Stephen Warne on professional negligence, regulation and discipline around the world

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The latest on pro bono costs agreements which preserve the possibility of a costs order against the other side

March 8th, 2017 · No Comments

For far too long, the law was unclear about whether costs agreements which said ‘We’ll only charge you if you win and only for work in respect of which we get a costs order’ actually worked.  The problem was that losing parties invoked the indemnity principle in the law of costs, arguing that what was recoverable under a costs order was nil.  The indemnity principle says that party-party costs awards are in no way punitive; they are wholly compensatory. Party-party costs orders are awarded as a partial indemnity to the winning party’s liability for their lawyers’ fees and other expenses of the litigation.  If the winning party has no such liability at the time of the costs order, there is nothing for the losing party to be ordered partially to indemnify.  Where the winner’s liability to pay their lawyer was conditional on a party-party costs order, there was, at the moment of making the costs order, nothing to indemnify.  Wentworth v Rogers [2006] NSWCA 145 was the leading case for many years.  Justice Santow’s dictum was favourable to pro bono solicitors while Justice Basten’s was unfavourable.  The third judge did not weigh in on this question.

What the judges in that case said, however, was obiter dicta.  Now there is a unanimous decision of the Victorian Court of Appeal which actually decides that this kind of costs agreement works; the winning party may obtain from the losing party a party-party costs order by way of a partial indemnity against the liability to pay their lawyers.  The case is Mainieri v Cirillo [2014] VSCA 227 and Nettle, Hansen and Santamaria JJA expressly preferred Justice Santow’s reasoning in Wentworth. It may be expected that state courts, including Courts of Appeal, elsewhere in Australia will follow the Victorian Court’s decision:  Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 at [134] and [158].

That is the good news though.  The bad news is that an unfortunate level of confusion still prevails in relation to costs agreements which are even closer to pure pro bono in that they say ‘We won’t charge you anything unless you get a costs order, and then we will only charge you so much as you are actually able to recover from the person ordered to pay costs under the costs order’.  A costs agreement which was, as a matter of substance, to that effect was found not to present a problem in LM Investment Management Limited v The Members of the LM Managed Performance Fund [2014] QSC 54.  Then in Mainieri, the Court of Appeal left open in obiter dicta  the possibility that a costs agreement in which the winning party’s liability to pay their solicitors was conditional on recovery of costs from the losing party might not work.  Subsequently, in Mourik v Von Marburg [2016] VSC 601 the Costs Judge in Victoria decided that such an agreement in fact does not work, but the correctness of that decision has subsequently been doubted in dicta of a Victorian Federal Court judge sitting in Sydney.  What a mess.  But I am not convinced that the pro bono sector should give up on obtaining judicial recognition of a costs agreement which, as a matter of substance, predicates recovery of costs on the actual recovery of costs from the other side. [Read more →]

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Does the Legal Services Board have the power retrospectively to excuse inadvertently practising briefly without a practising certificate?

February 24th, 2017 · No Comments

As with most years, no doubt scores of Victorian lawyers forgot to renew their practising certificates last year.  For months, in some cases, this situation was allowed by the regulators to persist without intervention.  In Victorian Bar Inc v GSL [2006] VCAT 435 the VCAT, constituted by Judge Bowman, Peter Jopling QC, and Ms F Harrison made clear that the disciplinary Tribunal expected regulators to be proactive to prevent practitioners inadvertently practising uncertificated. Eventually, at least in some cases, the regulators seem to have raised the issue with some practitioners whose sudden apparent cessation of practice at a young age seemed unlikely.

May I respectfully suggest that you go and check, now, whether you actually have a practising certificate for the current financial year.

The question now that the regulators have apparently complied imperfectly with VCAT’s guidance is what ought to happen?  Should the practitioners who are close to blameless for practising without a certificate be given a new one with retrospective effect (some were told, for example, by their office manager that the applications had been lodged before the end of the year, and were entitled to assume that their existing practising certificate had ongoing operation pending the Board getting around to dealing with the application, by virtue of a legislative provision to that effect discussed below). Or should the full consequences of the law, including disciplinary investigation, and the refunding to clients of fees for work done while uncertificated (s. 10, LPUL), be brought to bear? The latter approach has the disadvantage of causing lawyers’ professional indemnity insurer to cancel cover during the period of non-certification and the Fidelity Fund may be unavailable to clients of the lawyers in question in relation to conduct engaged in while uncertificated.

What VCAT said was:

[Read more →]

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2016: Not Such a Good Year (Part 5: The Election to Get Rid of the Pesky Cross-bench)

February 21st, 2017 · No Comments

Australian election Yes, it was also an election year. It was a perfectly orderly festival of democracy in which people got who they voted for with little corruption and a retreat from the two party duopoly to spice things up a bit.  I do not mean by including a report of the election to suggest that it was particularly indicative of not such a good year.

Prime Minister Turnbull figured that Australians were rejoicing so authentically in the fact that there has never been a more exciting time to be an Australian that he might as well scoop up as much of the love as was possible and convert it into power. So he called a double-dissolution election and changed how we vote in the Senate so as to make it harder for micro-parties to get elected. He told the land that what its people needed was a strong majority government, to rid itself of what he characterised as the chaos of the Rudd-Gillard-Rudd years of minority government.

The Labor party, the Greens and independents almost pulled off a 2016esque underdogs’ upset, a bit like how Pakistan came within 40 runs of achieving the greatest second innings run chase in test history at the first test at the Gabba. (Who knows what might have happened but for Steve Smith’s freak run out to take the 10th Pakistani wicket?) The Coalition’s 21 seat majority was reduced to a 1 seat majority, but Treasurer Morrison, who was so irritating on election night in his unshakeable, smug confidence that the Coalition would be returned to government in his own right was, to give him his due, right. The Prime Minister gave a miserable victory speech about which no one at all enthused.

In a double dissolution election, you only need half the votes you normally do to find yourself called to the Senate (though in this election the 3 least successful elected senators in each state will serve only three year terms). And more than a third of voters gave their first preference in the Senate to a party other than the Coalition and the Labor Party. There was accordingly a more than usually interesting haul of senators. Ironically, there are more Greens and cross-benchers than ever before. Following the election the government needed the vote of at least one senator from Pauline Hanson’s One Nation Party to pass any legislation opposed by both Labor and The Greens. That Party wants a Royal Commission into Islam, a Royal Commission into climate science, as well as the scrapping of the renewable energy target. [Read more →]

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On Freedom

February 15th, 2017 · No Comments

The Hon Robert French, until very recently the Chief Justice of Australia, gave the 2017 Law Oration about the rule of law in the Banco Court of the Supreme Court of Victoria.  You can read it or watch it here.  He cited authority for a proposition which I occasionally find a failure to grasp bedevils young lawyers’ thinking about problems.  It is that if there is not a law against it, you’re free to do it, in Australia at any rate.  You do not need a positively expressed ‘right’ to be entitled to do something (like be a bigot).  There is in fact no positively expressed right to be a bigot; rather the freedom to be a bigot, to the extent it exists, is an incident of your general freedom not having been curtailed by laws limiting that freedom.  Paradoxically, the Attorney-General would be on stronger ground in asserting the existence of his ‘right’ if his government worked some human rights, like freedom of speech, into the Constitution or even just enacted a federal charter of rights.

Of course sometimes it is nearly impossible to know whether a rule applies, and that is bad.  Incomprehensible laws undermine the rule of law, as do laws which ought never have been made and which are never used (like most of the criminal offences in the Legal Profession Act 2004). What, for example, is the meaning of r. 8 of the Legal Profession Uniform Conduct (Barristers) Rules 2015, a piece of subordinate legislation made under the authority of the Legal Profession Uniform Law (Vic.)?  That rule, a bad rule, says: ‘A barrister must not engage in conduct which is … discreditable to a barrister’.  Equally poor a law is the prohibition on barristers engaging in conduct which is ‘prejudicial to the administration of justice’, also in r. 8.  What even is the ‘administration of justice’? That is a question I have actually had to think about, and the answer is not entirely clear.  Breach of these rules actually gets prosecuted.

Might this blog post, in which I scorn unduly broad laws made by unelected bureaucrats, which can be used lazily by prosecutors who personally don’t approve of certain conduct of their colleagues even though it does not infringe any specific norm, prejudice the administration of justice by ‘bringing the law into disrepute’ (whatever that means)?

Getting back to what should be a most elementary proposition, what the former CJ said was:

[Read more →]

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2016: not such a good year (part 4: terror, including genocides)

February 10th, 2017 · No Comments

Nadia Murad, a former sex slave used by an old, fat and ugly Islamic fundamentalist, and survivor of the Yazidi genocide

It is said that 2016 may have been the year in which a coordinated terrorist attack involving bombs and knives reached Melbourne. St. Paul’s Cathedral, Federation Square and Flinders St, possibly on Christmas Day. 400 AFP and ASIO officers and regular police arrested seven men. Four were charged: Abdullah Chaarani, Hamza Abbas, Ahmed Mohamed, and a fourth man. Little is known. Per The Age, ‘Police said the suspects were “self-radicalised” but inspired by Islamic State.’

Tunisians pulled off a few memorable atrocities in the West. A man ran over and killed 86 people in a truck careering along the Promenade des Anglais in Nice. The divorced bisexual French father of three and alleged wife basher at the wheel was shot dead. Though Mohamed Lahouaiej-Bouhlel was Tunisian by birth, and ISIL claimed responsibility, actual links with terrorists still seem remarkably speculative. Such religiosity as he acquired was acquired very shortly prior to the attack, as in the fortnight prior. His phone suggested he loved men, women, booze and drugs. [Read more →]

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2016: not such a good year (part 3: Tromps, Trumps, Russia, China)

February 2nd, 2017 · No Comments

Victorious underdogs  With some already noted exceptions, it was the year of the underdog. In the AFL, the Western Bulldogs pulled off an extraordinary Grand Final victory, the fruits of ex-Slater & Gordon man Peter Gordon’s remaking of the club. By contrast, the Court of Arbitration for Sport confirmed the suspension for 12 months of 34 past and present Essendon players, including Jobe Watson. That club won only 3 games and wooden spooned. Watson had to hand back his Brownlow Medal.  The doping scandal was more or less over.

Then the Chicago Cubs won the oddly named World Series in American baseball, breaking a 108 year drought. In Basketball, the Cleveland Cavaliers improbably took the NBA title from the Golden State Warriors, one of the most dominant teams ever in the competition. In English football, Leicester won the premier league competition despite the bookies having them at 5000-1 at the beginning of the season, an extraordinary upset. It was described as a sporting miracle. [Read more →]

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2016: not such a good year (part 2: deaths)

February 1st, 2017 · No Comments

The Hon. Alan Goldberg AO, QC, portrait by Jacqueline Mitelman

Lots of unfamous people died horrible deaths last year: see part 1, and more to come. But more than the average number of famous pulses seemed to flatline in 2016. The grim reaper took a few big scalps prematurely: Max Walker at 68, David Bowie at 69, Prince at 47, the Beastie Boys’ John Berry at 52, and George Michael at 53. You could say that Brangelina karked it too.

Then there were the other cultural icons who shuffled off: [Read more →]

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2016: not such a good year (part 1: Iceland, Syria)

January 31st, 2017 · No Comments

‘Your turn, doctor’

I had a lovely time last year, but for many, 2016 was not such a good year,[1] even if they were fooled by propaganda and fake news into thinking it was. If you want to see how the other half lives, check out Médecins Sans Frontières’s photographic recap of 2016.

Pulses It was a great year if you were an Australian chickpea grower though. The excitement of living through the International Year of the Pulse is unlikely to be repeated during anyone’s lifetime, but the record harvest must have really pumped our growers’ yams. They harvested a million tonnes of chickpeas, and had a record breaking million hectares under cultivation, about the size of Sicily. Who knew? Production was very poor in the sub-continent and prices for pois chiche / gram / chana / hummus / garbanzo bean / falafel precursor, cultivated these past 7,500 years at least, skyrocketed to more than $1,250 a tonne. There are a lot of sub-continentals, (more about that later), and they eat a lot of chickpeas because (some people estimate) India alone has half a billion vegetarians: more than the rest of the world combined.

As we will see, the real pulse was that of the underdog and the white working class. Or at least so the conventional narrative goes, since it remains to be seen whether Trumpland will see factory workers making large American cars again and whether the grandchildren of Kentish publicans will take back the real English ale taps from the Poles and Czechs.

Not in Iceland, though, where following remarkable elections in the wake of the Panama Papers’s revelations, the Pirate Party, with their unique mode of populist appeal, was invited to form government but couldn’t manage it. So the conservatives are back in power notwithstanding that the Prime Minister was the most prominent scalp of the Papers.  Bet you didn’t know that Birgitta Jonsdottir who would be its leader if the Pirate Party had a leader used to live in Forest Hill but quit Australia in light of the indignities associated with the application for citizenship.

The Panama Papers were interesting: nothing like 11.5 million privileged documents of a law firm with lots of clients in tax havens to excite the Australian Professional Liability Blog.  We learnt that Bashar al-Assad probably funded his war against his own people by having Mossack Fonseca set up up front companies in the Seychelles through which international sanctions were evaded. And that he purchased £6million worth of luxury London real estate while his people endured one of the agonies of the millennium.

And nor did the underdog prevail in Syria either, after ISIS corrupted the purity of the Arab Springers and Russia rushed in to defeat ISIS, whatever the collateral cost. The rebels were crushed, providing for a historically unsatisfactory maintenance of the status quo after the slaughter and displacement and economic obliteration of an entire state.  Remember, it all started when Dr Assad’s world-class goons tortured some schoolboys for scrawling ‘Your turn, doctor’ in red paint on a Daraa wall at a provocative point in the falls of middle eastern despots in the Arab Spring.  According to the foundation lore of the rebels, ‘They forced [one schoolboy] to sleep naked on a freezing wet mattress, they strung him up on the wall and left him in stress positions for hours, and they electrocuted him with metal prods.’ When one of the kids’ dads objected to Dr Assad’s cousin, he was told to ‘forget about their sons, and consider having new children’ and if that failed, he was supposedly told, then the fathers should send their wives to the police station to be impregnated by the security forces.  These events are part of the narrative of the excellent re-telling of of the story of Doaa Al Zamel, a girl from Daraa who fled to Egypt and thence to Sweden on a smuggler’s boat on which hundreds drowned: A Hope More Powerful Than the Sea.  I commend it to you as a personal experience of the Syrian uprising, the precursor to today’s more complicated civil war and of the decision to flee by smuggler and of the horrific passage.

Syria  I am so glad I was not in Syria and not a Syrian in 2016. The great powers other than China played out a proxy war with Russia ramping up its cowboy intervention, a war which, it is estimated, has produced about 11 million refugees — 6 million inside Syria and about 5 million who have fled to neighbouring countries. Since the US was supporting the anti-Assad forces which are not ISIS, that means that despite everyone pretending to be battling ISIS, Russia and the US were in fact at war with each other last year. [Read more →]

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Transferring monies from trust to pay legal fees: can a client stymie an accrued right to appropriate fees by a late objection to the transfer?

December 23rd, 2016 · No Comments

Say you’re a solicitor.  You send a bill to your client noting your intention to pay it from monies in your trust account held for the client.  Seven days go by and there is no objection to the transfer.   Say at this point you have a perfectly good entitlement to appropriate your fees from trust.  But you don’t get round to transferring the money on the 8th day.  And then the client objects to the transfer, belatedly. Can the solicitor ignore the out of time objection and transfer the money?   [Read more →]

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Lessons from a tome in the dome on the assignment of suits’ fruits

December 23rd, 2016 · No Comments

Cruelly, the Legal Services Commissioner prosecuted my client recently for disbursing monies from his trust account to the wrong person, albeit without the slightest dishonest intent, which he said would be regarded by competent and reputable peers as disgraceful or dishonourable.  I say ‘cruelly’ because he made me go to the Supreme Court Library, and read impenetrable equity texts in its dome for hours.  I read the most obscure article I can ever remember reading: P G Turner’s ‘Assignment by Way of Charge’ (2004) Australian Bar Review 280.

The Commissioner said the solicitor’s client had assigned in equity the proceeds of their claims against negligent drivers for the cost of repairing their vehicles.  The assignee was said to be the repairer’s factor.  When the monies came into my client’s trust account, they were said to be ‘charged in equity’ (‘charged in law’ as well in fact, which I never got to the bottom of), such that the solicitor was obliged to pay them not to his client but to the assignee-chargor.  The Commissioner backed down from this claim in the end, but not before I had burrowed into the law.  Harsh.

In this post I gather together some law about assignment of choses in action.  Nothing new.  Just a summary of the law in case you are as ignorant of its nuances as I was before I hit the equity tome in the dome.  The most thorough texts are Heydon, Leeming and Turner Equity Doctrines and Remedies (2015, Lexis) and the superbly written The Law of Assignment by Marcus Smith and Nico Leslie (2013, OUP).

The reason this post is easier to understand and a great deal shorter than either book is that it does not deal with the many exceptions and uncertainties associated with the below propositions, and looks only at the law of Victoria.  And it ignores the Personal Properties and Securities Act 2009. You’d better look up the law yourself if you need to.  What follows might help you make sense of it though. [Read more →]

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