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

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VCAT’s Legal Practice List and the Privilege Against Penalties

July 30th, 2014 · No Comments

I have been banging on about the privilege against penalties for a long time.  VCAT used routinely to require respondents in disciplinary proceedings to submit witness statements prior to the final hearing.  Then the Court of Appeal admonished it for doing so in Towie v Medical Practitioners Board of Victoria [2008] VSCA 157.  (That case stands for the proposition, incidentally, still not perfectly understood by people who probably should understand it, that even expert evidence of a respondent need not be filed prior to the close of the prosecution’s case: see the Court at [10], apparently approving ASIC v Plymin (2002) 4 VR 168 at [10].)

All this did not stop certain regulators inviting respondents to consent to orders to that effect without bringing the privilege against penalties or Towie’s Case to their attention and serving ‘Notices to Admit’.  Some of my clients, keen to save an appearance fee of a few hundred dollars, consented to such orders. [Read more →]

→ No CommentsMore articles on: Discipline · procedure · prosecutors' duties · VCAT Act

Director ordered to pay company’s £35M and counting costs liability

July 25th, 2014 · No Comments

Deutsche Bank AG v Sebastian Holdings Incorporated [2014] EWHC 2073 (Comm) is big.  Deutsche Bank sued a company in the English High Court and got a quarter of a billion American dollars judgment.  Justice Cooke also ordered the company to pay costs and ordered  an interim payment towards the company’s costs liability of about £35 million within a fortnight.  The company, a special purpose shell company incorporated in the Turks & Caicos (a British territory in the Bahamas and offshore financial centre), didn’t pay.  The plaintiff successfully applied ex parte to join the company’s sole shareholder and director and effect substituted service in the US.  He is the Norwegian born, Swedish raised, Harvard educated, Monaco domiciled Alexander Vik, said to have been miraculously lucky in his path to billionnairedom.  Until now…

The plaintiff then succeeded in its non-party costs order against the director for the reasons set out below.  It seems all the rage over in England; consider also Xhosa Office Rentals Ltd v Multi High Tech PCB Ltd [2014] EWHC 1286 (QB).  (And see also this post about a similar decision in Victoria, Lillas and Loel Lawyers Pty Ltd v Celona [2014] VSCA 70.  Even more recently, see JJES Pty Ltd v Sayan (No 2) [2014] NSWSC 475 in which the director of a corporate plaintiff which sued its solicitors for professional negligence was ordered to pay the solicitors’ costs personally on an indemnity basis.  It refers to two more authorities directly on point: FPM Constructions v Council of City of Blue Mountains [2005] NSWCA 340, and May v Christodoulou [2011] NSWCA 75; (2011) 80 NSWLR 462) [Read more →]

→ No CommentsMore articles on: Non-party costs orders · Party party costs

Costs of a solicitor’s negligence claim which bombed only on causation; costs of the successful solicitor’s unsuccessful proportionate liability defence

July 23rd, 2014 · No Comments

In King v Benecke [2014] NSWSC 957, Mr King alleged that his solicitor was negligent.  The solicitor denied everything and lost on all but one issue, namely causation, with the result that the solicitor got judgment and Mr King only Pyrrhic victories.

Mr King argued he should not have to pay all of the solicitor’s costs.  Rather, he argued, he should have his costs of the issues on which he succeeded (duty, breach, the proportionate liability defence), which took up most of the case.

Harrison J only acceded to that argument in one respect.  The solicitor had alleged that Mr King’s solicitors in the professional negligence suit were themselves concurrent wrongdoers against whom some of any liability which might be established against him ought to be apportioned under the proportionate liability regime.  The consequence was that Mr King had to get new solicitors, the plea having put the old ones into a position of conflict between self-interest and duty to Mr King.

The solicitor never adduced any evidence in support of the proportionate liability defence.  His Honour found that Mr King should have his costs of and incidental to it, but otherwise pay the solicitor’s costs of the entire proceeding: [Read more →]

→ No CommentsMore articles on: "professional negligence" · Causation · Negligence · Party party costs

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.    

→ No CommentsMore articles on: Travel

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 of the disciplinary prosecution (including those of the Commissioner’s employed solicitors) on County Court scale if they lose and (ii) a private reprimand.

I make 7 points about all this in the balance of this post. [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