Everingham & Anor v Mullins & Ors No. Scciv-01-714

EVERINGHAM & ANOR v MULLINS & ORS
[2001] SASC 415
Full Court: Martin, Gray and Besanko JJ

MARTIN J The respondents (“the plaintiffs”) are a firm of solicitors practising as Stanley and Partners. The appellants (“the defendants”) are former clients of the plaintiffs. By summons filed in the Magistrates Court on 8 December 1997, the plaintiffs sought to recover from the defendants the sum of $6883.50 for professional services rendered. The defendants filed a defence alleging that the services provided were not of a professional standard and that, as a consequence, the defendants had suffered damages. After a trial a magistrate found in favour of the plaintiffs and gave judgment for the full amount of the claim. Indemnity costs were awarded. An appeal against that judgment to a single judge was dismissed. The defendants appeal against the decision of the single judge.
On 3 April 2000 the defendants filed a document headed “Particulars of Defence”. The magistrate treated the document as including particulars of a counterclaim. His Honour directed that the defendants should proceed as dux litis. He expressed his reasons for that decision as follows:
“9I directed that the defendants should proceed as dux litis. I did so primarily because there had never really been any issue of liability (or non-liability) in respect of the Stanley accounts. The principal quibble that the Everinghams had was that the bills may have been excessive, and to that end Stanleys prepared a Bill of Costs for taxation in the Supreme Court pursuant to s 42 of the Legal Practitioners Act 1981. It would appear that the Bill of Costs is still in that jurisdiction and that Judge Kelly declined to proceed with the taxation until the questions of liability raised by the Everinghams was (sic) resolved in the Magistrates Court civil division.
10With that background in mind I made the order regarding dux litis and advised Mr Everingham as to the significance of it - with particular reference to the burden of proof and the standard of proof that would apply in these proceedings.”
As the defendants complain that the magistrate erred in directing that they should proceed as dux litis, it is necessary to set out the particulars of the defence:
“Particulars of Defence
It is alleged that services provided by the plaintiff(s) were not of a professional standard and/or unnecessary costs were incurred as specified below, and should not be charged to the client:
1.With respect to charges attributed to matters associated with Teachers Appeal Board Action No.4/1992 the plaintiff;
a.      failed to inform the client of potential and/or actual conflicts of interest and/or to advise the client to seek independent advice with respect to:
(i)the plaintiff filing the appeal application out of time.
(ii)the plaintiff’s failure to advise client that a medical appointment had not been re-scheduled and/or take appropriate action.
(iii)evidence and or testimony that could be provided by and/or adduced from the plaintiff which was relevant to the matter.
b.     continued to advise the client in the matter and failed to fully and/or correctly inform and/or advise the client with respect to the matters referred to in part (a).
2.With respect to charges attributed to Supreme Court Action No. 1248/92 the plaintiff acted contrary to and/or without instruction by accepting $8,000 in full settlement of an order for costs in the action, leaving an outstanding balance of $1530.30 which was debited to the defendant. $1530.30 is therefore claimed as a set off.
3.With respect to counsel fees associated with Supreme Court Action Nos. 1248/92, 2086/94 and 1896/95 the plaintiff failed to fully and properly advise the client in matters related to:
a.      the selection and role of a barrister.
b.     costing issues including estimates of counsel fees.
c.     the opinion provided by the barrister.
4.With respect to Supreme Court Action No. 2086/94 counsel fees were excessive and/or unnecessary and/or incurred without instruction, and the excessive amount (and adjustment) is claimed as a set off.
5.The plaintiff failed to provide at any time an estimate of solicitor costs with respect to Supreme Court Actions Nos. 1248/92, 2086/94 and 1896/95.
6.With respect to costs attributed to Supreme Court Action No. 2086/94 the plaintiff provided:
a.      inadequate, inappropriate or incorrect advice which was relied upon by the client in instituting the action
or
b.     inadequate, inappropriate or incorrect advice either directly or through counsel which was relied upon by the client in discontinuing the action
7.With respect to charges attributed to matters associated with Supreme Court Action No. 1896/95 the plaintiff:
a.      provided inadequate, incorrect or inappropriate advice which was relied upon by the client and resulted in the institution of the action.
b.     failed to prosecute the action efficiently and diligently.
c.     failed to inform the client and seek instructions.
d.     failed to inform the client of the reasons for the delays.
e.     discontinued to act for the client without good cause or reason.
f.      failed to fully inform the solicitor who took over the action.”
The plaintiffs joined issue with the allegations made by the defendants.
In the trial before the magistrate the defendants were unrepresented. Mr Everingham was the sole witness for the defendants and the solicitor who had acted throughout for the defendants, the fourth respondent Mr Bourne, gave evidence for the plaintiffs.
In his reasons, the magistrate addressed each paragraph of the particulars of defence. His Honour made the general observation that Mr Everingham’s evidence in chief was “largely unsatisfactory because of the vague nature of the particulars of counterclaim” and that “there was a significant vagueness or amorphous quality” about Mr Everingham’s testimony. His Honour formed the view that a lot of Mr Everingham’s evidence was “simple assertion or allegation” rather than the presentation of evidence in respect of the facts in issue. His Honour rejected each particular of the defence and each allegation that the conduct of Mr Bourne was less than satisfactory. In his Honour’s view the evidence established that the defendants should have been thankful for having had, over a lengthy period, “a careful, cautious, canny and conscientious solicitor such as Mr Bourne to conduct their affairs.” The magistrate’s ultimate overall conclusion was expressed in the following terms:
“Conclusions
There is not at any stage any evidence of want or lapse of care by Mr Bourne or indeed of any impropriety or lack of application of the appropriate professional standards. At all times he acted and made decisions with the best wishes of his clients uppermost in his mind.
I must say that I have a considerable sympathy for the plight in which Mr Bourne found himself. It is clear that the Everinghams are a couple who seem to have developed what I would regard as an unwholesome liking for litigation. It is clear that they were very particular clients whose particularity at times bordered on outright difficulty. It may be that they are persons who adhere to counsel of perfection. Mr Bourne was not perfect. But I consider that his performance over the relevant period with which this action was concerned was nigh impeccable and nigh flawless. In my view he did all that a reasonable solicitor in his position could possibly do. It does not surprise me that he has been called to account in these proceedings, by the Everinghams, by virtue of their cavilling and nit-picking attitude.”
Before the single judge, the defendants advanced 30 grounds of appeal. Each ground was addressed in turn during oral argument presented by Mr Everingham. The judge identified eight matters that he considered were “deserving of comment”. I can discern no error in the manner in which his Honour approached those eight identified matters. In concluding that no appealable error had been identified by Mr Everingham, his Honour said:
“Most of Mr Everingham’s criticisms upon appeal appear to be based upon the “nitpicking” to which the magistrate referred.... The Magistrate did not find any professional negligence and I consider that the Magistrate’s decision was justified by the evidence. Therefore the grounds of appeal largely fall away.”
Mr Everingham argued the appeal before this Court. Although there were 21 grounds of appeal, in his written outline of submissions Mr Everingham referred to “ten substantive issues”. Mr Everingham addressed each of those issues in his oral submissions. Having considered the grounds of appeal and the ten issues, in my opinion the defendants have failed to make out a case for intervention by this Court. The magistrate and the single judge were plainly correct. It is only necessary to deal briefly with each of the ten issues specifically addressed on the appeal.
The first issue concerns the allegation that the plaintiffs failed to prosecute one of the actions instituted on behalf of the defendants efficiently and diligently. Mr Everingham argued that as a consequence the success of the action was jeopardised and unnecessary costs were incurred. The magistrate rejected the allegation and, on appeal, the judge was satisfied that the magistrate was correct. The defendants have failed to demonstrate that either erred in their conclusions.
Secondly, the defendants complain that a finding that the retainer of the plaintiffs was terminated by “mutual consent” was contrary to the evidence given by Mr Everingham. The defendants also argued that as they were compelled to change solicitors, they lost a chance of succeeding in the particular proceedings that were being conducted by Mr Bourne at that time.
There is no doubt that Mr Bourne instigated the change in solicitors. But he did so for good reason. The magistrate correctly found that there had been a complete breakdown in the solicitor/client relationship. Although the defendants preferred that the plaintiffs continue to act for them, Mr Everingham said in evidence that when the plaintiffs did not reply to a letter from the defendants, he and his wife decided to ask another firm of solicitors to take over the matter. Having received advice from the new firm of solicitors that their claim would fail, the defendants gave instructions that the proceedings be discontinued.
In these circumstances, regardless of whether it is literally correct to say that the retainer of the plaintiffs was terminated by “mutual consent”, the evidence established that the defendants made conscious decisions to change solicitors and to discontinue the proceedings. There is no substance in the various complaints advanced under this second “substantive issue”.
The third matter concerns the requirement that the defendants proceed as dux litis in the trial. As mentioned, the magistrate treated the Particulars of Defence as, in part, a counterclaim. However, paragraph 2 of the Particulars specifically asserted that the amount of $1530.30 was claimed as a set off. At the heart of the defendants’ pleading was the allegation that, in a number of respects, the plaintiffs did not properly perform the work which they agreed to carry out. As Von Doussa J observed in Horbelt v Raft Pools Pty Ltd (1987) 47 SASR 389 at 396, where there is a claim for work and labour the defendant may set off damages for bad workmanship. His Honour determined that as the defendant’s counterclaim in those proceedings put in issue the plaintiff’s performance of its agreement, the plaintiff was required to lead evidence in proof of a particular aspect of the claim and carried the evidential burden to establish due performance. In the particular circumstances, Von Doussa J concluded that the trial judge had been in error in ruling that the defendant was obliged to begin by leading evidence on the counterclaim.
The single judge specifically referred to the matters raised by the defendants’ case being treated as a counterclaim although it was also capable of giving rise to a set off. In rejecting the complaint by the defendants in this regard, his Honour made the following observations:
“9...The defendants bore the onus of proof on these issues [the matters raised in the defendant’s case] and it was consistent with practice and within the Magistrate’s discretion to require the defendants to begin. I do not consider that there was any unfairness resulting from the adoption of this procedure. Mr Everingham was apparently unprepared to proceed in this way. He expected to be able to put his complaints to the plaintiffs’ witnesses in the first instance. However, he did not seek an adjournment to further prepare himself. In my opinion the Magistrate was not in error.
...
21It has long been established that a client is entitled to an equitable set off of damages for solicitor’s negligence against the liquidated claim of the solicitor for his costs - see Piggott v Williams (1821) 56 ER 1027 and article “Equitable Set Offs” by Dr ICF Spry - 43 ALJ 265. The difficulty for Mr and Mrs Everingham is that their complaints are not supported by the Magistrate’s findings. The Magistrate treated the defence as raising a counterclaim. I do not consider that the appellants have been disadvantaged thereby.”
From the pleadings it appeared to the magistrate that the essential features of the plaintiffs’ claim for costs were not in dispute. In those circumstances, while in my opinion the preferable course would have been for the plaintiffs to present their case first, it was within the magistrate’s discretion to require the defendants to proceed first.
Further, I am not persuaded that the judge erred in his assessment that the defendants were not disadvantaged. As the judge observed, following the ruling by the magistrate Mr Everingham did not seek an adjournment to further prepare himself. He was able to present his case in full. The magistrate gave Mr Everingham considerable assistance during the course of his evidence. Mr Everingham’s evidence was not concluded on the first day of the trial. Early on the second day, immediately after Mr Everingham finished his evidence, the magistrate asked Mr Everingham if he had further evidence to call. In particular, the magistrate asked whether Mrs Everingham would be called. Mr Everingham replied in the negative. During submissions on the appeal, Mr Everingham said that at the time he told the magistrate he did not wish to call his wife, she was sitting outside the court. At the conclusion of the evidence for the plaintiffs, and after addresses by Mr Everingham and counsel for the plaintiffs, at about 2.45 pm the court adjourned at the request of Mr Everingham. Upon resumption at 10 am the following day, the magistrate asked if there was anything else either party wished to put before him and Mr Everingham responded negatively.
The defendants chose not to call Mrs Everingham. There is no substance in the complaint that, by being required to start first, the defendants were deprived of presenting any evidence. Ultimately, the plaintiffs were required to present all their evidence and Mr Everingham was given every opportunity to challenge the evidence led for the plaintiffs and to put his complaints to Mr Bourne in cross-examination. The magistrate’s decision did not rest upon fine questions of the burden of proof. His Honour accepted the plaintiffs’ case and rejected the case for the defendants. In these circumstances, even if a procedural error is assumed, in my opinion the error did not lead to such unfairness that intervention by this Court is justified.
The fourth “substantive issue” concerns an opportunity of presenting submissions with respect to the question of who should proceed first. The transcript of the proceedings before the magistrate did not provide any assistance. The defendants sought to place before the single judge an affidavit of Mr Everingham which stated that Mr Everingham did not have an opportunity to address the issue before the ruling was made. The plaintiffs answered the affidavit of Mr Everingham with an affidavit from Mr Cogan, counsel for the plaintiffs at the trial. Mr Cogan denied the allegations made by Mr Everingham and swore that both he and Mr Everingham made submissions to the magistrate prior to the ruling.
In his reasons, the judge stated that he refused to receive any affidavit evidence on the appeal, but that he allowed Mr Everingham to make his assertions in argument. That course was open to his Honour. Even if the version put forward by Mr Everingham was accepted, the appeal could not succeed on this basis. As I have indicated, the procedural error that followed did not cause a miscarriage of justice.
The fifth matter is a complaint that hearsay evidence was wrongly admitted to the effect that Mrs Everingham refused to speak to a junior solicitor employed by the plaintiffs. Mr Bourne gave evidence that, in connection with seeking an adjournment of proceedings, he attempted to have a junior solicitor in his firm explain the difficulties to the defendants and obtain instructions from them. He said the solicitor became very upset and told him that Mrs Everingham very rudely refused to speak to her. Mr Bourne also said that Mr Everingham came into the office “to smooth things over” and explained to Mr Bourne that Mrs Everingham had been caught off guard and the solicitor’s perception of what had happened was incorrect.
In referring to the issue of the application to adjourn a hearing, the magistrate observed that Mr Bourne “deputed the attendance, at the application to re-list, to a junior solicitor to whom Mrs Everingham refused even to speak.” The judge commented that Mrs Everingham had refused to speak to a junior solicitor who was sent to a routine listing conference. Strictly speaking, there was no admissible evidence to prove that fact. The evidence of Mr Bourne could not be used to prove the truth of the assertion, namely, that Mrs Everingham refused to speak to the solicitor. To use the evidence in that way would infringe the rule against hearsay. The evidence was, of course, admissible as evidence of material affecting Mr Bourne’s state of mind and belief that it was appropriate to terminate the solicitor/client relationship.
The trial was littered with evidence that, strictly speaking, infringed the hearsay rule. The evidence that is the subject of complaint was of very minor significance to the issue of the breakdown in the solicitor/client relationship. The critical evidence of the breakdown of the solicitor/client relationship came from Mr Bourne and was more than ample to justify the conclusion by the magistrate that there was a complete breakdown in that relationship. In addition, as the judge observed, there was no evidence that the defendants suffered any loss by reason of the change of solicitor.
The sixth head of complaint concerns the conduct of Mr Bourne in reaching a settlement with the Crown Solicitor as to costs without instructions from Mr or Mrs Everingham. Following a successful application by Mrs Everingham for judicial review of administrative action, Mr Bourne placed before the Crown Solicitor a solicitor/client bill of costs in short form for the amount of $9530.30. Without instructions from the defendants he negotiated with the Crown Solicitor and accepted an offer of $8000 in full settlement of Mrs Everingham’s claim against the Crown for the costs of the proceedings. The defendants claim that Mr Bourne should not have settled for anything less than the full solicitor/client amount of $9530.30 and that they are out of pocket to the extent of $1530.30 as a consequence of Mr Bourne’s actions.
The magistrate accepted the evidence of Mr Bourne that he reached the view that it was in the best interests of Mrs Everingham to accept the offer rather than undertaking the time consuming and expensive process of submitting a bill of costs for full taxation. The Magistrate also accepted Mr Bourne’s view that the difference of $1530.30 would be consumed by the expensive taxation process. His Honour concluded that the defendants had failed to establish that any loss was caused by reason of the settlement.

Before the judge and this Court, Mr Everingham argued that because they were reasonable clients who did not call upon Mr Bourne unnecessarily, there would not have been a gap between the party and party costs and the solicitor and client costs. The judge rejected that submission. His Honour concluded that the finding of the magistrate was justified. I agree with that conclusion.
The seventh issue raised by the defendants encompasses a number of findings of the magistrate which Mr Everingham submitted were not supported by the evidence. The judge reviewed these complaints and concluded that the findings of the magistrate were justified by the evidence. While it might be said that the magistrate was somewhat generous in his conclusion that Mr Bourne’s performance over the relevant period was “nigh impeccable and nigh flawless”, the ultimate conclusions to which the magistrate came were open on the evidence and I am unable to discern any basis upon which this Court should interfere with the assessment by the judge to that effect.
Next Mr Everingham complained about the rate of the award of interest on costs. Although the defendants complained before the judge that the magistrate erred in granting full indemnity costs and interest from the date the account became due, they did not complain about the rate of interest. In these circumstances, in my opinion the defendants should not be permitted to raise the issue in this Court.
The ninth issue is a claim by the defendants that they have been unfairly disadvantaged by being presented with one account. Mr Everingham argued that if the claim had been divided into two parts, the claims would have been minor civil claims which would not have attracted any legal representation. I agree with the judge that there is no substance in this complaint.
Finally, the defendants submitted that the decision of the judge on appeal is “manifestly unsafe” and that to allow it to stand would “constitute a severe injustice” to the defendants. I am unable to discern any substance in this complaint.
In my opinion, the appeal should be dismissed.
GRAY J I agree.
BESANKO J I agree that this appeal should be dismissed for the reasons given by Martin J.

[2001] SASC 415

21 December 2001