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

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Unqualified costs consultants

November 10th, 2014 · No Comments

There has been another challenge to the legality of the work done by non-lawyer costs consultants.  It did not go anywhere because of deficiencies in the way the client (himself a lawyer) went about trying to prove in the Magistrates’ Court that the costs consultant in question (a struck off lawyer) had engaged in unqualified practice, and because of the limited nature of an appeal from a Magistrate. The Supreme Court’s judges also emphasised the exactness of proof necessary to establish a breach of s. 2.2.2 Legal Profession Act 2004‘s prohibition on unqualified practice, given that it sets up an indictable criminal offence punishable by up to 2 years’ jail.  Such exactness is needed even in civil proceedings which obviously do not carry criminal consequences.

But as three judges of the Supreme Court made clear, all this means is that this was not the vehicle to decide just how much non-lawyers are permitted to do in the realm of costs law, and subject to what level of supervision by a lawyer, and there is little solace for unqualified costs consultants in the judgments.

The reasons of the Court of Appeal for not granting leave to appeal the Supreme Court’s dismissal of an appeal from a Magistrate are: Defteros v JS [2014] VSCA 154.  They are interesting for three reasons:

1.  They endorse comments made by the Costs Judge in a June 2010 decision as to the need for consideration of reform of the ‘mini-industry’ of costs consultants (Kaye J did so at [2014] VSC 205 at [85] and Santamaria JA (with whom Neave JA agreed) did so at [2014] VSCA 154 at [21]);

2.  They record an interesting submission of counsel, namely that the solicitor client was relying on his own contempt of the Supreme Court by asserting as a defence to a suit for fees a statutory prohibition on the recovery of money charged for the provision of legal services in contravention of the prohibition on unqualified practice — the contempt arose, so the argument ran, because the solicitor well knew at all relevant times that the costs consultant was not a practising certificate holder, and so had permitted the costs consultant to engage in unqualified practice if it had occurred, contrary to s. 2.2.10 of the Legal Profession Act 2004; and

3.  They emphasise the modern trend of leaving to the Costs Court questions which have traditionally been dealt with by certificates of the trial judge (e.g. certification for two counsel).

It will not be too long before someone takes a grip of this issue and runs a test case carefully.  An alternative battle ground might be found if the unqualified costs lawyers seek to influence the makers of the forthcoming Uniform Rules of professional conduct so as to provide an exemption for unqualified costs lawyers from the prohibition on unqualified practice: see s. 10(3), Legal Profession Uniform Law (Vic).  That seems to me to be the most efficient means of resolving the question.  In my books, if there is to be a place for the continued operation of unqualified practitioners there may be a case for restricting the exemption from unqualified practice to existing practitioners and closely defining the permissible ambit of their activities, perhaps to party-party disputes. [Read more →]

→ No CommentsMore articles on: National Profession Uniform Law · Party party costs · Practising certificates · Professional fees and disbursements · Solicitor client bills of costs · Taxations · Unqualified practice

New South Wales Law Society misconceivedly suspends sole practitioner’s PC peremptorily

November 5th, 2014 · No Comments

In Dennis v Council of the Law Society of New South Wales [2014] NSWSC 1487, the Law Society suspended a sole practitioner’s practising certificate with immediate effect and appointed a manager to his practice.  He had not responded to commands by a trust investigator to produce documents and answer questions in relation to a disciplinary complaint.  The Society said that he had failed to do so wilfully and without reasonable excuse, and this, it said, made it necessary to abolish the man’s livelihood.

Hoeben CJ at CL found that the commands were invalid in law, and there had been no failure at all to comply with them.  But even if the Society’s interpretation of the provisions of the Legal Profession Act 2004 (NSW) in question had been correct so that there had been a failure to comply with them, his Honour said, this would still not have been an appropriate occasion on which to exercise the ‘emergency powers’ which the Law Society exercised.  It simply was not ‘necessary’ for the protection of the public to shut down a sole practice like that.  Especially since, prima facie, the appropriate place for the complainant to raise the practitioner’s conduct was in the proceedings in the Supreme Court of Victoria which were the backdrop to the conduct complained of and which were pending at the time of the complaint.  And more especially still where the practitioner had cited the commercial sensitivity to that litigation of confidential information sought by the Law Society and had suggested that the investigation be paused pending the imminent completion of those proceedings.

Given that the complaint in which the practitioner was said wilfully to have failed to obey the stipes’ commands was the complaint of a non-client, I will be interested to learn what it is about NSW law which means that the solicitor could be obliged to deliver up privileged information even if the commander had the power to issue the commands.  The Victorian Bureau de Spank has no such powers: B v Auckland District Law Society [2003] UKPC 38, a decision of the Privy Council and Legal Services Commissioner v Shulsinger [2010] VCAT 965. [Read more →]

→ No CommentsMore articles on: External administration · Legal Profession Act · Practising certificates · Professional regulation · regulators' duties · Suspension · Trust money · trust monies

Uniform Legal Services Council appointed

October 17th, 2014 · No Comments

Following the appointment a little while ago of the inaugural Commissioner for Uniform Legal Services Regulation, Dale Boucher, The Victorian and NSW Attorneys General have announced the appointment of the Uniform Legal Services Council, the blokes who are to be responsible for the conduct rules which will shortly govern all Victorian and NSW lawyers.  Their bios follow.

I am currently drafting a costs agreement to comply with the new Act and rules.  Some of the law relating to costs as between solicitor and client has not yet been made, because the new Act provides for it to be made by the new rules.  Some time ago the Legal Services Board circulated to the Victorian profession for comment a draft of the rules which I had assumed would come into force more or less as circulated.  They were developed by the Law Council of Australia and were branded as the ‘Australian Solicitors Conduct Rules’.  When it became apparent that this new Council was to be established, however, the Victorian Legal Services Board decided not to adopt them so that the Council could do its work afresh or at least unaffected by the recent adoption by one of the two participants in the ‘national scheme of a new set of rules.  So there will be another round of consultation, and the detail of the new law may not be finalised until some time rather shortly prior to its commencement which was slated, last I heard, for early next year. [Read more →]

→ No CommentsMore articles on: Legal Profession Uniform Law · National Profession Uniform Law · Professional regulation · Uniform Legal Services Council and Commissioner

Executrixes’ denial of deceased’s alcoholism without any proper factual foundation results in indemnity costs order

October 15th, 2014 · 3 Comments

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.

→ 3 CommentsMore articles on: Alleging fraud & misconduct · Civil Procedure Acts · Ethics · litigation ethics · Party party costs

Client obtains Anton Piller order over solicitor’s hard disk in fees dispute

October 15th, 2014 · No Comments

Ho v Fordyce [2014] NSWSC 1404 is a decision in an ex parte application of which the solicitor had no notice and did not participate. There is a dispute between solicitor and client in relation to fees.  The client contended that costs agreements relied on by the solicitor were ‘a recent invention’.  Given that the client asserts that there was no costs agreement, presumably the implication is that someone forged the documents relied on by the solicitor.  The client applied 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 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 by a client or granted against a solicitor in such circumstances before.

What his Honour said was:

’10  I do not wish to suggest that I am satisfied at this stage that there has been any false creation of documents. Rather there is a contention that it has occurred, and there is some support for that possibility in the evidence which has been presented. If it has occurred it will be difficult to prove and, if the secrecy of this application were not preserved until the point at which someone independent is at the office to obtain copies, the opportunity to establish that there has been recent creation (if that be the fact) will be lost.

11  In other words, for the plaintiff to have to present a normal application for discovery may act to the disadvantage of the plaintiff forensically and, accordingly, in circumstances where (a) the ambit of information which is sought is very narrow and (b) the consequences of the making of these orders will be of very limited effect, if it turns out that there has been no recent creation, weighs in favour of the making of the order.’

→ No CommentsMore articles on: Alleging fraud & misconduct · Costs agreements · duty to court · litigation ethics · Professional fees and disbursements · The suit for fees

What does an indemnity costs order actually get you?

October 7th, 2014 · No Comments

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.

→ No CommentsMore articles on: Costs agreements · Party party costs · Professional fees and disbursements

What orders ought follow the setting aside of a costs agreement?

October 3rd, 2014 · No Comments

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.

→ No CommentsMore articles on: Costs agreements · Professional fees and disbursements · setting aside costs agreements

Law firm sued for recommending wife hacks husband

October 2nd, 2014 · No Comments

London firm Mischon de Reya — cool name don’t you think? — puts out a newsletter about fraud. Here is a bite from the latest one:

‘Lawyers for a woman divorcing her husband recommended computer experts who could hack into her husband’s computer and iPhone. The husband’s lawyers have been given the go ahead to appeal the divorce ruling in what could be a landmark case concerning the use of information obtained legally [sic. but should be ‘illegally’]. The Singapore High Court said that the law firm could be guilty of perjury, breach of professional ethics, and other crimes under the Computer Misuse Act.’
The Straits Times, 17 September 2014

→ No CommentsMore articles on: Ethics · litigation ethics

The Lawchestra’s second ever concert

September 18th, 2014 · No Comments

The Lawchestra, about which I have troubled you before, is playing again this Sunday after we totally nailed the last concert (photos from the brilliant young photographer and law student Sean R. Ali here). It was thanks to the good work of Robert Dora, the conductor.  Man does he have a hard job.  Orchestras like the Melbourne Symphony Orchestra run themselves and the conductors just add an air of distinguished flamboyance.  But conducting a community orchestra, the conductor really has to work hard to cue people, explain to them without speaking or stopping wagging the baton that they came in a bar early, as well as drag some dynamic contrast out of players more worried about playing the right notes than where to diminuendo.  It’s a high-risk, high-stress job, and Dora the Conductor is great.  So is the gorgeous soloist, Natasha Lin.  You should definitely come: book here.  Even The Age says so. [Read more →]

→ No CommentsMore articles on: mental illness

Change

September 15th, 2014 · No Comments

Just when everyone finally stopped calling the Legal Profession Act 2004 the ‘new Act’, we’re set to have another one from early next year.  This is supposed to simplify things, just like the new Act was intended to simplify things. Sigh.  You can read about it here (and if you do, you will learn the surprising fact that the obligation on lawyers to charge no more than fair and reasonable costs is a ‘change’ in the law.)

And there are other developments which are more obviously changes too.  The functions traditionally carried out by the Law Institute, first as the regulator, and then as a delegate of the independent regulators created by statute — the issuing of practising certificates and the investigation of disciplinary complaints — are no longer being carried on by it.  Old names from this part of the Institute are gone — Joe Barravecchio, Jim Leach, Helen Hartsias.

Of course Steve Mark retired recently, and the hunt continues for a new Commissioner for NSW, and Robert Brittan replaced John Briton in Queensland.

One thing that’s not changing is Victoria’s Legal Services Commissioner, Michael McGarvie, who has just been reappointed for a further 5 year term in which he will preside over an expanded local regulatory empire with exciting new powers while liaising to an unprecedented extent with his NSW — and perhaps soon other states’ — Commissioners.

But there have recently been two key new appointments worthy of reportage: [Read more →]

→ No CommentsMore articles on: Legal Profession Uniform Law · Professional regulation