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Latest on whether solicitors engage in trade or commerce: part I

Leong v J P Sesto & Co [2009] VCAT 99 is the latest in the on-again off-again saga of whether solicitors engage in trade or commerce, and, whether, if not, it means that VCAT does not have jurisdiction over claims involving them, and if so, which claims. Senior Member Vassie considered the question in the context of an application to set aside a costs agreement. It was heard in October 2008 and decided on 30 January 2009. The NSW Court of Appeal’s decision in Kowalczuk v Accom Finance [2008] NSWCA 343, decided on 10 December 2008 was not referred to (see Part II).

The application was made on the orthodox basis (under the predecessor of the Legal Profession Act, 2004) and supplemented by somewhat half-hearted arguments under the Fair Trading Act, 1999, the state equivalent of the Trade Practices Act, 1974. The law is quite clear that regardless of whether lawyers engaged in their core professional roles of representation and advising are engaged in in trade or commerce (the traditional view is that they are not), some aspects of their businesses are. What this decision says is that in negotiating fees, lawyers are engaging in trade or commerce, and so causes of action which seek relief in relation to costs agreements under the Fair Trading Act, 1999 and which are dependent on conduct in trade or commerce are available to clients. (It might be worth tucking away for future thought whether a lawyer who does not negotiate and seeks to recover fees only on scale or practitioners remuneration order, could be said to be engaging in trade or commerce, but it is unlikely such a costs agreement would be the subject of an application to set it aside.)

The decision also asserts that the Fair Trading Act, 1999‘s definition of ‘services’ requires that the services be in trade or commerce, contrary to an earlier considered decision of the Legal Practice List, which it seems may not have been cited to Senior Member Vassie. No argument on this point is recorded in the decision. Ironically, if this decision is followed, the result may be a narrowing of VCAT’s jurisdiction, because in those causes of action which do not specifically require conduct in trade or commerce, but require ‘services’, VCAT’s previous position was that the services did not have to be in trade or commerce to come within the definition, because though the words ‘trade or commerce’ appeared in the definition, the definition was inclusory, and only ‘included’ certain conduct in trade or commerce, rather than mandating ‘trade or commerce’ as an essential characteristic of activity falling within the meaning of ‘services’. An example of such a jurisdiction is the one to resolve ‘consumer-trader disputes’, a jurisdiction which essentially grants to VCAT common law jurisdiction enhanced by special legislative powers over all disputes arising directly out of the provision of services, regardless of their value. In those instances of lawyers’ conduct which are not engaged in in trade or commerce, Senior Member Vassie’s construction of the Act would deny VCAT jurisdiction where it would otherwise have had jurisdiction by virtue of the expansive construction of the definition of ‘services’. (Note that J P Sesto & Co v Jadewealth Pty Ltd [2009] VCAT 80 is essentially the same judgment in the same case.)

What Senior Member Vassie said was: Continue reading “Latest on whether solicitors engage in trade or commerce: part I”

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Calderbank offers

Calderbank offers — those marked ‘without prejudice except as to costs’ — are one of those subjects which recur so often that single judge decisions are constantly coming out, but one never knows exactly which ones to read. They all say much the same thing, with an equal degree of fuziness, and the illusion is that one may read the tea leaves to discern which way the wind is blowing. People are constantly typing ‘Calderbank offer’ into google and finding their way, for some reason, to my blog. So, for all those people, here is the latest and greatest discourse on the subject, a learned review in the nature of a tiny text by no less a luminary than a justice of the Supreme Court of NSW, Justice Beazley. It’s an extra-judicial bit of writing called, appealingly, ‘Calderbank offers’, available only on the website of the Supreme Court of NSW. Another authoritative and up-to-date source is the recently published second edition of Dal Pont’s also endearingly entitled Law of Costs.

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Beak bribe boast bars barro

Legal Services Commissioner v JDG [2008] LPT 17 is a shocking case in which a Queensland barrister was struck off after he lied when confronted by investigators with the true proposition that he had offered to pay a $50,000 bribe to a Magistrate or Crown prosecutor on behalf of a client.  He also took $59,000 in cash from the direct access client and popped it into his safe.  He used some of it to feed his gambling.  He should, of course, have chucked it into a special account.  He told his client that: Continue reading “Beak bribe boast bars barro”

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Tendency evidence in solicitor’s negligence case

Vaccaro v Flammia [2008] NSWSC 1322 is a tantalizing case about the admissibility of tendency evidence of dishonesty against a solicitor and about issue estoppel arising from earlier cases brought by others against the same solicitor.  It was decided against the uniform evidence legislation which has been introduced into Victoria by the Evidence Act, 2008 (Vic.), yet to commence.  The tantalization which is an incident of this being only an interlocutory decision will be consummated if the matter goes to trial.

The solicitor’s clients left a certificate of title with him for safekeeping.  He kept it in ‘a tin’ in the back room of his practice.  Someone took it without the clients’ authorization and raised $400,000 by forging their signatures on a mortgage.  The clients did not receive any of the money.  The witness which the mortgage instrument suggested had witnessed it did not exist. Continue reading “Tendency evidence in solicitor’s negligence case”

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Negligence claim against solicitor is a relevant factor in a limitation period extension application

Personal injuries guru recently turned Supreme Court judge, Justice Forrest, declined an application for an extension of time in which to bring an action for negligence against a cruise line. The case was Gordon v Norwegian Capricorn Line (Australia) Pty Ltd [2007] VSC 517. His Honour said the case against the cruise line was a simple, one issue case.  Had the extension application succeeded, the trial would have taken place nine years after the allegedly negligent treatment of a heart attack suffered by the plaintiff at sea.  The representation of the plaintiff by his former solicitors S&G Ltd was characterised by ‘ineptitude’, the judge found.

A key reason for declining the extension was the availability of a reasonably simple cause of action for negligence against the plaintiff’s former solicitors.  Justice Forrest had more material against which to judge the prospects of success in such a claim than in other cases, where the signficance of the availability of a negligence claim against the applicants’ former solicitors was downplayed.  His Honour had enough to conclude that the plaintiff had a ‘powerful if not overwhelming case’ against S&G Ltd (I can feel a settlement coming on…).  His Honour set out the law in relation to the relevance of an extension of time application of the availability of a professional negligence claim against a solicitor as follows: Continue reading “Negligence claim against solicitor is a relevant factor in a limitation period extension application”

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Seems the implied waiver hystericals were right after all

Lawyers Weekly has an article by some folk at Allens noting Justice Branson’s decision in Rich v Harrington [2007] FCA 1987, a mega anti-discrimination suit brought by Christina Rich, a former partner of PricewaterhouseCoopers Australia against the other partners. There are so many privilege cases which come out, it’s hard to know which ones to read. This one would be a good choice: it covers implied waiver, the prerequisites to a successful assertion of privilege over communications with in-house counsel, and the common interest exception to waiver, namely most of the tricky bits.

Pricewaterhouse’s lawyers wrote to Ms Rich saying:

‘Our client has acted at all times with the benefit of external advice and does not believe that there has been any victimisation or other conduct for which compensation could properly be sought.’

That was held to waive privilege in the advice so as to entitle Ms Rich to a copy of it. I have always thought people have been overly hysterical about the dangers of waiver, and, living in fear of it as they do, forego forensic advantage that they might obtain but for their phobia.  Admittedly, this single decision does seem to add fuel to the hystericals’ fire. Allens’ people’s message is: never mention legal advice. To give them their due, they were writing for a national rag. Victorians in fora outside the Federal Court can probably relax a bit more than that because of the Court of Appeal’s decision in Secretary, Department of Justice v Osland [2007] VSCA 96, which the authors mention. Even Victorian Federal Court judges are likely to be influenced by that decision.

One aspect of the law of privilege about which lawyers are more comfortable and relaxed than perhaps they might be is the entitlement of the employers of in-house lawyers to claim privilege over their advice and work. This decision confirms that they are in fact more comfortable and relaxed than they should be.

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Negligent misstatement limitation period lecture

Update, 20 November 2008: The latest decision is Pegasus Management Holdings S.C.A. v Ernst & Young (a firm) [2008] EWHC 2720 (Ch).  A CMS Cameron McKenna Law Now note may be read here.

Original post: The Law Institute is putting on a lecture at lunchtime on 24 June 2008 by an ex-megafirms lawyer who has gone boutique, Margot Clarkson. It will be about the very specific topic of limitation periods for negligent misstatement cases (though somewhat oddly, the case featured in the flyer, Wardley v Western Australia (1992) 175 CLR 514 is a pure misleading and deceptive conduct case).  I treated that topic at some length in an article imaginatively titled ‘Legal Professional Liability Part II’ at (2001) 9 Torts Law Journal 1 (I have reproduced the relevant bit below), and have blogged about it from time to time since (see these posts).  It’s a difficult topic, and such a seminar is welcome. It costs $80 for LIV members and $160 for non-members.

This is what I said in the article: Continue reading “Negligent misstatement limitation period lecture”

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Detailed causation analysis in solicitor’s negligence case

Walton v Efato Pty Ltd [2008] NSWCA 86 was the subject of this sister post in relation to advocates’ immunity. But the case is also interesting for the detailed analysis given in relation to causation, which is the subject of this post. The Court found that the solicitor’s failure to lodge within time an application to set aside a creditors statutory demand was the cause not only of the failure of that application but also of the costs incurred in the ensuing successful defence of an application to wind up the client company, an atypical costs order at the end of that application by which the client company was ordered to pay the costs of the creditor who had applied unsuccessfully (i.e. so that the rule that costs follow the event was turned on its head) and the costs of the liquidation which was occasioned by the client company’s inability to meet the costs order. The decision will have legal liability insurers squirming and a High Court appeal must be a possibility. Continue reading “Detailed causation analysis in solicitor’s negligence case”

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NSW Court of Appeal on advocates’ immunity for out of court work

The NSW Court of Appeal dismissed an appeal from a decision finding that a solicitor was not immune from a negligence suit based on a failure to prepare evidence promptly, though its comments in relation to immunity were obiter dicta [102]. Although the evidence did get adduced after a change of solicitors and before the end of the trial, so that the solicitor’s client succeeded, the client was penalised when it came to costs for adducing the critical evidence at the last moment, contrary to case management pre-trial directions. Not only did the succeesful client not get an order that the other side repay its costs, but it was ordered to pay the other side’s costs. The decision is Walton v Efato Pty Ltd [2008] NSWCA 86. Another aspect of the decision is noted at this sister post. Justices of Appeal Beazley and Giles agreed with the lead judgment of Justice of Appeal Tobias.

What happened was that a creditor of a company served a statutory demand on a company. The company’s solicitor did not file and serve within the necessary 21 days the application to set it aside on the basis of a genuine dispute as to the existence of the debt. He did so out of time. So by operation of the Corporations Law, 2001, the company was presumed to be insolvent, and the courts had no power to extend the time retrospectively. Continue reading “NSW Court of Appeal on advocates’ immunity for out of court work”

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Ohio State Medical Association Frivolous Lawsuits Committee scores 3 victories against med neg plaintiff lawyers

The Ohio State Medical Association’s Frivolous Lawsuit Committee defended 3 frivolous medical negligence suits against members and funded counterclaims by the defendant doctors against the plaintiff’s solicitors for bringing hopeless claims. The doctors succeeded. Continue reading “Ohio State Medical Association Frivolous Lawsuits Committee scores 3 victories against med neg plaintiff lawyers”

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So long as you don’t intentionally fail to turn up when briefed, no problem

Senior Member Howell’s decision in Crawford v Kennedy [2008] VCAT 5 begins:

‘Mr. Gilbert Crawford was a defendant in proceedings to be heard in the Magistrates’ Court on 29 March 2006. He was impressed by [the late] Mr. Peter [H] QC when he saw Mr. [H] on a television programme. Mr. Crawford went to see Mr. [H] and engaged him to appear on his behalf at the hearing in the Magistrates’ Court.’

A Melbourne solicitor, presumably giving evidence on oath, was described as ‘not an impressive witness’ who was ‘determined not to give an answer unfavourable to Mr. H,’ which she presumably won’t be too happy about. Interestingly, she is quoted in this article in The Australian as saying that her one-time boss, tax lawyer Michael Brereton was using Mr H almost full-time before Mr H died. Mr Brereton was being irritated by a dispute with the tax man in the Supreme Court, and retained Mr H to ameliorate the irritation, but was also briefing Mr H on behalf of his own clients, according to the article. It was Mr Brereton’s case which Mr H attended to on 29 March 2006, instructed by the female solicitor, who had by then gone out on her own, and was acting for Mr Brereton. Continue reading “So long as you don’t intentionally fail to turn up when briefed, no problem”

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Why you needn’t call a solicitor an ‘Australian legal practitioner’

Update: The nice thing about blogging compared with, say, writing a book (not that I would know) is the interactivity.  Lawyers are obviously still a bit chary of the comment function, given how many of them email me rather than comment.  Nothing prompts the sharpening of e-pencils quite like an error, and it seems I have made one, in an article, ironically, about errors of exactly the same species.  To stem the deluge of correspondents (which stands at 2) let me recognise that ‘beaks’ are not, in common parlance, lawyers, but Magistrates, and judges, possibly even tribunal members.  I am not convinced that all of the guests on 3RRR’s Lawyers Guns & Money’s impossibly amusing ‘Beak of the Week’ segment were such folk, but then again, that was a long time ago.

Original post: Often enough, I see pleadings against barristers, and against solicitors, which recite that the defendant is an Australian legal practitioner within the meaning of the Legal Profession Act, 2004. I am often unsure why. I think it would be fine to plead that the defendant is a solicitor, or a barrister. The other day, I came across a decision of Justice Byrne which considered a somewhat analogous question in a completely different context: Smith v Harris [1996] 2 VR 335. It reassures me that changes in statutory language need not necessarily affect the use in the law of ordinary language: see below. But there are moments when the language of the Act should be pleaded, and when you must, as a matter of law, call yourself an Australian legal practitioner rather than any old beak. Continue reading “Why you needn’t call a solicitor an ‘Australian legal practitioner’”

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Getting documents out of insurers

If I recall correctly, one of my first contested hearings as a young solicitor was about whether the claim for privilege over a loss adjuster’s report in an affidavit of documents drafted by me was kosher.  I went on to write an article on the subject in that august journal, the newsletter of Women in Insurance’s Victorian chapter.  The law was all over the place.  Now Wotton & Kearney have put out a note of a substantial decision on the same issues: privilege of documents in the hands of an insurer brought into existence at a time when proceedings were merely anticipated.  The case is Southland Coal Pty Ltd (Receivers & Managers Appointed) (In Liquidation) [2006] NSWSC 899.  It is a decision which is favourable towards insurers and takes an expansive rather than restrictive approach to the question.  The article appears in the firm’s inaugural annual insurance review, but its author, Sydney senior associate Brendan Hammond has given me permission to reproduce it.

This is one of the points made:

‘some of the disputed documents were emails exchanged between officers of the insurer, or between an officer of the insurer and a third party. It was held that the issue was not whether those emails were privileged but whether granting access to them would result in disclosure of privileged communications such as the provision of legal advice by the insurer’s lawyers.’

That is consistent with Justice Chernov’s majority view of waiver in Spotless Group Ltd v Premier Building & Consulting Pty Ltd [2006] VSCA 201, and inconsistent with Neave JA’s minority view.  Now, here’s the article in full:

Continue reading “Getting documents out of insurers”

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Judge says finality has overtaken intimate connection as immunity touchstone

A New South Wales District Court judge has handed down an important decision on advocates’ immunity, which is under appeal. The case is Fowler v La Fontaine [2007] NSWDC 207. It is a case which explores what the test for the immunity really is now that the High Court has said ‘it’s all about finality’. The decision on appeal will be important especially in those cases where there is no adjudicated outcome after a contested hearing, such as where there is a discontinuance, or a default judgment, or a striking out consequent upon terms of settlement. The facts, and the relevant bit of the judgment, are set out below. Continue reading “Judge says finality has overtaken intimate connection as immunity touchstone”

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Two new cases from NSW

Here’s a 37,000 word long judgment in a professional negligence case against a solicitor which began in early 2000: Rebenta Pty Ltd v Wise [2007] NSWSC 1332. It does not discuss many issues of law. The reason one might want to look at it is that it is one of those rare cases where a dispute about whether there was one ongoing retainer or several more discrete retainers of a solicitor. The solicitor won after a four and a half week trial.

In The Prothonotary of the Supreme Court of New South Wales v. Sukkar [2007] NSWCA 341, the NSW Court of Appeal engaged in a surprising degree of soul searching before deciding to strike an ecstasy importer cum solicitor off the roll of practitioners. The fact that he gave false evidence in his trial did not assist him. The decision is an interesting illustration of the distinction between a finding of want of good fame and character and a finding of professional misconduct where the conduct in question is unconnected with legal practice. The Court of Appeal’s decision in the criminal appeal is reported at Regina v Sukkar [2005] NSWCCA 54. The importation of 124 kilograms of ecstasy earnt the solicitor 14 years in jail. In relation to the appropriateness of a finding of misconduct where the conduct in question is unconnected with legal practice, Basten J said in separate reasons from the majority: Continue reading “Two new cases from NSW”

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Yet another corporate counsel privilege case; the US position.

Even though legal professional privilege, duties of confidentiality, and other evidentiary privileges are something I try to keep up with, and though I have just advised a litigation funder on the subject, I would be challenged by an urgent brief to argue the privilege of a communication between in-house counsel and a staff member or officer of his or her corporate employer. There are just so many single-judge cases and so few appellate cases, and I’m not sure they all stitch together too well. The latest is Telstra Corporation Limited v. Minister for Communications, Information Technology and the Arts (No.2) [2007] FCA 1445, and Cutler Hughes & Harris’s note on it is here. Telstra’s resistance to the other side inspecting certain documents failed for want of evidence as to the independence of the relevant in-house counsel.

The law on the question has recently been summarised in the US in  In re Vioxx Prods. Liab. Litig., 501 F.Supp.2d 789 (E.D. La. 2007). Hogan & Hartson’s note on the decision, well worth reading, is here.

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Auditors’ liability for failure to ‘blow whistle’ on fraud

English firm CMS Cameron McKenna has published a case note on Case Stone & Rolls Limited (in liquidation) v. Moore Stephens (a firm) [2007] EWHC 1826 (Comm). It is a decision which considers the rule ex turpi causa non oritur actio in the context of a professional liability claim, in this case to a claim of liability in a professional whose task was to prevent fraud. The rule says no cause of action can be founded on illegality or immorality in the plaintiff.  The case note begins:

‘In an important decision, the [English] Commercial Court considered whether or not a company which had perpetrated a fraud could claim against its auditors for failing to detect and report that fraud.  Even though this involved the company relying on its own fraud, the Court nevertheless held that it could continue with its claim against the auditors.  This was, according to the Court, because the fraud was “the very thing” that the auditors were under a duty to identify, and the “ordinary citizen” would not find anything repugnant in allowing the company to make a recovery in such circumstances.’

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Father instructs lawyer as daughter’s agent then daughter sues him: whose privilege?

Here’s a weird old privilege case: Sugden v Sugden [2007] NSWCA 312. A minor from Orange in rural NSW suffered bad injuries in a car crash while she was driving. She was on L plates and her father was supervising. Since she was all banged up and in the Royal North Shore Hospital in Sydney, her father went to the local solicitor in Orange and gave a statement with a view to getting advice as to who was responsible for compensating her for her injuries. Turns out, he was the one to blame, so the daughter sued him. He and the daughter’s solicitor had stopped communicating after a while, of course, but there were the communications beforehand. Needless to say the only reason the daughter was suing her father was that her father had liability insurance. The insurer obviously wanted a copy of the father’s statement. The President of the NSW Court of Appeal and Justices Ipp and McDougall JJ said they couldn’t have it because it was privileged and the owner of the privilege was the father, who had been acting as his daughter’s agent. The analysis was under the uniform evidence legislation which does not apply in Victoria except in the Federal and Family Courts etc. exercising federal jurisdiction.

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Justice Brereton’s latest professional negligence decision: failure to warn punter of commercial improvidence

Update, 5 December 2007: Thank goodness.  Someone has read the case and done a little note for us all. Nigel Watson’s crew over at Tress Cox, in fact.  Here it is. It says, in part:

‘it was or ought to have been plain to the solicitor that the plaintiffs were putting their family home at risk in order to raise the funds for an investment in which they had unrealistic expectations which were objectively absurd and in practice involved an extremely high risk. It was insufficient for the solicitor to advise the plaintiff that they limited their retainer on advising on a proposed investment. The solicitor should not have requested that the plaintiffs seek and obtain legal and financial advice elsewhere in respect of this component of the transaction and yet still continued to act on and facilitate the loan transaction. It should have also been evident to the solicitor that the plaintiffs did not appreciate the importance of obtaining such advice and did not intend to get the relevant advice. The Judge stated “what was required was advice that firmly brought home the apparent improvidence of the proposed investment.”’

Original post: Justice Brereton has put out another long professional negligence decision in a solicitor’s liability case: Riz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153. Must say I haven’t read it, and I hesitate to make promises by adding “yet”. But it seems to be about the failure of a solicitor to warn her clients against going into a scam involving — no kidding — shopping trolleys. The solicitors had formerly acted for the scammer. Their job was to give the familiar independent advice on loan and mortgage documents. The clients were Lebanese immigrants and had poor English. This was one of those cases where an attempt to limit the solicitors’ obligations to warn against really improvident transactions did not work, probably because the whiff of a conflict of duties hung in the air.