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

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Solicitor’s creditors statutory demand set aside because of alleged non-compliance with costs disclosure obligations prior to settlement of client’s case

July 21st, 2014 · No Comments

In IMO Speedy Loans Pty Ltd [2014] VSC 273, a Victorian law firm delivered a creditors statutory demand to a company which was its former client.  The client convinced Gardiner AsJ to set it aside exclusively by reference to an argument that by virtue of s. 3.4.17(1) of the Legal Profession Act 2004, the client was not yet obliged to pay the fees, no taxation (‘costs review’) having yet occurred.  That was because there was an alleged failure to comply with the s. 3.4.16 requirement to provide costs estimates prior to the negotiation of the compromise of a litigious proceeding.

The lawyer involved swore that he had done so orally and the client swore that the lawyer had not. There was, accordingly, a genuine dispute as to the indebtedness of the company and the statutory demand had to be set aside. Lesson: give written disclosures even when writing is not specifically required.  And be very sure of perfect compliance before suing for fees or issuing a creditors’ statutory demand.  Otherwise, seek taxation of your own costs, following which the Costs Court will ordinarily make an order for payment of the taxed sum (or simply write off the fees as uncommercial to recover).

→ No CommentsMore articles on: Professional fees and disbursements · The suit for fees

Costs in settlements of claims by persons under disability

July 15th, 2014 · No Comments

Associate Justice Lansdowne has released for publication an edited transcript of reasons her Honour gave in Chan v Falls Creek Alpine Resort Management Board for not approving a proposed compromise of the claim of a person under a disability. The citation for the decision is  [2014] VSC 314.  ‘Disability’ in this sense is a term of art and extends to the disability of being a minor.

The plaintiff, through his litigation guardian, had proposed a compromise in terms which were expressed as an amount for the claim and an amount for his costs.  Her Honour pointed to Sztockman v Taylor [1979] VR 572 which suggests that such compromises are to be discouraged lest the plaintiff’s solicitors be attracted to an offer which is comparatively favourable in relation to costs but comparatively unfavourable in relation to the claim.  That raises a conflict between interest and duty which is inherent in any compromise structured this way, but which is comparatively impermissible because of the disability of the plaintiff and the important role played by the parties’ lawyers in assisting the Court to evaluate the reasonableness of the compromise, a judicial function which is not a feature of compromises of claims by people not under a disability.  Another reason for the discouragement of such compromises is that the judge approving the compromise is ill-equipped to assess the reasonableness of the proposed compromise in relation to costs.

Following the non-approval of the compromise, the deal was renegotiated such that the settlement sum was expressed on an all-in basis as the total of the separate sums originally proposed by way of compromise of the claim and of costs.  That sum was to be paid to the Senior Master and the plaintiff’s solicitors were to apply to the Senior Master for costs.  The renegotiated proposed compromise was approved by the Court.

→ No CommentsMore articles on: conflicts · duty and interest · Ethics · Party party costs

18 good places to stay in Bali, none of them in Kuta

June 20th, 2014 · No Comments

I’m off to Bali and Java soon.  An instructress too and as I gathered together for her some good places to stay in Bali today, I thought to share them with you; my other post about Bali is lost in the increasingly large archives.  Brush up on the Schapelle Corby saga before you go to improve discussions with taxi drivers.

 South Coast Desa Seni (Canggu: the far western extremity of the Kuta connurbation) Hotel Tugu (Canggu) Tandjung Sari (Sanur, not quite part of the Kuta connurbation) This cliff-top home in Bingin on the Bukit Peninsula (surfing territory) Mu Bali in the same region.

East Coast Seraya Shores

North Coast Taman Selini (Permuteran) Cilik’s Beach Garden (Yeh Sanih)

In the middle Taman Bebek (in Sayan, bordering Ubud) Murni’s House (central Ubud) The Tjampuhan (central Ubud) Bambu Indah (outer Ubud) Bali Eco Stay (Mt Batakaru) Bali Eco Lodge (Mt Batakaru) This Ubud home on Airbnb or this one, nearby. Or this one, or any of the same owner’s properties. This homestay ($55 per night) near Ubud.    

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To accept a reprimand or not to accept a reprimand?

June 17th, 2014 · No Comments

Following a disciplinary investigation, Victoria’s Legal Services Commissioner must form an opinion as to the likelihood of VCAT finding the lawyer guilty of conduct warranting discipline.  If he is satisfied that there is a reasonable likelihood of VCAT finding the lawyer guilty of something, his options depend on what that something is.  If it’s professional misconduct, then he must prosecute.  If it’s unsatisfactory professional conduct, he can take no further action, or he can prosecute.  And then there’s the in between bit: in the case of suspected unsatisfactory professional conduct he can also, with the lawyer’s consentreprimand the lawyer, caution the lawyer, and require the lawyer to pay compensation to the complainant.  See Legal Profession Act 2004, s. 4.4.13.

My clients frequently have to make a decision about whether to consent to a reprimand or take their chances.  The way the choice is presented to them, they usually conceive of it as a choice between (i) public prosecution in an environment where it is very difficult to get a costs order against the Commissioner if they succeed and have to pay the Commissioner’s costs at distinctly commercial rates if they lose and (ii) a private reprimand.

I make 7 points about all this (and one request for crowd-sourced assistance) in the balance of this post.  I am, more generally, interested to hear others’ experience of navigating these waters between Scylla and Charybdis. [Read more →]

→ No CommentsMore articles on: Discipline · Evidence

Advocates’ immunity summarily defeats claim alleging negligent advice to settle

June 13th, 2014 · 1 Comment

I once spent a long time writing an article called ‘Compromise of litigation and lawyers’ liability: Forensic immunity, litigation estoppels, the rule against collateral attack, confidentiality and the modified duty of care’ which was published in the Torts Law Journal when it was edited by Professor Luntz ((2002) 10 TLJ 167), and I acted for the Victorian Bar in relation to D’Orta-Ekenaike v Victoria Legal Aid and instructed in the hearing of that case in the High Court.  So a case like Stillman v Rushbourne [2014] NSWSC 730 is fairly well up my alley.  Three key areas of uncertainty about the scope of and operation of the immunity post-D’Orta have been:

1.  Whether advice to settle which results in settlement can be said to affect the conduct of the cause and so be within the immunity;

2. Whether the immunity extends to intentional wrongs; and

3. When it is appropriate to grant summary judgment by reference to the immunity.

Relatively recently, those issues have become relatively authoritatively resolved in favour of lawyers.  In Stillman, Davies J summarily dismissed a claim against solicitors that they negligently advised settlement and intentionally and wrongfully coerced the plaintiff into settling.  The various authorities on these questions are usefully rehearsed and consolidated by his Honour, making this judgment a useful one-stop shop on these issues.

In relation to allegations of intentional wrongdoing, see also Young v Hones (No.2) [2013] NSWSC 1429.  As to the desirability of dealing with an advocates’ immunity defence at an early stage, including in a summary judgment application, see also Donnellan v Woodland [2012] NSWCA 433, a decision of a bench of five.

→ 1 CommentMore articles on: Advocates' Immunity · Barristers' immunity · defences · Forensic immunity · Negligence · Out of court settlements

WASCA on the kind of recklessness in making statements which amounts to conduct warranting discipline

June 12th, 2014 · No Comments

Traditionally, the law of professional discipline has differed from the law of negligence in three profound ways.  First, its aim is the protection of the public (though the policy in favour of protecting the reputation of the profession grossly infects the purity of this proposition in most analyses).  Secondly, it is about personal wrongdoing.  Statute aside, there is no law of attributed liability in contrast to doctrines such as vicarious liability in the law of negligence.  And thirdly, simple as opposed to gross negligence was never considered to warrant discipline.  Things got messed up by the introduction into disciplinary statutes of a concept of unsatisfactory professional conduct defined in terms identical to the test for simple professional negligence.

Disciplinary tribunals (and, in my experience, disciplinary investigators and prosecutors) seem to lapse from time to time into the language of ‘should have known’ even outside the prosecution of that species of unsatisfactory professional conduct which is defined by reference to the test of simple professional negligence.  Two practitioners had to go to two Courts of Appeal to reverse decisions on dishonesty charges which were horribly infected by objective reasoning:  Legal Services Commissioner v Brereton [2011] VSCA 241 and Giudice v Legal Practitioners Complaints Committee [2014] WASCA 115.  Surprisingly, the former decision did not get a guernsey in the latter.  The law of recklessness is authoritatively restated in the three separate judgments in Giudice and I have set the whole lot out below along with some observations about Brereton’s Case. [Read more →]

→ No CommentsMore articles on: "question of law" · appeals · autrefois acquit · Discipline · Dishonesty · duties regarding witnesses · duty to court · Ethics · fraud · litigation ethics · negligence as disciplinary breach · procedure · prosecutorial failures · prosecutors' duties

Efficacity of lawyers’ retainers effected by written instructions procured by crash n bash agents

June 6th, 2014 · 1 Comment

The Local Court of NSW has released for publication a considered decision about costs in what it treated as a test case, Foot v Burrett [2013] NSWLC 26.  A man’s car was damaged.  It was taken to panel beaters in Marrickville.  He there signed a document in order to get use of a replacement car while his car was being repaired.  He did not have to pay until later and it seems to have been anticipated that the repairer would pursue the cost from the allegedly negligent other driver on the man’s behalf.  The transaction was something like (but probably not) the man giving the repairer an equitable assignment of his right to damages for loss of the use of his vehicle against the allegedly negligent other driver in return for the free use of a car.  The document authorised Boston Commercial Services Pty Ltd to act for the man in recovering the costs of hiring the replacement car from the allegedly negligent driver who allegedly caused the property damage.  The document also said:

‘I hereby consent to Boston instructing Dejure Commercial Lawyers as my Solicitor on the record in respect of any proceedings commenced in relation to this retainer and I hereby retain Dejure on the terms and conditions of Boston’s existing retainer with Dejure….’

Proceedings were commenced in the man’s name.  Dejure Commercial Lawyers went on the record for him.  It is apparent that the man was required by the circumstances of the litigation to have an involvement in it.  The other driver lost.  He was ordered to pay costs.  He invoked the indemnity principle, saying that the man had no liability to pay Dejure Commercial Lawyers’ costs and so could not recover a partial indemnity against any such liability in the form of party-party costs.  The Court, treating the question as a test case, declined to accept that argument.  The decision casts doubt on the correctness in law of positions adopted by various legal disciplinary bodies as to the impropriety of lawyers accepting instructions from interested third parties in writing obtained from the agent.  The Court seemed a lot less perturbed by this mode of retainer than the Victorian Legal Services Commissioner tends to be, saying helpfully: [Read more →]

→ 1 CommentMore articles on: Indemnity principle · Party party costs · Retainers

Is solicitor-director of ILP which acted for him to be treated as self-represented?

June 6th, 2014 · No Comments

A NSW solicitor was partially successful in a defamation suit.  But for the circumstance that he had retained an incorporated legal practice with which he was associated and for part of the time the director and the file handler, the Court was willing to order the defendant to pay his costs on an indemnity basis.  In respect of the period in which the solicitor was — the fictions of corporations law aside — substantially self-represented, his costs were ordered to be assessed on the ordinary basis.   What McCallum J said in McMahon v John Fairfax Publications Pty Ltd (No 8) [2014] NSWSC 673 is:

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→ No CommentsMore articles on: Costs agreements · Incorporated legal practices (ILPs) · Indemnity principle · Party party costs · Professional fees and disbursements · Solicitor litigants

Self-represented solicitor guilty of misconduct for breaching a rule expressed to regulate conduct when acting for a client

May 29th, 2014 · No Comments

A Western Australian disciplinary case, Legal Profession Complaints Committee v CSA [2014] WASAT 57 is interesting in a number of ways. A criminal lawyer was the manager of a strata corporation.  She owned two units and the complainant the third. The complainant affixed an airconditioner to a wall which impeded on a common area.  She sought legal advice.  Her lawyers wrote a letter of demand to the complainant and charged a few thousand dollars.  The complainant did not fix the problem within the 14 days demanded, so the lawyer sued in the Magistrates’ Court.  The case was settled on the basis that the airconditioner would be relocated and the lawyer withdrew the proceeding without seeking costs.  When the complainant sold the third unit, the lawyer demanded that the complainant pay her the few thousand dollars her lawyers had charged her for the advice and the letter of demand.  She did so by a letter of demand drafted for her by another lawyer, though the involvement of this second lawyer only emerged at the disciplinary hearing. When the complainant did not pay up, she sued for them in her personal capacity.  The suit was found to have no legal foundation, but the lawyer said that she mistakenly thought that it did have a legal foundation, and that civil proceedings were not her thing. The case says:

1.  The suit was an abuse of process because there was no legal foundation for suing for the recovery of ‘pre-litigation’ legal costs.

2.  The lawyer’s conduct in threatening to bring and then bringing a suit which was an abuse of process was common law misconduct but was also a breach of a rule which prohibited lawyers from claiming on behalf of a client costs in a letter of demand for recovery of a debt because she was acting for herself in writing the letter (even though no legal letterhead or reference to her status as a lawyer was involved).

3.  There is no defence of honest and reasonable mistake in professional discipline.

4.  It is inappropriate for a disciplinary tribunal to make what the prosecutors described as ‘an incidental finding of dishonesty’ in relation to statements made during the investigation in respect of which no charge had been laid in the disciplinary proceeding.  Any such allegation ought to be the subject of a separate process (though the Tribunal then went ahead and found that the allegation was not made out on the Briginshaw standard anyway). [Read more →]

→ No CommentsMore articles on: Abuse of process · Briginshaw · Discipline · Dishonesty · duty to court · Evidence · jurisdiction · litigation ethics · Misconduct · procedure · The suit for fees

Prompt extinguishment of claims met by advocates’ immunity; walk-away offers by defendants entitled to immunity

May 14th, 2014 · No Comments

Young v Hones (No 3) [2014] NSWSC 499 is a decision about the costs of a lawyers’ negligence claim which was defeated by advocates’ immunity.  It and the (No 2) decision are interesting because:

1.  The Court determined the immunity point against the plaintiff in the trial of a preliminary question, having previously dismissed the lawyers’ summary judgment application;

2.  The Court suggested that the immunity applies in respect of allegations of conduct otherwise than in good faith despite suggestions to the contrary in pre-D’Orta-Ekenaike’s Case authorities; and

3.  The Court was inclined to the view that a well-drawn walk-away Calderbank offer would have been unreasonably rejected by the plaintiff and attracted costs penalties had it only been open a little longer than the 7 days it was expressed to be open for.

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→ No CommentsMore articles on: Advocates' Immunity · Barristers' immunity