Unpaid fees deny prof neg plaintiffs inspection of discovered file

Hammerstone Pty Ltd v Lewis [1994] 2 Qd R 267 BC9303056 is a useful case for solicitors sued for negligence. I advised a client to rely on it the other day, and he did, successfully, in the Magistrates’ Court at Melbourne. He acted for a woman who failed to pay his bill. He sued, and was met with a set-off defence alleging professional negligence. He discovered his file but objected to inspection on the basis of the solicitor’s lien. That entitles a solicitor to keep clients’ property (including that part of a solicitor’s file that the client owns as a matter of law) as security for payment of outstanding fees. The Magistrate ordered the woman to pay a large proportion of the unpaid bill into court as a condition of inspecting my client’s file. This post is a little note on the case, which won the Magistrate over.

It is a decision delivered by Shepherdson J of the Supreme Court of Queensland on 9 September 1993. The plaintiffs sued their former solicitors for negligence. The solicitors discovered their file but took objection in the affidavit of documents to inspection because they asserted a lien over $2,700 of unpaid fees which had been the subject of a bill of costs in taxable form but not yet a taxation. The solicitors did not counterclaim for their fees. Shepherdson J commented that “It is patently obvious in the present case the plea of negligence is one of substance.” Nevertheless, his Honour conluded:

“If I were to order inspection without any payment of fees or the giving of security therefor, the defendants will be disadvantaged in the event that the plaintiffs’ claim fails by which time the defendants’ lien will be in effect worthless. As aaginst that if I were to order payment of the full amount namely $2700 or the giving of security therefor, the plaintiffs would be disadvantaged in that the amount so ordered might turn out to be excessive. At the end of the day the order which I will make is a compromise.”

He ordered the solicitors to give inspection of their file upon payment into court of $2,000. The plaintiffs, the former clients, got costs, however, because — oversimplifying somewhat — the solicitors had offered to allow inspection only on the basis that the full amount of the billed fees be paid into their an interst bearing account, the funds to abide the decision in the professional negligence case. That is, if the plaintiffs won the case, they got the money (and interest earnt) back, and if the solicitors won the case, they kept the money (and interest earnt) without any entitlement in the plaintiffs to verify the reasonableness of the costs by taxation. Since the plaintiffs did better in the result than they could have done by accepting the offer, they got their costs of the application.

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