Harith & Kanuth v McCrohon & 2 Ors - [2009] NSWSC 111

CITATION: Harith & Kanuth v McCrohon & 2 Ors [2009] NSWSC 111

HEARING DATE(S): 7-10 October 2008

JUDGMENT DATE :
5 March 2009

JUDGMENT OF: Smart AJ at 1

DECISION: See paras 185-186

CATCHWORDS: Initial action by plaintiffs against Beale in Queensland to recover land in Queensland held on trust - Action Against Solicitors in contract, tort and for breach of fiduciary duties as to conduct of action against Beale - Solicitor altering terms of counsel's engagement in action against Beale 2 days before hearing in Mackay, Queensland by declining to be responsible for payment of counsel's fees as plaintiffs had not provided funds - Solicitor failing to give reasonable notice and not previously disclosing fee problems to counsel - withdrawal of counsel - plaintiffs forced to apply for and granted an adjournment - Adverse costs order made against plaintiffs resulting in their being liable to pay $250,000 to Beale for his costs - Defendants disclosing not admitted in Queensland but failing to advise fully of costs consequences of them acting for plaintiffs instead of Queensland solicitors who are less expensive - Assessment of Damages - Amounts recoverable by plaintiffs against solicitors - plaintiffs ultimately successful in recovering property subject to amounts payable to plaintiffs. Party/party costs of plaintiffs to be assessed on basis Mackay solicitors retained and on task not time charging.

LEGISLATION CITED: Civil Liability Act 2002 (NSW)

CATEGORY: Principal judgment

CASES CITED: Hoby v Built (1832) 3 B & AD 350
Heslop v Cousins [2007] 3 NZLR 679

TEXTS CITED: Jackson v Powell on Professional Negligence 1992 at para 384

PARTIES: Paul Antoni Harith and Eizabeth Gay Kanuth

FILE NUMBER(S): SC 20238/2005

COUNSEL: B R McClintock SC & P Doyle Gray (Ps)
S A Kerr (Ds)

SOLICITORS: Searle & Associates (Ps)
P Bard (Ds)

- 44 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
PROFESSIONAL NEGLIGENCE LIST

SMART AJ

Thursday, 5 March 2009

20238/2005:

PAUL ANTONI HARITH AND ELIZABETH GAY KANUTH

v

PETER McCROHON, KARIN BERGSENG AND CHRISTINE PERRY

JUDGMENT

1. The defendants were solicitors admitted to practise in New South Wales. Mr McCrohon and Ms Bergseng were partners in McCrohon Bergseng Partners ("MBP), a firm of solicitors practising in Sydney. Ms Perry was a non-equity Partner in MBP. The defendants were not admitted to practise in Queensland and did not hold practising certificates which would entitle them to practise or to conduct litigation in Queensland.

2. In their Defence the defendants pleaded that in 2002 and 2003 the plaintiffs and John Beale (Beale) were in dispute relating to, and arising out of, a property known as Cool Palms located at Mandalay Road, Airlie Beach and that in November 2002 they were retained by the plaintiffs to act on their behalf in relation to a dispute with Beale. The defendants also pleaded that their retainer with the plaintiffs required them to exercise due care, skill and diligence in carrying out work for the plaintiffs.

3. The plaintiffs have sued the defendants for damages…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Harith & Kanuth v McCrohon & 2 Ors

Details

AGLC: Harith and Kanuth v McCrohon and 2 Ors [2009] NSWSC 111
Case: [2009] NSWSC 111
Decision Date: 5 March 2009

CaseChat Overview and Summary

The plaintiffs, Harith and Kanuth, sought to recover land held on trust in Queensland from the defendants, Beale and others. They also initiated legal action against their solicitors for their conduct in managing the case against Beale. The case was heard in the Queensland Supreme Court. The central issue before the court was the extent to which the solicitors were liable for the consequences of their actions, particularly their failure to manage the engagement of counsel effectively, which resulted in the withdrawal of counsel and an adjournment of the case. This led to an adverse costs order against the plaintiffs, making them liable to pay Beale $250,000 for his costs.

The court examined whether the solicitors were negligent in altering the terms of the counsel's engagement without proper notice and whether they breached their fiduciary duties by not fully disclosing the fee issues to counsel. The court also considered the solicitors' duty to advise the plaintiffs of the financial implications of their representation, particularly in comparison to local Queensland solicitors. The plaintiffs argued that the solicitors' actions were a breach of contract, tort, and fiduciary duties, leading to significant financial loss and distress. The court had to determine the appropriate measure of damages and whether the plaintiffs could recover the costs from the solicitors.

The court found that the solicitors were indeed negligent in their conduct and breached their fiduciary duties. They failed to provide reasonable notice to counsel and did not fully disclose the fee problems, which led to the withdrawal of counsel and the adjournment of the case. As a result, the plaintiffs suffered significant financial loss and distress. The court held that the plaintiffs could recover the costs from the solicitors and awarded damages to the plaintiffs. The court ordered that the costs of the plaintiffs be assessed based on the assumption that the Mackay solicitors were retained and that they charged on a task-based rather than time-based system. This decision underscored the importance of proper communication and disclosure in legal practice, particularly in managing client expectations and financial liabilities.

Orders