Ali v Allianz Australia Insurance Limited
[2016] ACTSC 152
•4 July 2016
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Ali v Allianz Australia Insurance Limited |
Citation: | [2016] ACTSC 152 |
Hearing Dates: | 30 June, 1 July 2016 |
DecisionDate: | 4 July 2016 |
Before: | Mossop AsJ |
Decision: | See [58] |
Catchwords: | PRACTICE AND PROCEDURE – Leave for plaintiff’s solicitors to withdraw as solicitors on the record – Civil Procedures Rules 2006 (ACT), rr 2806, 2807 – Where application made in close proximity to substantive hearing – Uncertainty as to termination of retainer – Failure to provide written advice identifying the fact of and basis for termination – Stated just cause was irreparable breakdown in solicitor-client relationship – Where client refused to accept solicitors’ advice – Significance of solicitors’ duties to the Court and relevant professional rules – Significance of plaintiff no longer wishing for the solicitors to act for him in the proceedings – Leave granted. |
Legislation Cited: | Civil Procedures Rules 2006 (ACT), rr 2806, 2807, 2808 Legal Profession (Solicitors) Conduct Rules 2015 (ACT), r 13 Legal Profession Uniform Law Australian Solicitors Conduct Rules 2015 (NSW), r 13 |
Cases Cited: | Blue Cross Properties (Toorak) Pty Ltd v Mackie & Staff Pty Ltd [2007] VSC 304 Frigger v Clavey Legal Pty Ltd (No 3) [2015] WADC 21 Super 1000 Pty Ltd v Pacific General Securities Ltd [2007] NSWSC 171 |
Texts Cited: | G E Dal Pont, Lawyers Professional Responsibility (Thomson Reuters, 5th ed, 2013) LexisNexis Butterworths, Solicitors Manual vol 1 (looseleaf service) |
Parties: | Nazem Ali (Plaintiff) Firths The Compensation Lawyers (Applicant) Allianz Australia Insurance Limited (Defendant) |
Representation: | Counsel Self-represented (Plaintiff) J Moffett (Applicant) N Bruno (Defendant) |
| Solicitors Self-represented (Plaintiff) Firths The Compensation Lawyers (Applicant) King & Wood Mallesons (Defendant) | |
File Number: | SC 359 of 2014 |
MOSSOP AsJ:
Application
This is an application in proceedings by the plaintiff’s solicitor to withdraw as the solicitor on the record in these proceedings. Although the application is dated 14 June 2016 and was apparently filed on 17 June 2016, the application first came before me as duty judge on 30 June 2016. A significant fact relevant to the application is that the plaintiff’s case is listed for a hearing in the central civil list during the week commencing 11 July 2016.
The application was supported by an affidavit of Gregory James McKean, a solicitor with Firths The Compensation Lawyers (Firths), dated 14 June 2016.
Relevant rules
The rules in the Court Procedures Rules 2006 (ACT) (CPR) which are relevant to the withdrawal of a solicitor are as follows:
2806 Application for leave to withdraw as solicitor
(1) A solicitor for a client who is a party in a proceeding in the court may apply to the court for leave to withdraw from the record in the proceeding.
Note Pt 6.2 (Applications in proceedings) applies to an application for an order under this rule.
(2) The solicitor may apply to the court for leave to withdraw from the record only if, at least 7 days before the day the solicitor applies for leave, the solicitor gives notice (a notice of intention to apply for leave to withdraw) to the client—
(a) stating the solicitor’s intention to withdraw; and
(b) asking the client, not later than 7 days after the day the notice is given to the client—
(i) to appoint another solicitor; or
(ii) to file, and serve a stamped copy of, a notice that the client acts in person; and
(c) stating that, if the client does not comply with the notice—
(i) the solicitor may apply to the court for leave to withdraw; and
(ii) the client may be ordered to pay the solicitor’s costs of the application.
Note See approved form 2.76 (Notice of intention to apply for leave to withdraw) AF2006-321.
2807 Leave to withdraw as solicitor
(1) A solicitor for a client who is a party in a proceeding in the court may withdraw from the record in the proceeding only with the court’s leave on application under rule 2806.
(2) If the solicitor’s client does not comply with the notice of intention to apply for leave to withdraw given to the client under rule 2806, the court may give the solicitor leave to withdraw from the record and make an order for costs.
(3) On withdrawing from the record, the solicitor must—
(a) file a notice of withdrawal; and
(b) serve a stamped copy of the notice on—
(i) the party the solicitor represented in the proceeding; and
(ii) all other active parties to the proceeding.
Note See approved form 2.77 (Notice of withdrawal of solicitor) AF2006-322.
(4) The solicitor’s withdrawal does not take effect until the solicitor has complied with subrule (3).
(5) On the withdrawal of the solicitor’s name from the record, the party must—
(a) appoint another solicitor; or
(b) comply with subrule (6).
Note See approved form 2.75 (Notice of change of solicitor) AF2006-320.
(6) To comply with this subrule, the party must—
(a) file a notice that the party is acting in person; and
(b) serve a stamped copy of the notice on all other active parties.
Note See approved form 2.74 (Notice that party acting in person) AF2006-319.
(7) The notice must state the party’s address for service.
Note Address for service is defined in the dictionary.
2808 Effect of removal of, or leave to withdraw as, solicitor
(1)This rule applies if a solicitor for a client who is a party to a proceeding is removed from the record under rule 2804 (Removal of solicitor by court) or withdraws from the record under rule 2807 (Leave to withdraw as solicitor).
(2) The client’s home or business address becomes the address for service until—
(a) another solicitor is appointed; or
(b) the client notifies another address for service in accordance with these rules.
(3) The removal, or withdrawal, of a solicitor from the record under this part does not affect the rights or liabilities of the solicitor and the party for whom the solicitor acted as between them.
The operation of a similar rule was considered by the High Court in Plenty v Gladwin (1986) 67 ALR 26 (Plenty). In that case solicitors had ceased to act for a litigant in the High Court because he had failed to pay fees requested by his solicitors and made allegations of serious unethical behaviour on the part of the solicitors. The submission of the client was that the single judge of the Court who had allowed the solicitors to withdraw fell into error because no good cause had been shown for the solicitors ceasing to act. The Court recorded that the client’s argument was based upon a fallacy that the relevant rule involved determining whether the solicitors in fact had good cause for ceasing to act. The judgment of the Court continued (at 27):
The purpose of the rule is quite different. Its concern is with the record of the court and with the service of documents. It comes into play when, rightly or wrongly, a solicitor has ceased to act and the party has not given notice of change of solicitor or notice of intention to act in person. The solicitor may then take steps to have his name removed from the record. The first step is by applying to the court or a justice for an order declaring that the solicitor has ceased to be the solicitor acting for the party in the proceeding. As we have noted the court has a discretion whether or not to make the order, but unless there are special circumstances which would render it expedient to retain the solicitor on the record the order will generally be made as a matter of course upon proof that the solicitor has in fact ceased to act for the party and that no steps have been taken to take the solicitor’s name off the record. Order 7, rule 7(4) makes it plain that an order made under the rule does not affect the rights or liabilities of a solicitor and a party as between themselves.
I note that r 2808(3) is to the same effect as r 7(4) referred to in the High Court’s reasons.
A case in which leave was refused is Investec Bank (Australia) Ltd v Mann [2012] VSC 81 (Investec). That was a case in which in December 2011 proceedings had been set down for trial to commence on 13 March 2012. The application made by the defendants’ solicitors for leave to serve a notice of ceasing to act for the defendants was dated 2 March 2012 and heard on 7 March 2012. The application was, therefore, made late and heard only shortly prior to the commencement of the trial.
Pagone J identified the general principle that a solicitor ought not be required to act for a party where the party has ceased to provide funding. However, he referred with approval to the decision of Habersberger J in the Blue Cross Properties (Toorak) Pty Ltd v Mackie & Staff Pty Ltd [2007] VSC 304 to the effect that whilst solicitors “remain the solicitors on the record they are… required to comply with the orders of the Court even if they have no funding.” His Honour referred to the decision in Plenty and the passage quoted above. In the light of that authority his Honour indicated at [3] that:
Generally leave will be given upon proof that the solicitor “has in fact ceased to act for the party and that no steps have been taken to take the solicitor’s name off the record” but leave may not be granted if there are special circumstances which render it expedient to retain the solicitor on the record.
In Investec the reason that the solicitors ceased to act was because their clients were unable to pay additional amounts on account of anticipated fees that had been requested of them. However, the request for those amounts had only occurred on 2 March 2012, very shortly prior to the commencement of the hearing. There was no explanation about why the request for funding had not been made until the date for trial was so imminent. Pagone J said at [7]:
Solicitors seeking the exercise of the Court’s discretion to grant leave carry the burden of satisfying the Court that leave should be granted in all of the circumstances which are particular to the case in which they make the application. Solicitors making such applications must be particularly mindful of their duties to the Court, the administration of justice, to their client (or former client) and to opposing or other litigants and to their legal advisors. Usually the only possible controverter to such an application will be the solicitors’ own (former) client, and often the application will be unopposed and untested although the inconvenience that may be caused in granting leave may be substantial. It has been held that such applications need not be served upon the other party to the proceedings but only upon the party for whom the solicitors act. However, the impact of granting leave upon the Court and upon other parties to a proceeding may be a relevant factor in whether to grant leave.
(Footnotes omitted.)
For that reason he gave leave to the plaintiff’s counsel to appear to assist the Court.
Because of the lateness of the application, the proximity of the trial and the absence of an explanation given for the late insistence upon additional funding his Honour was of the view that there were special circumstances which rendered it expedient to retain the solicitor on the record.
His Honour said at [8]:
Applications of this kind are likely to be unopposed and that circumstance, coupled with the practitioner’s duty to the Court and to uphold the law, makes it incumbent upon them to be full and frank with the Court asked to grant leave. The removal, or absence, of legal practitioners close to trial is sometimes used as a reason for an adjournment of the hearing with inconvenience to the Court, the other parties and to other litigants. Practitioners ought to guard against the possibility of the Court finding itself with unrepresented litigants close to the hearing date. No evidence was given by [the solicitors] of having taken any steps to avoid the inexpedient consequences to the Court, to the plaintiff and to the plaintiff’s solicitors which would arise if the leave [the solicitors sought] were to be granted. Nor, for that matter, have [the solicitors] given evidence of any steps to prevent the situation of the defendants finding themselves close to the hearing date without legal representation or having to conduct the trial unrepresented after many months of all concerned knowing of the trial date. The inconvenience to the Court and the additional inconvenience and costs to the plaintiff and its solicitors, that would be occasioned by granting leave at so late a stage, could not be compensated by costs orders and outweigh any burden to [the solicitors] of not granting them leave. The requirement in [the relevant Victorian rule] of seeking leave is imposed upon legal practitioners for the proper administration of justice. It enables the Court’s work to be performed efficiently and with the confidence of the assistance of practitioners it provides a protection to former clients and serves to protect the position of adversaries.
Having determined that it was a case in which there were special circumstances which rendered it inexpedient to grant leave, his Honour then addressed the consequences of a refusal to grant leave. He said of the solicitor’s future role at [9]:
Their continued role should, as far as possible, be limited to the purpose of the rule requiring leave as explained in Plenty v Gladwin as concerned with the record of the Court and with service of documents. They may be required to continue to receive documents from the plaintiff’s solicitors. It may require [the solicitors] to continue to convey to the defendants any documents served for them at [the solicitors]. Their status as officers of the Court may conceivably also require them to offer such assistance as the Court may require during the conduct of the trial. [The solicitors] may not be required to conduct the trial on behalf of their former clients without funding but may need to give such other assistance as may be required by the Court to lessen or eliminate the adverse impact upon the Court’s record or upon the orderly service of documents upon the defendants as the Court may direct. It is conceivable that greater duties may also arise but they should not be considered in the abstract and without hearing submissions from [the solicitors] and others affected.
(Footnotes omitted.)
Other cases to which I was referred by Mr Moffett provide examples of situations where it was appropriate for the Court to grant leave notwithstanding the proximity of a trial in circumstances where the retainer had been terminated due to a failure to provide funding to solicitors (see Super 1000 Pty Ltd v Pacific General Securities Ltd [2007] NSWSC 171 (Super 1000)) or where it was clear on the evidence before the court that the client had chosen no longer to retain the solicitors (see Lezaja v Hannover Life Re of Australasia Ltd (No 2) [2016] NSWSC 167 (Lezaja)). I note, however, that the decisions in Super 1000 and Lezaja appear to involve a greater consideration of the entitlement of the solicitors to cease to act rather than the mere fact thereof. On one view that could be seen as inconsistent with the decision of the High Court in Plenty. However, in Plenty the relevant rule was expressly conditioned upon establishing that the solicitor had ceased to act. It was thus clearer that the cessation was a past fact rather than something for which approval was being sought.
I note that the authority, cited in the passage from Investec set out above at [7], for the proposition that the applications need not be served on the other party to proceedings is Re Creehouse Limited [1982] 3 All ER 659, which referred in particular to the need for the purposes of the application to reveal matters which were confidential as between solicitor and client. Although there does not appear to be any exemption under the CPR from the requirement to serve an application under r 2806, careful consideration should be given as to what evidence in support of that application should be served on the other parties so as to on the one hand preserve the confidentiality as between solicitor and client and on the other to provide a proper evidentiary basis for the solicitor’s application.
The terms of the rules make the following points clear:
(a)The rules provide a formalised process so that the party for whom the solicitors formerly acted is given proper notice of the solicitor’s intention and the opportunity to make alternative arrangements.
(b)The rules protect the position of the other party or parties by ensuring that there is always an address for service in the proceedings.
(c)The requirement for leave provides the court with a capacity to regulate the solicitors withdrawal and hence prevent any injustice to the parties or interference with the orderly conduct of the litigation as a consequence of that withdrawal.
The authorities referred to above also establish the following matters. The question of withdrawal from the record is distinct from the termination of the solicitor’s retainer. Although, unlike the rules considered in Plenty, r 2807 is not expressly conditioned upon the solicitor having ceased to act, that is the context in which the rule appears. In those circumstances the rule requiring leave should be interpreted as not requiring the Court to adjudicate on the rights or wrongs of the solicitor ceasing to act except to the extent to which those matters might influence, in the context of a rule relating to address for service, whether leave is granted or the terms upon which leave might be granted. However, the Court should be satisfied that the solicitor has in fact ceased to act for the client. In those circumstances leave should be granted unless there are special circumstances which render it expedient to retain the solicitor on the record.
Because of the nature of the application, being made in the absence of the client or with an unrepresented client, solicitors making such an application bear the burden of satisfying the Court of the appropriateness of granting leave and should ensure that they provide a full and frank explanation of the circumstances in which leave is sought.
The purpose of the rule is not to compel solicitors to run cases without funding or without instructions or where they have otherwise ceased to act. However, their obligations as officers of the Court and their professional duties to their client and the other parties mean that there is scope, through the discretion given under the rule to grant or refuse leave to control their conduct in relation to ceasing to act and the conduct of the proceedings. That is particularly so in circumstances where the application for leave is made close to a hearing in circumstances that may cause difficulties for their former client, other parties or the Court. As Investec makes clear, while the burdens that may be imposed relate most obviously to questions of service they may extend beyond that but how far beyond that has not been defined.
Facts
The proceedings were commenced by originating claim filed on 13 August 2014. The plaintiff’s solicitors at that time were Ken Cush & Associates. The defendant at that point was Pro Cement Rendering Pty Ltd. The claim alleged that the plaintiff was employed by the defendant as a cement renderer and suffered an injury following an accident on 17 October 2011. The claim alleged that the injuries suffered by the plaintiff were caused by the negligence or breach of contract by that company. The claim identified that the company was deregistered on 24 February 2013.
On 27 October 2014 the plaintiff was given leave to remove Pro Cement Rendering Pty Ltd as the defendant and to add its insurer, Allianz Australia Insurance Ltd as the defendant. A defence was filed by Allianz on 27 May 2015.
At a directions hearing on 1 February 2016 the proceedings were listed for hearing in the central civil list commencing on 11 July 2016.
The affidavit of Mr McKean dated 14 June 2016 disclosed that he received an enquiry from the plaintiff on 16 February 2016. He received instructions from the plaintiff to take over his matter from Ken Cush & Associates on 29 February 2016.
On 10 March 2016 Mr McKean wrote to Ken Cush and Associates requesting a copy of their file. He records “I had significant difficulties in securing a copy of the file from the previous solicitors, despite a number of attempts to obtain the same.” Although not specifically dealt with in the evidence it is likely that the difficulties arose from the assertion by Ken Cush & Associates of a solicitor’s lien over the file. Although not the subject of evidence, I was told by the solicitor appearing for the defendant that she had provided documents relevant to the case that were in her possession to the incoming solicitors.
On 8 April 2016 the plaintiff’s solicitors paid the hearing fee which was, at that point, overdue.
A notice of change of solicitor was filed on 11 April 2016 identifying that Mr McKean acted for the plaintiff in the place of Ken Cush & Associates.
On 23 May 2016 Mr McKean received the previous solicitor’s file. The balance of his affidavit describing what occurred between that point and the date of giving notice of his intention to apply for leave to withdraw was as follows:
On reviewing the file I gave the Plaintiff certain advices as to the status of the claim and as to the state of the evidence in relation to the proceedings before the Court, noting that they were listed for hearing on 11 July 2016.
On 2 June 2016 I had a further telephone attendance upon the Plaintiff in which the plaintiff advised that he wished to represent himself at the upcoming hearing and did not wish to follow or accept the legal advice which he had been given.
In the circumstances I believe that there has been a breakdown in the relationship between myself and the client which is irreparable and I would seek leave to withdraw from these proceedings.”
On 2 June 2016 a solicitor from Firths sent a notice of intention to apply for leave to withdraw to the plaintiff. Read receipts indicate that the plaintiff read the message shortly after it was sent.
Hearing on 30 June 2016
Mr Moffett, who appeared for Firths, read the affidavit of Mr McKean in support of the application and made four submissions in support of the application.
First, he submitted that notice had been served in accordance with the rules giving the plaintiff an opportunity to make alternative arrangements.
Second, he submitted that the evidence before the Court was that the plaintiff wished to represent himself at the hearing.
Third, he submitted that the evidence indicated that the solicitors were entitled to cease to act because the plaintiff refused to accept their advice and wished to represent himself.
Fourth, he submitted that there was some time between now and the commencement of the hearing in which the plaintiff could obtain alternative representation if he wished.
Through its counsel a senior solicitor at Firths also offered an undertaking that if leave was given to withdraw the firm would release the plaintiff’s file forthwith to the plaintiff. Necessarily implied in that is that Firths would not seek to retain the file by reason of any solicitors lien that might otherwise be available.
The plaintiff appeared in person. He did not give evidence. As I understood it he indicated that he was originally from Iraq and his understanding of spoken English was limited. That certainly appeared to me to be the case. He indicated some dissatisfaction with the manner in which his solicitors had handled his case. He requested that I appoint an interpreter to assist him with his case. I explained that it was not a function of the Court to provide interpreters to parties in civil cases. When asked whether in those circumstances he wished Firths to act for him in the proceedings he indicated he thought that he had little choice and would have to retain them.
State of the evidence as at 30 June 2016
As at 30 June 2016 the evidence was clearly less than complete in two significant respects. First, whether, by whom and pursuant to what power the retainer between plaintiff and solicitors had been brought to an end. Second, whether any proper advice had been given to the plaintiff in relation to a termination of the retainer arising from the conversation on 2 June 2016.
Uncertainty as to termination of engagement: The affidavit of Mr McKean did not state in terms that the solicitor’s retainer had been terminated. If it had, then the basis for that termination was not expressly stated. The engagement of a solicitor may be terminated in a number of ways under r 13 of the uniform solicitors conduct rules (Legal Profession (Solicitors) Conduct Rules 2015 (ACT), Legal Profession Uniform Law Australian Solicitors Conduct Rules 2015 (NSW)):
(a)by agreement (r 13.1.1);
(b)by the law practice being discharged from the engagement by the client (r 13.1.2);
(c)by the law practice terminating the engagement for just cause and on reasonable notice (r 13.1.3); or
(d)by operation of law (r 13.1.4).
The assertion in Mr McKean’s affidavit that there had been an irreparable breakdown in the relationship was not elaborated upon. Assuming that this was put forward in order to establish just cause for the determination of the retainer, it has been accepted that just cause for terminating a retainer might be available where the client has indicated that the necessary relationship of trust between the parties has broken down to the extent that the basis for the retainer has been compromised: Riley’s Solicitors Manual, vol 1 (at Service 60) [3165.5]; Frigger v Clavey Legal Pty Ltd (No 3) [2015] WADC 21 at [345]-[353]. However, the facts as they were disclosed by the limited evidence in Mr McKean’s affidavit were not sufficient to demonstrate that this had occurred in the present case. The submission that the failure by the client to accept the solicitor’s advice demonstrated a proper basis for the termination of the engagement did not obviously indicate a basis upon which it could be said that the relationship between solicitor and client had irretrievably broken down. Clients are not obliged to follow the advice given to them by their solicitors. As at the end of the hearing on 30 June 2016, the position of the plaintiff did not appear to be consistent with an irreparable breakdown of the relationship.
It was possible that the proceedings were being conducted by the plaintiff’s solicitor on a speculative basis and that the solicitor was not prepared to continue to act on that basis in circumstances where his advice had not been accepted and the plaintiff had declined to retain him on any other basis. There was, however, no evidence to establish the basis upon which Mr McKean was acting in the proceedings or whether any request for payment of fees had been made. Necessarily in those circumstances there was no evidence that would indicate that the plaintiff had delayed or refused to pay the lawyers’ costs in breach of the retainer or costs agreement. Had there been such evidence that might have indicated another just cause for termination: Riley’s Solicitors Manual, vol 1 (at Service 60) [3165.5]; Super 1000.
Finally it might have been contended (but was not) that the retainer was terminated by reason of the plaintiff discharging his solicitor from the engagement. However, the evidence was not sufficient to establish that the solicitor was discharged from the retainer by the client. The evidence was that in a single conversation “the Plaintiff advised that he wished to represent himself at the upcoming hearing and did not wish to follow or accept the legal advice which he had been given”. While that indicates a desire inconsistent with the maintenance of the retainer, the form of this evidence and the absence of evidence that the solicitors had taken any steps to ensure that the plaintiff understood that he would be treated as having discharged the retainer meant that there was not sufficient evidence to indicate that the plaintiff had knowingly discharged his solicitors from their obligations under the retainer (cf Lezaja at [17]-[21], [25]).
No evidence of written communications or advice: There was no evidence that the plaintiff was given any written advice either before or following the telephone conversation on 2 June 2016. In circumstances where the retainer had been or was proposed to be terminated I would expect that there be written communication from the solicitor to the client identifying the fact of termination and the basis for that termination. That is important in order to formally inform the plaintiff what has occurred and the legal basis for it having occurred. There was no evidence of any communication other than the giving of the notice under r 2806. That did not in terms indicate that the retainer has been terminated and provided no information about the basis for that termination.
There were additional matters which made written communication and advice more significant in the circumstances. First, the plaintiff had an imperfect grasp of English. It is apparent to me that any oral communication relating to the circumstances of his case or a proposal to cease to act carried with it the risk that the plaintiff would not completely understand what had transpired and reasonable diligence on the part of the solicitors required that the substance of the advice being given and the consequences of its non-acceptance be communicated in writing. Second, the evidence of Mr McKean was that the plaintiff “wished to represent himself at the upcoming hearing”. Although I know very little about the state of preparation of the case it must have been apparent to the plaintiff’s solicitors that the plaintiff would be completely unable to effectively prosecute even a well prepared case at a contested hearing. In those circumstances, in my view, the solicitors were duty-bound not only to provide advice about the imprudence of such a course, but to do so in writing before acting to terminate the retainer or accepting the plaintiff’s discharge of the engagement.
Adjournment of the application
The affidavit of Mr McKean did not expressly address the termination of the retainer or any notice of such termination having been given to the plaintiff other than by reason of the service of the notice of intention to seek leave to withdraw as solicitor on record. It did not appear to me that the solicitors had provided full disclosure of the relevant evidence on these points. The position of the plaintiff appeared to be that he, albeit somewhat reluctantly, wished that Firths continue to act for him. In those circumstances I considered it appropriate for there to be an adjournment so that there might be some discussion between the parties so as to clarify whether the retainer was terminated and, if necessary, permit further evidence to be led as to whether or not the retainer agreement had in fact been terminated.
Additional evidence on 1 July 2016
On Friday 1 July 2016 there was no evidence of any change of position. Mr Moffett read an additional affidavit of Katherine Boshev, a solicitor at Firths, dated 1 July 2016 addressing the circumstances leading up to the application for leave to withdraw.
There were four aspects of the additional evidence which were of significance.
First, the conditional costs agreement signed by the plaintiff on 5 April 2016 was a “no-win-no pay” agreement which, unusually, set a fixed fee of $77,000 for completion of the work the subject of the agreement in the event that there was a “successful outcome” (a term defined to include a settlement): see Conditional Costs Agreement cll 2, 4 and cl 2.2 of the attached costs disclosure statement.
Second, the affidavit of Ms Boshev provided that, having undertaken a further review of the file, “I verily believe the that the amount that was provided for in the retainer for professional costs on any objective and reasonable view would in all of the circumstances have been excessive.” She and a senior solicitor at the firm agreed that an estimate of the firm’s costs to date were more likely to be in the order of $10-$15,000 plus GST plus disbursements.
Third, the Conditional Costs Agreement permitted the solicitors to terminate the agreement in circumstances which included:
...
(iii) You fail to provide us with proper, accurate, truthful and/or timely instructions; or
(iv) You unreasonably refuse to follow our advice in relation to your matter and we believe that your refusal has caused an irretrievable breakdown in our relationship with you; or
(v) you fail to accept an offer of settlement which we believe (on reasonable grounds) is reasonable.
Fourth, a letter sent on 7 June 2016 (five days after the discussion on 2 June 2016) provided:
We refer to previous correspondence in relation to this matter and confirm that as a result of our discussions on 2 June 2016 that I believe that under the terms of our retainer we are no longer able to act for you.
Effectively you have advised that you wish to represent yourself at the upcoming hearing of this matter and thus I believe terminating my retainer.
In any event I believe that the circumstances are such that you have failed to provide us with proper instructions and you are now unreasonably refusing to follow our advice which has caused an irretrievable breakdown in our relationship with you.
There are a number of matters which arise from this additional evidence.
The letter on 7 June 2016 did not clearly identify the basis for the termination of the retainer. It made reference to the possibility that the retainer was being terminated by the client as well as a number of possible bases for termination by the solicitors pursuant to the terms of the costs agreement. In relation to the latter it did not identify in any coherent way which of the provisions of the agreement operated or the facts upon which that operation was based. There is no evidence that, consistently with the standards of conduct that could have been expected, the solicitors gave any advice to the plaintiff about:
(a)the imprudence of seeking to represent himself in a contested personal injury case in circumstances where he had no legal training and a limited grasp of the English language;
(b)the imprudence of terminating the retainer of his solicitors shortly prior to the date listed for hearing;
(c)the likely costs consequences that would flow if, by reason of his solicitors ceasing to act, he was granted an adjournment of the personal injury proceedings;
(d)any advice about the outstanding steps that would be required to be immediately attended to upon the termination of the retainer.
Further, the only evidence of there being any disclosure by Firths that the fees that would be charged to the plaintiff would be different from the fixed fee identified in the Conditional Costs Agreement was the affidavit of Ms Boshev dated 1 July 2016. Thus the transactions between the parties prior to that date (including the critical conversation on 2 June 2016) occurred in a context where the entitlement of the solicitors under the Conditional Costs Agreement was to a fixed fee of $77,000 in any situation where there was a “successful outcome of the work” as defined in that agreement. It was simply not clear on the evidence whether the quantum of fees chargeable was a significant issue and whether what occurred may have been altered had the plaintiff been provided at an earlier stage with the information belatedly recorded in Ms Boshev’s affidavit.
At the conclusion of Mr Moffett’s submissions on 1 July 2016, the plaintiff indicated that he was now of the view that he did not wish to have Firths continue to act for him in the proceedings. That involved a change from the position apparently adopted by the plaintiff the day before.
Consideration
Dal Pont Lawyers Professional Responsibility (5th ed, 2013) at [3.210] identifies the duties of a lawyer upon termination of his or her retainer as follows:
where a lawyer terminates a retainer for just cause, the prevailing ideal remains that the client in question must not be disadvantaged by reason of the termination. To this end, unless the law and/or professional rules require the lawyer to terminate the retainer, he or she must give due consideration as to whether the determination will unduly disadvantage the client. A lawyer who opts to terminate the retainer must take reasonable care to avoid foreseeable harm to the client, including giving due notice to the client and allowing reasonable time or the substitution of a new lawyer.
(Footnotes omitted.)
The text also indicates that in circumstances where the file is handed to another solicitor acting for the client, it would be good practice for the terminating solicitor:
to clearly indicate the impending work required to be done including any impending limitation periods and, if the file is handed over to the client, the client should be informed as to the likely consequences of a failure to promptly attend to such matters and advised to seek alternate legal representation as soon as possible. Ideally, this should be done in writing.
Had the evidence remained as it was at the end of 30 June 2016 there would have been difficult questions to be resolved about the extent to which leave should be granted or, if it was granted, any conditions upon which it should be granted. That is because, on the material before me at that stage it was not clear that the retainer had been terminated or, if it had, that the solicitors had met their duties in relation to termination. It may have been necessary to impose a condition upon the grant of leave that the solicitors provide, prior to any grant of leave taking effect, clear written advice to the plaintiff of what the solicitors had asserted had occurred by reason of the conversation on 2 June 2016 and their reaction to it.
Ultimately, in the light of the additional evidence and the position ultimately adopted by the plaintiff, the most significant considerations are as follows:
(a)I am satisfied that the preconditions under the rules to a grant of leave, most significantly the service of the notice under r 2806 have been met.
(b)I am satisfied that the solicitors have in fact ceased to act on his behalf. It is not necessary to determine the mechanism of the termination of the retainer. Because of the position ultimately adopted by the plaintiff it is now clear that Firths does not and will not act for him in these proceedings.
(c)The plaintiff has been on notice of the intention of the solicitors to seek leave to withdraw as solicitors on record since 2 June 2016. There is no evidence that he has done anything to attempt to engage new solicitors. The overall significance of any lack of diligence on the plaintiff’s part is limited having regard to significant criticisms of the manner in which the solicitors communicated to the plaintiff the fact that they had ceased to act for him and of the absence of advice given to the plaintiff upon them ceasing to act. That tends to reduce the significance of the period of notice given by the solicitors, however, it does not avoid the fact that, rightly or wrongly, his solicitors have in fact ceased to act on his behalf.
(d)There is a very limited period available prior to the trial during which it may be possible for the plaintiff to secure legal representation which might lead to a new address for service being identified.
(e)Even if the plaintiff is unable to retain further solicitors, the withdrawal of Firths from the record is unlikely to cause difficulties in relation to service of documents because, in the absence of the plaintiff taking the steps required by r 2808, his home address will become the address for service and, unlike in Investec, that is an address within the jurisdiction.
(f)Firths have undertaken not to impede the plaintiff’s immediate access to his file to the extent that it is in the firm’s possession, minimising the difficulties that might be encountered by new solicitors attempting to take over the matter.
In those circumstances, notwithstanding the proximity of the hearing, it is appropriate to grant leave to Mr McKean to withdraw as the solicitor for the plaintiff.
Orders
The orders of the Court are:
1. Gregory McKean of Firths The Compensation Lawyers is granted leave to withdraw as solicitor on the record in this proceeding.
2 There is no order as to costs of the application.
3. The court notes the undertaking given by Mr Evan Griffith of Firths The Compensation Lawyers to provide the plaintiff with his file forthwith.
| I certify that the preceding fifty-eight [58] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Associate Justice Mossop. Associate: Date: 5 July 2016 |
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