Kelly v Jowett - [2009] NSWCA 278

No judgment structure available for this case.

Reported Decision: 76 NSWLR 405

New South Wales

Court of Appeal

CITATION: Kelly v Jowett [2009] NSWCA 278
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 7 August 2009

JUDGMENT DATE:
4 September 2009

JUDGMENT OF: Beazley JA at 1; McColl JA at 2; Barrett J at 95

DECISION: In addition to orders 1 and 2 made by consent in the Short Minutes of Order dated 15 December 2008: 1. Join Robert Stanley Bryden and Bandeli Hagipantelis as respondents to the appeal. 2. Set aside orders 3 and 4 made by McLaughlin As-J on 29 May 2008. 3. In place of orders 3 and 4 order Robert Stanley Bryden and Bandeli Hagipantelis to pay Kenneth Rowland Jowett’s costs of the conduct of the Equity Proceedings up to and including 29 May 2008 on an indemnity basis. 4. Order Robert Stanley Bryden and Bandeli Hagipantelis to pay Kenneth Rowland Jowett’s costs of the stay application before Brereton J on an indemnity basis. 5. Order Robert Stanley Bryden and Bandeli Hagipantelis to pay Kenneth Rowland Jowett’s costs of the substantive appeal, including his notices of motion of 15 October 2008 and 19 May 2008 and the summons seeking leave to appeal on an indemnity basis. 6. Order that all the above costs orders be satisfied by Robert Stanley Bryden and Bandeli Hagipantelis paying the costs directly to Kenneth Rowland Jowett or his legal representatives. 7. Order that all the above costs orders be payable forthwith. 8. Dismiss the summons seeking leave to appeal.

CATCHWORDS: COSTS – wasted costs jurisdiction – defence of Family Provision Act 1982 (NSW) proceedings left to employed solicitor – delinquency in their handling – whether principals personally liable for wasted costs incurred by plaintiff – Uniform Civil Procedure Rules 2005 (NSW) 42.3(g) and Civil Procedure Act 2005 (NSW), s 99 - LEGAL PRACTITIONERS – duties and liabilities – duty to the Court, to their client and to the other party to proceedings - LEGAL PRACTITIONERS – retainer with clients

LEGISLATION CITED: Civil Procedure Act 2005 (NSW)
Family Provision Act 1982 (NSW)
Legal Profession Act 2004 (NSW)
Legal Profession Act 1987 (NSW)
Legal Profession Reform Act 1993 (NSW)
Supreme Court Act 1970 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

CATEGORY: Principal judgment

CASES CITED: Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 258 ALR 14
Harley v McDonald [2001] UKPC 18; [2001] 2 AC 678
Jowett v Kelly & Anor (Supreme Court of New South Wales, McLaughlin As-J, 29 May 2008, unreported)
Jowett v Kelly [2008] NSWSC 1009
Kendirjian v Ayoub [2008] NSWCA 194
Keppie v Law Society of the Australian Capital Territory (1983) 62 ACTR 9
Knaggs v J A Westaway & Sons Pty Ltd (1996) 40 NSWLR 476
Lemoto v Able Technical Pty Ltd & 2 Ors [2005] NSWCA 153; (2005) 63 NSWLR 300
Myers v Elman [1940] AC 282
Myers v Rothfield [1939] 1 KB 109
Orchard v South Eastern Electricity Board [1987] QB 565
Re Bannister & Legal Practitioners Ordinance 1970-75; Ex Parte Hartstein (1975) 5 ACTR 100
Re Fabricius & McLaren and Re Legal Practitioners Ordinance 1970 (1989) 91 ACTR 1
Re Jones (1870) 6 Ch App 497
Ridehalgh v Horsfield [1994] Ch 205
Rondel v Worsley [1969] 1 AC 191
Sydney South West Area Health Service v Stamoulis [2009] NSWCA 153
Taylor v Taylor [1979] HCA 38; (1979) 143 CLR 1

PARTIES: Leanne Emeline Kelly - First appellant
Terrence John McLennan - Second Appellant
Kenneth Rowland Jowett - Respondent

FILE NUMBER(S): CA 40263 of 2008

COUNSEL: T J Morahan - for the Appellants
A C Scotting - for the Respondent

SOLICITORS: Brydens Law Office - for the Appellants
Russell McLelland Brown - for the Respondent

LOWER COURT JURISDICTION: Supreme Court

LOWER COURT FILE NUMBER(S): SC 4376/07

LOWER COURT JUDICIAL OFFICER: McLaughlin As-J

LOWER COURT DATE OF DECISION: 29 May 2008

CA 40263/08
SC 4376/07

BEAZLEY JA
McCOLL JA
BARRETT J
Friday 4 September 2009

Leanne Emeline Kelly and Anor v Kenneth Rowland Jowett

HEADNOTE
[This headnote is not to be read as part of the judgment]

Kenneth Rowland Jowett claimed provision under the Family Provision Act 1982 (NSW) for his maintenance and advancement in life out of the estate or notional estate of his late mother (the “Equity Proceedings”). The defendants in the Equity Proceedings were Leanne Emeline Kelly and Terrence John McLennan, the executors of the deceased estate (the “appellants”). The appellants retained Brydens Compensation Lawyers to represent them in the Equity Proceedings. Mr Bryden and Mr Hagipantelis were the principals of that firm, and of Brydens Law Office. Mr Dimmock, a solicitor employed in one or both firms represented the appellants in the Equity Proceedings. He signed the Notice of Appearance as the solicitor on the record. Prior to the hearing of the Equity Proceedings, court rules, orders and directions relating to the filing of the appellants’ affidavits were not complied with. At the hearing of the matter on 29 May 2008 before McLaughlin As-J, the appellants led no evidence and there was no cross examination on their behalf of Mr Jowett or of any other witness. McLaughlin As-J ordered that Mr Jowett receive a legacy from the deceased’s estate. He also ordered the appellants and Mr Dimmock personally to pay Mr Jowett’s costs on an indemnity basis on the ground that the appellants had “deliberately and consistently flouted the orders and directions of the Court” and that Mr Dimmock had failed to comply with undertakings to file their affidavits.

The appellants appealed from McLaughlin As-J’s orders. Prior to the notice of appeal being filed, they sought, and were granted, a stay on the basis that they had reasonable prospects of success on appeal because of the incompetence of their legal representation. They led evidence on the stay application that while they had retained Brydens Compensation Lawyers to represent them in the Equity Proceedings, they were not kept informed by Mr Dimmock of the progress of the proceedings and were unaware they had not complied with any court orders.

In the appeal proceedings, the parties consented to the substantive orders granting Mr Jowett relief under the Family Provision Act being set aside and the matter being remitted to the Equity Division for a new trial. The issue of the costs orders made by McLaughlin As-J was left outstanding.

Mr Jowett sought orders rendering Mr Bryden and Mr Hagipantelis personally liable for the costs orders McLaughlin As-J had made and for his costs of the appeal. He relied substantially on the same evidence as that Ms Kelly and Mr McLennan adduced on their stay application. In the course of the hearing in the Court of Appeal Mr Bryden and Mr Hagipantelis disclosed that “very shortly after the problems with … Mr Dimmock were discovered” they had agreed to indemnify the appellants for any costs for which they were liable in respect of the proceedings before McLaughlin As-J and in respect of the appeal

Held, (per McColl JA, Beazley JA and Barrett J agreeing):

1 Where a solicitor is employed by another, the client’s retainer is with the employer. Accordingly, although Mr Dimmock filed the Notice of Appearance as the solicitor on the record, the appellants were Mr Bryden and Mr Hagipantelis’ clients: (at [69] - [71])

Re Bannister & Legal Practitioners Ordinance

Ex Parte Hartstein

Re Fabricius & McLaren and Re Legal Practitioners Ordinance

Knaggs v J A Westaway & Sons Pty Ltd

2 The court has a right and a duty to supervise the conduct of its solicitors, and to visit with penalties any conduct of a solicitor which is of such a nature as to tend to defeat justice in the very cause in which the solicitor is engaged professionally. The jurisdiction is exercised where it is demonstrated that the solicitor has failed to fulfil his or her duty to the Court and to realise his or her duty to aid in promoting in his or her own sphere the cause of justice. The order is for payment of costs thrown away or lost because of the conduct complained of and is frequently exercised in order to compensate the opposite party in the action. Misconduct or default or negligence in the course of the proceedings is in some cases sufficient to justify an order. The jurisdiction may be exercised even where there has been no personal complicity by the solicitor charged: (at [61] – [62], [65])

Re Jones

Myers v Elman

Harley v McDonald

3 The additional evidence Mr Jowett adduced demonstrated that Mr Dimmock was left in charge of the defence of the Equity Proceedings notwithstanding considerable material in Brydens’ possession demonstrating his unreliability in relation to matters he was given to handle and that his delinquency, both in relation to the appellants’ defence, in relation to his handling of other estate matters and generally, was known to both Mr Bryden and Mr Hagipantelis by mid-May 2008, yet neither took any steps to ensure that Mr Dimmock complied with the court’s directions to prepare the appellants’ affidavits: (at [72] – [74], [76]).

4 Mr Bryden and Mr Hagipantelis’ failure to ensure that the appellants’ affidavits were filed in time to enable Mr Jowett’s legal representatives to complete their preparation for the hearing and for the hearing to proceed on 29 May 2008 was a serious neglect of their duties which caused Mr Jowett to incur the costs of the Equity Proceedings and of the stay application. Those costs were wasted costs which Mr Bryden and Mr Hagipantelis should pay: (at [77], [79], [81], [83]).

Myers v Elman

5 Mr Jowett’s costs of the substantive appeal (including interlocutory steps) were costs he incurred by Mr Bryden and Mr Hagipantelis’ serious neglect in the conduct of the Equity Proceedings, as well as without reasonable cause in circumstances for which they were responsible; in not settling the balance of the substantive appeal they also caused the appellants to breach their duty to assist the Court to further the overriding purpose of the just, quick and cheap resolution of the real issues in the proceedings and, in turn, by their conduct they caused that breach. They should pay the wasted costs incurred in those respects also: (at [85]-[89]).

Civil Procedure Act

(per Barrett J)

6 Solicitors in sole practice or in partnership should not allow an employed solicitor to be the solicitor on the record in proceedings, even if the employed solicitor holds an unrestricted practising certificate, and this position is not altered by s 87 of the Legal Profession Act 2004: (at [94]-[95]).

Orders

In addition to orders 1 and 2 made by consent in the Short Minutes of Order dated 15 December 2008:

(1) Join Robert Stanley Bryden and Bandeli Hagipantelis as respondents to the appeal.

(2) Set aside orders 3 and 4 made by McLaughlin As-J on 29 May 2008.

(3) In place of orders 3 and 4 order Robert Stanley Bryden and Bandeli Hagipantelis to pay Kenneth Rowland Jowett’s costs of the conduct of the Equity Proceedings up to and including 29 May 2008 on an indemnity basis.

(4) Order Robert Stanley Bryden and Bandeli Hagipantelis to pay Kenneth Rowland Jowett’s costs of the stay application before Brereton J on an indemnity basis.

(5) Order Robert Stanley Bryden and Bandeli Hagipantelis to pay Kenneth Rowland Jowett’s costs of the substantive appeal, including his notices of motion of 15 October 2008 and 19 May 2008 and the summons seeking leave to appeal on an indemnity basis.

(6) Order that all the above costs orders be satisfied by Robert Stanley Bryden and Bandeli Hagipantelis paying the costs directly to Kenneth Rowland Jowett or his legal representatives.

(7) Order that all the above costs orders be payable forthwith.
(8) Dismiss the summons seeking leave to appeal.

*********************

CA 40263/08
SC 4376/07

BEAZLEY JA
McCOLL JA
BARRETT J
Friday 4 September 2009

Leanne Emeline Kelly and Anor v Kenneth Rowland Jowett

Judgment

1 BEAZLEY JA: I agree with McColl JA.

2 McCOLL JA: The proceedings before the Court were commenced by the filing of a notice of appeal on 29 August 2008 by Leanne Emeline Kelly and Terrence John McLennan (the “substantive appeal”). They were appealing from orders made by McLaughlin As-J on 29 May 2008 in proceedings under the Family Provision Act 1982 (NSW) in which Kenneth Rowland Jowett, the respondent to the appeal, claimed provision for his maintenance and advancement in life out of the estate or notional estate of his late mother (the “Equity Proceedings”).

3 In those proceedings, McLaughlin As-J made the following orders:

2. Each Defendant on or before 12 June 2008 is to restore to the estate the amount of $81,470.74.
3. Subject to order 4, the Defendants are to pay the costs of the Plaintiff on the indemnity basis and the Defendants are not to be entitled to recoup such costs from the estate of the deceased.
4. Jason Dimmock to pay the costs of the Plaintiff on the indemnity basis incurred as a result of his failure to comply with undertakings given on 7 April 2008 and 26 May 2008 regarding the filing and service of affidavits.”

4 Jason Dimmock filed the Notice of Appearance on Ms Kelly and Mr McLennan’s behalf in response to Mr Jowett’s summons. The Notice of Appearance identified Mr Dimmock as the “Solicitor on the record” and “his” firm and the address for service as “Brydens Law Office LP”. As shall become apparent, “Brydens Law Office” and “Brydens Compensation Lawyers” are the business names for law firms whose practices are carried on by Robert Stanley Bryden and Bandeli Hagipantelis. The business names appear to be, and have been, used interchangeably. However it is common ground that Mr Dimmock was at all relevant times employed by Mr Bryden and Mr Hagipantelis either directly or by the law firms which carried on business under those names.

5 On 15 December 2008 Short Minutes of Order were filed by consent in the substantive appeal pursuant to which the appeal against orders 1 and 2 made by McLaughlin As-J was allowed, those orders were set aside and the proceedings were remitted to the Equity Division so that Mr Jowett’s claim for relief might be “reheard”. A timetable presumably for the conduct of the remitted matter was set out. Order 6 provided:

“The appeal regarding orders 3 & 4 of the orders of Associate Justice McLaughlin made on 29 May 2008, the respondent’s Notice of Motion filed on 15 October 2008 and the Notice of Motion of Robert Stanley Bryden and Bandeli Hagipantelis filed on 21 November 2009 [sic, 2008] be stood over to 9 February 2009 before the Registrar of the Court of Appeal with a view to the allocation of a hearing date.”

6 Prior to the filing of the consent orders, the following steps had also been taken in the substantive appeal proceedings.

7 By notice of motion filed on 15 October 2008 Mr Jowett sought an order that Mr Bryden and Mr Hagipantelis (the first respondents to the motion, hereinafter referred to, where appropriate, as “Brydens”), pay his costs thrown away in the matter and on the appeal including the costs to be paid under orders 3 and 4 of the orders made by McLaughlin As-J on 29 May 2008. Mr Dimmock was named as the second respondent to the motion no doubt on the basis he may be affected by the proposed order: Uniform Civil Procedure Rules 2005 (NSW) 18.2(1) (“UCPR”).

8 On 21 November 2008 Brydens filed a notice of motion again in the substantive appeal proceedings, seeking an order that Mr Dimmock indemnify them, trading as Brydens Law Office and also as Brydens Compensation Lawyers, in respect of “any judgments and/or any costs orders made against them”. Brydens were not parties to the substantive appeal, although they were respondents to Mr Jowett’s notice of motion of 15 October 2008.

9 Mr Jowett has made several unsuccessful attempts to serve Mr Dimmock with the notice of motion of 15 October 2008: see affidavit of service of James Twigg, sworn 7 November 2008 and affidavit of Michael Lewis sworn 11 November 2008. According to the submissions filed for Mr Jowett, which were not challenged, Brydens have also been unsuccessful in attempting to serve Mr Dimmock with their notice of motion. Brydens did not seek to have service on Mr Dimmock dispensed with (UCPR 18.2(c)), and, had they sought to move on it, it would not have been open to the Court to dispose of it in his absence: UCPR 18.7.

10 Subsequent to the filing of the Short Minutes of Order, on 19 May 2009, Mr Jowett filed a summons in the substantive appeal proceedings, seeking leave to appeal from orders 3 and 4 made by McLaughlin As-J. The summons also sought an order that it be determined with the question of costs outstanding in the substantive appeal and, to the extent the Court saw fit, an order joining Brydens as parties to the proceedings. The draft notice of appeal filed in anticipation of leave being granted, sought an order setting aside orders 3 and 4 made by McLaughlin As-J and substituting an order that Brydens bear the burden of those costs, and pay the costs directly to Mr Jowett. It also sought an order that Brydens pay Mr Jowett’s costs, including the costs of the stay application referred to below.

11 By notice of motion filed on 19 May 2009, Mr Jowett also sought leave pursuant to s 75A(8) of the Supreme Court Act 1970 (NSW) to rely on the following additional evidence:

(a) Affidavit of Terrence John McLennan, sworn 14 November 2008 (at pars 1–7).

(b) Affidavit of Leanne Emeline Kelly, sworn 17 November 2008 (at pars 1, 9–11).

(c) Affidavit of Paul Brandalise, sworn 6 May 2009 (at pars 1–3, 6–9 and 20 and annexures D and J).

(d) Affidavit of Michael Rodney Lewis, sworn 15 October 2008.

12 In his written submissions, Mr Jowett limited the application to rely upon those parts of Mr Lewis’ affidavit of 15 October 2008, to par 2 and annexure A of that affidavit and to an attached affidavit of Mr Lewis sworn 14 May 2008.

13 In my view, to the extent to which it is necessary (as to which see the discussion later in these reasons), Mr Jowett’s application for his summons to be heard with the balance of the relief on the question of costs outstanding in the substantive appeal should be granted. Accordingly there is before the Court:

(a) The issue of costs outstanding in the substantive appeal (i.e. orders 3 & 4 made by McLaughlin As-J), as well as the costs of the substantive appeal;

(b) Mr Jowett’s application for leave to appeal and his notice of motion filed on 15 October 2008.

Statement of the case

14 In the Equity Proceedings, Mr Jowett claimed an order for provision for his maintenance and advancement in life out of the estate or notional estate of his late mother, Fay Sandra Jowett, (“the deceased”). The deceased died on 23 April 2006, leaving a will dated 22 January 2002. Probate of the will was granted on 15 June 2006 to the defendants, Ms Kelly and Mr McLennan, the executors named in the will. They are the niece and nephew of the deceased: see primary judgment (at [3], [21]).

15 In his ex tempore judgment, the primary judge made a number of observations regarding the defendants’ conduct of the proceedings which were unfavourable to them: Jowett v Kelly & Anor (Supreme Court of New South Wales, McLaughlin As-J, 29 May 2008, unreported). His Honour noted (at [13] – [19]):

I would advise you at this time that as no claim was anticipated, all proceeds from the estate of Fay Sandra Jowett have been disbursed and there are no remaining assets left at this time. I further wish to advise that if the claim proceeds, we will be requesting that all costs involved with defending this claim be paid by your client Mr Kenneth Rowland Jowett.

14. An appearance was filed on behalf of the defendants on 11 October 2007. That is the only document which has ever been filed by the defendants. The defendants have never complied with the requirements of Schedule J to the Supreme Court Rules 1970 by filing an affidavit of the nature required by clause 5 of the provisions of [sic, as in original] relating to the Family Provision Act . That clause is mandatory.

…

Order that defendants pay plaintiff’s costs of the application today on the indemnity basis without prejudice to other costs sought by the plaintiff. Stand the matter over to 29 May 2009 at 10am before the Duty Judge. Note that defendants will serve affidavits by 2pm on 27 May 2008.

17. No affidavits were served by 2pm on 27 May 2008 or by any other time or by any other date.

…

16 In relation to the defendants’ conduct of the matter, the primary judge concluded (at [20]):

“20. It is abundantly obvious from the procedural history of this matter which I have just outlined, that the defendants have deliberately and consistently flouted the orders and directions of the Court, that they are contemptuous of the Court and of its procedures and that they are deliberately trifling with the Court. It is likely that the plaintiff, in order to enforce any order for provision which may ultimately be made in his favour, will need to resort to procedures by way of contempt, with the ultimate sanction of attachment and imprisonment being invoked against the defendants.”

17 The primary judge found (at [23] – [24]) that Mr Jowett was, in consequence of the provisions of the will, left without adequate provision for his proper maintenance and was accordingly entitled to receive from the estate of the deceased a legacy in the sum of $100,000. His Honour accordingly made orders 1 and 2 as set out above (at [3]).

18 The primary judge noted (at [27]) that ordinarily defendant executors were entitled to receive their costs out of the estate of the deceased, irrespective of the outcome of the proceedings, since it is the obligation of executors to uphold the terms of the will of the deceased. However, his Honour found (at [27]) that the defendants had:

“ … flagrantly disregarded their obligations, not only to uphold the terms of the will of the deceased but to comply with the statutory requirement of Schedule J to the Supreme Court Rules 1970 and in flouting the various orders and directions made by the Court for the filing of affidavits”

19 He concluded (at [28]) that subject to anything which the solicitor for the defendants might say concerning the costs:

“ … it seems to me the defendants personally should pay the costs of the plaintiff of the proceedings and that those costs should be on the indemnity basis and that the defendants should not resort to the estate of the deceased to recoup those costs.”

20 The primary judge then made costs orders 3 and 4 as earlier set out.

Stay proceedings

21 On 13 August 2008, Ms Kelly and Mr McLennan filed a notice of motion in the Equity Proceedings seeking an order that McLaughlin As-J’s judgment be stayed in aid of an appeal they had foreshadowed by the filing of a holding appeal.

22 Brereton J delivered an ex tempore judgment granting the stay: Jowett v Kelly [2008] NSWSC 1009. Mr M K Meek and Ms Christofis, instructed by Messrs Russell McLelland Brown appeared for Mr Jowett. Mr T J Morahan appeared for Ms Kelly and Mr McLennan (the defendants) instructed by Brydens Law Office.

23 After referring to the basis on which McLaughlin As-J made his orders, Brereton J said:

“2… However, the evidence now before me establishes that although the defendants did instruct the firm of solicitors who then acted for them, they were not kept apprised by the solicitor with the conduct of the matter of its progress, and were quite unaware of their predicament.

3 The second defendant Terrence John McLennan deposes that he saw the solicitor in question on at least two occasions: first, to give him instructions to act and secondly, to provide instructions in connection with a Schedule J affidavit, although he never signed any such affidavit. He said he was never told of, and was unaware of, any orders made by the Court. He assumed the solicitor was looking after his case and that everything was proceeding normally. In about April 2008 – when, as it transpires, there was to be a court ordered mediation – he received a phone call from the solicitor asking him to attend a meeting in the city (which, it would seem, was that mediation). Mr McLennan said that he could not do so, as the meeting was to take place within 20 minutes of that phone call, and he lived well out of the city. The solicitor proffered the excuse that he had himself only received late notice of the meeting. On 29 May 2008 – the date of the hearing – Mr McLennan was contacted by the solicitor – who had previously told him that there was no need to attend, as he was going to obtain an adjournment – and informed of the outcome. Mr McLennan says that he was never advised of any previous court order, nor of the undertakings the solicitor had previously proffered to file affidavits within defined times.

4 The first defendant Leanne Emeline Kelly says that she assumed when instructing the solicitors that everything was under control; that at no stage was she ever informed that the matter was not proceeding satisfactorily; that the solicitor never told her anything to the contrary; that she now understands that several directions were made in respect of the filing of evidence and that various undertakings given but, so far as she can recall, was never informed of those matters; and that she did receive a phone call from the solicitor about making a statement a couple of weeks prior to 29 May, following which she provided a statement but never signed one. Ms Kelly says that she was not advised to attend the hearing, and was told that the solicitor would be seeking to adjourn it – in order to obtain further time to finalise the statements; she said that she was never advised of the possibility or consequences of an adjournment application being refused. On the evening of 29 May, she received a phone call from the solicitor, informing her that judgment had been given.

Other solicitors in the firm of which he was an employee have given evidence on this application by affidavit which substantially corroborates that the solicitor's conduct of the matter was, to use the word that appears in one of the intra-firm communications, ‘woeful’.”

24 In considering the prospects of success of the appeal, Brereton J referred (at [6] – [10]) to authorities to the effect that incompetence of legal representation is an arguable ground of appeal, and concluded:

“12 In my view, it is at least seriously arguable that they would be capable of application in a case such as the present where, in effect, the defendants trusted their solicitor to act competently, and at least on the evidence before me, were not on any notice to the contrary, nor had any occasion to be suspicious, yet were left practically unrepresented, or perversely represented. The law encourages clients to be trustful, not suspicious, of their lawyers. Bearing in mind the panoply of fiduciary obligations which the law attaches to the solicitor/client relationship, it is hardly realistic to expect a client to be suspicious, or vigilant in the supervision, of his or her solicitor, at least in the absence of some special reason. In this case, on the material presently available, all the defendants have done wrong was to trust the solicitor they instructed to act competently. Prima facie, they were seriously disappointed in that trust.”

25 Brereton J (at [14]) rejected the argument that leaving the defendants to a remedy against their solicitor met the justice of the situation. He referred to Taylor v Taylor [1979] HCA 38; (1979) 143 CLR 1. In that case the High Court considered the inherent jurisdiction of a superior court of record to set aside orders obtained in circumstances where, although a party was on notice of proceedings, by accident or mistake the party did not attend and was not present during their conduct. Gibbs J said (at 9):

“…it is no answer to a party who asks the court to set aside an order made against him in his absence at a hearing of which he had no notice to tell him that he has a remedy against his solicitor. In such a case, assuming that there is a real question to be tried, justice requires that the order, having been made in breach of a fundamental principle of natural justice, should be set aside, and that the matter should be reconsidered on its merits.”

26 Brereton J (at [15]) was of the view that while no question of breach of a fundamental principle of natural justice arose in the present case, the notion that it was no answer to a party, who asked the Court to set aside an order made against him in his absence, that he had a remedy against the solicitor, was capable of application not only where a party was absent, but also where the party’s representation was incompetent or perverse.

27 Brereton J granted the stay “upon the partners of Brydens Law Office” by their Chief Executive Officer, Paul Brandalise, giving to the Court the usual undertaking as to damages. His Honour also ordered that the costs of the motion seeking the stay be the applicant’s costs in the appeal.

28 The notice of appeal in the substantive appeal was filed on 29 August 2008. As I have said, it was disposed of, insofar as it sought to challenge orders 1 and 2 made by McLaughlin As-J, by the consent Short Minutes of Order of 15 December 2008.

The appeal

29 When the appeal was called on for hearing on 7 August 2009, Mr T J Morahan appeared for Ms Kelly, Mr McLennan and Messrs Bryden and Hagipantelis. Mr A C Scotting appeared for Mr Jowett.

30 Both counsel had filed written submissions. However, in the case of Mr Morahan, those submissions were not filed until 6 August 2009 and then only after persistent requests by Court staff that he comply with the rules.

31 The White Folder prepared for the purpose of the summons seeking leave to appeal, was filed on 5 June 2009. Pursuant to UCPR 51.13, the response setting out the opposing parties’ attitude to the application for leave to appeal, including their argument, should have been filed by 3 July 2009. The Court has made it clear on many occasions that it expects, and relies upon, legal practitioners to comply with timetables, not least to ensure the expeditious conduct of proceedings. Practice Note Gen SC 5 reinforces the obligation of legal practitioners to comply with the directions and rules of the Court. Failure to comply may lead to the Court making a personal costs order against a legal practitioner. Failure to comply is also capable, in my view, of constituting “unsatisfactory professional conduct”: s 496, Legal Profession Act 2004 (NSW). It is particularly egregious that Mr Morahan failed to comply with UCPR 51.13 in a case already attended with serious mismanagement by the legal representatives for whom he appeared.

32 In preparing the matter for hearing, the Court became concerned as to how Mr Morahan could appear for Ms Kelly and Mr McLennan as well as Messrs Bryden and Hagipantelis in circumstances where the latter had a personal interest in resisting being personally burdened with a costs order, a position which, if successful, could have led to Ms Kelly and Mr McLennan remaining burdened by order 3 made by McLaughlin As-J.

33 The Court put both parties on notice of that concern by email on 6 August 2009, advising that Mr Morahan should be in a position to deal with the issue of conflict of interest when the matter was called on. When the conflict issue was raised, Mr Morahan said there was no conflict of interest because “very shortly after the problems with … Mr Dimmock were discovered” Messrs Bryden and Hagipantelis had agreed to indemnify Ms Kelly and Mr McLennan for any costs for which they were liable in respect of the proceedings before McLaughlin As-J and in respect of the appeal. That information had not hitherto been divulged to the Court nor, significantly, to Mr Jowett or his legal representatives.

34 In the course of the proceedings Mr Morahan, on behalf of Brydens, reduced the indemnity to Ms Kelly and Mr McLennan to writing and to an undertaking to the Court to honour that indemnity in the following terms:

35 I will return to the significance of this indemnity.

Additional evidence

36 Mr Scotting moved on the motion to adduce additional evidence. That application was unopposed. No evidence was adduced in response. That evidence disclosed the following.

37 Mr Michael Rodney Lewis’ affidavit of 15 October 2008 annexed four affidavits being those of Mr McLennan sworn 14 November 2008, Ms Kelly sworn 17 November 2008, Mr Brandalise sworn 6 May 2009 and Mr Lewis sworn 14 May 2008, in respect of which Mr Jowett’s written submissions had identified the specific paragraphs relied upon. It also attached an affidavit of a Mr Hamad Zreika. No part of that affidavit was referred to in the motion to adduce additional evidence or in Mr Jowett’s written submissions and I do not understand Mr Jowett to have relied upon it.

38 Mr Lewis’ affidavit of 15 October 2008 also attached two business names extracts. The first was for “Brydens Law Office”. It showed the business name commenced on 27 May 1994 and had been renewed on 19 December 2007 but as at 14 October 2008 was described as “ceased”. The persons carrying on a law firm under that business name were Mr Robert Stanley Bryden, who was shown to have started carrying on the business on 19 December 1995, but to have ceased doing so on 27 September 2005. The second person carrying on the law firm under that business name was Mr Bandeli Hagipantelis whose dates of commencing and ceasing carrying on the business were the same as Mr Bryden’s.

39 The second business name extract was for the law firm, “Brydens Compensation Lawyers”. It showed the business status as “registered” as at 14 October 2008. It showed the persons carrying on the business as at 14 October 2008 to have been Mr Robert Stanley Bryden and Mr Bandeli Hagipantelis.

40 Mr Lewis’ affidavit of 14 May 2008, attached to his affidavit of 15 October 2008, was clearly prepared in anticipation of the hearing before McLaughlin As-J. It set out the history of the litigation. It annexed an email dated 11 October 2007 from Mr Dimmock identified as “Solicitor Brydens Law Office”, referenced to the Equity Proceedings, advising: “We act for both defendants … we have prepared a Notice of Appearance to be filed today”. It also annexed Mr Lewis’ letter of 11 October 2007 addressed to Brydens Law Office, reference “Jason Dimmock”, noting that “you have been instructed to accept service on behalf of the defendants”, and enclosing the summons to be served on Mr McLennan and Mr Jowett’s affidavit. It attached numerous letters Mr Lewis sent to Brydens Law Office advising that court orders as to the filing of affidavits had not been complied with. It attached a letter of 23 April 2008 from Brydens Compensation Lawyers signed by Mr Dimmock advising that he had “drafted the principal affidavits of the defendants” and that they would be “finalise[d]” by 29 April 2008. According to Mr Lewis, those affidavits had not been received as at 14 May 2008.

41 The correspondence from Mr Dimmock attached to the 14 May 2008 affidavit was written on a letterhead which bore a stylised logo stating “Brydens”, and asked that all correspondence be addressed to “Brydens Law Office”. The author’s signature appeared under the business name “Brydens Compensation Lawyers”.

42 The additional evidence, insofar as Mr McLennan and Ms Kelly’s affidavits were concerned was in substance in the terms set out by Brereton J at [3] – [4]. In addition I note that both said that they had retained “Brydens Compensation Lawyers” to represent them in the Equity Proceedings: Mr McLennan (at par 3); Mrs Kelly (at par 9). Notwithstanding that, the cover sheets of each of their affidavits identified “Hamad Zreika Brydens Law Office” as their legal representative.

43 Mr Scotting also relied on pars 1 – 3, 6 – 9 and 20, and annexures D and J of the affidavit of Paul Brandalise sworn 6 May 2009. Mr Brandalise is the Chief Executive Officer of Brydens Compensation Lawyers. He “directly supervised Mr Dimmock”, who he described as “an ex–employee” (par 3). Mr Morahan informed the Court that Mr Brandalise was not a solicitor. He did not suggest Mr Brandalise had any legal qualifications.

44 According to Mr Brandalise’s affidavit in or about May 2008 he asked Mr Dimmock to transfer all his estate matters to another solicitor employed by Brydens Compensation Lawyers. This was because, he said, he wanted Mr Dimmock to focus purely on criminal and family law matters, a decision made after reviewing the manner in which Mr Dimmock had conducted his practice in the area of will disputes and after “discussing with some of his clients complaints arising from his conduct of these matters” (par 7).

45 On or about 16 May 2008 he was approached by Mr Zreika who said he was concerned with the conduct of the Equity Proceedings and drew Mr Brandalise’s attention to Mr Lewis’ 14 May 2008 affidavit. On reading that affidavit, Mr Brandalise said he “immediately consulted one of the partners of Brydens Compensation Lawyers, Mr Lee (presumably ‘Bandeli’) Hagipantelis”. Mr Hagipantelis then directed Mr Dimmock to file and serve affidavits from the two defendants and brief counsel. Mr Brandalise sent an email to Mr Dimmock “telling him what I thought about his conduct of this matter”. That email was sent at 12.47pm on 16 May 2008. It was copied to Mr Bryden and Mr Hagipantelis. Its reference was “18394” which appears from the Court papers to have been Brydens’ matter number for the Equity Proceedings. It stated:

“Jason

Your performance in the conduct of this matter has been pathetic.

Your failure, given the recent transfer of these matters, to even have the courtesy to provide Hamad with a memo regarding the status of the file is totally inconsiderate of a colleague already burdened with some of your other similarly neglected files.

This file is your mess, clean it up.

46 Mr Brandalise also stated that on 15 July 2008 Brydens had made a disclosure under s 263 of the Legal Profession Act to the Law Society of New South Wales. Section 263(1) requires notice to be given to the Law Society of any irregularity in a law practice’s trust accounts or trust ledger accounts. The disclosure letter was also tendered by Mr Jowett. The letter was referenced to “Robert Bryden” and signed over the words “Brydens Compensation Lawyers”. According to the letter Mr Dimmock commenced employment with “our firm” on or about 20 August 2007. His employment was terminated on 11 July 2008. The primary area of his work was criminal matters.

47 The s 263 letter disclosed various matters. I refer only to those which occurred prior to the hearing of the Equity Proceedings. In December 2007 Mr Dimmock denied appearing in a matter. Brydens obtained a transcript and “checked with the Court which showed that he had appeared”. Mr Dimmock maintained his denial “until confronted with the evidence on the transcript”. Following that incident he was “warned and counselled”. He was directed that he was not to appear in Court on behalf of clients unless money was received before the appearance. He was directed “to complete and submit time sheets and to complete and submit proper bills and to work with [Brydens’] accounts staff in this regard”.

48 In another matter Brydens’ accounts staff contacted the client regarding outstanding costs in February 2008. The client advised that he had paid Mr Dimmock $1500 in cash in December 2007. The letter continued:

“When confronted, Jason Dimmock said that he had received the money. He then left work, went home and returned with $1500.”

49 The letter continued:

50 Mr Lewis’ second affidavit relied upon as additional evidence was sworn on 19 May 2009 in the substantive appeal proceedings. It also set out the history of the matter. After noting that the carriage of the defence was “apparently for the main part left to Mr Dimmock” the affidavit continued:

“11. Between the initial return of the Summons on 11 October 2007 and 29 May 2008 the Defendants failed to comply with every order made by the Court for directions to have the matter ready for hearing.

12. At a Mediation of the matter listed on 7 April 2008 Mr Dimmock belatedly appeared but without the Defendants. The mediation of the matter could not effectively proceed.

13. Mr Dimmock gave two undertakings in the matter to ensure affidavits were filed and served. Neither of the undertakings were complied with.

14. The matter was listed for hearing on 29 May 2008 before Associate Justice McLaughlin. Mr Dimmock again appeared but without the Defendants. He applied to adjourn the hearing of the matter. The application for adjournment was refused.

15. Mr Dimmock remained at Court whilst the matter was heard and participated including making submissions.

…

20. The Plaintiff sought to enforce the orders. I have not been able to locate Mr Dimmock and I fear that the costs orders against him will be practically worthless.

…

24. It appears Mr Dimmock is no longer practicing as a solicitor.

…..

30. By letter dated 20 October 2008 I informed Brydens that the Plaintiff did not oppose Orders 1 and 3 of the orders sought in the Notice of Appeal. However in relation to Order 4 of the Notice of Appeal and Orders 3 and 4 made by Associate Judge [sic] McLaughlin the Plaintiff would seek that the Partners of Brydens pay the costs. Annexed hereto and marked with the letter ‘A’ is a true copy of that letter.

…

34. On 15 December 2008 Consent Orders were filed in the Court of Appeal disposing of the appeal against Orders 1 and 2 of the orders of Associate Judge [sic] McLaughlin made on 29 May 2008. That left to be deal[t] with the appeal against orders 3 & 4.

…

36. The aspect of the appeal which remains outstanding is in relation to Orders 3 and 4 of the orders of Associate Judge [sic] McLaughlin.

37. The matter proceeded on the Court of Appeal on the basis that the notices of motion were to be determined in due course.

38. On 27 February 2009, the matter was mentioned before the Registrar and this matter was stood over [to] the Motions’ List on 27 April 2009.

39. I made enquiries of Brydens about their attempts to locate and serve Mr Dimmock. I did not receive any response. Annexed hereto and marked with the letter ‘B’ is a copy of letter to Brydens dated 12 December 2008. Annexed hereto and marked with the letter ‘C’ is a copy of letter to Brydens dated 9 March 2009.

40. As I [it] appeared to me that Brydens were not taking any or any significant steps to attempt to serve Mr Dimmock I instructed my counsel to ask for the motions to be listed for hearing.

…

47. The matter was mentioned before the Registrar on 18 May 2009. Orders were made for the Plaintiff to file a summons seeking leave to appeal. The matter has been listed for hearing on 7 August 2009.

48. The Plaintiff seeks an extension of the time for leave to appeal.

49. At no stage prior to 15 May 2009 had I received any letter or submission from the Defendants asserting that they claimed than an appeal was required to (be) lodged to ventilate the issue of whether the partners of Brydens should pay the costs orders ordered by Associate Justice McLaughlin.

51 Annexure “A” observed, in addition to the matter summarised in paragraph 30 of Mr Lewis’ affidavit that as it appeared from the affidavit filed in support of the stay application that Mr Dimmock was an employed solicitor, the Court had jurisdiction to make costs orders against the partner of the firm by which he was employed. It referred to relevant authorities discussed later in these reasons. It invited advice as to the position of “your clients and Mr Bryden and Mr Hagipantelis … regarding costs …”. The evidence does not disclose any written response to that letter.

Submissions

52 The appellants submitted that the Court had power to order Mr Bryden and Mr Hagipantelis pay Mr Jowett’s costs as sought in the notice of notion filed on 15 October 2008, in exercise of its inherent supervisory jurisdiction over legal practitioners. This submission rested largely on the principles enunciated in Myers v Elman [1940] AC 282.

53 Brydens' submissions were largely of a technical nature. In short, they argued that Mr Jowett’s 15 October 2008 notice of motion was not the appropriate vehicle by which to seek to convince the Court of Appeal that McLaughlin As-J’s costs orders were wrong in law. They contended that the proper procedure to satisfy those orders was by way of appeal. They contended, wrongly, that the substantive appeal had been disposed of by way of consent. They did not refer to the fact that the Short Minutes of Order of 15 December 2008 disposed only of orders 1 and 2 made by McLaughlin As-J and not of orders 3 and 4. They referred to the motion filed “by the appellants on 21 November 2008” as having been filed for “insurance” purposes, to obtain an indemnity from Mr Dimmock if the Court was disposed to make the orders sought in the respondent’s motion. As I have said, Brydens did not seek to move on the 21 November 2008 motion.

54 Brydens' also relied upon the principles attending interference by an appellate court with a discretionary decision on a matter of practice and procedure. It is unnecessary to refer to those well-known authorities. They submitted that McLaughlin As-J did not act on a wrong principle, make any mistake of fact nor fail to take into account any material consideration. They admitted that Mr Dimmock was recalcitrant. They contended that the submission that the partners of Brydens should have borne the costs of the Equity Proceedings could have been made below. However, they contended that those arguments were “equally as invalid now as they would have been then” and that the question was not one of “tortious vicarious liability of the partners, but one of a discretionary costs order”. They submitted, without elaboration, that Myers v Elman could be distinguished “because of a much wider wording of the Civil Procedure Act and the Uniform Civil Procedure Rules”.

Statutory framework

55 Subject to the rules of court and to the Civil Procedure Act 2005 (NSW) or any other Act, the Supreme Court has full power to determine by whom, to whom and to what extent costs are to be paid, and may order that costs are to be awarded on the ordinary basis or on an indemnity basis: s 98, Civil Procedure Act.

56 The Court has power to order a legal practitioner to bear costs which have been incurred by the serious neglect, incompetence or misconduct of a legal practitioner or improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible: s 99, Civil Procedure Act. The Court’s power to make an order for costs in the exercise of its supervisory jurisdiction over its own officers, including solicitors notwithstanding that they are not a party, is expressly preserved by UCPR 42.3(2)(g). Section 99, and UCPR 42.3(2)(g) (and their legislative predecessors) reflect the English RSC O 62, r 8(1), which “confirm[ed] the ancient jurisdiction of the court to exercise control over its own officers”: Orchard v South Eastern Electricity Board [1987] QB 565 (at 569) per Sir John Donaldson MR.

57 The Court’s power to make costs orders in respect of a legal practitioner has, as the discussion to which I will shortly turn demonstrates, always been exercised to ensure legal practitioners observe their duty to the Court and, in turn, to the administration of justice, to ensure among other obligations the expeditious and efficient conduct of litigation. Those obligations now find express reflection in s 56(1) and (3) of the Civil Procedure Act in requiring parties to civil proceedings to assist the Court to further the just, quick and cheap resolution of the real issues in the proceedings and directing that “[a] solicitor … must not, by his or her conduct, cause his or her client to be put in breach of the duty identified in subsection (3)”: s 56(4).

58 These provisions reflect the fact that “the courts are concerned not only with justice between the parties, which remains their priority, but also with the public interest in the proper and efficient use of public resources”: Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 258 ALR 14 (at [23]) per French CJ. The resolution of disputes serves the public as a whole, not merely the parties to the proceedings: Aon (at [113]) per Gummow, Hayne, Crennan, Kiefel and Bell JJ.

59 In considering exercising its discretion to make costs orders against legal practitioners, the Court may take into account a legal practitioner’s failure to comply with s 56: s 56(5); see also Kendirjian v Ayoub [2008] NSWCA 194 (at [209]) per McColl JA (Beazley JA agreeing).

Wasted costs orders

60 The jurisdiction to make costs orders against legal practitioners referred to in s 99 and UCPR 42.3(2)(g), now commonly referred to as the “wasted costs” jurisdiction, must be exercised “with care and discretion and only in clear cases”: Lemoto v Able Technical Pty Ltd & 2 Ors [2005] NSWCA 153; (2005) 63 NSWLR 300 (at [92](a)) per McColl JA (Hodgson and Ipp JJA agreeing). In exercising the jurisdiction, however, the Court takes into consideration the public interest reflected in the legislative provisions to which I have referred, that litigants should not be financially prejudiced by the unjustifiable conduct of litigation by their or their opponent’s lawyers: Ridehalgh v Horsfield [1994] Ch 205. It is the public interest in the administration of justice which is the source of duties that lawyers owe to the court: Rondel v Worsley [1969] 1 AC 191 (at 227) per Lord Morris.

61 The wasted costs jurisdiction is based on the court’s right and duty to supervise the conduct of its solicitors: Myers v Elman (at 302) per Lord Atkin, (at 318 – 319) per Lord Wright, (at 334 – 336) per Lord Porter. The underlying principle is that the court has a right and a duty to supervise the conduct of its solicitors, and visit with penalties any conduct of a solicitor which is of such a nature as to tend to defeat justice in the very cause in which the solicitor is engaged professionally. The jurisdiction is exercised where it is demonstrated that the solicitor has failed to fulfil his or her duty to the Court and to realise his or her duty to aid in promoting in his own sphere the cause of justice. The order is for payment of costs thrown away or lost because of the conduct complained of and is frequently exercised in order to compensate the opposite party in the action: Myers v Elman (at 319) per Lord Wright; see also SydneySouth West Area Health Service v Stamoulis [2009] NSWCA 153 (at [204]) per Ipp JA (Beazley and Giles JJA relevantly agreeing).

62 The history of the wasted costs jurisdiction was discussed in Lemoto (at [83] ff). As can be seen from that discussion many of the principles were explained in the seminal decision of Myers v Elman which makes it clear that the object of the wasted costs jurisdiction is to protect the client who has suffered and to indemnify the party who has been injured. Misconduct or default or negligence in the course of the proceedings is in some cases sufficient to justify an order: Myers v Elman (at 289) per Viscount Maugham (Lord Russell of Killowen (at 307) and Lord Porter (at 334) agreeing).

63 The critical question in Myers v Elman was whether a solicitor could be ordered to pay to the plaintiff the costs of an action because the solicitor had delivered defences which he must have known or suspected to be false, and had prepared and permitted his clients to make affidavits of documents which were inadequate and false. The solicitor had left the conduct of proceedings largely to his managing clerk.

64 The trial judge held that the solicitor had not been guilty of professional misconduct in allowing the defences to be delivered, but that he had been guilty of such misconduct in allowing the inadequate affidavits of documents to be made. He ordered the solicitor to pay one-third of the plaintiff's costs of the action and two-thirds of the costs of the application. On appeal the Court of Appeal relevantly held (Myers v Rothfield [1939] 1 KB 109 per Greer and Slesser LJJ, MacKinnon LJ dissenting), that, assuming that the acts in question, if done by a solicitor personally, would constitute professional misconduct on his part, the solicitor was not liable as he had appointed a fully qualified clerk to prepare the defences and affidavits of documents, and the acts had been done not by the solicitor himself but by the clerk.

65 The House of Lords reversed the Court of Appeal’s decision. It said the plaintiff was not asking the court to exercise its disciplinary jurisdiction over officers of the court but, rather, its jurisdiction to order a legal practitioner to pay costs by reason of some misconduct, default or negligence in the course of proceedings, a jurisdiction which could be exercised where the solicitor was merely negligent, so that the solicitor could not “shelter himself behind a clerk, for whose actions within the scope of his authority he is liable”: Myers v Elman (at 288, 291) per Viscount Maugham. Lord Atkin distinguished between the court’s disciplinary jurisdiction in respect of officers of the court and its wasted costs jurisdiction, saying, that while in disciplinary proceedings “[n]o punishment based on personal misconduct will be inflicted unless the party visited is himself proved to be personally implicated”, the jurisdiction as to costs will be exercised where “there has been no personal complicity by the solicitor charged”: Myers v Elman (at 302–3); see to like effect Lord Wright (at 321) and Lord Porter (at 334 – 335).

66 Making wasted cost orders against a solicitor in respect of the costs of the opposite party reflects the duty of the court “to be equally anxious to see that solicitors not only perform their duty towards their own clients, but also towards all those against whom they are concerned”: Re Jones (1870) 6 Ch App 497 (at 499) per Lord Hatherley LC. In Myers v Elman (at 290), after observing that he could not find that the proposition laid down by Lord Hatherley LC had ever been doubted, Viscount Maugham said, “…Lord Hatherley’s phrase implying the solicitor’s duty to parties for whom he is not acting is founded on his duty to the Court.” It seemed clear to him “[t]hat a partner in a firm of solicitors cannot escape from such an order on the ground that he took no active part in the proceedings”. As Lord Porter explained (at 335), “[i]t is misconduct in the way in which the work entrusted to his firm is carried on, not the personal misdoing of the individual, which gives rise to the exercise of the jurisdiction”.

67 Lord Atkin said (at 302 – 303):

At times the misconduct is associated with the conduct of litigation proceeding in the court itself. Rules are disobeyed, false statements are made to the court or to the parties by which the course of justice is either perverted or delayed. The duty owed to the court to conduct litigation before it with due propriety is owed by the solicitors for the respective parties, whether they be carrying on the profession alone or as a firm. They cannot evade the consequences of breach of duty by showing that the performance of the particular duty of which breach is alleged was delegated by them to a clerk

[A]s far as the interests of the court and the other litigants are concerned, it is a matter of no moment whether the work is actually done by the solicitor on the record or by his servant or agent. If the court is deceived or the litigant is improperly delayed or put to unnecessary expense, the solicitor on the record will be held responsible, and will be admonished or visited with such pecuniary penalty as the court thinks necessary, in the circumstances of the case…

The court is not concerning itself with a breach of duty to the other litigant, but with a breach of duty to itself. Its jurisdiction is punitive, and is exercised in appropriate cases and in appropriate measure where there has been no personal complicity by the solicitor charged

68 The court may “design its [costs] sanction for breach of [a legal practitioner’s] duty in a way that will enable it to provide compensation for the disadvantaged litigant”: Harley v McDonald [2001] UKPC 18; [2001] 2 AC 678 (at [49]).

69 Before returning to the facts, I note that I earlier referred to the fact that Mr Dimmock filed the Notice of Appearance as Mr McLennan and Ms Kelly’s “solicitor on the record”. In order to be a “solicitor on the record”, a solicitor must hold an unrestricted practicing certificate: UCPR 7.1(6). It is by no means apparent that Mr Dimmock, as an employed solicitor in Mr Bryden and Mr Hagipantelis’ law firms would have held such a practicing certificate: see the definition of “unrestricted practicing certificate”, s 4, Legal Profession Act. No evidence was led in this respect, nor did Mr Bryden or Mr Hagipantelis challenge the proposition that they were responsible for Mr Dimmock’s conduct, notwithstanding the Notice of Appearance.

70 Nevertheless it is pertinent to note that where a solicitor is employed by another, the client’s retainer is with the employer: Re Bannister & Legal Practitioners Ordinance 1970-75; Ex Parte Hartstein (1975) 5 ACTR 100 (at 104) per Fox J (Blackburn J agreeing, and also to like effect at 111); (at 116) per Connor J, to like effect; see also Re Fabricius & McLaren and Re Legal Practitioners Ordinance 1970 (1989) 91 ACTR 1 (at 9); Knaggs v J A Westaway & Sons Pty Ltd (1996) 40 NSWLR 476 (at 484) per Simos A-JA (Giles and Aberdee A-JJA agreeing).

71 That statement of principle is sufficient for this Court to conclude that Mr McLennan and Ms Kelly were Mr Bryden and Mr Hagipantelis’ clients. I would also note that by allowing Mr Dimmock to carry on practice indiscriminately using their business names “Brydens Law Office” and “Brydens Compensation Lawyers”, Mr Bryden and Mr Hagipantelis held him out as acting on their behalves and for the clients who retained them. The additional evidence disclosed that Mr McLennan and Ms Kelly retained the law firm which practised as “Brydens Compensation Lawyers”.

Consideration

72 The additional evidence Mr Jowett adduced demonstrated that Mr Dimmock was left in charge of the defence of the Equity Proceedings notwithstanding considerable material in Brydens’ possession demonstrating, to put it as neutrally as possible, his unreliability in relation to matters he was given to handle. Save for the events of May 2008 to which I will come, it does not appear that either Mr Bryden or Mr Hagipantelis took any direct role in supervising his conduct of the Equity Proceedings. To the extent that Mr Dimmock was “supervised”, that was apparently done by a person who was not a solicitor or, apparently, a legal practitioner. While it is not necessary, in order to burden Mr Bryden and Mr Hagipantelis with the costs orders Mr Jowett seeks, to establish they had personal knowledge of the manner in which Mr Dimmock was neglecting the conduct of the Equity Proceedings (Myers v Elman) the additional evidence establishes that Mr Dimmock’s delinquency, both in relation to the Equity Proceedings, in relation to his handling of other estate matters and generally was clearly known to both Mr Bryden and Mr Hagipantelis.

73 It was apparent from the s 263 letter written by Mr Bryden that as early as December 2007 the firm knew that Mr Dimmock had, at best, made a serious misrepresentation to his principals concerning a matter in which he originally denied appearing and, as a result, had been “warned and counselled” and given directions concerning the conduct of his practice as an employee of Brydens. In February 2008 he had, apparently, failed to account to Brydens for a substantial quantity of cash received from a client. Once again, according to the s 263 letter, he was “specially supervised, counselled and supported to the best of our ability …”.

74 In about May 2008 Mr Dimmock was directed by Mr Brandalise to transfer his estate matters to another solicitor, a decision made because it was apparent after a “review” that the view was formed that Mr Dimmock’s conduct of those matters was unsatisfactory. It is not apparent who formed that “view”, whether it was either or both Mr Bryden and Mr Hagipantelis or Mr Brandalise alone. If it was the latter it demonstrated what appears to be a remarkable delegation of responsibility by the principals in a legal firm to a person carrying out executive rather than legal duties. However more significantly the “view” which apparently led to the transfer was that Mr Dimmock had “neglected” the estate matters. That “view’” was conveyed to Mr Bryden and Mr Hagipantelis, if not earlier, when they were copied in on Mr Brandalise’s email to Mr Dimmock of 16 May 2008, describing the latter’s conduct in relation to the Equity Proceedings as “pathetic”.

75 Despite this “view” and despite the fact that on or about 16 May 2008 Mr Brandalise became aware of Mr Lewis’ 14 May 2008 affidavit which set out Mr Dimmock’s serial delinquency in complying with court orders and rules in relation to the Equity Proceedings, it was left to him to conduct their defence. Mr Hagipantelis was consulted in relation to Mr Lewis’ 14 May 2008 affidavit. He directed Mr Dimmock to comply with the outstanding orders in relation to the affidavits.

76 Yet by May 2008, the history of Mr Dimmock’s delinquency both in relation to the Equity Proceedings, in other estate matters and the “unreliability” referred to in the matters referred to in the s 263 letter, was such that neither Mr Hagipantelis or Mr Bryden could, in my view, have had any confidence that he would comply with Mr Hagipantelis’ direction to complete the affidavits for the Equity Proceedings. Yet it is apparent that neither Mr Hagipantelis nor Mr Bryden took any steps to ensure that Mr Dimmock complied with that direction.

77 The minimum discharge of Mr Hagipantelis and Mr Bryden’s duty was to ensure that the affidavits were filed in time to enable Mr Jowett’s legal representatives to complete their preparation for the hearing and for the hearing to proceed on 29 May 2008. Their failure to do so was a serious neglect of their duties. That neglect caused Mr Jowett to incur, at least, the costs of preparing for the hearing on 29 May 2008, of the hearing itself and of the stay application.

78 Leaving Mr Dimmock to conduct the Equity Proceedings, in my view, indicated a substantial failure on Mr Hagipantelis and Mr Bryden’s parts to appreciate the extent to which they had failed, in the circumstances, to discharge their duty to the Court. By mid-May 2008 they were aware that Mr Dimmock on behalf of clients of their firm had failed to comply with court directions made as long ago as 11 October 2007. Mr Brandalise’s statement to Mr Dimmock, “this file is your mess, clean it up”, also manifested a serious failure by Mr Hagipantelis and Mr Bryden to appreciate their duties to their clients, the opposing party and the court. No explanation was forthcoming in this Court as to why despite the firm’s view that his estate matters had been “neglected” and transferred to another solicitor, the Equity Proceedings, to which an even more serious description could be attached, were left in Mr Dimmock’s charge.

79 It was Mr Hagipantelis and Mr Bryden’s responsibility to ensure that the court’s orders and rules were complied with in relation to matters conducted by their law firms. They are as responsible for his persistent failures to comply with court directions from October 2007, as they are for his failures to comply in 2008 when they were clearly on notice of his omissions in this respect. In short, they were responsible for the neglectful manner in the way their firm conducted the Equity Proceedings: Myers v Elman (at 335) per Lord Porter.

80 Indeed, Mr Bryden and Mr Hagipantelis admitted, in my view, that they were responsible for the neglectful manner in the way their firm conducted the Equity Proceedings and the wasted costs which flowed therefrom by giving Ms Kelly and Mr McLennan the indemnity set out above (at [34]) “very shortly after the problems with … Mr Dimmock were discovered”. It was also in substance admitted in the application they made on the defendants’ behalf to stay McLaughlin As-J’s orders. It must have been apparent to Mr Bryden and Mr Hagipantelis that the endeavours by Mr Jowett’s legal representatives to obtain a variation of McLaughlin As-J’s costs orders to cast the burden on them was driven by a concern that Ms Kelly and Mr McLennan would be unable to meet that order and, too, that it was improbable, to the extent order 4 might benefit Mr Jowett, that Mr Dimmock, whose whereabouts were unknown, would ever meet it – Mr Lewis having expressed the view as to Mr Dimmock at least, that “that the costs orders against him will be practically worthless”: Mr Lewis’ 19 May 2009 affidavit.

81 It is open to the Court, in the substantive appeal, to make any order which ought to have been given or made or which the nature of the case requires: s 75A(10), Supreme Court Act. In my view, had the additional evidence been before McLaughlin As-J, it would have been appropriate, rather than ordering Ms Kelly and Mr McLennan to pay personally Mr Jowett’s costs on an indemnity basis, for his Honour to have ordered Mr Bryden and Mr Hagipantelis to pay those wasted costs by reason of their serious neglect in the conduct of the defence of the Equity Proceedings.

82 I would reject Mr Morahan’s submission that the present application could have been made on 29 May 2008. It was not until the affidavits were filed by Ms Kelly, Mr McLennan and Mr Brandalise for the purposes of the stay application that Mr Jowett and his legal representatives could have known that it was their legal representatives’ neglect and not the defendants’ “contemptuous” attitude to the Equity Proceedings as McLaughlin As-J inferred (an inference I note Mr Dimmock did not apparently seek to dissuade him from) which led to their failure to comply with court orders and rules.

83 The stay application was a direct consequence of the necessity for the defendants to seek to preserve their position pending the hearing of the substantive appeal. Its success depended substantially on Brydens’ admission that their conduct of the Equity Proceedings had been “woeful” as a result of which the defendants had been left in the dark about their progress. The costs of the stay application were also incurred as a consequence of Messrs Hagipantelis and Bryden’s serious neglect.

84 That leaves the question of the costs of the substantive appeal as well as of Mr Jowett’s 15 October 2008 notice of motion, his 19 May 2009 affidavit seeking to adduce additional evidence and his 19 May 2009 summons seeking leave to appeal.

85 Insofar as the substantive appeal is concerned, it would not have been commenced at all had the Equity Proceedings been properly conducted. It is apparent that the only reason orders 1 and 2 in the Short Minutes of Order of 15 December 2008 were made by consent was because Mr Jowett’s legal representatives accepted the force of what Brereton J said in the stay judgment concerning the prospects of the defendants’ success on appeal. In my view that was a realistic concession on their part, but it had to be made not because Mr Jowett faced failure on the appeal because of any conduct on his part, but because of the manner in which the Equity Proceedings were conducted. Thus, prima facie, the costs of the substantive appeal were incurred by Mr Jowett because of the serious neglect attending the conduct of the Equity Proceedings.

86 Further, Mr Bryden and Mr Hagipantelis ought to have appreciated that the consequence of their firm’s neglectful handling of the Equity Proceedings being disclosed during the hearing of the substantive appeal would be that the Court would not leave the costs to lie in accordance with Ms Kelly and Mr McLennan’s apparent success in having orders 1 and 2 set aside: cf UCPR 42.1. Rather they ought to have appreciated that once their firm’s, and their, serious neglect of the Equity Proceedings was proven by the tender of the additional evidence, it was probable that this Court would replace McLaughlin As-J’s orders burdening the defendants with costs orders making Mr Bryden and Mr Hagipantelis liable for the wasted costs of the Equity Proceedings and, too for Mr Dimmock’s failure to comply with his undertakings to the Court. A sensible appreciation of this probable consequence should have led to a settlement of the issue of orders 3 and 4 in order to give effect to the just, quick and cheap resolution of the real issues in the proceedings.

87 Mr Bryden and Mr Hagipantelis did not, however, settle the matter. They opposed the orders Mr Jowett sought. Further they failed to disclose the indemnity they had given to Ms Kelly and Mr McLennan to Mr Jowett and/or his legal representatives, a disclosure which would, in my view, have assuaged concerns the latter held about Mr Jowett’s ability to be indemnified in relation to the wasted costs of the Equity Proceedings. In this respect Mr Bryden and Mr Hagipantelis caused Ms Kelly and Mr McLennan to be in breach of their duty to assist the Court to further the overriding purpose of the just, quick and cheap resolution of the real issues in the proceedings (s 56(3), Civil Procedure Act) and, in turn, by their conduct caused that breach: s 56(4), Civil Procedure Act.

88 I am of the view, accordingly, that Mr Jowett’s costs of the substantive appeal were costs he incurred by Mr Bryden and Mr Hagipantelis’ serious neglect in the conduct of the Equity Proceedings, as well as without reasonable cause in circumstances for which they were responsible, such as to warrant making an order that they indemnify Mr Jowett against the costs he has incurred in connection with that appeal: s 99, Civil Procedure Act.

89 It is apparent from the extent of the Court’s powers pursuant to s 75A(10), that it was unnecessary for Mr Jowett to file the summons seeking leave to appeal or, indeed, the 15 October 2008 notice of motion. However those steps were necessitated, in my view, as a consequence of the serious neglect of the matter by Mr Bryden and Mr Hagipantelis and their breach of their s 56A(4) duty. It is appropriate, in the circumstances, that they pay the costs wasted by the taking of those steps. It was necessary for Mr Jowett to file the notice of motion of 19 May 2009 seeking to adduce additional evidence, in order to place the evidence of serious neglect of the Equity Proceedings before the Court.

90 Although UCPR 42.3(2)(g) permits the Court to make costs orders against Mr Bryden and Mr Hagipantelis notwithstanding that they are not parties to the proceedings, they are directly affected by the relief sought, and should be joined as respondents: UCPR 51.4(1)(a).

91 There may be room for debate as to whether all of Mr Jowett’s costs of the Equity Proceedings can be characterised as “wasted”. Presumably he swore an affidavit setting out the basis of his claim and prepared other evidence, all of which can be used at the second hearing of the Equity Proceedings. Mr Morahan did not suggest that, if Mr Jowett’s application to vary orders 3 and 4 succeeded, the Court should make any more detailed order than that made by McLaughlin As-J. In the circumstances I do not think it appropriate to engage in a cheese-paring exercise to wean out those costs totally attributable to Mr Bryden and Mr Hagipantelis’ serious neglect and those which would have been incurred in any event.

92 The indemnity Mr Bryden and Mr Hagipantelis gave Ms Kelly and Mr McLennan, as recorded in the undertaking handed up in Court (see [34]) above, depended on orders being made rendering the latter liable for the costs to which it referred. Mr Morahan accepted that an indemnity Mr Bryden and Mr Hagipantelis gave Ms Kelly and Mr McLennan could not assist Mr Jowett – I would infer, at least directly. In my view the Court should accept the undertaking, however the undertaking, and the indemnity, do not obviate the need to make orders which indemnify Mr Jowett in respect of his wasted costs.

93 Further, even to the extent of the protection the undertaking affords, I would be of the view that to allow the matter to rest on that undertaking would not sufficiently register the Court’s disapproval of Mr Bryden and Mr Hagipantelis’ conduct.

94 I would make the following orders in the substantive appeal in addition to orders 1 and 2 made by consent in the Short Minutes of Order dated 15 December 2008:

1. Join Robert Stanley Bryden and Bandeli Hagipantelis as respondents to the appeal.

2. Set aside orders 3 and 4 made by McLaughlin As-J on 29 May 2008.

3. In place of orders 3 and 4 order Robert Stanley Bryden and Bandeli Hagipantelis to pay Kenneth Rowland Jowett’s costs of the conduct of the Equity Proceedings up to and including 29 May 2008 on an indemnity basis.

4. Order Robert Stanley Bryden and Bandeli Hagipantelis to pay Kenneth Rowland Jowett’s costs of the stay application before Brereton J on an indemnity basis.

5. Order Robert Stanley Bryden and Bandeli Hagipantelis to pay Kenneth Rowland Jowett’s costs of the substantive appeal, including his notices of motion of 15 October 2008 and 19 May 2008 and the summons seeking leave to appeal on an indemnity basis.

6. Order that all the above costs orders be satisfied by Robert Stanley Bryden and Bandeli Hagipantelis paying the costs directly to Kenneth Rowland Jowett or his legal representatives.

7. Order that all the above costs orders be payable forthwith.

95 BARRETT J: I agree with McColl JA and wish to add some brief observations of my own.

96 Solicitors in sole practice or in partnership should not allow an employed solicitor to be the solicitor on the record in proceedings, even if the employed solicitor holds an unrestricted practising certificate. As McColl JA has observed, the client does not retain the employed solicitor; the retainer is with the employer. The solicitor retained has clear and direct responsibility to the client for the execution of the retainer. Personal assumption of the role of solicitor on the record and the specific relationship with the court that it entails are part of that responsibility, even though day-to-day work may be delegated to an employee.

97 This principle is in no way blunted by the statutory provision that now confirms the right of solicitors to act as advocates (s 87 of the Legal Profession Act 2004, originally s 38L of the Legal Profession Act 1987 (NSW) introduced by the Legal Profession Reform Act 1993 (NSW)). That provision does not distinguish between principals and employed solicitors and operates regardless of the kind of practising certificate a solicitor holds. But it is one thing to act as an advocate and quite another to act as solicitor on the record for a plaintiff or a defendant. Although in a given case one person may play both roles, the distinction between the functions and the responsibilities attaching to them is clear. By signing and filing the originating process or a notice of appearance, a solicitor becomes solicitor on the record and incurs duties under the rules of court. That first act of such a solicitor occurs well before the first act of an advocate.

98 In this case, the partners of the firm exercised inadequate control over the employed solicitor. When shortcomings in his protection of the clients’ interests became known, it was incumbent upon them to act in the way, and for the reasons, stated by Blackburn CJ, Kelly J and Gallop J in Keppie v Law Society of the Australian Capital Territory (1983) 62 ACTR 9 at 19:

“When Mr A was first told by his employed solicitor — a solicitor of limited experience — that he (the employed solicitor) had been accused of a breach of an undertaking, it was incumbent on Mr A to read the correspondence and find out the facts in full. If he had done so, it would at once have been apparent that an undertaking had in fact been broken. It would then have been Mr A's duty to take control of the situation, for two reasons.

In the first place, there was the question of the effect of what had happened on the interest of the client. When a solicitor finds that he has made an error (or that one has been made by his employee) his first thought should be to ensure that he does not get into a situation in which his interest could conflict with that of his client. Any attempt to adopt a defensive attitude to the other solicitor or party concerned, eg by denying that the conduct was wrong, or conducting a legal argument about it, is highly likely to create a situation of conflict. In this case, the appellant had got the firm into a situation in which it was at least possible that the client would become liable for a breach of an undertaking. If the client did so become liable, the firm would at least arguably have to bear that liability. The risk that a situation could arise in which the firm's interests would diverge from those of the client should have been obvious. The first action which should be taken by a solicitor who discovers or realizes that an error of this kind has been made is to do whatever is necessary to ensure that the client's interests are not put into a situation of potential conflict with his own. He may have to cease to act for the client. In any event, he must explain the whole matter to the client and clarify the relationship between the client and himself.

99 Neither Mr Bryden nor Mr Hagipantelis acted to “take control of the situation”. Neither sat down with the employed solicitor to get to the bottom of the matter. Neither took over the file and gave it his personal attention or arranged for another solicitor to do the necessary work. Mr Hagipantelis merely instructed the employee to comply with the outstanding directions of the court. Beyond that, the partners were content to leave attempts at correction of the employee’s clear dereliction in the hands of a manager without legal qualifications whose unhelpful and inadequate response was to say to the employee, “This file is your mess, clean it up”.

100 By their failure to act, the partners of the firm allowed to emerge the very situation they were duty bound to avoid, that is, one in which the clients’ interests not only were left unprotected but came into conflict with their own.

101 The court should exercise its supervisory jurisdiction over legal practitioners by making against Mr Bryden and Mr Hagipantelis the orders proposed by McColl JA. To allow the matter to rest on an undertaking proffered by them would not sufficiently register the court’s disapproval of their conduct.

**********

25/11/2010 - [53],[54] - (The appellants') changed to Brydens'; [90] - UCPR 42.3(g) should be UCPR 42.3(2)(g). - Paragraph(s) 53, 54, 90

Actions

Download as PDF Download as Word Document

Citations

Kelly v Jowett [2009] NSWCA 278

Most Recent Citation

Australians for Sustainable Development Inc v Minister for Planning [2011] NSWLEC 33

Cases Citing This Decision

107

Birketu Pty Ltd v Atanaskovic [2025] HCA 2

Maguire v Makaronis [1997] HCA 23

Cases Cited

7

Statutory Material Cited

7

Jowett v Kelly [2008] NSWSC 1009

Taylor v Taylor [1979] HCA 38

CITATION:	Kelly v Jowett [2009] NSWCA 278 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	7 August 2009
JUDGMENT DATE:	4 September 2009
JUDGMENT OF:	Beazley JA at 1; McColl JA at 2; Barrett J at 95
DECISION:	In addition to orders 1 and 2 made by consent in the Short Minutes of Order dated 15 December 2008: 1. Join Robert Stanley Bryden and Bandeli Hagipantelis as respondents to the appeal. 2. Set aside orders 3 and 4 made by McLaughlin As-J on 29 May 2008. 3. In place of orders 3 and 4 order Robert Stanley Bryden and Bandeli Hagipantelis to pay Kenneth Rowland Jowett’s costs of the conduct of the Equity Proceedings up to and including 29 May 2008 on an indemnity basis. 4. Order Robert Stanley Bryden and Bandeli Hagipantelis to pay Kenneth Rowland Jowett’s costs of the stay application before Brereton J on an indemnity basis. 5. Order Robert Stanley Bryden and Bandeli Hagipantelis to pay Kenneth Rowland Jowett’s costs of the substantive appeal, including his notices of motion of 15 October 2008 and 19 May 2008 and the summons seeking leave to appeal on an indemnity basis. 6. Order that all the above costs orders be satisfied by Robert Stanley Bryden and Bandeli Hagipantelis paying the costs directly to Kenneth Rowland Jowett or his legal representatives. 7. Order that all the above costs orders be payable forthwith. 8. Dismiss the summons seeking leave to appeal.
CATCHWORDS:	COSTS – wasted costs jurisdiction – defence of Family Provision Act 1982 (NSW) proceedings left to employed solicitor – delinquency in their handling – whether principals personally liable for wasted costs incurred by plaintiff – Uniform Civil Procedure Rules 2005 (NSW) 42.3(g) and Civil Procedure Act 2005 (NSW), s 99 - LEGAL PRACTITIONERS – duties and liabilities – duty to the Court, to their client and to the other party to proceedings - LEGAL PRACTITIONERS – retainer with clients
LEGISLATION CITED:	Civil Procedure Act 2005 (NSW) Family Provision Act 1982 (NSW) Legal Profession Act 2004 (NSW) Legal Profession Act 1987 (NSW) Legal Profession Reform Act 1993 (NSW) Supreme Court Act 1970 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
CATEGORY:	Principal judgment
CASES CITED:	Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 258 ALR 14 Harley v McDonald [2001] UKPC 18; [2001] 2 AC 678 Jowett v Kelly & Anor (Supreme Court of New South Wales, McLaughlin As-J, 29 May 2008, unreported) Jowett v Kelly [2008] NSWSC 1009 Kendirjian v Ayoub [2008] NSWCA 194 Keppie v Law Society of the Australian Capital Territory (1983) 62 ACTR 9 Knaggs v J A Westaway & Sons Pty Ltd (1996) 40 NSWLR 476 Lemoto v Able Technical Pty Ltd & 2 Ors [2005] NSWCA 153; (2005) 63 NSWLR 300 Myers v Elman [1940] AC 282 Myers v Rothfield [1939] 1 KB 109 Orchard v South Eastern Electricity Board [1987] QB 565 Re Bannister & Legal Practitioners Ordinance 1970-75; Ex Parte Hartstein (1975) 5 ACTR 100 Re Fabricius & McLaren and Re Legal Practitioners Ordinance 1970 (1989) 91 ACTR 1 Re Jones (1870) 6 Ch App 497 Ridehalgh v Horsfield [1994] Ch 205 Rondel v Worsley [1969] 1 AC 191 Sydney South West Area Health Service v Stamoulis [2009] NSWCA 153 Taylor v Taylor [1979] HCA 38; (1979) 143 CLR 1
PARTIES:	Leanne Emeline Kelly - First appellant Terrence John McLennan - Second Appellant Kenneth Rowland Jowett - Respondent
FILE NUMBER(S):	CA 40263 of 2008
COUNSEL:	T J Morahan - for the Appellants A C Scotting - for the Respondent
SOLICITORS:	Brydens Law Office - for the Appellants Russell McLelland Brown - for the Respondent
LOWER COURT JURISDICTION:	Supreme Court
LOWER COURT FILE NUMBER(S):	SC 4376/07
LOWER COURT JUDICIAL OFFICER:	McLaughlin As-J
LOWER COURT DATE OF DECISION:	29 May 2008