STATE JUDICIAL BRANCH OF GOVERNMENT.
Can ONLY represent WARDS OF THE COURT, INFANTS,
PERSONS OF UNSOUND MIND (SEE CORPUS JURIS SECUNDUM, VOLUME 7, SECTION 4.)
"CERTIFICATE" IS NOT A LICENSE to practice Law AS AN OCCUPATION, nor to DO BUSINESS AS A LAW FIRM!!!
The "STATE BAR" CARD IS NOT A LICENSE!!! It is a "UNION DUES CARD".
The "BAR" is a "PROFESSIONAL ASSOCIATION." 1. Like the Actors Union, Painters Union, etc. 2. No other association, EVEN DOCTORS, issue their own license. ALL ARE ISSUED BY THE STATE.
It is a NON- GOVERNMENTAL PRIVATE ASSOCIATION. The State Bar is; An Unconstitutional Monopoly.
AN ILLEGAL & CRIMINAL ENTERPRISE; Violates Article 2, Section 1, Separation of Powers clause of the U.S Constitution.
There is NO POWER OR AUTHORITY for joining of Legislative, Judicial, or Executive branches within a state as the BAR is attempting. "BAR" members have invaded all branches of government and are attempting to control de jure governments as agents of a foreign entity! It is quite simple to see that a great fraud and conspiracy has been perpetrated on the people of America. The American Bar is an offshoot from London Lawyers' Guild and was established by people with invasive monopolistic goals in mind. In 1909 they incorporated this TRAITOROUS group in the state of Illinois and had the State Legislature (which was under the control of lawyers) pass an unconstitutional law that only members of this powerful union of lawyers, called the "ABA," could practice law and hold all the key positions in law enforcement and the making of laws. At that time, Illinois became an outlaw state, and for all practical purposes, they seceded from the United States of America. The "BAR ASSOCIATION" then sent organizers to all the other states and explained to the lawyers there how much more profitable and secure it would be for them, as lawyers, to join this union and be protected by its bylaws and cannons. They issued to the lawyers in each state a charter from
the Illinois organization. California joined in 1927 and a few reluctant states and their lawyers waited until the 1930's to join when the treasonous Act became DE FACTO and the Citizen's became captives. Under this system, the lawyers could guarantee prejudged decisions for the privileged class against the lower class. This was all made possible by the AMERICAN BAR ASSOCIATION to favor the right and have unlawfully substituted them in place of Constitutional Laws. The Constitution was written in plain English and the Statutes passed by Congress were also in plain English, with the intent of Congress how each law should be used and not the opinions of various Judges as the codes list. Any normal person can read the Constitution and Statutes and understand them without any trouble. The public in California was shocked to learn that the State Government has no control or jurisdiction over the Bar Association or its members. The state does not accredit the law schools or hold Bar examinations. They do not issue state licenses to LAWYERS. The Bar Association accredits all the law schools, holds their private examinations and selects the students they will accept in their organization and issues them so-called license but keeps the fees for themselves. The Bar is the only one that can punish or disbar a Lawyer. They also select the lawyers that they consider qualified for Judgeships and various other offices in the State. Only the Bar Association, or their designated committees, can remove any of these lawyers from public office. The State Legislature will not change this system as they are also a designated committee of the Bar. On August 21, 1984, Rose Bird, Chief Justice of the California State Supreme Court, another of the Bar Associations Judicial Committee's,
stated in essence, that the Bar should determine the legality of all initiatives before they were allowed to go on the ballot. This is contrary to both State and Federal Constitutions, as well as the Laws of this Nation instituted By and For the People as a Sovereign UNITY of Independent States of We The People, not a fraudulent Corporate entity of Lawyers. This is a tremendous amount of power for a PRIVATE union that is incorporated and headquartered in Illinois to hold over the Citizens of California or any other state. The only recourse is through this initiative process and vote by the people. After the Founding Fathers had formed the Constitution, outlining the laws as to the way our government was to be run, Thomas Jefferson said, in essence, "This proves that plain people, if given the chance, can enact laws and run a government as well as or better than royalty and the blue bloods of Europe." The American people must stop thinking that lawyers are better than they are and can do a better job than they can before the courts of America. Under the Common Law and the Laws of America, no where is it expressly given for anyone to have the power or the right to form a Corporation. "Corporations" are given birth because of ignorance on the part of the American people and are operating under implied consent and power which they have usurped and otherwise stolen from the people. By RIGHT AND LAW THEY HAVE NO POWER, AUTHORITY, OR JURISDICTION, and must be put out of business by the good Citizens of America in their fight for FREEDOM. The U.S. Constitution GUARANTEES to every state in this union a REPUBLICAN FORM of government. Any other form of government is FORBIDDEN. No public officer or
branch of government can be limited to a RULING CLASS of any kind, or the states become ARISTOCRACIES and NOT Republics. Also, the lawyers have made themselves 1st Class Citizens, where many public offices and branches of government are open to lawyers only. All other people are limited to only two branches of government and to only certain offices in those two branches of government, making all people who are non-lawyers into 2nd class subject citizens. When the courts belong to the people, as the United States Constitution REQUIRES, (Article IV, Section 4, we the people, will NEVER rule against themselves.) In these Unconstitutional foreign tribunals "courts" (hoodlum centers), "men" in black dresses, that are Unconstitutional ROBES OF NOBILITY. (Article 1, Section 9 and 10) dispense a perverted ideology, where the people are terrorized by members of the BLACK ROBE CULT (lawyers and lawyer judges in the courtrooms). The legislative branch of government does NOT have the Constitutional Power to issue Court Orders or any other kind of Orders to the people, as a "fiction court" or a "court/corporation for profit and gain" cannot reach parity with a lawful man. ONLY Presidents and Governors have the Constitutional Power to grant PARDONS, but lawyers and lawyer- judges are unconstitutionally granting PARDONS with "immunity from prosecution." Citizens are not permitted to act like people in the courts. The Citizen (2nd class) is told that he does not know how to fill out fancy lawyer forms; that he is not trained in the law; that he does not know court rules and procedures; etc. This is Unconstitutional "lawyer system," only HEARSAY SUBSTITUTES (lawyers)
NOT under oath, have access to the fiction/for profit and gain courts, even though ONLY sworn testimony and evidence can be presented in court. Anything else is "Bill of Attainder," NOT permitted under the U.S. Constitution (Article 1, Sections 9 and 10). The U.S. Constitution does NOT give anyone the right to a lawyer or the right to counsel, or the right to any other HEARSAY SUBSTITUTE. The 6th Amendment is very SPECIFIC, that the accused ONLY has the right to the ASSISTANCE of counsel and this ASSISTANCE of counsel CAN BE ANYONE THE ACCUSED CHOOSES WITHOUT LIMITATION. LAWYERS and LAWYER-JUDGES: Created Unconstitutional "lawyer system" pre-trial "motions" and "Hearings" to have eternal EXTORTIONISTIC litigation's, which is BARRATRY and also is in violation of the U.S. Constitution, and Article 1, as this places defendants in DOUBLE JEOPARDY a hundred times over. Defendants only have a right to A TRIAL, NOT TRIALS. When a criminal is freed on a TECHNICALITY, HE IS FREED BECAUSE OF A FIX and a PAY-OFF, as a defendant can only be freed if found innocent BY A JURY NOT BY ANY "TECHNICALITY." Whenever a lawyer is involved in a case directly or indirectly, as a litigant or assisting in counsel, ALL LAWYER- JUDGES HAVE TO DISQUALIFY THEMSELVES, AS THERE CANNOT BE A CONSTITUTIONAL TRIAL and also there would be a violation of the conflict of interest laws, along with the violation of separation of powers and checks and balances, because "OFFICERS" OF THE COURT ARE ON BOTH SIDES OF THE BENCH. These same LAWYER-JUDGES are awarding or approving LAWYER FEES, directly and
indirectly, amounting to BILLION OF DOLLARS annually, all in violation of conflict of interest laws. As long as there are lawyers, there will never be any law, Constitution or Justice. There will only be MOB RULE, RULE BY A MOB OF LAWYERS. CASE "LAW" IS UNCONSTITUTIONAL: As CASE "LAW" IS ENACTED BY THE JUDICIAL BRANCH OF GOVERNMENT. When a lawyer- judge instructs, directs, or gives orders to a jury, the lawyer-judge is TAMPERING WITH THE JURY. He also tampers with testimony when he orders the answers to be either "Yes" or "No." The lawyer-judge also tampers, fixes, and rigs the trial when he orders anything stricken from the record, or when he "rules" certain evidence and the truth to be inadmissible. This makes the trial and transcript FIXED and RIGGED, because the jury does not hear the REAL TRUTH and ALL THE FACTS. Juries are made into puppets by the lawyers and lawyer- judges. All lawyers are automatically in the judicial branch of government, as they have the Unconstitutional TITLE OF NOBILITY (Article 1, Section 9 and 10), "Officer of the Court." Citizens have to be elected or hired to be in any branch of government, but non-lawyer Citizens are limited to only two of the three branches of government. Lawyers, as 1st class citizens, can be hired or elected to any of the three branches of government. Lawyers, "Officers of the Court," in the Judicial Branch, are Unconstitutionally in two branches of government AT THE SAME TIME whenever they are hired or elected to the executive or legislative branches. This is a violation of the separation of powers, checks and balances, and the conflict of interest laws. District attorneys and State's attorneys have taken over the
Grand Juries FROM the people, where the people are DENIED ACCESS to the Grand Juries when they attempt to present evidence of crimes committed in the courtrooms by the lawyers and lawyer-judges. The U.S. Constitution, being the Supreme Fundamental Law, is not and CANNOT be ambiguous as to be interpreted, or it would be a worthless piece of paper and we would have millions of interpretations (Unconstitutional amendments) instead of the few we have now. That is why all judges and public servants are SWORN TO SUPPORT the U.S. Constitution, NOT interpret it. Under INTERNATIONAL ORDERS: ALL LAWYERS, whether they left law school yesterday or 50 years ago, are EXACTLY THE SAME. All lawyers have to file the same motions and follow the same procedures in using the same Unconstitutional "lawyer system". In probate, the lawyers place themselves in everyone's will and estate. When there are minor children as heirs, the lawyer-judges appoint a lawyer (a child molesting Fagin) for EACH CHILD and, at times, the lawyer fees EXCEED the total amount of the estate. An OUTRAGEOUS amount of TAX "MONEY" is directly and indirectly STOLEN BY LAWYERS. Money that is budgeted to County/City/Borough Boards, School Boards and other local and federal agencies eventually finds its way into the pockets of lawyers, as ALL of these agencies are "TRICKED" and "FORCED" into ETERNAL EXTORTIONISTIC LITIGATION. In the state of Alaska and Hawaii, the BAR ASSOCIATION has mandated that all judges are to be licensed to practice law (e.g. Alaska Constitution, Article IV, Section 4). This license requirement is not found in any other state of the Union. As all licenses to
practice law in the state of Alaska and Hawaii are issued by a judge, what judge is qualified to issue a license to practice law to another judge? As only members of the Bar may be licensed to practice law (e.g. A.S. 08.08.020), Alaska and Hawaii judges are REQUIRED to be members of the BAR and as such, they are prejudiced to do the business of the BAR. If a judge is required to be a member of the BAR, who disqualifies the judge from office if that judge does not pay the dues or violates the rules of the BAR? Every state in the Union (with the exception of Alaska and Hawaii) "prohibits" judges from holding licenses to practice law.
Executrixes’ denial of deceased’s alcoholism without any proper factual foundation results in indemnity costs order
The Australian Professional Liability Blog
Inbox
x
The Australian Professional Liability Blog via google.com
04:17 (9 hours ago)
to me
The Australian Professional Liability Blog
Executrixes’ denial of deceased’s alcoholism without any proper factual foundation results in indemnity costs order
Posted: 14 Oct 2014 10:51 PM PDT
Hartnett v Taylor [2014] VSC 501 was a Part IV claim for testators’ family maintenance. The defendant executrixes said that the plaintiffs’ conduct led to estrangement from the deceased and to the deceased’s alcoholism. The plaintiffs said that the deceased’s alcoholism led to their estrangement, and that is what Sifris J found. The defendant executrixes’ contention was one which was contradicted by their own witness, the deceased’s doctor, who said that the deceased was an alcoholic before the estrangement with the plaintiffs. Sifris J said:
’12 It is in my view clear that the defendants’ evidence and contentions in relation to the deceased’s alcohol consumption and the estrangement from the plaintiffs were made in wilful disregard of known facts and were allegations which ought never have been made. This provides a sufficient basis for an order for indemnity costs notwithstanding that the defendants are not personally liable for such costs.’
Regrettably, the plaintiffs do not appear to have argued the case under s. 18(d) of the Civil Procedure Act 2010. I say ‘regrettably’ because it is desirable that a coherent and easily accessible body of law about the costs consequences of the making of allegations without a proper factual foundation grow up around the new statutory provision.
Then Sifris J denied the second defendant her costs of being separately represented, since there was no need for the two executrixes to have separate representation.
Client obtains Anton Piller order over solicitor’s hard disk in fees dispute
Posted: 14 Oct 2014 05:20 PM PDT
In Ho v Fordyce [2014] NSWSC 1404, there is a dispute between solicitor and client in relation to fees. The client contended that costs agreements relied on by the solicitor were what Rein J described as ‘a recent invention’. Given that the client asserts that there was no costs agreement, presumably the allegation is that someone forged the documents relied on by the solicitor. There is apparently some evidence already before the Court of dodginess. The client applied ex parte for an Anton Piller-like order allowing IT people to march into the solicitor’s office and copy certain contents of the solicitor’s hard disk in order to preserve evidence which may assist in proving the implied fraud. In a rather brief judgment given ex tempore, Rein J granted the application, relying on a decision of the Victorian Supreme Court’s Justice McMillan. The question of the likelihood of privileged material being present on the firm’s computers is not something discussed in the reasons. It may well be dealt with in the order, which is not reproduced in the reasons. I have never heard of any such application having been made or granted before.
Tuesday, October 7, 2014
What does an indemnity costs order actually get you?
The Australian Professional Liability Blog via google.com
04:10 (4 hours ago)
to me
The Australian Professional Liability Blog
What does an indemnity costs order actually get you?
Posted: 06 Oct 2014 07:20 PM PDT
On 3 October 2014, Besanko J decided in Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2014] FCA 1066 that an order of a fellow judge that one party pay the other’s costs on an indemnity basis, which did not specify that the costs were to be assessed by reference to the successful party’s costs agreement with its solicitors, entitled it to costs assessed on that basis.
The Federal Court is therefore a better place to get an indemnity costs order than the Supreme Court because the law in the Supreme Court, as determined by the Costs Judge, is that the beneficiary of an indemnity costs order gets costs assessed according to the same scale as ordinary costs are assessed by reference to, but with an easier road to showing that the costs incurred ought to be paid by the other party at all: ACN 074 971 109 as trustee for the Argo Unit Trust v National Mutual Life Association of Australia Limited [2013] VSC 137.
In the Supreme Court, of course, a special costs order allowing costs to be taxed by reference to the costs agreement may still be sought, and obtained, e.g. Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3) [2012] VSC 399. But that is the exception rather than the default, and one which many trial counsel may not be aware of.
So badly do many trial counsel deal with the question of costs that it really would not be a bad idea if litigants got advice more often than they do from costs lawyers before costs fell to be argued in any case in which there are substantial costs and fault in the costs sense on both sides, or a number of interlocutory costs issues remaining for determination.
Mind you, according to Besanko J, it has long been thus. His Honour pointed to Beach Petroleum NL v Johnson (1995) 57 FCR 119 at 121 (per Von Doussa J) and older cases from other jurisdictions.
This case demonstrates that ultimately what determines questions of costs is always the statutory instrument which provides for them. Increasingly, one jurisdiction’s jurisprudence will not prove persuasive in relation to different statutory regimes.
You are subscribed to email updates from The Australian Professional Liability Blog
To stop receiving these emails, you may unsubscribe now. Email delivery powered by Google
Google Inc., 20 West Kinzie, Chicago IL USA 60610
Friday, October 3, 2014
What Orders Ought Follow the Setting Aside of a Costs Agreement?
The Australian Professional Liability Blog via google.com
05:12 (2 hours ago)
to me
The Australian Professional Liability Blog
What orders ought follow the setting aside of a costs agreement?
Posted: 02 Oct 2014 05:15 PM PDT
BGM v Australian Lawyers Group Pty Ltd [2014] WASC 290 (S) is a decision confined to questions about what ought to follow from a Court coming to a view that a costs agreement ought to be set aside. Three matters are of interest:
1. The Court took the view that it followed as a matter of statutory construction that upon a costs agreement being set aside, bills rendered pursuant to it were of no force and effect, and declined to make a declaration to that effect because it was unnecessary.
2. Though the Court assumed that some form of restitutionary relief would entitle the applicant to repayment of monies paid under such bills, the Court declined to make any such order because no such relief had been pleaded in the originating process.
3. The Court declined an application for costs by the successful applicant for the setting aside of the costs agreement. It did so on the basis that there was a Calderbank offer to accept a sum of money in satisfaction of the lawyers’ claim to fees. The applicant argued that it had succeeded in the application to set aside the costs agreement and that the Calderbank offer should be brought to bear in the subsequent phase of ascertaining the fees against a scale which applied in default of the costs agreement having application. But the Court reserved the question of the costs of the application to set aside the costs agreement pending the finalisation of that second phase.
Thursday, July 24, 2014
Costs of a solicitor’s negligence claim which bombed only on causation; costs of the successful solicitor’s unsuccessful proportionate liability defence
The Australian Professional Liability Blog
Costs of a solicitor’s negligence claim which bombed only on causation; costs of the successful solicitor’s unsuccessful proportionate liability defence
Posted: 23 Jul 2014 12:45 AM PDT
In King v Benecke [2014] NSWSC 957, Mr King alleged that his solicitor was negligent. The solicitor denied everything and lost on all but one issue, namely causation, with the result that the solicitor got judgment and Mr King only Pyrrhic victories.
Mr King argued he should not have to pay all of the solicitor’s costs. Rather, he argued, he should have his costs of the issues on which he succeeded (duty, breach, the proportionate liability defence), which took up most of the case.
Harrison J only acceded to that argument in one respect. The solicitor had alleged that Mr King’s solicitors in the professional negligence suit were themselves concurrent wrongdoers against whom some of any liability which might be established against him ought to be apportioned under the proportionate liability regime. The consequence was that Mr King had to get new solicitors, the plea having put the old ones into a position of conflict between self-interest and duty to Mr King.
The solicitor never adduced any evidence in support of the proportionate liability defence. His Honour found that the man should have his costs of and incidental to it, but otherwise pay the solicitor’s costs of the entire proceeding:
’25 On the discrete issue of Mr Benecke’s proportionate liability defence, Mr King’s written submissions traced the evidentiary background to this issue in great detail. It is presently unnecessary to repeat that material here. Mr King submitted that he should have the costs of this issue, whatever else I may decide with respect to his application as a whole.
26 One of my conclusions on the proportionate liability issue was that as a direct result of being nominated as concurrent wrongdoers, Mr King’s former solicitors and counsel were confronted with an apparent conflict of interest that prevented them from continuing to appear for him. Mr King was therefore forced to retain alternative representation. That caused significant cost, disruption and delay. I referred to this at [726] as follows:
“[726] Those allegations were first pleaded in September 2011, more than two years after the proceedings were commenced. Cheney & Wilson and Mr Kerr were at that time acting for him in relation to these proceedings. As a direct result of being named as concurrent wrongdoers by the defendants, Cheney & Wilson and Mr Kerr were prevented by reason of a conflict of interest from continuing to act. George King was forced to engage new legal representation, causing significant cost, disruption and delay.”
27 I disposed of Mr Benecke’s contentions at [731]:
“[731] George King’s submissions on this issue are unanswerable. Mr Benecke’s contention that George King’s lawyers were somehow at fault fail for a complete want of supporting evidence.”
28 Mr King contended that the proportionate liability allegations were discrete and separable. He succeeded on that issue. Mr King submitted that he should have his costs of defending these allegations as they were never supported by evidence and should never have formed any part of the proceedings. He insisted that such a result should follow whatever the ultimate fate of his costs application generally.
…
57 The issue concerning the proportionate liability defence is more difficult. On balance I consider that Mr Benecke’s failure to lead any evidence in support of the defence indicates that it was always destined to fail. I appreciate that Mr Benecke says that evidence to support it was both difficult to acquire in the first place and only ever likely to emerge, if ever, in the course of the trial in the second place. However, that seems to me to be a forensic risk that necessarily falls at his feet. It was a separate and severable issue upon which Mr Benecke failed and he took the chance that Mr King would be required to incur legal costs to respond to it. In the events that occurred, Mr King’s costs were also significantly increased by the consequent disruption to his preparation occasioned by the need to retain and instruct an entirely different legal team.
58 In the circumstances I consider that Mr Benecke should pay Mr King’s costs of and incidental to that issue.’
Thursday, June 12, 2014
WASCA ON THE KIND OF RECKLESSNESS IN MAKING STATEMENTS WHICH AMOUNTS TO CONDUCT WARRANTING DISCIPLINE
WASCA on the kind of recklessness in making statements which amounts to conduct warrantgin discipline
June 12th, 2014 · Comments (0)
Traditionally, the law of professional discipline has differed from the law of negligence in three profound ways. First, its aim is the protection of the public (though the policy in favour of protecting the reputation of the profession grossly infect the purity of this proposition in most analyses). Secondly, it is about personal wrongdoing. Statute aside, there is no law of attributed liability in contrast to doctrines such as vicarious liability in the law of negligence. And thirdly, simple as opposed to gross negligence was never considered to warrant discipline. Things got messed up by the introduction into disciplinary statutes of a concept of unsatisfactory professional conduct defined in terms identical to the test for simple professional negligence.
Disciplinary tribunals (and, in my experience, disciplinary investigators and prosecutors) seem to lapse from time to time into the language of ‘should have known’ even outside the prosecution of that species of unsatisfactory professional conduct which is defined by reference to the test of simple professional negligence. Two practitioners had to go to two Courts of Appeal to reverse decisions on dishonesty charges which were horribly infected by objective reasoning: Legal Services Commissioner v Brereton [2011] VSCA 241 and Giudice v Legal Practitioners Complaints Committee [2014] WASCA 115. Surprisingly, the former decision did not get a guernsey in the latter. The law of recklessness is authoritatively restated in the three separate judgments in Giudice and I have set the whole lot out below along with some observations about Brereton’s Case.
In Brereton’s case, the Commissioner alleged misappropriation of trust funds. Though the Court of Appeal found that there is doubt about whether it is an essential element of a charge of misappropriation that the conduct was dishonest, the Commissioner had gone to the trouble of alleging a dishonest misappropriation and so had to prove it to succeed. VCAT’s findings were in terms that
‘Given the intermingling of his business interests and his role as a lawyer responsible for trust money, he well knew (or ought to have known) his legal and fiduciary responsibilities to those beneficially entitled to the invested funds, and on whose behalf he and GDK were ostensibly managing those funds. He also well knew (or ought to have known) his obligations to properly account for the trust money.’
The Court of Appeal approved the trial judge’s reversal of VCAT’s conviction of the practitioner for professional misconduct. Tate JA with whom Nettle and Ashley JJA agreed found that VCAT had misconceived the test for dishonesty by making a finding of dishonesty predicated in the alternative not on actual subjective knowledge of the facts by reference to which the conduct could be judged by an ordinary man to be dishonest but predicated on the proposition that he should have known those facts. (Furthermore, her Honour said at [75] et seq, the Commissioner had argued the case in a way which reversed the onus of proof, by saying it was for the practitioner to establish an honest intent.) And the Court refused to remit the matter back to VCAT for a new hearing of the dishonesty charge because the Commissioner had argued his case and lost and had he argued it in the manner which was legally appropriate, the practitioner may well have conducted his case differently. So there is in fact a shadow of the criminal law’s concept of autrefois acquit in disciplinary proceedings which is food for a whole new blog post…
And so it was again in Giudice v Legal Practitioners Complaints Committee where the practitioner was convicted of misconduct constituted by settling a client affidavit knowing it contained a false statement, or reckless to that possibility. The Court reversed WASAT’s conviction of the practitioner on that charge. Once again, the disciplinary prosecutor had nailed its colours to the mast and put the case squarely as a dishonesty case so no finding of conduct warranting discipline based on even gross negligence was possible. Once again, however, the findings were predicated on ‘ought to have knowns’ rather than ‘knowns’ despite the Tribunal purporting in terms to apply a subjective test.
Martin CJ said:
’8 As this court has pointed out5, when a practitioner provides information or makes a statement to a court which is false or misleading, there are (at least) three categories of case in which that conduct will constitute either professional misconduct or unsatisfactory professional conduct.6 First, the practitioner might know that the statement or information is false or misleading. Second, the practitioner might have a reckless disregard to the question of whether the statement or information is false or misleading, and third, the practitioner might be negligent or careless. Because the first two categories will only apply if, assessed subjectively, the practitioner is either aware that the statement or information is false or misleading, or wilfully indifferent to its truth, in the absence of special circumstances one would ordinarily expect a finding of either category of conduct to be characterised as a substantial departure from the standards of conduct reasonably expected of a practitioner such as to constitute professional misconduct, within the taxonomy of the Act. In cases falling within the third category – that of negligence or carelessness – whether or not the practitioner’s conduct is either unsatisfactory professional conduct or professional misconduct will depend upon the nature and degree of negligence or carelessness involved.
…
42 The word ‘reckless’ is used in many different legal contexts. A useful review of those differing contexts is provided by the decision to which the Tribunal referred: Pollard v Commonwealth Director of Public Prosecutions.21 Although the word has been described as ambiguous22 and as ‘imprecise in ordinary parlance’,23 I would prefer to say that the word is capable of bearing different meanings, and that the particular meaning to be applied is to be ascertained from the context in which the word is used.
43 In one context, the word is capable of connoting a particular characterisation of conduct objectively assessed, without regard to the state of mind of the person responsible for that conduct. So, s 60 of the Road Traffic Act 1974 (WA) provides that the offence of reckless driving is committed by wilfully driving a motor vehicle in a manner that is inherently dangerous or that is, having regard to all the circumstances of the case, dangerous to the public or to any person. In that context, the only state of mind which must be proven to establish the offence is to the effect that the driving of the motor vehicle was wilful, and the word ‘reckless’ is used to characterise objectively the degree of risk created by the manner in which the vehicle was driven. The section does not require the prosecution to establish that the driver was aware of the risk which was created, or was wilfully indifferent to that risk. Section 62 of the Road Traffic Act provides that the offence of careless driving is committed by a person who drives a motor vehicle without due care and attention. So, in the context of the Road Traffic Act, the word ‘reckless’ is used to connote driving which creates risks of a particular character and which is, for that reason, more culpable than careless driving.
44 In other legal contexts, the word ‘reckless’ requires that a particular state of mind be subjectively established. In Fidock v Legal Professional Complaints Committee24 this court held that an allegation of reckless disregard of the truth by a legal practitioner could only be made out if it was established that the practitioner’s actual state of mind was that of indifference to the truth of the relevant statement25 or, in the more colourful language of Le Lievre v Gould:26
… not caring in the man’s own heart and conscience whether it was true or false – and that would be wicked indifference and recklessness.
45 The court cited the observation of Bowen LJ in Angus v Clifford that, in this context, not caring did not mean not taking care.
46 In this case the only express finding made by the Tribunal with respect to the practitioner’s state of mind was that it was unlikely that the practitioner was actually aware that the statement in par 20 of the affidavit was false at the time when he settled its terms.27 The Tribunal made no express finding to the effect that at the time the practitioner settled par 20 of the client’s affidavit he was indifferent to its truth or falsity, in the sense that he did not care whether it was true or false. The question posed by the second aspect of the amended ground of appeal is whether such a finding is implicit in the Tribunal’s reasons. Unless such a finding is implicit in the reasons of the Tribunal, it cannot be concluded that the Tribunal correctly addressed and answered the critical question which it was required to answer, having regard to the LPCC’s allegation that the practitioner recklessly disregarded the truth or falsity of par 20 of the client’s affidavit. Such a failure would constitute an error of law and would, in the circumstances of this case, also constitute a substantial miscarriage of justice.
47 I have set out above all relevant portions of the Tribunal’s reasons relating to the issue of reckless disregard. At the commencement of that portion of the reasons, reference is made to two authorities28 in which a subjective approach was taken to the question of ‘reckless disregard’ and the Tribunal expressly acknowledged that a subjective approach was required.
48 However, the process which follows strongly suggests that in fact the Tribunal adopted an objective approach to the question which it was required to resolve.
49 In [70] of its reasons, the Tribunal expresses the obligation which the LPCC had to discharge in order to establish the practitioner’s guilt in objective terms – namely, that the practitioner ‘should have been aware that the statement might be untrue’ rather than in terms of whether the practitioner was aware that the statement might be untrue. In the next paragraph of its reasons [71], the circumstances to which the Tribunal refers are entirely objective. The first sentence of the next par [72] expresses a finding in objective terms – namely, that the practitioner ‘should have considered’ that the words of the affidavit warranted some further inquiry. Significantly omitted is any finding that the practitioner did in fact consider that the words warranted further inquiry but made no such inquiry because he was indifferent to their truth. The last sentence in [72] strongly suggests that the Tribunal adopted an objective approach to the characterisation of the practitioner’s conduct. The Tribunal found that ‘the practitioner was more than careless and showed a culpable indifference as to whether it was true’. The process of reasoning elucidated by that observation appears to involve a conclusion driven by an objective assessment of the practitioner’s conduct, and a characterisation of that conduct as involving a greater degree of culpability than mere carelessness. Put another way, the observation suggests that the Tribunal approached the question of recklessness on the basis that it might be established by careless conduct of a particular quality or character, such that it could be characterised as culpable, rather than by reference to a finding of fact as to the practitioner’s state of mind.
50 The conclusions which I have drawn from this analysis of the Tribunal’s reasons are reinforced by the Tribunal’s conclusion that the practitioner was not guilty of professional misconduct, but only of unsatisfactory professional conduct, because his conduct did not involve a substantial failure to comply with the standards of competence that might be expected. As I have already indicated, that would be a surprising conclusion if the Tribunal had found that the practitioner was wilfully indifferent to the truth or falsity of the paragraph in the affidavit which he settled.
51 The construction which I place upon the portions of the Tribunal’s reasons to which I have referred is reinforced by the portion of the Tribunal’s reasons with respect to penalty which I have set out above. In those reasons, the Tribunal reiterated its finding that the practitioner ‘acted in a way which was more than careless and that he showed a culpable indifference as to whether or not the affidavit was true’.29 As I have already observed, a finding expressed in those terms suggests an objective approach to the characterisation of conduct by reference to the quality or character of the culpability involved, rather than by reference to the practitioner’s actual state of mind.
52 When leave is sought to appeal to this court from the Tribunal, it is not appropriate to scrutinise the reasons of the Tribunal with a fine-tooth comb and an eye keenly attuned to the perception of error.30 I do not exclude the possibility that the Tribunal may have addressed the correct question and in fact determined that the practitioner’s state of mind at the time he settled par 20 of the client’s affidavit was that he did not care whether its terms were true or false, but omitted to express such a finding in its reasons. However, for the reasons I have given, a finding as to the practitioner’s state of mind cannot be extracted from the reasons given by the Tribunal. To the contrary, those reasons strongly suggest that the Tribunal proceeded by way of an objective assessment of the practitioner’s conduct, and a characterisation of the relative culpability of that conduct.
53 As the reasons of the Tribunal do not demonstrate that it addressed and determined the question which had to be determined with respect to the practitioner’s state of mind, it follows that an error of law is revealed which, in the circumstances of this case, if uncorrected, would be the cause of substantial injustice. Leave to appeal should be granted in respect of the second aspect of the amended ground, and that ground should be allowed. The decision of the Tribunal should be set aside and the matter remitted to the Tribunal for further consideration and determination in accordance with the reasons of this court. It is therefore neither necessary nor appropriate to consider the grounds of appeal relating to the penalty imposed by the Tribunal, as the Tribunal’s decision with respect to penalty must necessarily be set aside.
54 In the course of argument on the appeal, counsel for the LPCC suggested that it would have been open to the Tribunal to find the practitioner guilty of unsatisfactory professional conduct on the basis of negligence or carelessness in relation to the settlement of par 20 of the client’s affidavit, because the LPCC’s allegation of more culpable conduct should be taken to incorporate an allegation of less culpable conduct. However, as the LPCC did not propose such a finding at any point during the proceedings before the Tribunal, nor did the Tribunal make such a finding, it would not be appropriate for this court to purport to determine that question in the course of an appeal on a question of law from the decision which the Tribunal did make. If the LPCC move for a finding on that alternative basis when the matter is reconsidered by the Tribunal, it will be a matter for the Tribunal to determine whether such a finding is open, having regard to the manner in which the proceedings were conducted before the Tribunal, and to any potential prejudice which the practitioner might suffer if the LPCC were permitted to, in effect, amend the grounds of its application against the practitioner at that stage in the proceedings.’
Buss JA said:
’80 The respondent alleged in the proceedings before the Tribunal, relevantly, that the appellant ‘recklessly disregarded whether the statement [in par 20 of the client's affidavit] was true or false’.
81 The word ‘reckless’ has a broad connotation. Its meaning may vary in colour and content according to the context in which it is used. See, for example, the range of meanings identified by Abadee J in Pollard v Commonwealth Director of Public Prosecutions (1992) 28 NSWLR 659, 669 – 675.
82 Gummow, Hayne and Heydon JJ noted in Banditt v The Queen [2005] HCA 80; (2005) 224 CLR 262 that the word ‘reckless’ has various uses as a criterion of legal liability [1]. Their Honours gave these illustrations by reference to the civil law [2]:
(a) when ‘reckless’ is used in the application of the principles of the tort of negligence, the standard is objective rather than subjective;
(b) in an action in deceit:
[F]raud is proved when it is shown ‘that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false’ (the formulation is that of Lord Herschell in Derry v Peek(1889) 14 App Cas 337 at 374). But (3) is but an instance of (2) because, as Lord Herschell put it in Derry v Peek((1889) 14 App Cas 337 at 374): ‘[O]ne who makes a statement under such circumstances can have no real belief in the truth of what he states.’ This reasoning is akin to that which supports the evidentiary inference explained by Lord Esher MR as being that one who wilfully shuts his eyes to what would result from further inquiry may be found to know of that result (English and Scottish Mercantile Investment Co Ltd v Brunton[1892] 2 QB 700 at 707-708).
83 A criminal offence may be created by statute with a criterion of intention, knowledge or awareness, recklessness or reckless indifference, or foresight with respect to some act, circumstance or consequence. See La Fontaine v The Queen [1976] HCA 52; (1976) 136 CLR 62, 75 – 76 (Gibbs J); Kural v The Queen [1987] HCA 16; (1987) 162 CLR 502, 504 – 505 (Mason CJ, Deane & Dawson JJ); Banditt [6] – [8].
84 In Pollard, Abadee J considered the proper construction and application of s 178BB of the Crimes Act 1900 (NSW) which provided, relevantly, that a person who, ‘with intent to obtain for himself or another person any money or valuable thing or any financial advantage of any kind whatsoever, makes or publishes, or concurs in making or publishing any statement … which is false or misleading in a material particular and is made with reckless disregard as to whether it is true or is false or misleading in a material particular shall be liable to imprisonment for 5 years’. His Honour held that the word ‘reckless’ in s 178BB, when used in relation to a false statement, means ‘without an honest belief as to its truth’ or, in other words, ‘dishonest’ (674 – 675).
85 In Gillard v The Queen [2014] HCA 16, the appellant was convicted after a trial on three counts of having sexual intercourse with the complainant, without the complainant’s consent, knowing that she was not consenting or being reckless as to her consent, contrary to s 92D of the Crimes Act 1900 (ACT). The appellant was also convicted after a trial on one count of committing an act of indecency in the presence of another complainant, without the complainant’s consent, knowing that she was not consenting or being reckless as to her consent, contrary to s 92J of the Crimes Act. The word ‘reckless’ was not defined for the purposes of s 92D or s 92J. French CJ, Crennan, Bell, Gageler and Keane JJ referred to the joint reasons of Gummow, Hayne and Heydon JJ in Banditt in which their Honours had approved various formulations by the House of Lords in Director of Public Prosecutions v Morgan [1976] AC 182 of the concept of recklessness as a state of mind in the context of the mens rea of the common law offence of rape [26]. These formulations were that the requisite state of mind was ‘at least indifference as to the woman’s consent’ (Lord Cross of Chelsea at 203), ‘the equivalent intention of having intercourse willy-nilly not caring whether the victim consents or no’ (Lord Hailsham of St Marylebone at 215) and ‘without caring whether or not she was a consenting party’ (Lord Edmund-Davies at 225). French CJ, Crennan, Bell, Gageler and Keane JJ said the formulations of the House of Lords, as approved in the joint reasons in Banditt, were ‘equally apt to proof of recklessness’ for the purposes of s 92D and s 92J of the Crimes Act [26].
86 Numerous cases have examined the distinction between recklessness and negligence. In Kane v Dureau [1911] VLR 293, Cussen J said that ‘”recklessness”, which is characterised by indifference to consequences, is to be distinguished in this respect from “negligence”, in which the consequences are as a rule not expected at all’ (297). In Thompson v Copeland [1936] SASR 45, Murray CJ observed that ‘recklessness implies that the possible consequences which may ensue from [a person's] act are adverted to by the actor, but he is indifferent whether those consequences occur or not’ (47 – 48). See also Lederer v Hitchins [1961] WAR 99, 101 (Virtue J).
87 So, on those authorities, to be reckless as distinct from negligent, conduct must be such as to evince a disregard of or an indifference to consequences. A reckless disregard or indifference involves, at least, a subjective element of actual conscious disregard of or indifference to the risks created by the conduct.
88 In Commissioner of Metropolitan Police v Caldwell [1982] AC 341, the House of Lords considered the proper construction and application of s 1 of the Criminal Damage Act 1971 (UK), which provided, relevantly:
(1) A person who without lawful excuse destroys or damages any property belonging to another intending to destroy or damage any such property or being reckless as to whether any such property would be destroyed or damaged shall be guilty of an offence.
(2) A person who without lawful excuse destroys or damages any property, whether belonging to himself or another – (a) intending to destroy or damage any property or being reckless as to whether any property would be destroyed or damaged; and (b) intending by the destruction or damage to endanger the life of another or being reckless as to whether the life of another would be thereby endangered; shall be guilty of an offence.
89 Lord Edmund-Davies (Lord Wilberforce agreeing), who dissented, emphasised that recklessness, in the context of s 1 of the Criminal Damage Act, involved foresight of consequences:
It has therefore to be said that, unlike negligence, which has to be judged objectively, recklessness involves foresight of consequences, combined with an objective judgment of the reasonableness of the risk taken. And recklessness in vacuo is an incomprehensible notion. It must relate to foresight of risk of the particular kind relevant to the charge preferred, which, for the purpose of section 1(2), is the risk of endangering life and nothing other than that.
So, if a defendant says of a particular risk, ‘It never crossed my mind’, a jury could not on those words alone properly convict him of recklessness simply because they considered that the risk ought to have crossed his mind, though his words might well lead to a finding of negligence. But a defendant’s admission that he ‘closed his mind’ to a particular risk could prove fatal, for ‘A person cannot, in any intelligible meaning of the words, close his mind to a risk unless he first realises that there is a risk; and if he realises that there is a risk, that is the end of the matter’: (see Glanville Williams, Textbook of Criminal Law (1978), p 79) (358). (original emphasis)
90 The majority in Caldwell held that, for the purposes of s 1 of the Criminal Damage Act, to decide whether a person had been reckless as to whether harmful consequences of a particular kind would result from his or her act, it was necessary to consider the mind of ‘the ordinary prudent individual’ (354). Lord Diplock (Lord Keith of Kinkel & Lord Roskill agreeing) then said:
In my opinion, a person charged with an offence under section 1(1) of the Criminal Damage Act 1971 is ‘reckless as to whether any such property would be destroyed or damaged’ if (1) he does an act which in fact creates an obvious risk that property will be destroyed or damaged and (2) when he does the act he either has not given any thought to the possibility of there being any such risk or has recognised that there was some risk involved and has nonetheless gone on to do it (354).
91 In R v G [2004] 1 AC 1034, the House of Lords unanimously overruled the majority decision in Caldwell. Lord Bingham of Cornhill (Lord Browne-Wilkinson & Lord Hutton agreeing) stressed that he was not addressing the meaning of ‘reckless’ in any other statutory or common law context than s 1 of the Criminal Damage Act 1971 (UK). After an extensive review of the case law and academic writings concerning the concept of ‘recklessness’ in the criminal law, his Lordship concluded that a person acts recklessly within the meaning of s 1 of the Criminal Damage Act with respect to:
(a) a circumstance, when he or she is aware of a risk that it exists or will exist;
(b) a result, when he or she is aware of a risk that it will occur,
and it is, in the circumstances known to him or her, unreasonable to take the risk [41].
92 In the present case, the word ‘recklessly’ must not be considered in isolation. It is necessary to construe the phrase ‘recklessly disregarded whether the statement [in par 20 of the client's affidavit] was true or false’ as a whole and in the context of the respondent’s assertion, made in professional disciplinary proceedings, that the appellant’s alleged reckless disregard constituted professional misconduct or, as the Tribunal concluded, unsatisfactory professional conduct.
93 The object of disciplinary proceedings against a legal practitioner is the protection of the public and the maintenance of proper professional standards. The maintenance of proper professional standards is conducive to the protection of the public. Disciplinary proceedings are not designed to punish the person who is disciplined even though the decision of the disciplinary tribunal may involve the imposition of sanctions on, and great deprivation to, that person. See New South Wales Bar Association v Evatt [1968] HCA 20; (1968) 117 CLR 177, 183 – 184 (Barwick CJ, Kitto, Taylor, Menzies & Owen JJ); Paradis [25]. The powers that are exercisable by the Tribunal where it has found a legal practitioner guilty of professional misconduct or unsatisfactory professional conduct are set out in s 438 – s 441 of the Act.
94 In my opinion, the allegation that the appellant ‘recklessly disregarded whether the statement [in par 20 of the client's affidavit] was true or false’ comprises two subjective elements.
95 The appellant will have recklessly disregarded whether the statement was true or false if:
(a) the appellant was aware, when he settled the statement in par 20 and caused the affidavit to be sworn, filed and served in the Family Court proceedings, that there was a risk that the statement was untrue or false; and
(b) the appellant consciously disregarded the risk.
96 Those elements are subjective in that they are concerned with the appellant’s actual state of mind.
97 The notion of ‘conscious disregard’ by the appellant of the risk, being the second element, connotes that the appellant wilfully or deliberately shut his eyes to, or excluded from contemplation, the risk that the statement was untrue or false. See PES v The State of Western Australia [2013] WASCA 202 [22] (Buss JA, McLure P & Mazza JA agreeing).
98 If the Tribunal, having found that the statement was false, were to find that the subjective elements had been made out and that the appellant had therefore ‘recklessly disregarded whether the statement was true or false’, those findings would not resolve the matter. It would then be necessary for the Tribunal to consider whether it should be concluded that, in all the circumstances, the appellant had engaged in professional misconduct or, alternatively, unsatisfactory professional conduct.
99 The Tribunal would be bound to consider that issue by reference to all the circumstances, including the relevance and materiality of the statement, the magnitude of the risk, the duties owed by the appellant as a legal practitioner to the court and the intended use (to the appellant’s knowledge) of the affidavit in the Family Court proceedings. All the circumstances, including those I have specified, must be evaluated, on an objective basis, to determine whether the appellant’s actual awareness of the risk and his actual conscious disregard of it in those circumstances require the conclusion that he engaged in professional misconduct or unsatisfactory professional conduct.
100 A legal practitioner owes duties of candour and honesty to the court. Indeed, the duty of a legal practitioner not to mislead the court is at the heart of his or her duty as an officer of the court. See Vogt v Legal Practitioners Complaints Committee [2009] WASCA 202 [61] (Owen, Wheeler & Newnes JJA).
101 In Kyle v Legal Practitioners’ Complaints Committee [1999] WASCA 115; (1999) 21 WAR 56, the appellant was a legal practitioner who had deliberately or knowingly misled the court. It was not a case where a legal practitioner had ‘recklessly’ misled the court. In Kyle, Ipp J said:
It is the essence of a charge of unprofessional conduct involving misleading the court that the practitioner concerned is guilty of having done something dishonourable: see Re Cooke (1889) 5 TLR 407 at 408, per Lord Esher MR, (with whom Fry and Lopes LJJ agreed). The dishonourable quality lies in knowingly misleading the court: Tombling vUniversal Bulb Co Ltd [1951] 2 TLR 289 at 297, per Denning LJ; Vernon v Bosley (No 2) [1997] 3 WLR 683; [1997] 1 All ER 614. A practitioner who knowingly misleads a court will do so dishonestly. Therein lies the unprofessional conduct. There can be no professional misconduct where a practitioner innocently misleads a court; that is, without knowledge that the court is being misled. I accept, therefore, the submissions made by senior counsel that an intention to deceive, or dishonesty, is a necessary element of misleading the court [6].
102 However, as Martin CJ, Newnes and Murphy JJA explained in Fidock v Legal Profession Complaints Committee [2013] WASCA 108, a legal practitioner who misleads the court may engage in professional misconduct even though the practitioner did not knowingly mislead the court [100]. Their Honours gave, as an example, ‘a solicitor [who] swears an affidavit recklessly, careless whether it be true or false in the sense discussed in the authorities on fraudulent misrepresentation’ [100]. In these circumstances, the practitioner’s conduct ‘will generally properly be characterised as professional misconduct’ [100]. Their Honours added that ‘there is no reason in principle why conduct which can be classified as negligent cannot amount to professional misconduct’ [101], and then provided the following example:
Thus, for example, a misleading statement to the court made by a practitioner on a matter of importance to the disposition of the case, where the misstatement is made as a result of gross carelessness, may, depending on all the circumstances, involve a ‘substantial … failure to reach or maintain a reasonable standard of competence and diligence’ and thereby constitute professional misconduct within the meaning of s 403 of the 2008 Act. The importance of practitioners providing reliable information to the court applies with heightened force to a solemn occasion such as the swearing of an affidavit by a solicitor. Its significance is underscored where the affidavit is in support of an ex parte application [102].
103 In Fidock, the Tribunal found that the appellant, who was a legal practitioner, had engaged in professional misconduct in three respects including, relevantly, by swearing misleading affidavits containing misleading statements ‘and [making] those misleading statements recklessly’ [1]. This court criticised the Tribunal’s approach to the issue of ‘recklessness’ by reference to a line of authority, including Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378, which was concerned with the nature of dishonesty and recklessness in the context of accessorial liability for breach of trust [93], [103]. Martin CJ, Newnes and Murphy JJA said ‘the authorities dealing with reckless misstatement would have provided a more pertinent source of guidance to the Tribunal in relation to the misleading affidavits’ [93]. Nevertheless, this court dismissed the appeal. The Tribunal’s findings of primary fact were sufficient to justify its conclusion of professional misconduct. Martin CJ, Newnes and Murphy JJA said:
[T]he effect of the findings is that [the appellant] knew sufficient to indicate that Mrs Argentieri may have a claim to the money and he was thereby reckless or indifferent to the importance of the truth in swearing his affidavits in support of his application for probate. Even if, as the Tribunal found, [the appellant] did not actually know that the affidavits were false, that was sufficient to warrant the finding of professional misconduct, either by reference to Kyle or to s 403(1)(a) of the 2008 Act [106].Section 403(1)(a) of the Act defines ‘professional misconduct’ to include ‘unsatisfactory professional conduct … where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence’.
104 In the present case, I am satisfied that, despite a reference in its reasons to a ‘subjective approach’ being necessary in assessing ‘whether or not an act was done with “reckless disregard”‘ [68], the Tribunal applied the wrong test in deciding that the appellant had recklessly disregarded whether the statement was true or false. The Tribunal did not focus on the appellant’s actual state of mind in relation to the false statement in par 20. This is apparent from a number of passages in the Tribunal’s reasons.
105 In its reasons:
(a) the Tribunal found that in the circumstances ‘the [appellant] ought to have known that the statement was false’ [5];
(b) the Tribunal said ‘the [respondent] must show that in all the circumstances the [appellant] should have been aware that the statement might be untrue’ [70]; and
(c) the Tribunal said the appellant ‘should have considered that the words of the affidavit … warranted at least some further inquiry’ [72].
106 The findings and comments that the appellant ‘ought to have known’, ‘should have been aware’ and ‘should have considered that the words … warranted at least some further inquiry’ connote negligence or carelessness. They are inconsistent with the notion of an actual ‘awareness’ of a risk and an actual ‘conscious disregarding’ of the risk.
107 Also, the Tribunal’s observation, at [71] of its reasons, that ‘the words in paragraph 20 of the affidavit were settled by a very senior practitioner with some 30 years’ experience who knows the importance of the document being complete, accurate and having no potential to mislead’ are concerned with relevant objective circumstances and not the appellant’s actual state of mind. Similarly, the Tribunal’s statement, at [72] of its reasons, that ‘[b]y not making further inquiry, the [appellant] was more than careless and showed a culpable indifference as to whether it was true and to the consequences’ indicates that the Tribunal made an objective appraisal of the appellant’s conduct and the degree of his culpability, rather than undertake an inquiry as to his actual state of mind, in deciding that the appellant had recklessly disregarded whether the statement was true or false.
108 The Tribunal did not in its reasons mention any of the appellant’s evidence that was of direct relevance to his state of mind. Also, the Tribunal did not in its reasons make any express findings of fact as to the appellant’s actual state of mind in the context of the alleged reckless disregard. No implication can properly be made to overcome this omission.
109 At the hearing of the appeal, counsel for the respondent submitted that leave to appeal should be refused and the appeal dismissed because it was open to the Tribunal to find that the appellant had been negligent or careless in his conduct concerning par 20 of the client’s affidavit and because an allegation of less egregious conduct of this kind was subsumed within the respondent’s assertion of reckless disregard. I do not accept that submission. The proceedings before the Tribunal were fought on the basis that the issues as between the appellant and the respondent were whether the appellant had engaged in professional misconduct in that he knew the statement in the affidavit was false or, alternatively, he recklessly disregarded whether the statement was true or false. Negligence or carelessness was not in issue between the parties. The Tribunal did not base its decision on negligence or carelessness. In these circumstances, and in view of the proceedings in this court being in the nature of judicial review, it would not be appropriate for this court to endeavour to resolve the case in the manner submitted on behalf of the respondent.
110 Paragraph (b) of the new ground has been made out. It is in the interests of justice to grant leave to appeal on par (b). The Tribunal made a material error of law. This court is not able to conclude that the error did not affect the Tribunal’s fact finding process or its conclusion that the appellant had engaged in unsatisfactory professional conduct.
Edelman JA said:
’129 The question raised by this ground of appeal was introduced by amendment during the course of oral submissions. The question is whether the Tribunal made an error of law in its application of the test of ‘recklessness’.
130 I agree with the Chief Justice, for the reasons he gives, that the meaning of ‘reckless’ will be coloured by the context in which that term is used. I also agree with the Chief Justice’s reasons at [44] that the context of the allegation of recklessness, involving a complaint against a legal practitioner,32 was an allegation of subjective recklessness in the sense of the practitioner being indifferent to the truth of the statement or ‘not caring in the [practitioner's] own heart and conscience whether it was true or false’.33 As the High Court of Australia, quoting from various judgments in the House of Lords, recently expressed the common law concept of recklessness in criminal law, it involves ‘at least indifference’ or ‘not caring’.34 This was also the sense in which the case was run. The case was opened on the basis that the practitioner knew that the statement was false or was ‘reckless as to whether [the statement] was true’.35
131 The question is whether the Tribunal properly applied this legal test.
132 The Tribunal started with the correct test at [68]. The Tribunal cited pages from the decision in the New South Wales Court of Appeal decision in Pollard v Commonwealth Director of Public Prosecutions.36 At those pages, Abadee J discussed the concept of recklessness at length before concluding that it was a subjective concept.
133 The Tribunal also defined ‘reckless’ from the Shorter Oxford English Dictionary in terms that were concerned with subjectivity: ‘heedless of the consequences of one’s action or of danger’: [69].
134 Despite these references to subjectivity, there are five other matters that suggest that the Tribunal applied a test which was not subjective and which suggest that the Tribunal considered that recklessness could also be proved without making a determination about the actual state of the practitioner’s mind (which it could not).
135 First,there are the remarks by the Tribunal in [70] and [72].
136 At [70], the Tribunal says that the Committee was required to show that ‘in all the circumstances the Practitioner should have been aware that the statement might be untrue and made that statement without satisfying himself that it was true and regardless of the consequences’ (emphasis added).
137 At [72], the Tribunal said that the practitioner ‘should have considered that the words of the affidavit … warranted at least some further inquiry’ (emphasis added).
138 It is possible that the references by the Tribunal to ‘should have been aware’ and ‘should have considered’ might be read as shorthand references to
A matter that any reasonable practitioner would have been aware so that the inference to draw from the circumstances was thatthis practitioner wasaware that the statement might be untrue and made that statement without satisfying himself that it was true and regardless of the consequences.
139 By themselves, it is possible that these references might have been capable of being understood in this way, especially since in ‘appeals’ of this nature a court should not be ‘concerned with looseness in the language … nor with unhappy phrasing’ of the decision-maker, and the reasons for the decision under review should not be ‘construed minutely and finely with an eye keenly attuned to the perception of error’.37
140 However, these references to ‘should have’ must also be considered in the context that the Tribunal made no express conclusion that the practitioner’s state of mind was one of indifference, or not caring, about the truth of par 20 of the affidavit. Further, for the four additional reasons below, the references to ‘should have’ cannot be attributed to mere looseness in language.
141 Secondly, the Tribunal made no reference to any of the practitioner’s evidence that was directly relevant to his state of mind. If the Tribunal’s focus in its reasons was on the subjective state of mind of the practitioner then an important consideration ought to have been the practitioner’s direct evidence about his state of mind.
142 In cross-examination, the practitioner’s evidence was that what ‘was in [his] head’ was that the ‘bail conditions were varied’ to enable ‘supervised contact under an order of a family law magistrate’.38 He reiterated that his understanding at the time he settled the affidavit was that ‘bail was varied enabling [the client] to have supervised contact by order of a Family Court magistrate’.39 The practitioner then said that this was how he had read par 20 of the affidavit at the time.40
143 If accepted by the Tribunal, this evidence from the practitioner might have invited the conclusion that the practitioner, however carelessly, had incorrectly formed the opinion that par 20 was true. More precisely, to put the matter in terms of the burden of proof upon the LPCC and the context in which that burden needed to be satisfied,41 unless the practitioner’s evidence were rejected by the Tribunal, his evidence might have prevented the inference that he was indifferent about whether par 20 was true or false.
144 Thirdly, the issue of recklessness also appears to have been conflated with carelessness in closing submissions of counsel for the respondent (who was not counsel on this appeal). Although the submissions of counsel are not directly relevant to construing the reasons of the Tribunal, those submissions provide relevant context to the Tribunal’s decision.
145 Counsel for the respondent opened the respondent’s case on the basis that actual knowledge of falsity or recklessness as to truth was alleged.42 In dealing with this charge in closing submissions, counsel submitted that the practitioner knew that par 20 of the affidavit was false (which the Tribunal rejected). But then counsel expressed the alternative in terms that ‘he merely believed genuinely that it truly reflected the information he had’ and was ‘a substantial and culpable [sic] failure of professional competence’.43 This alternative is not an expression of subjective recklessness.
146 The manner in which counsel for the LPCC closed the case of the LPCC lends further force to the conclusion of the Chief Justice at [49] that the Tribunal approached the question of recklessness on the basis that it might be established by careless conduct of a particular quality or character.
147 Fourthly,there is an apparent error of comparison in the statement by the Tribunal at [69] that recklessness involves ‘more than carelessness and more than negligence’. Negligence is an objective concept. Recklessness in the context of this case is subjective. Describing recklessness as ‘more than’ negligence suggests that the matters might be comparable on the same scale.
148 The later repetition of this remark by the Tribunal at [72] is also consistent with an objective approach to recklessness. At that paragraph the Tribunal says that the practitioner was ‘more than careless and showed a culpable indifference as to whether [the statement in par 20] was true and to the consequences’. The reference to what the conduct of the practitioner showed suggests an objective characterisation of recklessness rather than the attempt to draw an inference about the state of mind of the practitioner.
149 Fifthly,there is, at least, an incongruity between a finding of recklessness by the Tribunal and the conclusion of the Tribunal that the unsatisfactory professional conduct of the practitioner did not involve a ‘substantial’ failure to reach or maintain a reasonable standard of competence and diligence.
150 Putting aside any issue, which was not argued on this appeal, concerning whether or not a legal characterisation of ‘substantial failure’ was open under s 622 of the 2008 Act, the conclusion of the Tribunal that the conduct of the legal practitioner did not satisfy this test of ‘substantial’ failure suggests that the Tribunal did not consider the conduct to be reckless in a subjective sense.
151 A finding of subjective recklessness would have been an extremely serious finding that a legal practitioner settled an affidavit without caring about the truth of an assertion by his client that ‘my bail conditions were varied so that I may spend time with the children supervised’. The finding would be even more serious in circumstances in which the client had informed the practitioner two months earlier that the client intended to plead guilty to seven charges of indecently dealing with a child under the age of 13 years, and two charges of sexual penetration of a child under the age of 13 years. It is difficult to see how a finding of recklessness, if intended in a subjective sense, could have been considered to involve a failure to reach or maintain a reasonable standard of competence and diligence but not to involve a ‘substantial’ failure.
152 Although there are references to subjectivity in the reasons of the Tribunal, the five matters referred to above illustrate why, when read as a whole, the Tribunal’s reasons determined the question of recklessness of the practitioner without drawing any inference concerning the practitioner’s state of mind that the practitioner did not care whether the statement in par 20 was true or false.
153 For these reasons, I agree with the Chief Justice that the decision of the Tribunal should be set aside and the matter remitted to the Tribunal for further consideration and determination in accordance with the reasons of this Court. I also agree that as the Tribunal’s decision in relation to penalty must be set aside, it is neither necessary nor appropriate to consider the grounds of appeal in relation to the penalty imposed by the Tribunal.’
See also:
◾What, exactly, is a reckless contravention of a conduct rule?
◾VSCA restates practitioners’ duty of honesty to Court
◾Workcover case trust transfer costs solicitor $10,000
◾Insanity not a defence to professional discipline proceedings
◾Disciplinary charges and intentional wrongdoing
Tags: "question of law" · appeals · autrefois acquit · Discipline · Dishonesty · duties regarding witnesses · duty to court · Ethics · fraud · litigation ethics · negligence as disciplinary breach · procedure · prosecutorial failures · prosecutors' duties
Wednesday, June 11, 2014
Prothonotary of the Supreme Court of New South Wales v Hendrick Jan van Es [2014] NSWCA 169 (05 June 2014) (Macfarlan JA; Leeming JA; Sackville AJA)
Supreme Court of New South Wales - Court of Appeal
Prothonotary of the Supreme Court of New South Wales v Hendrick Jan van Es [2014] NSWCA 169 (05 June 2014) (Macfarlan JA; Leeming JA; Sackville AJA)
Catchwords LEGAL PRACTITIONERS - removal from Roll of Local Lawyers - whether fit and proper person to remain on the Roll - whether person of good fame and character - attempt to cheat in Ethics examination - dishonest explanation to Bar Association - breaches of obligations of candour to Bar Association - nature and quality of conduct established present unfitness to practise
SEE MORE LINKS IN BARNET JADE FOR CASES OF LAWYERS REMOVED FROM THE ROLL OF BARRISTERS AND SOLICITORS: https://jade.barnet.com.au/Jade.html#sdi=1&sdp=1
and https://jade.barnet.com.au/Jade.html#sdi=4&sdp=1
Monday, June 9, 2014
Efficacy of lawyers retained in writing through crash n bash agents
The Australian Professional Liability Blog
Efficacy of lawyers retained in writing through crash n bash agents
Posted: 05 Jun 2014 07:02 PM PDT
The Local Court of NSW has released for publication a considered decision about costs in what it treated as a test case, Foot v Burrett [2013] NSWLC 26. A man’s car was damaged. It was taken to panel beaters in Marrickville. He there signed a document in order to get use of a replacement car while his car was being repaired. He did not have to pay until later and it seems to have been anticipated that the repairer would pursue the cost from the allegedly negligent other driver on the man’s behalf. The transaction was something like (but probably not) the man giving the repairer an equitable assignment of his right to damages for loss of the use of his vehicle against the allegedly negligent other driver in return for the free use of a car. The document authorised Boston Commercial Services Pty Ltd to act for the man in recovering the costs of hiring the replacement car from the allegedly negligent driver who allegedly caused the property damage. The document also said:
‘I hereby consent to Boston instructing Dejure Commercial Lawyers as my Solicitor on the record in respect of any proceedings commenced in relation to this retainer and I hereby retain Dejure on the terms and conditions of Boston’s existing retainer with Dejure….’
Proceedings were commenced in the man’s name. Dejure Commercial Lawyers went on the record for him. It is apparent that the man was required by the circumstances of the litigation to have an involvement in it. The other driver lost. He was ordered to pay costs. He invoked the indemnity principle, saying that the man had no liability to pay Dejure Commercial Lawyers’ costs and so could not recover a partial indemnity against any such liability in the form of party-party costs. The Court, treating the question as a test case, declined to accept that argument. The decision casts doubt on the correctness in law of positions adopted by various legal disciplinary bodies as to the impropriety of lawyers accepting instructions from interested third parties in writing obtained from the agent. The Court seemed a lot less perturbed by this mode of retainer than the Victorian Legal Services Commissioner tends to be, saying helpfully:
‘The evidence available to the Court is supportive of the existence of a retainer. The conduct of Mr Foot in providing a statement to the Court and referring to information shown to him by his solicitors is conduct that is consistent with the existence of a retainer. Mr Foot also signs an authority giving consent to Boston to act as his agent in instructing Dejure Commercial Lawyers. As a matter of agency law Dejure Commercial Lawyers would be entitled to seek payment of their costs directly from the plaintiff. Even if the Court were to assume that there was no written costs agreement between Mr Foot and Dejure Commercial Lawyers it would be open for Dejure Commercial Lawyers to seek payment on a quantum meruit basis from Mr Foot given his knowledge and acceptance of the benefit provided by the lawyers acting on his behalf.
Accordingly, the Court is satisfied that the indemnity principle is not infringed. Mr Foot is entitled to an award of costs. The Court will allow costs on the issue fee and service fee of the claim in the sum of $125.00 together with legal costs at the [maximum sum allowable in view of the fact that the matter was a small claim] being the sum of $662.20.’
Is solicitor-director of ILP which acted for him to be treated as self-represented?
Posted: 05 Jun 2014 06:17 PM PDT
A NSW solicitor was partially successful in a defamation suit. But for the circumstance that he had retained an incorporated legal practice with which he was associated and for part of the time the director and the file handler, the Court was willing to order the defendant to pay his costs on an indemnity basis. In respect of the period in which the solicitor was — the fictions of corporations law aside — substantially self-represented, his costs were ordered to be assessed on the ordinary basis. What McCallum J said in McMahon v John Fairfax Publications Pty Ltd (No 8) [2014] NSWSC 673 is:
‘Ardent Legal Pty Ltd
There is a further issue of some complexity raised by Mr McMahon’s application. It relates to the fact that he is a solicitor and has, for at least part of the case, acted for himself.
At all times, the solicitor on the record for Mr McMahon has been a solicitor from Ardent Legal Pty Ltd. That company was incorporated on 2 July 2007. It has been known by the name Ardent Legal Pty Ltd since 9 October 2007, a date which happens to fall between the publication of the two matters complained of. Mr McMahon’s wife has been a director since the company’s inception.
The evidence in the proceedings included an employment contract dated 15 October 2007 between Mr McMahon and Ardent Legal. Under that contract, Mr McMahon is entitled to a fixed annual salary of $52,000. However, the contract also provides for fee sharing in the event that he reaches an annual target of $170,040 of professional fees “rendered and collected”. Accordingly, he has a personal interest in seeing the firm he retained charge and recover higher fees. Since 1 November 2010, Mr McMahon has also been a director of the company. As at 17 March 2011, its sole shareholder was Mr McMahon’s wife (exhibit 29).
The proceedings were commenced by statement of claim filed on 28 April 2008. The statement of claim identified Mr Quah-Smith of Ardent Legal as the solicitor for the plaintiff. On 28 April 2011, a notice of change of solicitor was filed in the following (quaint) terms:
Bryan Francis McMahon, plaintiff, has appointed Bryan Francis McMahon of Ardent Legal Pty Ltd to act as the plaintiff’s solicitor in these proceedings in the place of Gordon Quah-Smith of Ardent Legal Pty Ltd.
From that date until 11 December 2011, Mr McMahon was the plaintiff, the solicitor on the record for the plaintiff as an employee of Ardent Legal and a director of that company, the other director and sole shareholder being his wife.
On 11 December 2011, a further notice of change of solicitor was filed re-appointing Mr Quah-Smith in place of Mr McMahon as Mr McMahon’s solicitor.
The defendants submit that, in the circumstances, Mr McMahon is not entitled to any costs “in respect of his own conduct of the proceedings”. That was said to be so for two reasons. First, it was submitted that to award such costs in the present case would entail a breach of the indemnity principle. Secondly, it was submitted that Mr McMahon is a solicitor litigant and that the principles relating to such litigants preclude him from recovering the costs of representing himself.
The indemnity principle
The indemnity principle holds that the sole purpose of a costs order is to indemnify the successful party. If the successful party is under no legal obligation to pay lawyers fees, no amount is necessary to meet that purpose. In that event there can be no basis for making an order for costs (other than disbursements).
The defendants submitted that, on the evidence, Mr McMahon has no obligation to pay Ardent Legal in respect of the legal services he performed for himself as an employee of the firm. It was further submitted that, in the absence of any liability to pay any such costs, a costs order in Mr McMahon’s favour that extends to the costs of his own professional services would entail a breach of the indemnity principle.
It may be accepted, and indeed appeared to be common ground, that the evidence does not establish one way or the other what obligation (if any) Mr McMahon has to pay Ardent Legal in respect of the work either he or Mr Quah-Smith performed on this case.
Mr McMahon submitted that the indemnity principle allows the recovery of costs in all cases where there exists a liability between lawyer and client in respect of costs, even if the prospect of the client discharging that liability is remote. It was submitted that, unless there was an agreement with the solicitors that the client would not be liable for costs, recovery is allowed in accordance with the decision in Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 495. Mr McMahon noted that the decision in Adams has been applied in a number of decisions in Australia.
On that basis, Mr McMahon submitted that the defendants bear the onus of establishing the existence of an agreement exculpating him from any liability to Ardent Legal. It was further submitted (with some ingenuity) that “of course there was no such agreement”, since it would make no sense to enter into such an agreement and the Court would accordingly be reluctant to infer its existence. That is a rhetorical submission which hardly proves the existence or non-existence of any fact.
The defendants relied on an answer given by Mr McMahon in evidence to the effect that his time recorded in these proceedings is recorded as “non-chargeable time”.
The defendants also pointed to the likely existence of an agreement exculpating Mr McMahon from any costs (or at least the absence of any liability to pay costs to Ardent Legal) by reference to time costing records in MFI 11. As the reference suggests, that is a document that has only been marked for identification. It is not in evidence. The defendants asserted in their written submissions that they tender it on the costs issue but I had by that point determined that the costs argument would proceed on written submissions. The simple fact is that the document is not before the Court. For the reasons that follow, I do not think it is necessary to afford any further opportunity to tender that document.
As noted in Mr McMahon’s submissions in reply, assuming the position is as he said (that the firm’s time records record time spent on this matter as non-chargeable), that is hardly determinative as to the existence of any obligation he may have to pay Ardent Legal. Equally non-probative, conversely, was Mr McMahon’s assertion in the same submissions that Mr Quah-Smith has recorded his time and that “Ardent Legal intends to bill for it”. Having regard to the corporate details, that appears to amount to an assertion that Mr McMahon has instructed his counsel, for the purposes of a costs application, that he has decided to bill himself for Mr Quah-Smith’s time (or that his wife has said she intends to do so). The submission is that the whole amount should be recoverable against the defendants whether or not Mr McMahon has any intention or ability to pay such a bill.
There is accordingly a measure of artificiality in treating this as an ordinary application of the indemnity principle. Mr McMahon knows whether or not he has any present liability to Ardent Legal. Further, he appears to be in a position to control or influence the quantum of any future liability. The determination of those issues, which are potentially of considerable significance in the assessment of costs, should not be left to speculation or inference based on inadequate evidence. It is not, in my view, an issue which should rest on the defendants’ failure to discharge an alleged onus of proof. Mr McMahon is an officer of the Court. Whatever the authorities say about the indemnity rule, the Uniform Civil Procedure Rules expressly assume that indemnity costs, at least, are awarded to indemnify a party in respect of costs in fact incurred (see r 42.5(b)). Assuming the corporate structure is being respected, if Mr McMahon has no liability to Ardent Legal, the allowance of those costs would be a windfall to him rather than an indemnity.
Solicitor litigants and the Chorley Rule
That leads me to the second issue raised by the defendants, which relates to the contention that Mr McMahon was at all times a litigant in person. There is a measure of tension between that and the first point since, to the extent that he was, he has no need of any indemnity against costs payable to another.
The defendants acknowledge that a litigant in person who is a solicitor can, in some circumstances, recover fees for representing himself. They submit, however, that that cannot be allowed in the present case. They relied on the fact that it was an aspect of Mr McMahon’s special damages claim that his new firm had the capacity to do the lost Lumley work and that the firm had not filled the gap left by the loss of that work. It was submitted that, since Mr McMahon had the capacity to attend to his own case, he is not entitled to recover for that time because, in acting for himself, he has not lost the opportunity to do any other paying client work.
A threshold issue is whether Mr McMahon is properly to be regarded as a “solicitor litigant” (that is, a litigant who, being a solicitor, represents himself in the proceedings). Mr McMahon submitted that he is not a solicitor litigant since he was represented at all times by Ardent Legal. He noted that the law has been “tolerably clear” since Salomon v Salomon & Co [1897] AC 22 that a company is a separate legal entity, even as against its own members.
The defendants submitted that Mr McMahon should be regarded as a solicitor litigant notwithstanding the legal structure through which he operated. They relied upon the decision of Brereton J in McIlraith v Ilkin & Anor (Costs) [2007] NSWSC 1052. In that case, there was an issue as to whether a solicitor litigant was entitled to profit costs for work done by himself. His Honour said (at [11]):
Strictly speaking, Mr Ilkin did not act for himself; a solicitor corporation of which he is the director was the solicitor. However, I have attributed no significance to this distinction, and proceed on the basis that Mr Ilkin is to be regarded as having acted as his own solicitor.
Mr McMahon submitted that it is not clear from the judgment whether that case is on all fours with the present. It is at least relevant in holding that, in considering costs claimed by a solicitor plaintiff who has appeared in his own cause, it is appropriate to lift the corporate veil. There is an obvious public interest in doing so.
However, there appear to be two significant differences between McIlraith and the present case. The first is that the solicitor in McIlraith appears to have been the only director of the solicitor corporation, whereas Mr McMahon and his wife are each directors. I should not assume that Mr McMahon’s wife had no autonomy in that role. The second is the fact that, in the present case, another employed solicitor was the solicitor on the record for most of the proceedings, albeit possibly under Mr McMahon’s control (if Mr McMahon was the principal of the firm, as its origins would suggest).
I have concluded that professional services provided by Mr McMahon to himself should be treated as work undertaken by a solicitor litigant, while services provided by Mr Quah-Smith should be regarded as having been provided by the separate corporate entity, Ardent Legal.
Accordingly, as to professional services provided by Mr McMahon to himself, it is necessary to consider the defendants’ submissions concerning the “Chorley rule”. The general rule is that a litigant appearing in person is not entitled to recover from the unsuccessful party any compensation for time spent preparing and conducting the case.
In England in 1884, a rule of practice was recognised to operate as an exception to that general rule, providing that a self-represented solicitor is entitled to professional costs. It is known as the Chorley rule or the Chorley exception after the decision in which it was unequivocally recognised, London Scottish Benefit Society v Chorley (1884) 13 QBD 872. In that decision it was explained that, according to the authorities establishing the rule, a solicitor litigant:
does not recover such costs in such circumstances in the capacity of a solicitor, but because, he happening to be a solicitor, his costs are able to be quantified by the Court and its officers.
In 1976, the High Court held that the Chorley rule applies in Australia to allow a solicitor who acts for himself in litigation to recover his professional costs: Guss v Veenhuizen (No 2) (1976) 136 CLR 47.
The defendants’ submissions noted a series of subsequent decisions in which doubts have been expressed about the continuing appropriateness of the rule. However, as cogently explained by Brereton J in McIlwraith, since the High Court has authoritatively endorsed it, it is not open to this Court to discard it: see McIlwraith at [12] to [26].
The defendants submitted, however, that the Chorley rule is properly characterised as allowing an indemnity (in the case of solicitor litigants) against “opportunity cost” rather than the direct cost of the solicitor’s professional time, citing Atlas v Kalyk [2001] NSWCA 10 per Handley JA at [9], Meagher and Sheller JJA agreeing at [13] and [14] respectively. It is appropriate to consider the whole of the relevant passage:
It might be said, with respect, that although solicitors representing themselves in litigation have no need of any indemnity against professional costs paid or payable to another practitioner, there is still scope for the indemnity principle. Such solicitors will have spent time and trouble representing themselves and, to that extent, they will have lost the opportunity of using that time doing professional work for other clients and being remunerated accordingly. The indemnity in the case of solicitor litigants is, therefore, against the opportunity cost rather than the direct cost of their professional time spent on their own case.
The defendants relied upon the fact that, in the proceedings before me, Mr McMahon gave evidence (in support of his claim for special damages) that as a result of the publication of the matters complained of he had lost the Lumley work and had been unable to replace it. Specifically, he said that he only had enough work to fill approximately 20 hours per week (T344.15 – 49). On that basis, the defendants argued that, by working on his own case, Mr McMahon did not lose any real opportunity of doing other paying work (since he would not have had a full load of other paying work in any event).
Mr McMahon submitted that that is a selective statement of the rationale for the Chorley rule which does not reflect the principle approved by the High Court in Guss. Regrettably I feel compelled, if not bound, to accept that submission. In Khera v Jones [2006] NSWCA 85, the Court of Appeal refused leave to appeal in a case in which it was argued that there should be an exception to the Chorley rule in the case of an unemployed solicitor who was arguing the case in his spare time: Khera v Jones [2006] NSWCA 85. Although a decision to refuse leave does not stand as binding authority, the Court’s reasons provide a clear statement of the present law.
The Chorley rule did not emerge unscathed. The Court said (at [3]):
If the “rule of practice” deserves continuing application, the present case is a most undeserving applicant for inclusion. Indeed, it casts further doubt on the sustainability of the Chorley rule.
Had the issue been “uncluttered by authority”, the Court would have favoured the approach of the Full Court of the Supreme Court of Western Australia in Dobree v Hoffman (1996) 18 WAR 36 in which the Chorley rule was abandoned. However, the Court concluded, following the decision in Atlas v Kalyk, that the decision in Guss is binding, reiterating the High Court’s admonition that it is for that Court alone to determine whether one of its previous decisions is to be departed from or overruled: see Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at 403.
The rationale for the Chorley rule explained in Guss is, quite simply, that unlike the case of an ordinary layman, work done by a solicitor can be quantified on a taxation of costs: at 52.6. Neither the appropriateness of the rule nor the untested assumption that work done by “ordinary laymen” cannot be quantified appears to have been in dispute. The decision turned on differing views as to the significance of the fact that, due to an error in the registry, the particular solicitor’s name had not been entered in the Register of Practitioners of the High Court, raising an issue as to whether his costs could indeed be “quantified on a taxation” in accordance with the rules of court. The case accordingly did not afford the occasion for a particularly satisfactory analysis of the competing considerations for exempting people who happen to be solicitors from the general rule that a litigant who represents himself cannot recover compensation for the time spent doing so.
Ultimately, however, that is the authority that binds me. It follows, in my view, that if Mr McMahon is properly characterised as a solicitor litigant, he is entitled to the benefit of the Chorley rule notwithstanding his own evidence suggesting that he was able to act for himself during what would otherwise have been spare time. As already explained, I am of the view that Mr McMahon is to be regarded as a solicitor litigant as to those legal services provided by himself.
It remains to consider the significance of those considerations in the context of the application for indemnity costs under s 40(2) of the Defamation Act. Under an assessment on the ordinary basis, “party/party” costs are assessed by determining appropriate fair and reasonable costs: see ss 364 and 365 of the Legal Profession Act 2004. However, where party/party costs are assessed on an indemnity basis, the assessor is to allow all costs other than those that appear to have been unreasonably incurred or appear to be of an unreasonable amount: s 364(4) of the Legal Profession Act r 42.5 of the Uniform Civil Procedure Rules 2005.
The position is complicated by the fact that the evidence is inconclusive as to whether Mr McMahon has any liability to Ardent Legal.
Conclusion
I have concluded that, as to professional services provided to Mr McMahon by himself, the interests of justice require that the costs of those services be awarded on the ordinary basis, notwithstanding my conclusion that the defendant unreasonably failed to make a settlement offer so as to attract the sanction of s 40(2) of the Defamation Act. That is because there is a clear risk that a solicitor acting in his own cause will not bring to bear the impartiality required to serve the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in the proceedings. I consider it appropriate that those costs be subjected to the undemanding astriction of having to be fair and reasonable.
As to professional services provided to Mr McMahon by others including Mr Quah-Smith, those costs should be awarded on an indemnity basis. In the event that those costs are not agreed and are required to be assessed, the assessment should be conducted on the basis that it remains for Mr McMahon to establish that he has a liability to Ardent Legal for such costs. It would be open to the costs assessor under s 358 of the Legal Profession Act to require Mr McMahon to produce such documents or written information as the costs assessor sees fit in order to determine that issue.
Disbursements should be awarded on an indemnity basis.’
Subscribe to:
Posts (Atom)