Underachieving the overarching purpose

Michael O’Brien of Aitken Partners has referred me to a scorching judgment delivered by Justice Reeves in the Federal Court in Brisbane last week – Superior IP International Pty Ltd v Ahearn Fox Patent and Trade Mark Attorneys [2012] FCA 282.

The patent attorneys had served a statutory demand for $10,706 on their former client. The client asserted a genuine dispute under s 459G of the Corporations Act and ultimately succeeded in having the stat demand set aside. This outcome cost the parties a combined total of approximately 550 pages of affidavit material and looks set to cost someone (unlikely to be the parties themselves) legal costs of more than twice the actual amount in dispute.

The judgment refers to the Civil Dispute Resolution Act extensively and takes both parties’ lawyers to task for their apparent ignorance of it and related principles arising from the Federal Court Act and ethics generally. (It will be recalled that the Civil Dispute Resolution Act is the federal cousin of Victoria’s Civil Procedure Act).

Some tasters from the reasons –

….

7. The hearing lasted a full day, a large part of which was taken up with objections to the voluminous affidavit material described above. In keeping with their bellicose approach thus far, when I began to hear those objections, I discovered that there had been no discussion between the two lawyers to attempt to resolve any of them and thereby avoid both their clients’ and the Court’s resources being wasted on that exercise. To compound this situation even further, during the hearing of those objections it emerged, incredible as it may sound, that neither lawyer appeared to have a copy of the Federal Court Rules 2011 or the Evidence Act 1995 (Cth) with him in court. Thus, neither of them could tell me which section or rule he was relying upon to make particular objections.

8. The final travesty came at the end of the day’s hearing when, during submissions in reply, the lawyer for Superior IP sought leave to rely upon a large amount of additional material that he had not put forward earlier. When I say “final travesty”, I should add that there was a number of other less significant defaults on both sides that I have failed to mention (above) in the interests of brevity.

9. It hardly needs to be said that what I have just described is the absolute antithesis of the overarching purpose of civil practice and procedure set out in s 37M of the FCA Act, viz the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. It is not overstating the matter to observe that this is the sort of conduct that brings the legal profession into disrepute, that significantly undermines the efficient disposal of civil litigation and that has the potential to erode public confidence in the administration of justice in this country. I therefore propose to return to this matter when I come to consider the question of costs at the conclusion of these reasons. [my emphasis added.]

…..

46. … since an obvious conflict is likely to arise between the interests of the clients and that of their respective lawyers on [the issue of costs of this proceding], I consider I should make the following directions:

1.That each of the two lawyers concerned is to provide a copy of these reasons to his respective client and advise it to seek independent legal advice on the question of the costs of these proceedings.

2. That the two lawyers concerned be joined as parties to these proceedings for the limited purpose of determining the question of the costs of these proceedings.

47. Finally, I intend to direct the Registrar to provide a copy of these reasons to the Queensland Law Society, the Bar Association of Queensland and the Legal Services Commission, so that those bodies may take such action as they consider appropriate in relation to the conduct of the two lawyers concerned.

Ouch!

Advocates’ immunity revisited and regretted in the Supreme Court

You might have noticed in recent weeks lawyers’ immunity from suit getting some renewed attention – first in the Victorian Supreme Court in Goddard Elliott v Fritsch [2012] VSC 87 and then in resulting media reports such as this one in The Sydney Morning Herald.

Justice Bell’s trial division judgment was handed down a fortnight ago. It runs to 321 pages but mercifully includes a summary and a conclusion which are both succinct and helpful, plus a three(!) page table of contents.  Apart from advocates’ immunity, the judgment deals with apportionable liability, the rule in Jones v Dunkel, loss of opportunity damages, the allocation of responsibility and liability between a client’s solicitors on one hand and his barristers on the other, issues arising from acting for a mentally ill client and how ‘robust’ lawyers can and should be in giving advice in relation to settlements.

I plan to look at some aspects of the judgment in a series of brief posts over coming weeks.

Let’s start off today with the facts as found in the Supreme Court.

Paul Fritsch was mentally ill from the outset of his family law litigation. His lawyers knew this. The solicitors had two years to prepare the case but “inexcusably” allowed it to drift such that, at the commencement of the hearing, a three-day adjournment was required to fill the preparatory gaps. This placed enormous pressure on a fragile Mr Fritsch and his legal and accounting team. Then, as the case was about to resume after that adjournment, Mr Fritsch settled at the door of the Family Court. The settlement’s terms were overly generous to the former Mrs Fritsch to the tune of approximately $900,000. Mr Fritsch soon came to regret the settlement.

Mr Fritsch’s solicitors subsequently sued him in the Supreme Court for outstanding fees of almost $104,000. He counterclaimed against his solicitors, his silk and his senior junior plus the accountant the solicitors had retained to assist in preparation of the Family Court case.

The Supreme Court case ran 25 days.

For today’s purposes let’s fast forward to the bottom lines.

The two barristers each settled with Mr Fritsch. The judgment records that they separately agreed to pay $90,000 towards his costs. They also agreed to waive the outstanding balance of their fees which totalled $35,000. The accountant also settled. He paid $60,000 towards Mr Fritsch’s costs (but successfully maintained his claim against the solicitors for his outstanding fees of $14,000.)  The barristers and accountant then all remained nominal parties to the litigation for the purposes only of liability apportionment.

But the solicitors fought on. They were ostensibly successful but the outcome is unlikely to be one they will boast about to prospective clients.

The court found that the lawyers were all concurrent wrongdoers. Mr Fritsch has suffered a lost opportunity to run and/or settle his case on a better basis.  The solicitors were found to be responsible for 75% of that loss (ie $675,000) and the two barristers jointly liable for the balance.

But now the kicker for which the case has received media attention. Bell J found that he was bound by authority to conclude that advocates’ immunity supplied a complete defence to the solicitors. Bell J (at para 1145) describes this as “a conclusion to which I am driven by binding authorities and find deeply troubling”.

And that wasn’t all. The solicitors’ claim for its outstanding bill was upheld against Mr Fritsch.

 

Next post –

Bell J’s thoughts on how the rule inJones v Dunkel applies to the unexplained failure of one defendant to call evidence from another defendant within the context of apportionable liability.

Ethics and the uncertain world of costs orders against lawyers personally

I’m fresh back from delivering a presentation tonight on ethics and costs orders against lawyers.

There was no seminar paper but I made extensive reference to three cases involving lawyers behaving badly in court.

I promised attendees I’d post details of the cases and some related material on this blog.

The ‘how-not-to-cross-examine’ case is Rees v Bailey Aluminium Products Pty Ltd (2008) 21 VR 478; [2008] VSCA 244; BC200810744

The plaintiff did not ask for costs against the defendant’s errant silk personally even though Court of Appeal found “the predominant cause of the mistrial was the conduct of senior counsel for [the defendant]” and the 12 day jury trial had become a “fiasco”. See the costs decision at Rees v Bailey Aluminium Products Pty Ltd (2009) 21 VR 478; [2009] VSCA 96; BC200903853.

See Justinian’s account of the case here.

The ‘how-not-to-address-a-jury’ case is Baulch v  Lyndoch Warrnabool Inc (2010) 27 VR 1; [2010] VSCA 30 BC201001361.  A differently constituted Court of Appeal reviewed the performance of the same silk who attracted the Court of Appeal’s ire in Rees.  The time the crit included terms like “egregious” “unfair” and “having acted with a deliberate disregard of a fundamental rule of fairness.” The costs decision is at Baulch v Lyndoch Warrnambool Inc (No 2) — [2010] VSCA 53; BC201001361. Once more there was no costs order against the silk.

Justinian’s account of the case is here.

Costs were awarded against a barrister (no, not that silk this time) and his instructing solicitor in Apollo169 Management Pty Ltd v Pinefield Nominees Pty Ltd [2010] VSC 276 despite the court’s criticisms of their performance being less strident than in Rees   and Baulch. See also my case note on Apollo posted 23 February 2012.

The  Civil Procedure Act recently celebrated its first birthday. It postdates each of these cases but might now provide an even clearer line of attack against lawyers personally for wasted costs in similar cases.