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Commercial litigators referred to the DPP and ordered to pay their clients $11.7 m

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Banksia Securities is civil litigation’s ‘Lawyer X’ moment. It is “one of the darkest chapters in the legal history of this state,” according to the Victorian Supreme Court’s Justice John Dixon.

Dixon J. delivered this assessment in Bolitho v Banksia Securities (No 18)(remitter) [2021] VSC 666 on Monday.

He ordered two barristers, three solicitors and a litigation funder to pay their own clients damages of $11.7 million plus indemnity costs.

It is the latest crescendo in a slow-burn case spanning years. And there might be more to come because Dixon J. also ordered that the matter’s papers be provided to the Director of Public Prosecutions (plainly with view to potential fraud-related charges against some of the lawyers).

Here is the nutshell version of Banksia Securities to date. A class action for 16,000 mainly elderly investors was settled for $64 million in 2017. The plaintiffs’ lawyers then put their heads together to milk their clients of more than $19 million in legal costs and litigation funder’s commission. Between them, the lawyers’ efforts at securing this recompense included misleading the Court, reverse-engineering invoices, backdating costs agreements and destroying documents.

But two of the lawyers’ braver clients smelled a rat and spoke up.

A judicial bollocking has now resulted.

“Moral atrophy”, “disingenuous”, “intention to conceal”, “deliberately destroyed documentary evidence”, “nefarious”, “incompetent”, “extraordinarily casual”, “gross dereliction” and “knowingly false” are some of the phrases applied to particular lawyers in the decision. Dixon J. differentiates between the lawyers (for example, one solicitor is found to have been grossly derelict but not dishonest) but their collective efforts were cumulative and, in Dixon J.’s words, “The victim was the administration of justice.”

Two barristers – Norman O’Bryan SC and his junior Michael Symons – have already lost their tickets. They might yet lose their liberty depending on how things pan out with the DPP. The two surviving solicitors have been directed to show cause why they should not lose their tickets too.

I will try to blog further about this case when I have digested the 696-page judgment but in the interim the Court’s own three-page case summary will give you a taste.

My initial takeaways?

  • The Civil Procedure Act is more than a list of platitudes. Breaching it has just cost some commercial litigators millions of dollars. Complying with it (and also the Uniform Law as to costs disclosure) would have saved them that money plus their reputations, livelihoods and potentially some jail time too.
  • Pause if you ever find yourself at either end of an email between lawyers that proposes the deletion of documents. Is such a course likely to end well? And whether it is acted on or not, how is that proposal going to look if the email ever find its way into evidence?
  • Nothing about the case suggests that this was a debut performance by its ignominious ringleaders. If I had ever been represented by Norman O’Bryan SC or solicitor Mark Elliott I would now be dusting off their invoices to me with very deep suspicion.

Client complaints – a tool kit for solicitors

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Some lawyers have never received a complaint from a client.

Or so they say.

Such prodigies, liars and recent arrivals to the profession are vastly outnumbered by the rest of us.

This might explain the big audience of solicitors who turned out this week at a seminar Gordon & Jackson hosted on the twin topics of client complaints and recent cases dealing with the Civil Procedure Act.

I delivered a paper on the first topic. The paper’s section headings will give you the flavour of its content:

  1. Complaints are inevitable;
  2. Try not to take complaints personally (and get help, of whatever variety);
  3. Categories of complaint under the Uniform Law;
  4. Categories of complaint beyond the Uniform Law;
  5. Your LPLC insurance – the good news and the bad;
  6. Avoiding complaints in the first place; and
  7. Professional standards scheme – you are a participant, aren’t you?

My colleague Monika Paszkiewicz spoke on the Civil Procedure Act. Her paper includes reference to Judd J’s recent observations (in ACN 005 490 540 Pty Ltd v Robert Frederick James Pty Ltd [2016] VSC 217 at paras 18 -19) that solicitors who threaten each other too willingly with personal costs applications under the Civil Procedure Act might themselves be breaching the very statute they are invoking.

Client complaints and the Civil Procedure Act have obvious potential overlap for litigation solicitors. Download the two papers (combined as a single document) here and file them away with your Civil Procedure Act resources.

Our dishevelled new Uniform Law

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What a shambolic creature is the new Legal Profession Uniform Law.

I attempted to translate its provisions relating to costs disclosure and recovery in a presentation for the Goulburn Valley Law Association this week. I reckon I did a reasonably accurate job. I could tell this because my attentive audience seemed to be suitably irritated and confused by the end.

Anybody who claims an entirely confident understanding of the Uniform Law has obviously not read it properly.

By itself, the Uniform Law is frequently unintelligible without reference to the local (ie state) law which adopts it.Because of this, the Uniform Law in Victoria is actually a schedule to the zippily-named Legal Profession Uniform Law Application Act 2014.

This unattractive combination adds up to a combined total of approximately 570 pages and 120,000 words. And that’s before you reach for a third necessary document, the Legal Profession Uniform General Rules 2015 (and disregard other related subordinate legislation).

Between them, these three documents are ostensibly organised into various chapters, parts, divisions and schedules. Indeed, they seem to have more chapters than the Freemasons, more parts than Shakespeare, more divisions than Stalin and more schedules than V/Line. But you can’t be entirely sure because the centrepiece document, the Uniform Law itself, has no index whatsoever and the pagination doesn’t help.

That is bizarre in any legislation but particularly in something that presumably is meant to be accessible to, among others, disgruntled clients looking as lay people to the law for guidance about their rights and obligations vis-a-via their lawyers.

But given the sheer bulk of the Uniform Law package, it must be extraordinarily precise, right?

Wrong again.The mandarins responsible for administering it (for Victorians that means a combination of the Sydney-based Legal Services Council and the Melbourne-based Victorian Legal Services Board and Commissioner) have separate websites, each featuring information sheets for clients and for legal practitioners.

Alas, some of the Victorian Legal Services Board and Commissioner’s info appears to relate to superseded legislation and not to the Uniform Law at all.

And at least one of the Legal Services Council’s flyers makes the confident assertion that the Uniform Law “does not permit” lawyers to express estimated future costs to their clients as a range.

This “cost-estimates-must-not-be-expressed-as-a-range” view is an urban myth also gaining currency at high levels in Victoria.

But it is wrong. (Look, at least, at s 182(3) of the Uniform Law regarding conditional costs agreements and then look (in vain) for any prohibition on cost estimates being expressed as a range in other contexts.)

In August 2015, the Victorian Law Institute Journal breathlessly introduced the Uniform Law to its readers with a cover story entitled “Empowering Clients”. What nonsense. If any lay client can navigate the Uniform Law without professional assistance (which seems improbable) he/she would almost certainly have found (substantially) the same answers much faster under the now-repealed Legal Profession Act.

How did we get lumbered with the Uniform Law? It seemed a good idea to the Council of Australian Governments back in 2009 to have uniform nationwide legislation for the various jurisdictions’ barristers and solicitors. This might have made sense if most of our lawyers and clients were dealing with each other on a nation-wide basis.

But in the real world only substantial commercial and government clients generally operate on that basis. So guess which class of clients is largely excluded from the “protections” offered to clients by the costs provisions of the Uniform Law? You guessed it. Commercial and government clients.

What a mess. Little wonder that since the idea’s inception in 2009 every jurisdiction except Victoria and New South Wales has slipped off the Uniform Law bandwagon.

But enough venting from me.

I ended my Goulburn Valley Law Association presentation this week with what I hope are four practical observations:

  • As ever, costs are only recoverable by solicitors to the extent those costs are fair and reasonable. Costs agreements are prima facie evidence only as to what is fair and reasonable – see s 172(4).
  • Solicitors’ enforcement of costs agreements against clients hinge first and foremost on adequate costs disclosure at the front end. Position yourself to be able to demonstrate this. Employing the LIV’s template disclosure and costs agreement document will be a good start.
  • Even perfect front-end written costs disclosure of itself might still not be sufficient. For the purposes of s 174 of the Uniform Law, solicitors should ideally verify and document the client’s receipt and apparent comprehension of that written disclosure. (The Law Society of NSW suggests a short (and documented) Q & A exchange with the client about the client’s expectations as to costs and strategy following delivery of the written material as one mode of evidencing the client’s apparent understanding of that material.)
  • Perfect disclosure should ensure a valid costs agreement but even a perfect costs agreement isn’t bullet-proof either – see s 199 and s 200. Because of this, there will probably be situations where it will be fastest and cheapest for solicitors to grasp the nettle and initiate a costs assessment (aka a taxation) of their own bills rather than to sue for fees only to have their proceeding stayed pending an assessment anyway. But don’t think about this idea  too long if you are a solicitor because you might be statute-barred by s 198(4) if you wait more than 12 months from the date of your bill before seeking the costs assessment.

Need further clarification? Then reach for the Uniform Law with trepidation.


					

		
		
	


				
					
	

		

						
Clayton Utz and the lingering smell of smoke

			
						

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Are you a commercial litigator with an interest in client confidentiality and conflicts of interest? Or in schadenfreude?


Then you will probably appreciate Justice Elizabeth Hollingworth’s decision last month in Dale v Clayton Utz (No 2) [2013] VSC 54


A quick refresher before the summary.


Allan Myers QC and Clayton Utz both have singular reputations among Australian lawyers.


Myers is a top shelf commercial silk and philanthropist. His fame, prestige and profile are surely matched by few other practising lawyers in the nation. Apart from that, in his spare time he has dabbled in investments sufficiently to acquire, among other things, a Polish brewery, vast tracts of outback Australia and an entry in BRW’s Richest 200 list.


Clayton Utz’s reputation is more enigmatic. It is a mega firm employing hundreds of no-doubt talented and principled lawyers. But in the public mind it is arguably still best known for its murky role defending Big Tobacco against a claim by a dying ex-smoker, Mrs Rolah McCabe in 2002.


Mrs McCabe won at first instance (see decision here) after the cigarette company’s defence was struck out. The trial judge concluded, among other things, that through its “document retention policy”, the process of discovery in the case had been subverted by the defendant and its solicitors (Clayton Utz) with the deliberate intention of denying a fair trial to the plaintiff.


That decision was reversed by the Court of Appeal here but Clayton’s Utz’s judicial vindication was undermined by the PR shellacking The Age (and other media) gave Clutz and its client in stories like this and this.


How did the The Age get its material?


We now know that some of The Age’s information was leaked to it in 2006 by one time Clayton Utz litigation partner (and also 2004 Law Institute of Victoria president) Chris Dale.


For reasons which the Supreme Court might yet find were or were not related to the McCabe case, Clayton Utz had expelled Dale from its partnership a year earlier in October 2005.


Almost six years later, in September 2011, Dale sued Clayton Utz for breach of the partnership agreement.


Which brings us back to the Victorian Supreme Court’s recent decision.


Clutz filed its defence against Dale in January 2012. That defence was signed by Allan Myers QC.


Dale promptly objected to Myers’ involvement. He said that Myers had advised him in relation to his dealings with the Clutz partnership during 2004 and 2005 and accordingly Myers should not act against him now.


Clutz held its ground so Dale sought an injunction to prevent Myers acting further in the case.


Last month Dale won that argument and Myers exited the proceeding. (The wider dispute between Dale and the partnership remains to be determined.)


Justice Hollingworth’s 40 page judgment is a good read. There is something in it for you whether you are in the mood for a John Grisham-style legal who-dunnit or some pointers on how not to draw affidavits on this type of issue, lawyers’ obligations to parties they have formerly (and possibly informally as well) advised, concepts of ‘contractual’ and ‘consensual’ retainers and much else besides.


But the most confronting topic for mine is the treatment of obligations towards former clients (including people who might never have been ‘clients’ in a formal sense).


In short, Dale swore on affidavit and in cross-examination that as his relationship with the Clutz partnership frayed in 2004 and 2005 he sought and obtained Myers’ oral advice.


Myers denied this on affidavit and was not cross-examined.


Dale’s version (at least as to a single conference of about one hour’s duration in 2004) was preferred by Hollingworth J thus –


33     In so far as Mr Myers states … that he “was not retained” by Mr Dale, I read that as no more than a statement of his personal belief that he was not retained. Mr Myers cannot give evidence as to whether he was in fact retained. Whether or not there was a retainer is a legal matter for the court to determine, from the objective facts, and not from the subjective beliefs of the lawyer or the party alleging to have retained the lawyer.


….


59     In so far as Mr Myers states … that he was not asked to and did not provide legal advice to Mr Dale, given that he has no memory of this conversation at all, I read that as no more than a statement of his personal belief … that he was not retained to provide legal advice.


 ….


135   I accept that Mr Myers did not believe he was being professionally retained. But Mr Myers did not say to Mr Dale that he was seeing him other than in his capacity as senior counsel, even though the discussion lasted for about an hour and went into some detail about Mr Dale’s current predicament. Someone in Mr Myers’ position could easily have taken steps to make it clear that he was not acting in a professional capacity.


….


Conclusion


176   I propose to grant an injunction to restrain Clayton Utz from continuing to engage Mr Myers in this proceeding. Such an injunction would be justified by any of the following findings: 


(a)     That a professional relationship existed between Mr Dale and Mr Myers in relation to the August 2004 meeting; 


(b)     Further and alternatively, that Mr Dale communicated confidential information to Mr Dale [sic.— Myers?] in the August 2004 meeting, and there is a real and sensible possibility of a revival of recollection, about matters which are of critical importance in this proceeding; 


(c)      Further and alternatively, because a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice required that to occur. 


The bottom line for Clayton Utz? The firm needs a new silk in for its continuing stoush with Dale.


The bottom line for the rest of us? An hour’s discussion about which you have absolutely no memory or record can be enough nine years later to have you ejected from acting in litigation against the other party to that forgotten discussion.


For the record:


    

  • Hollingworth J stated (at para 121) “By accepting Mr Dale’s account, I am not in any way suggesting that Mr Myers is not a truthful witness”.
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  • In late 2001 or early 2002 I acted for Mrs Rolah McCabe for approximately 48 hours in her case against Clayton Utz’s then-client British and American Tobacco Australia Services Pty Ltd.
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Tripping up on the slip rule

			
						

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“Since the abolition of capital punishment there is now no mistake by a lawyer in Australia that cannot be effectively reversed.”


Or so I was told long ago after a bad day in the office as an articled clerk.


My supervising partner had in mind the slip rule.


The slip rule is the rule that allows courts to correct minor glitches in their own judgments and orders without the trouble and expense of an appellate court’s intervention.


The slip rule is within courts’ inherent jurisdiction but it is also succinctly expressed in most courts’ own rules — see for example Federal Court rule 39.05 and, in Victoria, Supreme Court rule 36.07; Magistrates’ Court rule 36.08 and VCAT Act s 119.


But the slip rule has its limits.


I was reminded of this over the Christmas break by a Retail Tenancies List decision – Versus (Aus) Pty Ltd v ANH Nominees Pty Ltd [2012] VCAT 1908.


In late 2011 the tenant-applicant won an order totalling almost $245,000 against its landlord – see Versus (Aus) Pty Ltd v ANH Nominees Pty Ltd [2011] VCAT 2273. In that case, after a 10-day hearing and a 62-page judgment, VCAT Vice-President Judge Lacava found that the landlord had failed to take reasonable steps to stop or prevent disruption to the tenant’s trading caused by, inter alia, a neighbour’s renovations.


The landlord duly paid up.


Almost a year later the tenant decided to go back to the well. It applied to VCAT under the slip rule for a further order which would have upped the original award by almost $96,000.


The application had three prongs.


Two were swiftly dealt with. Judge Lacava found both to require a total recalculation of damages in circumstances where the errors complained of and their consequences were “not readily identifiable.”


The third limb of the application was starker.


The landlord conceded that a typographical error (yes – a humble typo) in the original reasons had effectively cost the tenant $16,235. But it would not concede the slip rule application.


Quite right too ruled Judge Lacava.


He cited L Shaddock & Associates v City of Parramatta [1983] 151 CLR 590 to the effect that courts have a discretion when dealing with slip rule applications.


In my view, if there was an error capable of being corrected under s. 119 [of the VCAT Act dealing with slip rule applications], it ought to have been identified by the applicant and its accountants by the end of February 2012 at the latest and an application then made. That was not done. In my judgment, the delay in bringing this application for correction is unexplained and is too long. It is important that litigation be brought to an end. In this case, the respondent having promptly paid the amount of damages, it would be both inexpedient and inequitable for me to make the orders sought by the applicant in its further application dated 20 September 2012.


For these reasons, the applicant’s further application is dismissed.


The lessons?


Three occur to me:


    

  • Try to get it right the first time;
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  • Don’t hang about when you (or the judge’s typist) muck it up; and
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  • Don’t believe everything supervising partners tell their underlings.
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