Jasmin Solar Pty Ltd v Fitzpatrick Legal Pty Ltd
[2016] VSC 631
•21 October 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2016 3992
| JASMIN SOLAR PTY LTD (ACN 158 644 225) | Plaintiff |
| v | |
| FITZPATRICK LEGAL PTY LTD (ABN 61 124 925 524) | Defendant |
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JUDGE: | Ginnane J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 10 October 2016 |
DATE OF JUDGMENT: | 21 October 2016 |
CASE MAY BE CITED AS: | Jasmin Solar Pty Ltd v Fitzpatrick Legal Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2016] VSC 631 |
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LEGAL PRACTITIONERS –Client determines solicitor’s retainer – Client seeks return of documents – Solicitor’s lien -Client’s offer to provide security for solicitor’s costs – Client seeking assessment of costs – Solicitor entitled to rely on lien - Supreme Court Act 1986 s 76; Legal Profession Uniform Law Application Act 2014 s198(7); Supreme Court (General Civil Procedure) Rules 2015 O 37.05
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D C Gration | Madgwicks |
| For the Defendant | Mr M J Rivette | Fitzpatrick Legal |
HIS HONOUR:
The plaintiff seeks delivery to it of files, records and other documents held or maintained by the defendant as its solicitor in Federal Court proceedings and an appeal from an interlocutory decision in that proceeding and any auxiliary files.
It makes that application on the basis that it would pay the amount claimed by the defendant for costs, which is now $78,655.19, into its new solicitor’s, Madgwicks’, trust account or into court to abide the outcome of the assessment of the defendant’s fees. The plaintiff has paid all, or most, of counsel’s fees.
The plaintiff relies in support of its application on the Court’s powers under s 76 of the Supreme Court Act1986 and r 37.05 of the Supreme Court (General Civil Procedure) Rules2015. Affidavits with many exhibits were filed by Mr Kennedy of Madgwicks and Mr Fitzpatrick of Fitzpatrick Legal describing relevant background and the discussions between the parties.
During the hearing of the summons, neither the plaintiff nor the defendant submitted that the other party had been guilty of misconduct.
The following background is substantially taken from the summary in the plaintiff’s written submission.
As mentioned, the defendant was previously the plaintiff’s solicitor in a proceeding in the Federal Court and in ancillary matters.
The plaintiff terminated the defendant’s retainer on or about 29 July 2016 and requested that its files be transferred to its new solicitors, Madgwicks, and indicated that it would seek an assessment of the defendant’s costs. The file amounted to 30 lever arch files plus junior counsel’s brief.
The defendant responded on 1 August 2016, asserting a lien over the plaintiff’s file.
By letter of 4 August 2016, Madgwicks proposed to offer security in the sum mentioned by payment into its trust account. As mentioned, the plaintiff’s summons included, as an alternative, the payment into court of the sum in issue. The parties exchanged correspondence including about the amounts of the costs that were disputed. Madgwicks and the defendant were unable to agree on the terms on which the security would be provided. One issue concerned the inclusion in the undertaking of an agreement to pay interest on the outstanding fees. Madgwicks offered to give the defendant’s costs consultant necessary access to the files.
The defendant relied on its costs agreement with the plaintiff. First, it relied on an entitlement to interest on unpaid amounts that had been billed in invoices at the rate of 2% above the cash target rate set by the Reserve Bank of Australia applying at the rate that the invoice was issued.
Secondly, the defendant relied on a contractual foundation for its lien as well as the traditional basis. The contractual foundation was contained in clause 21 of its Disclosure Statement which stated:
Lien Over Documents
Without affecting any lien to which we are otherwise entitled at law over your papers and other property in our possession, we shall be entitled to retain by way of lien your property or papers which are from time to time in our possession or under our control until all costs, disbursements, interest and other monies due to us have been paid.
On 26 September 2016, the plaintiff issued a summons returnable in the Costs Court for assessment of the defendant’s costs. Section 198(7) of the Legal Profession Uniform Law Application Act2014 provides:
(7)If an application for a costs assessment is made in accordance with this Division –
(a)the costs assessment must take place without any money being paid into court on account of the legal costs the subject of the application;
(b)the law practice must not commence any proceedings to cover the legal costs until the costs assessment has been completed.
The plaintiff submitted that where a client has terminated its solicitor’s retainer, as has occurred in this instance, a court will not usually disturb the solicitor’s lien unless the client provides acceptable alternative security by way of, for example, payment of the outstanding fees claimed into court. However, if the client did that, the solicitor could be compelled to hand over the documents to the client’s new solicitor. The plaintiff had offered acceptable security to the defendant and the Court should order it to deliver the files to Madgwicks, subject to the provision of that security.
The defendant, on the other hand, submitted that because the plaintiff terminated the solicitor’s services for reasons that did not involve misconduct, the general rule was that the solicitor was entitled to exercise its lien over the documents. There was no reason for the Court to depart from that general rule.
Analysis
As a general rule, where the client discharges the solicitor, the court will not interfere with the solicitor’s right conferred by the lien not to hand over the client’s papers in order to compel payment of the costs due. The interest in the client having the papers for the purposes of conducting the proceeding is outweighed by the unfairness to the solicitor in having to give up the lien where the client has terminated its instructions without reasonable cause and retained new solicitors.[1] I consider that in this case, there are no special circumstances which take it outside the usual principles previously mentioned.
[1]See the cases discussed by Paul Collins, ‘Development of Solicitors’ Possessory Liens’ (2013) 87 Australian Law Journal 710.
Drummond J stated the principle in the following terms:[2]
[2]In Re Weedman [1996] FCA 1112.
In the absence of a special agreement, the right of a solicitor to refuse to hand over his former client’s papers in order to force the client to pay his costs has long been recognised under the general law. The principles relevant to the assertion of a solicitor’s lien upon a change of solicitor are set out in the judgment of Templeton LJ in Gamlen Chemicals and have been accepted by this Court in CC Com Pty Ltd v Jieing Pty Ltd and Ors (Cooper J, unreported 24 June 1992) and Cross v National Australia Bank Ltd (Drummond J, unreported, 13 May 1993):
If before the action is ended, the client determines the retainer, the solicitor may, subject to certain exceptions not here material, exercise a possessory lien over the client's papers until payment of the solicitor's costs and disbursements. Thus, in Hughes v Hughes [1958] P 224, 227-228, Hodson LJ said:
`There is no doubt that a solicitor who is discharged by his client during an action, otherwise than for misconduct, can retain any papers in the cause in his possession until his costs have been paid ... This rule applies, as the authorities show, whether the client's papers are of any intrinsic value or not, ...'
…
Where it is the client who discharges the solicitor, other than for the latter's misconduct, a different position obtains: in such cases the general rule is that the solicitor is entitled to keep his lien and the court has no power to interfere with the exercise of it: Lord v Wormleighton [1822] EngR 477; (1822) Jac 580, 37 ER 969; Robins v Goldingham (1872) LR 13 Eq 440; Hughes v Hughes [1958] P 224 at 227-228; Gamlen Chemical at 624; A v B at 269. In Hughes v Hughes, Hodson LJ, delivering the judgment for the Court, explained the reason for this, at 228:
"The litigant need not change his solicitor without good cause. It would be odd if he were in effect able to get solicitors' work done for nothing by the simple expedient of changing his solicitor as often as he chose, leaving a trail of unpaid costs in his wake and demanding the papers without payment when he had no just cause to complain of the conduct of the solicitors instructed and discarded."
In Ismail v Richards Butler, Moore-Bick J said, at 143, that the cases show that where the client has discharged the solicitor, the court has not been willing to interfere with the exercise of the lien, even where the papers concerned are required for pending litigation.
Where it is the client who has terminated the retainer otherwise than for the solicitor's misconduct, I doubt whether there is any residual discretion in the court to order that the former client shall have access to the documents, in the face of the lien, even where the denial of access to the documents may leave the client facing what can truly be regarded as catastrophic disruption to his litigation. Such a discretion could, in my opinion, only be justified on the basis that the interests of justice may require such an order to be made in some cases. But it is difficult to see why the court should disregard the interests of its own officers and leave them without payment for what is justly due to them because insistence on the lien would deprive the former client of material essential to the conduct of his case, where that situation has been brought about by the client discharging the solicitor without any good reason. However, it is unnecessary for me to reach a concluded view on whether such a discretion exists since even if the court does have that power, I would not regard this as a proper case to exercise it in favour of the applicants, for reasons which later appear.
The judgment of Drummond J was referred to with approval by Keane JA in the Queensland Court of Appeal decision Stark v Dennett.[3]
[3][2008] 2 Qd R 72 [42] Muir JA and Mullins J agreed.
The exercise of the rights afforded to clients of legal services by the Legal Profession Uniform Law Application Act2014 to seek an assessment of costs does not affect the existence of the solicitor’s lien over the plaintiff’s file. On the other hand, my decision does not affect the plaintiff’s entitlement to pursue those rights.
The plaintiff relied on the decision in Beneficial Finance Corporation Ltd v Conway (No 2).[4] But that case did not apply any different principle. Rather, by consent, an order had been made for the return of the client’s documents, for the payment of some money to the solicitor with the balance claimed by the solicitor being paid into court. The Court was later required to decide the consequence of the consent order on the solicitor’s lien. The case dealt with circumstances quite different from the present case. The other authorities upon which the plaintiff relied were instances of the application of the general principle, to which I have referred, in particular circumstances.
[4][1971] VR 594, 607.
Conclusion
No reason has been shown to prevent the defendant relying on its lien.
The plaintiff’s summons is dismissed.
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