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.

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.

I am speaking on ethics at a seminar on at Leo Cussen next week. In preparation I have dusted off a recent(ish) case in which a Victorian barrister and his instructor were both pinged for indemnity costs as a consequence of an ethical transgression.

Apollo 169 Management Pty Ltd v Pinefield Nominees Pty Ltd [2010] VSC 475

Apollo sued Pinefield on the basis of estoppels and misleading or deceptive conduct said to have arisen from particular conversations.  The allegations were set out in the original statement of claim. After day 1 of the trial the statement of claim was amended but the allegations about the conversations stood.

At trial, nothing was said about the conversations in the plaintiff’s opening. Then no evidence was led about them in evidence-in-chief. In cross-examination Apollo’s key witness agreed that he did not meet either of the other parties to those alleged conversations until well after those conversations were said in the statement of claim to have taken place. This concession made Apollo’s case against Pinefield chronologically untenable.

This caused the judge to ask of the plaintiff’s barrister ‘what is left then of Apollo’s case against Pinefield?’

‘There is nothing left against Pinefield,” answered the plaintiff’s barrister.

Immediately following this concession Apollo’s claim against Pinefield was dismissed.

Costs application against the plaintiff’s lawyers

Pinefield sought its costs pursuant to RSC 63.23(1) and (7) against the plaintiff, the plaintiff’s solicitor and the plaintiff’s barrister. It was successful against all three.

The judgment at  [2010] VSC 475 deals with only the costs application. In her survey some of the relevant authorities Emerton J made the following points:

• “I do not consider that the words “failure to act with reasonable competence and expedition” requires findings of gross negligence” (para 30).
• There is a line of cases to the effect ‘it is unwise for the court…to treat the pursuit of hopeless cases as a demonstration of incompetence by the lawyers presenting that case.’ In contrast there is a Queensland case to the effect “if the case is plainly unarguable it is improper [of lawyers] to argue it”.
• Emerton J concluded (para 43) that it was unnecessary for her to resolve the tension between these authorities because on either approach the case before her justified an order for indemnity costs against both the solicitor and the barrister. This was because when the barrister opened the plaintiff’s case he knew that the “very recently amended” pleading was false and could not be supported by any evidence. “The plaintiff’s legal representatives knew that the case was not just hopeless – they knew it to be without foundation.” She concluded that in choosing to persist with the claims on behalf of the plaintiff in the “faint hope” that relevant evidence in support of that claim might emerge in cross-examination the barrister had failed to act “with reasonable competence and expedition”.

The soli

The judge found that there was no difference between the position of the barrister and his instructing solicitors. “[The solicitor] too must have known the pleading to be false. A solicitor does not abdicate his or her professional responsibility once Counsel becomes involved” (para 48).

“[The barrister and the solicitor] allowed a pleading which they knew to be false to stand. This constituted a dereliction of their duty to the court.”

 Legal professional privilege

The court noted that both of the plaintiff’s lawyers were constrained in the evidence they could present in their own defence by the plaintiff’s refusal to waive legal professional privilege as to the instructions received and advice given by those lawyers. “…the court should only make an order requiring the legal representative to pay costs if satisfied that there is nothing the legal representative could have said, if unconstrained, to resist the order and that it is in all the circumstances fair to make the order the practitioner must have the benefit of any doubt that could be raised in the mind of the court” (para 54).

Upshot

Ultimately the unsuccessful plaintiff was itself ordered to pay costs on an indemnity basis from the date of a false interlocutory affidavit sworn by the plaintiff’s principal while the lawyers were each ordered to pay indemnity costs from the second day of the trial until the conclusion of the trial three days later. (It was on day 2 of the trial that amendments were made to the statement of claim but allegations which the lawyers should have recognised as being unsustainable were allowed to stand).

The lessons to be learned

This case does not appear to make any new law and, indeed, stops at the fork in the road offered by the two contrasting lines of authorities. I  noted it for two reasons.

Firstly, it provides a handy, current yardstick in answer to the often-asked “Can’t we get costs from the other side’s lawyers personally?”

On the back foot, it is a warning to both barristers and solicitors against persevering with flawed pleadings and doing no more than “taking the fifth” on them when running the trial. Simply not relying upon dubious pleaded allegations in the opening, evidence in chief or in closing is not the same as expressly withdrawing those allegations.

VCAT (via its Real Property List) has almost exclusive jurisdiction to hear what are often called “partition and sale” applications between co-owners of land. (See Part IV of the Property Law Act.) But what if the land in question has only a single registered owner?

In Garnett v Jessop [2012] VCAT 156 (13 February 2012) such a registered sole owner contended that VCAT lacked jurisdiction to hear a claim against her by a claimant asserting only an equitable interest in that land.

‘Co-owner means legal co-owner as VCAT has no equitable jurisdiction’ argued the registered owner.

VCAT disagreed. In reserved reasons delivered today VCAT Vice President (and soon to be County Court judge) Macnamara and Member French jointly concluded that the Property Law Act gives VCAT jurisdiction to make orders with respect to equitable as well is legal co-owners.

I appeared for the applicant / claimant.

The decision should cement VCAT’s jurisdiction to hear disputes between joint landowners (however described) who have fallen out with each other over the use and/or sale of their real estate.