Abruzzese v David Jones Ltd (No.1)
[2003] FMCA 280
•4 July 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ABRUZZESE v DAVID JONES LTD (No.1) | [2003] FMCA 280 |
| PRACTICE AND PROCEDURE – Subpoenas – application to set aside subpoena as an abuse of process – subpoena issued to former solicitor of the applicant requiring production of the solicitor’s file – claim by the former solicitor of a lien over the file on account of unpaid costs and disbursements – whether the lien defeats the subpoena considered – whether the solicitor is entitled to claim a lien in circumstances where the relationship of solicitor and client is severed by the solicitor considered – whether the former solicitor should be granted a charge over moneys that might be awarded by the court or agreed upon by the parties in the legal proceedings considered. |
Federal Magistrates Court Rules 2001 (Cth)
Legal Profession Act 1987 (NSW), s.209C
A v B [1984] 1 ALL ER 265
Bolster v McCallum [1966] 2 NSWLR 660
C Com Pty Ltd v Jiejing Pty Ltd & Ors (unreported, Cooper J, 24 June 1992)
Chester v Cassidy Gibson Howlin [1994] 18 FamLR 463
Cross v National Australia Bank Limited (unreported, Drummond J, 13 May 1993)
Flexible Manufacturing Systems Pty Limited v Lewis (trading as Morgan Lewis Alter Lawyers) (unreported, Berecry AM, 10 October 2002)
Hughes v Hughes [1958] P224
In the Matter of an Application by Weedman and Others [1996] 1112 FCA 1
Ismail v Richards Butler, A Firm [1996] 3 WLR 129
Lord v Wormleighton (1822) Jac 580
| Applicant: | MARIA ABRUZZESE |
| Respondent: | DAVID JONES LTD |
| File No: | SZ437 of 2002 |
| Delivered on: | 4 July 2003 |
| Delivered at: | Sydney |
| Hearing date: | 4 July 2003 |
| Judgment of: | Driver FM |
REPRESENTATION
| Solicitors for the Applicant: | Mr J Capsanis JP Capsanis & Co |
| Ms Gerace appeared in person in response to a subpoena issued to her. |
ORDERS
The motion by Ms Gerace to set aside the subpoena is dismissed with no order as to costs.
Maria Gerace is to provide the documents sought pursuant to the subpoena issued on 22 May 2003 on or before 16 July 2003.
Any damages payable to Ms Abruzzese pursuant to an order of this Court or a compromise of the proceedings shall be subject to a charge in favour of Maria Gerace in respect of professional costs and disbursements reasonably and properly incurred.
BY CONSENT, THE COURT ORDERS THAT:
Ms Abruzzese is to provide a direction to Ms Gerace, within seven days of entry of these orders, authorising the release of all funds held in trust by Ms Gerace for the payment of outstanding disbursements, including counsel’s fees and professional costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SZ437 of 2002
| MARIA ABRUZZESE |
Applicant
And
| DAVID JONES LTD |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
The application I have before me is a motion of which notice was given on 13 June 2003 by Maria Gerace of Sachs Gerace Lawyers, who formerly acted for the applicant in the principal proceedings (Maria Abruzzese). Ms Gerace was in fact the second of three solicitors who have acted for Ms Abruzzese in the proceedings. The applicant is currently represented by Mr Capsanis. The motion seeks that a subpoena issued by the Court at the instigation of Ms Abruzzese, directed to Ms Gerace, be set aside as an abuse of process.
That subpoena was filed on 22 May 2003 and sought all files, including documents, correspondence, memoranda, etcetera, in relation to the conduct of the matter between Maria Abruzzese and David Jones Pty Ltd. In essence, the subpoena sought the production of Ms Gerace's file as the previous solicitor acting in the matter. In the alternative to the setting aside of the subpoena as an abuse of process the motion seeks an order that Maria Gerace is not required to answer the subpoena and is entitled to maintain against Ms Abruzzese a lien over Ms Gerace's file for unpaid costs and disbursements.
In the further alternative, the motion seeks an order that neither the applicant nor the applicant's legal representative are to be given access to the documents produced pursuant to the subpoena. The motion also seeks an order for costs on an indemnity basis.
The significance of the alternative orders was explained to me by Ms Gerace this afternoon, noting that the subpoena issues from the Court (albeit at the instigation of a party) and calls for the production of documents to the Court. There is therefore an issue of obedience to the subpoena as between the recipient of the subpoena and the Court in addition to any question of answering the subpoena for the purposes of assisting the party who caused the subpoena to be issued.
The issue before me is whether the subpoena constitutes an abuse of process in circumstances where the recipient of the subpoena is a solicitor who claims a lien over the file sought to be obtained by the subpoena. Ms Gerace relies upon her affidavit filed on 13 June 2003 which explains the relevant circumstances in which a lien is claimed. Ms Gerace deposes that she is owed money by Ms Abruzzese. Although she holds $5,000 in trust, her costs and disbursements incurred in the conduct of the proceedings exceed that amount by several thousand dollars. Ms Gerace has been unable to obtain a direction to release the money held in trust for the payment of counsel and other purposes.
Ms Gerace also makes reference to an earlier affidavit which was filed on 24 April 2003 explaining the circumstances in which Ms Gerace withdrew as solicitor on the record. In that affidavit Ms Gerace deposes as follows:
By letter dated 3 March 2003 I gave notice to the applicant that I intended to cease acting 21 days after receipt of the letter.
I stated that date as 26 March 2003. I have not annexed the letter as the bulk of its contents are privileged.
I continued to act after 26 March 2003 as instructions were provided to attempt settlement of the proceedings. I carried out the instructions provided.
Additionally, I am of the opinion that the relationship between me and my client has deteriorated to the point where I must withdraw. The applicant has no confidence in the advice
I provide.
I appeared for the applicant before Registrar Kavallaris on 23 April 2003 in answer to a subpoena served on the applicant. The applicant indicated to me that she was not prepared to provide instructions to me to negotiate a proposition for production of the documents and wanted the Court to decide. This was conveyed to the Court. The applicant spoke directly to the Court indicating, amongst other things, that she was not happy with me. Although, the bulk of her advice was a criticism of the way I handled the subpoena in delaying providing a copy of it to her, I am of the opinion that the applicant has no confidence in my advice and is unwilling to undertake any direction from me in the manner in which legal process must be undertaken.
It is apparent from that affidavit that Ms Gerace had formed the opinion that the relationship of solicitor and client had irretrievably broken down and that, in the circumstances, she should withdraw. It was not apparent to me at that time that any leave of the Court was required. Pursuant to the Federal Magistrates Court Rules 2001 (Cth) a solicitor is entitled to withdraw upon giving proper notice in accordance with the Court rules. I accepted that sufficient notice had been given.
There is authority which Ms Gerace took me to that where a solicitor properly claims a lien over his or her file a subpoena issued at the instigation of the former client to obtain that file for the purposes of continuing proceedings is an abuse of process: Bolster v McCallum [1966] 2 NSWLR 660. However, this is not an absolute rule of procedure. It is apparent from that case that the question of whether the subpoena is an abuse of process cannot be answered without determining whether, in the circumstances of the particular case, the solicitor is properly entitled to rely upon the solicitor’s lien in answer to the subpoena.
There are at least three ways in which a client might seek to obtain a file from a solicitor where the relationship of solicitor and client has been terminated. The first and the most obvious (in New South Wales) is by making an application under s.209C of the Legal Profession Act 1987 (NSW) (“the Legal Profession Act”). That section relevantly provides as follows:
(1)On the application of a barrister's or solicitor's client the Supreme Court may order the barrister or solicitor:
…
(b) to give the client on such conditions as the Supreme Court may determine such of the client's documents as are held by the barrister or solicitor in relation to those services.
…
(4)In this section a reference to a barrister or solicitor includes a reference to a former barrister or solicitor.
The second method by which a former client may secure the file from the solicitor would be by order of the Court in the relevant proceedings at the time when the solicitor gives notice of intention to withdraw from the proceedings, at least where leave of the Court is required. In this case, I formed the view that leave of the Court was not required. There is a question in those circumstances whether the Court would be entitled to order the production of the file by the withdrawing solicitor. I need not form a final view on that question for the purposes of these proceedings.
The third method by which the file might be obtained is the method adopted on behalf of Ms Abruzzese in these proceedings; namely, by issuing a subpoena. Ms Gerace pressed on me that the issue of a subpoena in these circumstances is an abuse of process because the former client is able to obtain the file by making an application under s.209C of the Legal Profession Act and that that is the mechanism that should be pursued. She pressed this on me also by reference to the fact that on such an application the Supreme Court would be able to deal with any unresolved issue between the former solicitor and the client concerning unpaid solicitor’s costs and disbursements.
In my view, the issuing of a subpoena to obtain a file from a former solicitor is not necessarily an abuse of process simply because application could be made under s.209C. That course would require application being made, at least initially, in the Supreme Court and a quicker and simpler process is the issuing of a subpoena out of the Court where the relevant proceedings are being conducted.
However, I accept that ordinarily such a subpoena would be an abuse of process in circumstances where the solicitor receiving the subpoena is entitled to rely upon a solicitor's lien in order to withhold the file from the former client. This brings me back to the question of whether Ms Gerace is entitled to rely upon her asserted lien in order to withhold the file.
There is authority relevant to the exercise of jurisdiction under s.209C of the Legal Profession Act which is relevant to a consideration of that issue. The first case is a decision of the Federal Court in In the matter of an Application by Weedman and Others [1996] 1112 FCA 1, a decision of Drummond J. It appears from that case that the Federal Court was exercising jurisdiction under section 209C of the Legal Profession Act upon transfer of the proceedings to the Federal Court from the Supreme Court. His Honour, in a considered judgment which reviewed the relevant authorities, made the following observations:
In the absence of a special agreement, the right of a solicitor to refuse to hand over his former client's papers in order to force the client to pay his costs has long been recognised under the general law. The principles are relevant to the assertion of a solicitor's lien upon a change of solicitor as set out in the judgment of Templeton LJ in Gamlen Chemical at 624 and have been accepted by this Court in C Com Pty Ltd v Jiejing Pty Ltd and Others (Cooper J, unreported, 24 June 1992) and Cross v National Australia Bank Limited, Drummond J, unreported 13 May 1993:
If before the action is ended the client determines the retainer, the solicitor may subject to certain exceptions, not here material, exercise a possessory lien over the client's papers until payment of the solicitor's costs and disbursements. Thus, in Hughes v Hughes [1958] P224 at 227-228 Hodson LJ said: There is no doubt that a solicitor who is discharged by his client during an action, otherwise than for misconduct, can retain any papers in the cause in his possession until his costs have been paid. This rule applies, as the authorities show, whether the client's papers are of any intrinsic value or not…
The solicitor himself may determine his retainer during an action for reasonable cause, such as the failure of the client to keep the solicitor in funds to meet his costs and disbursements; but in that case the solicitor's possessory lien, ie, his right to retain the client's papers of any intrinsic value or not, is subject to the practice of the Court which, in order to save the client's litigation from catastrophe, orders the solicitor to hand over the client's papers to the client's new solicitors, provided the new solicitors undertake to preserve the original solicitor's lien and to return the papers to the original solicitor for what they are worth after the end of the litigation.
His Honour continued:
This passage cannot be read as limiting the cases in which delivery of the former client's papers will be ordered, the solicitor having terminated the retainer, to those in which the client will suffer a catastrophe, in the sense of irreparable harm, in conducting his litigation if denied the papers:
Templeton LJ added in Gamlen Chemical that: “where the solicitor has himself discharged his retainer, the Court then will normally make a mandatory order obliging the original solicitor to hand over the client's papers to the new solicitor against an undertaking by the new solicitor to preserve the lien of the original solicitor”. It has also been said that such an order is made “as of course” where it is the solicitor who discharges the retainer. See Gamlen Chemical at 620. See also Cordery on Solicitors, 9th Edition, paragraph 735.
However, the modern rule is that, while it is the usual practice for such an order to be made where it is the solicitor who has terminated the retainer, “the Court does not do this automatically. Whether it grants the order is an equitable matter and therefore one of discretion, with a result that it is to be exercised judicially on the facts of the case”: A v B [1984] 1 ALL ER 265 at 274. Gamlen Chemical at 624-625. Ismail v Richards Butler, A Firm, [1996] 3 WLR 129 at 139. In Gamlen Chemical, Templeton LJ, at 624, refers to the Court's overriding discretion with respect to ordering delivery of the client's papers, notwithstanding the general rule referred to above. Whether such a direction will be exercised in favour of the client depends, according to his Lordship at 625, “on the nature of the case, the stage which the litigation had reached, the conduct of the solicitor and the client respectively, and the balance of hardship which might result from the order the Court is asked to make”; the existence of such a discretion is based upon “the inherent, albeit judicial, discretion of the court to grant or withhold a remedy which is equitable in character”: Gamlen Chemical at 624.
In A v B Leggatt J said at 274 that,
in exercising this overriding discretion, the Court should make the order which would best serve the interests of justice and that, in determining where those interests lay, it is necessary to weigh up the principle that a litigant should not be deprived of material relevant to the conduct of his case and so driven from the judgment seat, if that would be the result of permitting the lien to be sustained, and the principle of litigation should be conducted with due regard to the interests of the court's own officers, who should not be left without payment for what is justly due to them.
Where it is the client who discharges the solicitor, other than for the latter's misconduct, a different position obtains: in such cases the general rule is that the solicitor is entitled to keep his lien and the Court had no power to interfere with the exercise of it: Lord v Wormleighton (1822) Jac 580.
His Honour continued, quoting Hodson LJ in Hughes v Hughes [1958] P224 at 228:
The litigant need not change his solicitor without good cause. It would be odd if he were in effect able to get solicitors’ work done for nothing by the simple expedient of changing his solicitor as often as he chose, leaving a trail of unpaid costs in his wake and demanding the papers without payment when he had no just cause to complain of the conduct of the solicitors instructed and discarded.
In Ismail v Richards Butler, Moore-Bick J said at 143, that the cases show that where the client has discharged the solicitor, the court has not been willing to interfere with the exercise of the lien, even where the papers concerned are required for pending litigation. Where it is the client who has terminated the retainer otherwise and for the solicitor's misconduct I doubt whether there is any residual discretion in the court to order that the former client shall have access to the documents in the face of the lien, even where the denial of access to the documents may leave the client facing what can truly be regarded as catastrophic disruption to his litigation. Such a discretion could, in my opinion, only be justified on the basis that the interests of justice may require such an order to be made in some cases. But it is difficult to see why the court should disregard the interests of its own officers and leave them without payment for what is justly due to them because insistence on the lien would deprive the former client of material essential to the conduct of his case, where that situation has been brought about by the client discharging the solicitor without any good reason. However, it is unnecessary for me to reach a concluded view on whether such a discretion exists since even if the court does have the power I would not regard this a proper case to exercise it in favour of the applicants for reasons which later appear...
His Honour's judgment was referred to in the later decision of the New South Wales Supreme Court in Flexible Manufacturing Systems Pty Limited v Lewis (trading as Morgan Lewis Alter Lawyers), (unreported, 10 October 2002 per Berecry AM). In that case the Master quoted extensively from Drummond J’s decision and adopted the same general principles.
I conclude from those authorities that it would generally be an abuse of process for a subpoena to be issued compelling the production of a solicitor's file in circumstances where the solicitor had been discharged by the client other than for misconduct and where the solicitor reasonably claimed a lien over that file. I say “generally” because there may be circumstances in which the interests of justice require that the file be produced for particular proceedings in any event.
Conversely, I take the view that it would generally not be an abuse of process for a subpoena to issue requiring the production of a solicitor's file in circumstances where the solicitor had by his or her own decision withdrawn from the proceedings and subsequently asserted a lien in respect of unpaid fees. Again, there may be circumstances where an abuse of process would properly be found depending upon the importance of the documents for the former client in the continuing proceedings and upon the circumstances in which the former solicitor withdrew.
In this matter it was apparent from the two affidavits upon which Ms Gerace relies that it was she who decided to sever the relationship of solicitor and client because she decided that her client had a want of confidence in her. Curiously, it appears from Ms Gerace's second affidavit that Ms Abruzzese is attempting, by complaint to the Legal Services Commissioner, to compel Ms Gerace to resume the conduct of the proceedings on her behalf. Although it may well be correct that Ms Abruzzese by words or actions indicated a want of confidence in Ms Gerace, it does not appear that Ms Abruzzese had by words or actions severed or intended to sever the relationship of solicitor and client. It was Ms Gerace who took the step of giving notice of her intention to withdraw and of withdrawing from the record.
In those circumstances, consistent with the view that I have just expressed, a subpoena directed to Ms Gerace requiring her to produce her file for the further conduct of the proceedings by or on behalf of Ms Abruzzese is not an abuse of process. That is because the lien claimed by Ms Gerace does not entitle her to withhold production of her file when required by her former client, for the future conduct of the proceedings. It is, nevertheless, relevant that Ms Gerace claims a lien over the file in view of unpaid legal fees. It is also relevant that Ms Abruzzese has provided the sum of $5,000 to Ms Gerace during the time that the solicitor and client relationship subsisted which has been held in trust by Ms Gerace. However, Ms Gerace has been unable to obtain a direction from Ms Abruzzese that would permit those funds to be released to deal with counsel's fees payable and other obligations. There is also apparently a shortfall in the funds held in trust in terms of costs and disbursements incurred on behalf of Ms Abruzzese up to the point where Ms Gerace withdrew.
It is also relevant that while the solicitor’s file is sought on behalf of Ms Abruzzese, the production of it could not be said to be essential in the sense that the failure to produce it would render the situation of Ms Abruzzese catastrophic. I was told of discussions prior to today's hearing where there was a tentative agreement between representatives that the subpoena would not be called upon. Subsequently, Mr Capsanis' instructions changed. That tells me that while the file held by Ms Gerace would assist Ms Abruzzese in the conduct of the proceedings it is not so vital to her that a failure to produce it would be catastrophic.
This leads me to consider whether it would be appropriate to place conditions upon orders compelling obedience to the subpoena, to provide reasonable protection to Ms Gerace, as an officer of the Court, in respect of unpaid legal fees. Ms Gerace took me to the decision of the Family Court in Chester v Cassidy Gibson Howlin [1994] 18 FamLR 463. In that case the Family Court ordered production of the file held by the former solicitor but further ordered that the former solicitor be given a charge over funds that might become payable to the former client as a result of those proceedings in order to provide some protection to the former solicitor.
In this matter Mr Capsanis has obtained instructions that a direction would be given permitting the release of the $5,000 held in trust by Ms Gerace. However, Ms Abruzzese's instructions are that she would not consent to any order giving a charge to Ms Gerace over any damages that she might obtain in these proceedings.
This Court has adopted the position that it will not seek to regulate costs as between solicitor and client. That philosophical position is reflected in the Federal Magistrates Court Rules: in particular, in rule 21.09(3). The Court takes the view that it is not the proper function of this Court to resolve disputes as between solicitor and client in relation to legal fees. This Court takes the view that such a dispute can be properly resolved in the Supreme Courts of the various states and territories having supervisory jurisdiction over solicitors, including the power to tax a bill on a solicitor and client basis.
However, it is in my view within the power of the Court to place conditions upon orders requiring obedience to a subpoena which would protect the position of a solicitor required to produce his or her file pursuant to the subpoena in order to ensure that a lien claimed by the solicitor over the file is not rendered nugatory. In so doing the Court would not be seeking to resolve any dispute between the former solicitor and the client over fees. Such a dispute could still be resolved through a taxation in the Supreme Court. The Court would be merely seeking to protect the interests of the former solicitor in relation to such professional costs and disbursements as were reasonably and properly incurred.
In this matter I have concluded that I should require Ms Gerace to produce her file in answer to the subpoena issued to her. That subpoena required production of the document sought on 11 June 2003. That date has of course passed and it will be necessary to specify a new date for compliance with the subpoena.
I will order that Maria Gerace provide the documents sought pursuant to that subpoena on 16 July 2003. I will further order that any damages payable to Ms Abruzzese pursuant to an order of this Court or a compromise of the proceedings be subject to a charge in favour of Maria Gerace in respect of professional costs and disbursements reasonably and properly incurred.
I will further order by consent that Ms Abruzzese provide a direction to Ms Gerace within seven days authorising the release of all funds held in trust by Ms Gerace for the payment of outstanding disbursements including counsel's fees, and professional costs.
In respect of the costs of the motion I am mindful of the fact that the issue has been a novel one, at least in this Court, and that the outcome will be of benefit to the Court and to litigants and their lawyers as part of the developing jurisprudence of the Court. I am also mindful of the fact that there had been discussions between Ms Gerace and Mr Capsanis prior to the hearing of the motion in which a tentative agreement had been reached, but that following statements made by me from the bench as to the need, as I saw it, to address some important issues relating to the entitlement of Ms Gerace to resist the subpoena by reference to her claim a lien over the documents, Ms Abruzzese gave instructions to Mr Capsanis that prevented that tentative agreement being maintained.
In all the circumstances, I have concluded that it would not be appropriate for any costs order to be made in respect of the motion. In order to formally deal with the motion I will order that the motion be dismissed with no order as to costs.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Driver FM
Associate:
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