Keddie v Stacks/Goudkamp Pty Ltd

The appeal concerned a costs order made against a law practice, Stacks/Goudkamp Pty Ltd, in favour of its former client, Ms Keddie. Ms Keddie had brought proceedings against Stacks/Goudkamp alleging professional negligence in their handling of a nervous shock claim. The primary legal issue was whether the claim had reasonable prospects of success, which was relevant to the application of ss 345 and 348 of the *Legal Profession Act 2004* (NSW) and s 99 of the *Civil Procedure Act 2005* (NSW).

The court was required to determine whether Stacks/Goudkamp had acted negligently in advising Ms Keddie and settling her nervous shock claim. Specifically, the court had to consider whether the law practice was obliged to take additional steps, such as obtaining psychiatric evidence, beyond relying on the advice of counsel and expert reports, and whether the expert reports were demonstrably wrong. The court also considered whether Ms Keddie was mentally or emotionally incapacitated at the time she gave instructions to settle her claim.

The court reasoned that a solicitor is entitled to rely on the advice of counsel and expert reports, provided they have applied their independent mind to the matter. In this instance, the expert reports were not shown to be wrong, and there was no evidence that Ms Keddie lacked the capacity to give instructions. Therefore, Stacks/Goudkamp was entitled to follow its client's instructions to settle the claim. The court found that the claim did not lack reasonable prospects of success, and thus the costs order against the law practice was set aside.

The appeal was dismissed, and the cross-appeal was allowed. The order made by the trial judge for the appellants to pay the respondent's costs of the notice of motion on an indemnity basis was set aside. However, the appellants were ordered to pay the respondent's costs of the appeal and the cross-appeal.