Falcon v Makin & Kinsey Solicitors Pty Ltd
[2022] VSCA 30
•10 March 2022
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S EAPCI 2021 0054
| JACK FALCON | Applicant |
| v | |
| MAKIN & KINSEY SOLICITORS PTY LTD (ACN 159 976 735) | First Respondent |
| and | |
| RONALD FREDERICK MAKIN | Second Respondent |
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| JUDGES: | BEACH, KYROU and SIFRIS JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 7 March 2022 |
| DATE OF JUDGMENT: | 10 March 2022 |
| MEDIUM NEUTRAL CITATION: | [2022] VSCA 30 |
| JUDGMENT APPEALED FROM: | [2021] VSC 171 (Forbes J) |
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PROFESSIONAL NEGLIGENCE – Solicitors – Solicitors ceasing to act for plaintiff in professional negligence claim against architect when plaintiff overseas – Whether plaintiff lost opportunity to pursue claim against architect – Trial judge concluded that plaintiff’s solicitors ceasing to act did not cause plaintiff to lose opportunity to pursue claim against architect – No error in trial judge’s conclusions – Application for leave to appeal refused.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | In person | |
| For the Respondents | Ms E A Bennett SC | Colin Biggers & Paisley |
BEACH JA
KYROU JA
SIFRIS JA:
Makin & Kinsey Solicitors Pty Ltd is a firm of solicitors, the principal of which is Ronald Makin (collectively, ‘the respondents’). Jack Falcon (‘the applicant’) is a former client of the respondents. In 2016, he retained them to act on his behalf in a claim against an architect he had engaged in respect of a property development in Frankston. Pursuant to that retainer, a proceeding known as the ‘Batsakis proceeding’ was issued against the architect.
On 7 June 2018, while the applicant was overseas, the respondents sent him an email advising him that they had ceased acting for him. The email attached a notice of ceasing to act in the Batsakis proceeding. On 3 July 2018, a notice of change of solicitor was filed by Robert West of RE West & Associates advising that he now acted on behalf of the applicant in that proceeding.
On 19 July 2018, in accordance with instructions given by the applicant to Mr West, the Batsakis proceeding was settled on terms that the Batsakis proceeding be dismissed, with each side bearing their own costs.
Subsequently, the applicant commenced a proceeding against the respondents alleging that as a result of their negligence and/or breaches of contract he lost the opportunity to recover damages in the Batsakis proceeding in the sum of $13,285,000. The central complaint made by the applicant was that, because he was told that the respondents had ceased to act for him when he was outside Australia, he was unable to obtain appropriate legal representation and was thus forced to settle the Batsakis proceeding on terms which involved no payment of any damages to him.
The applicant’s proceeding against the respondents was heard by Forbes J over four days in March 2021. On 19 April 2021, in accordance with reasons published by her Honour on 9 April 2021,[1] the judge made an order dismissing the applicant’s proceeding. The judge’s primary reason for dismissing the applicant’s proceeding was that the termination of the solicitor/client relationship did not cause the applicant’s claimed loss; and that any loss suffered by the applicant was directly caused by the instructions he gave to Mr West to settle the Batsakis proceeding on the terms to which we have referred.[2] The judge also said:
The action of the solicitor did not compromise the Batsakis proceeding. It was not accompanied by any failure to advise of a deadline or the need to take action to preserve rights that might amount to negligence. No rights of Mr Falcon were lost by the cessation of representation. … In short, I do not accept that by ceasing to act the solicitors did deprive Mr Falcon of the opportunity to pursue his claim.[3]
[1]Falcon v Makin & Kinsey Solicitors Pty Ltd [2021] VSC 171 (‘Reasons’).
[2]Ibid [29].
[3]Ibid [28].
The applicant now seeks leave to appeal from the judge’s order dismissing his proceeding. His proposed grounds of appeal make complaint about five paragraphs of her Honour’s reasons for judgment as follows:[4]
[4]Errors are in the original.
1.At paragraph 19 of the Judgment Her Honour refers to the Defendant’s handwritten file note purported to be drafted on 18 January 2018, which purports to be a meeting between the Defendant and me.
(a) I denied the meeting and conversation ever took place;
(b)I made it clear that wished to cross examine the Defendant about File Note, among other things.
2.At paragraph 20 Her Honour commented that a practitioner would be expected to give evidence in court to the veracity of the File Note;
(a)I was informed by the Defendant’s Counsel, some 14 minutes before the Defendant was to be called to give evidence in open court that the Defendant would not be called. This was prejudicial to my case as Her Honour stated: ‘The absence of sworn testimony to the contrary, where it was available and might be expected, means that I may more readily accept Mr Falcon’s evidence on the question of what he had been told about being joined to the costs dispute prior leaving Australia on 20 May 20128.’
3.At paragraph 21 Her Honour placed more importance in the failure of the Defendant to inform me of the consequences of the threat of the joinder of the claim for Counsel’s fees in the Batsakis proceeding. It is my submission the informing me of any consequences of the Joinder would not expose Making & Kinsey to accusations of conflict.
4.At Paragraph 27 one hand her honour accepted that ‘the manner of notification to Mr Falcon did make it more difficult to arrange more representation.’ It is my submission that it was impossible for me to arrange new representation from Turkey Because, I live in a remote area where communications are non-existent.
(a)Mr Makin knew or ought to have known that I live in a remote region with no communications as I informed him at a meeting at his office before, I left for overseas. He was made aware that I would go to Somalia and would be totally out of contact there.
5.At paragraph 29 The reason for closing the Batsakis was my inability to arrange alternative representation due to my inability to communicate properly from overseas and I could not rely on communication with Mr West as I was not in an area where communications made it impossible to mass on instructions to Mr West and adequately instruct him or any other Law Firm to proceed with the Batsakis proceeding.
For the reasons which follow, there is no substance in any of the applicant’s proposed grounds of appeal. Accordingly, his application for leave to appeal must be refused.
The judge’s reasons
The judge commenced her description of the facts of the case by setting out the circumstances in which the applicant came to retain the respondents.[5] In short, in January 2016, the applicant and his friend, Mr West (who was later to file the notice of change of solicitor stating that his firm acted for the applicant from 3 July 2018), conferred with a barrister about the possibility of a successful claim against the architect for damages for breach of contract and negligence. The barrister said that a firm of solicitors would need to be retained and, in March 2016, the applicant attended the respondents’ offices. The respondents agreed to act for the applicant, and the barrister who had been initially consulted was retained. At that time, Mr West was employed by Makin & Kinsey as a solicitor. He established his own practice, R E West & Associates, prior to 7 June 2018.
[5]Ibid [2]–[5].
Her Honour then set out the steps taken in the Batsakis proceeding, including the issuing of proceedings, the filing and serving of pleadings and the arranging of a mediation to be held in April/May 2018.[6] Her Honour summarised what then occurred as follows:
·On 1 April 2018, the applicant (who had been overseas since July 2016) returned to Australia for the purpose of attending the mediation.
·The mediation occurred on 18 May 2018, but failed to resolve the dispute.
·On 20 May 2018, following the unsuccessful mediation, the applicant again left Australia, having advised the respondents that he would be ‘gone for some considerable time’.[7]
·On 23 May 2018, the respondents sent an email to the applicant observing that the mediation had been ‘disappointing and left little doubt that the matter will have to go to court’; stating that a further directions hearing had been set down for 14 June 2018; and advising that the applicant’s case was ‘going to be limited by the lack of documentation in [the respondents’] possession’, and that until the respondents had ‘access to the complete files [the applicant would] have great difficulty progressing [his] case’.
·After some subsequent correspondence between the respondents and the solicitors for the Batsakis defendants, in which those solicitors urged the dropping of the claim against their clients, on 7 June 2018, the respondents (as we have already observed) emailed the applicant to say that they had ceased to act for him.[8]
[6]Ibid [6]–[9].
[7]Ibid [10].
[8]Ibid [10]–[13].
The judge then summarised a costs dispute that had arisen between the barrister and the respondents, noting that the barrister ultimately issued a Magistrates’ Court complaint against the respondents to recover his fees; and also noting that the respondents filed a defence contending that the applicant had directly engaged the barrister, and that the agreement with counsel was that fees were payable at the conclusion of the proceeding and were thus not yet due and payable.[9]
[9]Ibid [16].
In a passage containing the paragraphs of the Reasons referred to in proposed grounds 1, 2 and 3, the judge then said:
Mr Falcon obviously knew that Counsel was chasing fees from Makin & Kinsey. He had sent an email in January 2018 referring to his understanding that all the legal practitioners were to be paid at the conclusion of the proceeding. He described himself as feeling dejected. In part he said:
Just on 2 years now and we have just managed to lodge. Everyone decides to chase their bill now but no one wants to do anything about my matter …
He agreed in cross-examination that Mr Makin had told him that Counsel was chasing his fees and that Mr Makin would have difficulty paying it.
However, Mr Falcon said that he was not told that he might be joined as a party to the costs dispute. He said that had he been told that and understood it, he would have been able to arrange alternate legal representation while in Australia in 2018. He was asked about a meeting with Mr Makin on 18 January 2018. He said he was overseas at that time. It was suggested that on that day Mr Makin told Mr Falcon that, if sued for the fees, Mr Makin would join Mr Falcon as a party. Mr Falcon denied this.
Ms Matson put her questions on instructions and based upon a handwritten file note contained in the Court Book. Mr Falcon disputed the file note as he had denied the conversation. It was one of the matters Mr Falcon anticipated cross-examining Mr Makin about. The defendants elected not to call Mr Makin. Mr Falcon made a submission to me that this demonstrated that the defendants had something to hide. I took this in effect to be a submission that I should draw an adverse inference from the failure to call Mr Makin, inferring that evidence he might give about what was or was not said to Mr Falcon on the issue of joinder to the costs dispute and ceasing to act in the Batsakis proceeding, would not have assisted the defendant’s case.
In circumstances where there are no letters of advice or other documents to demonstrate confirmation of any oral advice given I would expect the practitioner to give evidence about the nature of any oral advice that was given. In its absence, I can place no weight on the file note. The absence of sworn testimony to the contrary, where it was available and might be expected, means that I may more readily accept Mr Falcon’s evidence on the question of what he had been told about being joined to the costs dispute prior to leaving Australia on 20 May 2018. I accept he was not told that he might become a party to that dispute.
More importantly perhaps, it also follows that if he was not told of the prospect of joinder, he was also not informed of or likely to appreciate the consequences of joinder, one of which was that because of a conflict of interest Makin & Kinsey would cease to act in the Batsakis proceeding. Given the mediation had not concluded the matter, it would have been clear that the question of the costs dispute and any joinder of Mr Falcon and its consequences needed to be addressed by Makin & Kinsey. For reasons left unexplained by the evidence, this did not occur prior to Mr Falcon’s departure from Australia.[10]
[10]Ibid [17]–[21] (footnotes omitted).
The judge then noted that the costs dispute was ultimately resolved on terms which did not require the applicant to make any immediate payment, but which would also have resulted in the release of any documents then being held by the barrister.[11]
[11]Ibid [22].
Next, the judge described the concluding stages of the Batsakis proceeding. Upon learning that the respondents had ceased to act for him, the applicant contacted Mr West. The judge referred to the evidence of the applicant and Mr West that the applicant retained Mr West ‘in an interim capacity and … not … to prepare and run the trial’.[12]
[12]Ibid [23].
The judge referred to Mr West attending a directions hearing on 15 June 2018.[13] At the directions hearing, the applicant was given leave to file a further amended statement of claim, and a timetable was made ‘for any application if the amendments were opposed by [the Batsakis defendants]’.[14] The matter was otherwise listed for a further directions hearing on 20 July 2018. The judge observed that Mr West thereafter acted on the applicant’s instructions, ‘which were to conclude the Batsakis proceeding and agree to a dismissal of the proceeding on the basis that he and the Batsakis defendants each walked away bearing their own costs’.[15] As the judge noted, in accordance with those instructions, terms of settlement were signed and thereafter a notice of discontinuance was filed.
[13]While the material suggests that this directions hearing was originally listed for 14 June 2018, it actually took place on 15 June 2018.
[14]Reasons [24].
[15]Ibid [26].
Having recited the relevant facts underlying the dispute, the judge turned to the issues of negligence and causation. In a passage containing the paragraphs of the Reasons referred to in proposed grounds 4 and 5, the judge said:
Has Mr Falcon established that the defendants were negligent or in breach of their retainer?
The statement of claim pleads a cause of action in negligence and breach of contract. It alleges that Mr Falcon was ‘unjustly and unfairly deprived of an opportunity to properly defend himself in the [Batsakis] proceeding because he was overseas’. Makin & Kinsey were not retained to act on behalf of Mr Falcon in the costs dispute. Makin & Kinsey determined a conflict of interest in the costs dispute because there was a dispute over who had retained the barrister, and so they could not continue to act in the Batsakis proceeding. I accept that the manner of notification to Mr Falcon did make it more difficult for him to arrange alternate representation and was not optimal from a client management perspective. Mr Falcon does not allege that he should have been told prior to the mediation of the possibility that the solicitor might cease to act, only that he should have been told while he was in Australia.
The action of the solicitor did not compromise the Batsakis proceeding. It was not accompanied by any failure to advise of a deadline or the need to take action to preserve rights that might amount to negligence. No rights of Mr Falcon were lost by the cessation of representation. Appropriately a solicitor from Makin & Kinsey attended the next court directions so that the court was aware that new solicitors would need to come onto the record. Makin & Kinsey’s action did not jeopardise the likelihood that on 20 July 2018 the Court would set a timetable for preparation for trial and a trial date for an appropriate time in 2019.In short, I do not accept that by ceasing to act the solicitors did deprive Mr Falcon of the opportunity to pursue his claim.
The actions of Makin & Kinsey did not cause loss
Importantly, even if the timing of the Notice of Ceasing to Act was negligent rather than merely poorly managed, it was not an action that caused the loss complained of by Mr Falcon. Any loss was directly caused by his instructions to Mr West to conclude the Batsakis proceeding on the terms agreed to by him and by entering into the Deed of Settlement. Mr Falcon it seems provided instructions to compromise the Batsakis proceeding believing, erroneously, that once concluded he was able to commence and maintain an action for negligence against Makin & Kinsey. There is no evidence that he sought or received any legal advice about this course of action.[16]
[16]Ibid [27]–[29].
In rejecting the applicant’s case on causation, the judge said that the evidence did not demonstrate the applicant was compelled to settle the Batsakis proceeding on the terms on which it ultimately settled. Her Honour gave the following reasons for that conclusion:
(i)Mr Falcon did in fact obtain alternate representation albeit on a limited basis;
(ii)Mr West was a legal practitioner familiar with the matter and one in whom Mr Falcon had confidence generally;
(iii)At the directions hearing before Associate Justice Daly on 15 June, the Court was aware of the plaintiff’s need to obtain alternate representation. During the mediation further amendment of the statement of claim was apparently foreshadowed. The court set a timetable for that to occur and the matter otherwise listed for further directions in a month’s time. At that time, the proceedings had not yet been allocated a trial date;
(iv)There was no evidence of any steps taken by Mr Falcon or Mr West on his behalf to attempt to arrange alternate representation between May and July 2018. I have no doubt that exercise was made more difficult by Mr Falcon’s departure from Australia. However as Mr Falcon had been able to provide instructions from overseas from July 2016 to April 2018 and continued to have confidence in Mr West who was representing him, arrangements could have been made or time sought from the Court to make those arrangements;
(v)Given Mr West’s familiarity with the matter and the fact that he held a Power of Attorney for Mr Falcon, it would have been possible for Mr West to take steps to engage alternate representation for the purpose of preparing the matter for hearing or to seek a trial timetable and date from the Court that would … allow time for Mr Falcon to do so;
(vi)The deed of settlement was entered into the day prior to the adjourned directions hearing of 20 July. It might be inferred that this date had some unexplained significance in Mr Falcon’s sense of urgency in concluding the proceeding.[17]
[17]Ibid [35].
Proposed grounds 1 to 3: the applicant’s complaints about Reasons [19], [20] and [21]
In proposed grounds 1 to 3, the applicant cavils with statements made by the judge at Reasons [19], [20] and [21]. There is no substance in any of the applicant’s complaints. Moreover, even if there were any issue with what her Honour wrote in these paragraphs, those paragraphs had no bearing on the judge’s ultimate conclusion that the respondent’s termination of the retainer did not deprive the applicant of the opportunity to pursue his claim. As a result, even if the applicant could establish one or more of the complaints made in proposed grounds 1 to 3, that would not form any basis upon which her Honour’s ultimate order dismissing the applicant’s proceeding could be overturned.
The passages in the Reasons about which the applicant makes complaint in proposed grounds 1 to 3 are contained in that part of her Honour’s judgment dealing with the costs dispute between the barrister and the respondents. None of the analysis in this section of the judgment bears on the judge’s rejection of the applicant’s case that, by ceasing to act for him, the respondents deprived the applicant of the opportunity to pursue his claim; or that there was no relevant negligence on the part of the respondents.
Proposed grounds 1 and 2 make complaint about the judge’s treatment of one of the respondents’ file notes which was said to evidence a meeting and conversation that the applicant denied ever took place. The short answer to the applicant’s complaints in these grounds is that, having referred to the file note, the judge said that she could place no weight upon it.[18] While the applicant may have wished to cross-examine Mr Makin for the purpose of putting to him that the meeting and conversation referred to in the file note never occurred, ultimately that course was unnecessary because the judge accepted the applicant’s evidence that he was not told the matters which the file note recorded Mr Makin as having allegedly told him.
[18]Ibid [20].
The complaint made by the applicant in proposed ground 3 is not easy to follow. The judge’s finding at Reasons [21] that the applicant was ‘not informed of or likely to appreciate the consequences of [his] joinder [to the costs dispute]’ was an acceptance of the applicant’s evidence and the case he advanced at trial. The applicant, however, appears to cavil with the proposition that his joinder to the costs dispute might have exposed the respondents ‘to accusations of conflict’. It is difficult to see how there could not be some conflict between the respondents and the applicant if the respondents joined the applicant as a third party to the Magistrates’ Court proceeding commenced by the barrister. That said, the issue goes nowhere in this proceeding. Accepting (for present purposes) the applicant’s submission that informing him of any consequences of his joinder would not expose the respondents to accusations of conflict, the ultimate reason for the dismissal of the applicant’s proceeding remains untouched. Thus proposed ground 3, like proposed grounds 1 and 2, goes nowhere.
Proposed grounds 4 and 5: the applicant’s complaints about Reasons [27] and [29]
The central complaint the applicant makes under proposed grounds 4 and 5 is that the judge did not accept that it was ‘impossible’ for the applicant to arrange new representation because he either lived ‘in a remote area where communications are non-existent’, or because he was (for at least part of the time) in an area where he ‘would be totally out of contact’. In proposed ground 4, the applicant asserts that it was ‘impossible’ for him to arrange new representation from Turkey because he lived ‘in a remote area where communications are non-existent’, and that he ‘made Mr Makin aware that [he] would go to Somalia and would be totally out of contact there’.
In opening his case at trial, the applicant said that when the respondents ceased to act for him, ‘I was [in] African countries … I wasn’t contactable, I was in Somalia and there is no way you can contact anybody in Somalia, and [Mr Makin] knew that’. In evidence, however, the applicant said that he had no option other than to settle the Batsakis proceeding because, ‘I don’t know any person who can carry on with the case’ and because ‘I couldn’t have arranged a legal team from there’. Then in final address, the applicant said that when he received the email from the respondents saying that they had ceased to act for him, he was in Gallipoli. He also said that he could not continue with the Batsakis proceeding as the barrister held a lien over his file.
Immediately it may be observed that, notwithstanding the terms of proposed ground 4, the applicant did not give evidence that it was impossible for him to arrange new representation because there were no communications where he was in Turkey, or because he was out of contact in Somalia.
During the course of the hearing in this Court, we permitted the applicant to rely on an additional written submission. In that submission, the applicant gave yet another explanation for settling the Batsakis proceeding. He asserted that he was forced to abandon the Batsakis proceeding because the barrister took too long to produce a statement of claim, the statement of claim was ‘below standard, which prejudiced the court proceeding’, and the barrister had retained the applicant’s files ‘because he breached our arrangement for payment when the proceeding was completed’. This was not the case run at trial but, having regard to the terms of the applicant’s proposed grounds of appeal, it is not necessary for us to give any further consideration to these assertions.
In oral submission, the applicant focussed on the fact that Mr Makin had not told him, while he was in Australia, that the respondents intended to cease acting for him in the Batsakis proceeding. The applicant said that if he had been given notice, while he was in Australia, that he would need new solicitors, he could have arranged new representation before leaving Australia. Accepting that proposition, however, does not lead to a conclusion that there was any breach of contract or negligence on the part of the respondents for failing to advise the applicant that, after he left Australia, they were going to cease acting for him.
In any event, the evidence given at trial about the applicant’s contacts with Mr West while he (the applicant) was overseas in June and July 2018 belied any notion that, by reason of the applicant’s location or circumstances, it was impossible for him to communicate with potential solicitors in Australia and arrange new representation. Thus, the case which the applicant wishes to pursue in this Court (whether or not run at trial) has no merit.
Notwithstanding the differences in the applicant’s explanations about his reason for settling the Batsakis proceeding on the terms on which it was settled, as her Honour’s analysis of the evidence given at trial shows, there was no basis upon which it could be concluded that the applicant lost an opportunity to pursue the Batsakis proceeding because he was overseas at the time when the respondents ceased to act for him. The applicant’s evidence that he could not obtain representation while overseas was quite unpersuasive, as was his evidence about why he instructed Mr West to settle the Batsakis proceeding on terms that did not involve any payment to him. Having reviewed the evidence for ourselves, we have come to the same conclusion as her Honour: namely, that the respondents, by ceasing to act for the applicant while he was outside Australia, did not deprive him of any opportunity to pursue the Batsakis proceeding; and that any loss suffered by him was caused by him giving Mr West instructions to compromise a proceeding which was not due to heard for at least another six months.
While (as the judge said) it may have been less than desirable for the respondents to cease acting for the applicant when he was overseas, and not to warn him that they might do so when he was in Australia, the applicant plainly could have instructed new solicitors (either with or without the help of Mr West) to continue pursuing the Batsakis proceeding during the balance of 2018 and into 2019.
Conclusion
The application for leave to appeal will be refused.
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