Atanaskovic Hartnell v Birketu Pty Ltd

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Court of Appeal


Supreme Court


New South Wales

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Medium Neutral Citation: Atanaskovic Hartnell v Birketu Pty Ltd [2021] NSWCA 201
Hearing dates: 29 March 2021
Date of orders: 3 September 2021
Decision date: 03 September 2021
Before: Basten JA at [1];
Gleeson JA at [2];
McCallum JA at [149]
Decision:

(1)   Appeal dismissed.

(2)   Appellants to pay the respondents’ costs.

Catchwords:

LEGAL PRACTITIONERS – solicitors – Court’s supervisory jurisdiction – recovery of fees – retainer to investigate dispute between client and third party arising from frauds committed by solicitors’ employee –actual conflict between solicitors’ personal interests and fiduciary duty to client – whether solicitors obtained fully informed consent to act – whether nature of conflict precluded reliance on consent

LEGAL PRACTITIONERS – solicitors – Court’s supervisory jurisdiction – undertaking not to charge fees for work done – whether undertaking given in a professional capacity – whether reliance, loss or consideration required to enforce undertaking – whether Court should prevent solicitors reneging on undertaking

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 99

Interpretation Act 1987 (NSW), s 34

Legal Profession Uniform Law (NSW), ss 264, 423(2)(c), 427, 428

Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW), Pt 1 r 3.1, Pt 2 rr 2, 12

Uniform Civil Procedure Rules 2005 (NSW), r 20.14

Cases Cited:

Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43

Blackmagic Design Pty Ltd v Overliese (2011) 191 FCR 1; [2011] FCAFC 24

Boensch v Pascoe [2019] HCA 49; (2019) 94 ALJR 112

Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36

Coll v Floreat Merchant Banking Ltd [2014] EWHC 1741

Commonwealth Bank of Australia v Smith (1991) 42 FCR 390

Council of the New South Wales Bar Association v Siggins [2021] NSWCA 40

Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22

Geoffrey Silver & Drake (A firm) v Baines [1971] 1 QB 396

Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266

Hastingwood Property Ltd v Saunders Bearman Anselm (A firm) [1991] Ch 114

In re A Solicitor [1966] 1 WLR 1604

John Fox v Bannister, King & Rigbeys [1988] QB 925

Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64

Kuru v State of New South Wales (2008) 236 CLR 1; [2008] HCA 26

Law Society of New South Wales v Harvey [1976] 2 NSWLR 154

Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23

Marcolongo v Mattiussi [2000] NSWSC 834

National Mutual Holdings Pty Ltd v The Sentry Corporation (1989) 22 FCR 209

New South Wales Crime Commission v Fleming (1991) 24 NSWLR 116

Phelan v Middle States Oil Corporation (1955) 220 F (2d) 593

Prothonotary of the Supreme Court of New South Wales v Thomson [2018] NSWCA 230

Rahme v Benjamin & Khoury Pty Ltd

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Details
Case
[2021] NSWCA 201
Decision Date

CaseChat Overview and Summary

The appeal concerned a dispute over legal fees claimed by Atanaskovic Hartnell (the solicitors) from Birketu Pty Ltd (the client). The retainer involved the solicitors investigating a dispute between the client and a third party, which arose from frauds committed by an employee of the solicitors. The central issue was whether the solicitors had obtained the client's fully informed consent to act, given an actual conflict between their personal interests and their fiduciary duty to the client. A further issue was whether the nature of this conflict was such that it precluded reliance on any consent obtained.

The court was required to determine whether the solicitors were entitled to recover fees for work performed under the retainer, and whether they were bound by an undertaking not to charge for certain work. This undertaking was given in a professional capacity, and the court had to consider whether reliance, loss, or consideration was necessary for its enforcement, and whether the court should prevent the solicitors from reneging on it.

The Court of Appeal upheld the primary judge's decision, finding that the solicitors had not obtained fully informed consent from the client to act in circumstances where their personal interests conflicted with their duty. The court reasoned that the nature of the conflict was so significant that it could not be waived by consent. Furthermore, the court found that the solicitors were bound by their undertaking not to charge for specific work, and that this undertaking was enforceable without proof of reliance, loss, or consideration.

Consequently, the appeal was dismissed, and the appellants, Atanaskovic Hartnell, were ordered to pay the respondents’ costs.

Orders

Orders of the court

(1) Appeal dismissed.

(2) Appellants to pay the respondents’ costs.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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