LawCover Insurance Pty Limited v Nicholas Mitchell Coren

[2013] NSWSC 76

Supreme Court

New South Wales

Medium Neutral Citation:	LawCover Insurance Pty Limited v Nicholas Mitchell Coren [2013] NSWSC 76
Hearing dates:	6 February 2013
Decision date:	06 February 2013
Jurisdiction:	Equity Division
Before:	Sackar J
Decision:
Category:	Principal judgment
Parties:	LawCover Insurance Pty Limited - plaintiff Nicholas Mitchell Coren - defendant
Representation:	Counsel: P Silver - plaintiff F Corsaro SC - defendant
File Number(s):	2012/380612

Judgment

Ex tempore (revised 11 February 2013)

1. By summons dated 7 December 2012, LawCover, the plaintiff, seeks a declaration that it is entitled by reason of a number of clauses of the relevant professional indemnity policy to settle an application against Mr Coren, solicitor, to the effect that he personally pay the costs of proceedings in which he was solicitor on the record for an unsuccessful plaintiff. There is related relief also claimed.

1. The application for costs against Mr Coren is listed for hearing, as I understand it, on or about 21 February 2013. Mr Coren is insured by LawCover, under the terms of its professional indemnity policy for 2011/2012. He, however, opposes the relief sought by LawCover.

THE FACTUAL BACKGROUND

1. Mr Coren was the solicitor on the record for a Ms Halina Jain Gillett in proceedings brought by her in this Court in matter number 2006/267258 against a Professor Jeffrey Robinson, an obstetrician.

1. The proceedings were medical negligence proceedings. A trial in the matter took place before Harrison J on 1 to 3 and then 5 August 2011. Other than an amendment application on the first day of the trial which was argued by Mr Connor of senior counsel, Mr Coren appeared for Ms Gillett throughout the balance of the trial.

1. On 26 September 2011 the trial judge delivered judgment in which he ordered a verdict for the defendant. The question of costs has been deferred since that time at the request of the parties. I should observe that a notice of intention to appeal was subsequently filed. By that time Mr Coren had ceased to act for the plaintiff. However, an application to extend the time for the filing of the notice of appeal which was filed by the plaintiff in May of 2012 was dismissed by Barrett JA on 31 August 2012.

1. The defendant (Professor Robinson) in the main proceedings in a motion dated 30 September 2011 seeks orders to the effect that the plaintiff (Ms Gillett) pay the costs of the defendant on an indemnity basis and that Mr Coren indemnify the plaintiff in relation to those costs.

1. On 9 November 2011 LawCover informed Mr Coren, that it granted him indemnity for that claim. The then solicitor for LawCover, Mr Lusk, recommended to Mr Coren that the costs application be settled as soon as possible. Mr Coren was asked for his response.

1. On 2 December 2011 LawCover instructed Mr Lusk that the costs application should be settled. Mr Coren raised a number of matters that he wanted LawCover to consider.

1. On 14 December Mr Lusk informed Mr Coren that he had considered all of the various matters raised by him but that LawCover had made a formal determination that the costs application should be settled and recommended a figure of some $290,000 including interest and costs.

1. Thereafter on 22 December Mr Coren requested that Mr Lusk arrange for the advice from an independent legal practitioner, it seems, within the terms of clause 21 of the policy. Mr Coren ultimately indicated he would accept the opinion of Mr Darke of counsel, who was one of a number of practitioners nominated. Mr Darke was retained.

1. Mr Darke was provided with relevant materials including submissions from Mr Coren and in turn provided his opinion on 10 May 2012. Mr Coren took the step of sending further submissions to Mr Darke, on both 27 and 28 May. Mr Darke thereafter indicated that the further submissions of Mr Coren did not alter his opinion.

1. It was not until 21 June, or so it seems, that Mr Coren received Mr Darke's opinion, but nothing turns upon that.

1. In a detailed and thorough analysis Mr Darke expressed the view that the defendant's claim for a personal costs order against Mr Coren should be settled, if possible, rather than defended and up to 90 per cent of the costs claimed. Mr Darke concluded that he thought Mr Coren would be found by a court to have provided legal services to the plaintiff on her claim against Professor Robinson in circumstances where it could be suggested that there were no reasonable prospects of success. Mr Darke expressed the view, that that was probably the case at all times since the proceedings were commenced. He thought, therefore, that the court's discretion to make an order that Mr Coren pay the plaintiff for the whole or any of the costs for which she may be liable would be enlivened. In the circumstances Mr Darke also thought that a court would probably order such costs on an indemnity basis. He also thought that the order for indemnity costs could date from as early as 28 November 2007, or perhaps a little later from 24 February 2009.

1. In or about June or July 2012 Mr Coren wrote to LawCover complaining about their use, or continued use, of Mr Lusk and his firm and advanced various reasons why they should desist from doing so. Those complaints were to the effect that Mr Lusk and/or his firm acted for LawCover in other matters which involved Mr Coren; that Mr Lusk had in fact briefed Mr Harrison of senior counsel, as he then was, and that one or other of those factors had somehow tainted the whole process.

1. I should say at the outset, although it is not necessary for me to do so, there was no substance nor could there be any substance whatsoever in the complaints made by Mr Coren about Mr Lusk, his firm, or indeed any conduct that they or anyone else had engaged in during that time.

1. Unsurprisingly therefore, LawCover rejected the suggestion and on 17 July 2012 stated that it intended to progress settlement discussions.

1. Mr Coren asserted that in some fashion or other Mr Darke's advice should still be seen as affected by the taint or conflict of interest and maintained his position in that regard. Mr Lusk's firm withdrew, or perhaps had their retainer terminated mutually by agreement with LawCover, although Mr Lusk made it very clear that he rejected out of hand that there was any substance in any of the complaints Mr Coren had voiced.

1. LawCover thereafter appointed Sparke Helmore to act as its new solicitors, and on 20 August it wrote to Mr Coren. LawCover, in that letter denied that it was obliged to change solicitors but nonetheless indicated that it was prepared to engage in a process of obtaining a further opinion from counsel. It will be necessary to briefly turn to the terms of that letter shortly.

1. By about this time a Mr Mason, solicitor of Mason Lawyers, began to act for Mr Coren. There is no information before the court from Mr Coren or otherwise as to, the precise circumstances in which Mr Mason was retained or, indeed, if it be the fact, when his retainer was terminated, although that appears to have occurred later in the year. Again, it is a matter to which I will return.

1. Mr Mason, however, asked be to provided with certain materials including, it seems, a copy of Mr Darke's opinion. On 29 August Mr Mason indicated that his client would be agreeable, in broad terms, with the proposal, it seems, put in the letter of 20 August from LawCover. That is, agreeable to the obtaining of a fresh opinion from counsel but he indicated his client wanted to ensure that he had some reasonable input into the brief. Mr Mason indicated that he was awaiting instructions and he hoped to get a formal response the next day.

1. On 3 September Mr Mason indicated that his client was agreeable to Mr Studdy SC (amongst others) being briefed and set out further conditions, including that Mr Studdy provide his opinion by 16 November. LawCover indicated that it was agreeable to those conditions.

1. Thereafter the solicitor for LawCover, not having heard from Mr Mason or from anyone else on behalf of Mr Coren or, indeed, from Mr Coren himself, forwarded the brief and supporting materials that had been outlined and foreshadowed in correspondence with its submissions to Mr Studdy on 5 October.

1. On 11 October Mr Studdy emailed the solicitor for LawCover and Mr Mason indicating he had received the LawCover submissions but observing that he had received no materials from Mr Coren. There is no evidence to suggest that that email was not received by Mr Mason. Mr Mason has not provided any evidence to the court. However, in his affidavit, Mr Coren indicates that according to him, at least, he received nothing from Mr Mason after about 20 August.

1. I am not obliged to accept Mr Coren's assertion to that effect. There is, however, I should observe, no material to the contrary but I find it very surprising, given the circumstances of this case, that Mr Mason, at least on Mr Coren's view of it, simply ceased to communicate with Mr Coren on or after 20 August. Were that so, given his attitude generally, I would have expected Mr Coren to have either made direct contact with LawCover or at least ensured he was, as it were, in the loop.

1. LawCover, on the other hand, on 12 November attempted to contact Mr Mason. The solicitor for LawCover, Ms Wright, attempted to contact him again on 13 November, both by telephone and by email. Neither of those attempts proved successful.

1. On 15 November 2012 Mr Studdy emailed his opinion to LawCover and to Mr Mason. In his opinion Mr Studdy followed a very similar analysis to that of Mr Darke however in a much more concise exercise expressed, in substance, the same view, namely, that the costs application be settled for an amount up to, he thought, $263,000 including interest and costs.

1. On 19 November Ms Wright emailed Mr Mason to the effect that LawCover was taking steps to settle the cost application in accordance with Mr Studdy's opinion. A letter was sent to Professor Robinson's solicitors on 22 November offering that the matter be settled for $263,000.

1. On 29 November, the solicitor for LawCover emailed Mr Mason indicating that it considered that it had authority to settle the cost application and referred to both the opinions of Mr Darke and Mr Studdy. Further, she indicated that her client intended to act in accordance with the opinions pursuant to its authority under the policy.

1. On 30 November Mr Coren emailed the solicitor for LawCover. He indicated that he objected to the settlement and he denied he was bound by Mr Studdy's opinion on the basis that he had not had input into the terms of Mr Studdy's retainer and that LawCover had failed to ensure that submissions in support of Mr Coren's position were obtained.

1. He also indicated that he wanted his contribution to Mr Darke's fees repaid to him and he would not pay any money, so he said, in relation to Mr Studdy's opinion. He indicated further he would provide a statement of issues limited to two pages, including his submissions, on or by 3 December.

1. On 2 December Mr Coren sent the solicitor for LawCover a five page submission which it seems he intended Mr Studdy consider.

1. I observe that having read that submission it does not appear to me, at least, to address issues that were germane to the costs application. Rather it seeks to agitate alleged errors on the part of Harrison J in his handling of the trial.

1. On 4 December the solicitor for LawCover sent an email to Mr Coren rejecting suggestions that he had made in his email of 30 November and stating that her client had authority to settle the costs application. On the same day, Mr Coren emailed the solicitor for LawCover and asked her to inquire what Mr Studdy's fees would be for him to consider Mr Coren's submissions of 2 December and to provide comments on them.

1. Nothing further seems to have been done in relation to Mr Coren's request. It seems to me entirely unsurprising given the content of those submissions.

1. In any event, on 5 December the solicitor for LawCover sent an email to Professor Robinson's solicitor offering to settle the matter subject to LawCover obtaining declaratory orders confirming its authority to do so.

1. On 6 December Professor Robinson's solicitors emailed the solicitor for LawCover accepting the offer to settle for $263,000 inclusive of costs and interest but on the basis that any settlement be subject to LawCover obtaining declaratory relief to confirm its authority to settle.

TERMS OF THE POLICY

1. The wording of the policy, in my view, is relatively clear. By clause 16 of the policy LawCover has the agreement of the insured to conduct a claim against the insured including reaching a settlement of that claim. Clauses 20 to 22 cover those matters, and it seems to me that subject to it granting indemnity, as here, LawCover has the right to conduct a claim on the insured's behalf.

1. By clause 20 LawCover must seek the consent of the insured before settling a claim. That is clear enough. However, if the insured does not consent the insured may notify LawCover that it requires an opinion from An independent lawyer pursuant to clause 34. This is a well known clause to be found in almost all professional indemnity policies of this kind.

1. Clause 34 sets out a procedure by which the relevant lawyer's opinion can be procured. The parties are to agree on the choice of a lawyer, otherwise there is a means of resolving disagreement. Each party may, if it wishes, make written submissions to the lawyer appointed but it is not entitled to make any oral submissions.

1. In relation to the settlement, the lawyer must take into account in giving the opinion the legal issues and the costs that may well be involved in the defence of such a claim. One gleans this from the provisions of clauses 34(a), (b), (e). Clause 35, importantly, of the policy provides that the parties agree to be bound by the lawyer's opinion.

A BINDING OPINION

1. In my view the parties agreed on Mr Darke as the lawyer to provide the initial opinion pursuant to the terms of the policy. Indeed, as I have already observed, he was one of the persons Mr Coren nominated. Each of Mr Coren and LawCover made submissions to Mr Darke and Mr Coren made some additional submissions to which I have referred.

1. I see no reason whatsoever why Mr Darke's opinion is not and was not at all relevant times binding upon the parties. The argument advanced by senior counsel for Mr Coren before me today was that the letter from LawCover of 20 August should be seen as equivocal, and by that I took him to mean that the terms of it, perhaps with or without later conduct, should be seen as LawCover abandoning or waiving its right to rely upon Mr Darke's opinion. In my view, with great respect to counsel, that argument cannot be sustained. The letter of 20 August is, in my view, clear in its terms. It is obvious from its terms that quite contrary to the suggestion that LawCover was abandoning its rights in relation to Mr Darke's opinion, it was simply, it seems to me, attempting by way of a practical solution, to explore whether it could appease Mr Coren and provide an alternative method by which the impasse might be overcome.

1. The terms of the letter, which I will not rehearse in any event, as I said are explicit. Paragraphs 17 and 18 of the letter could not be clearer, and in my view there is no abandonment or waiver, nor am I aware of any conduct which follows which could, in my view, objectively give rise to an abandonment or waiver of Mr Darke's opinion. The letter in terms states the contrary. Therefore, in my view, the Darke opinion is and was binding on Mr Coren and that, in one sense, puts an end to the matter because LawCover would be entitled as a result of that opinion alone to proceed to settle the matter as planned. However, other issues have arisen and I should briefly, in fairness to both sides, deal with them.

1. LawCover relies in the alternative, if it needs to do so, upon the alleged binding nature of Mr Studdy's opinion and again, if it needs to, further and in the alternative upon an estoppel argument. I will deal with both of these briefly.

1. LawCover made submissions to Mr Studdy prior to his giving his opinion. It seems to me, on the factual material available, notwithstanding it has some unsatisfactory aspects about it, Mr Coren had every opportunity to make submissions but he or his agent, Mr Mason, simply failed to do so. Mr Studdy was the agreed appointed counsel pursuant to the terms of the policy. The timetable suggested by Mr Mason, Mr Coren's solicitor, in his letter of 3 September was agreed to by LawCover. Further steps were certainly suggested, it seems, for reasons, which as I said, were not entirely explained, but then Mr Mason and/or Mr Coren simply failed to respond or engage thereafter with LawCover, notwithstanding the fact that it and the appointed counsel, Mr Studdy, kept Mr Mason updated on what, in fact, was occurring.

1. Mr Coren wishes me to construe the factual matrix as consistent with his not being fully informed and says that LawCover could not have proceeded on the basis that Mr Coren was agreeable to the process that was going ahead. I do not think that is a reasonable construction of the facts. Mr Mason had been retained. He was not reacting or engaging with Ms Wright but, in my view, LawCover was entitled to proceed on the basis that there was no opposition to the process that was being undertaken. Mr Studdy could not have been plainer in his email in October, namely that he had received nothing at all from Mr Coren but nonetheless was going to proceed upon the basis of the materials that he had. Mr Mason was sent that message.

1. It seems to me that LawCover was perfectly entitled to proceed upon the basis that indeed Mr Mason, or for that matter Mr Coren, had no opposition to a number of things. First, clearly and obviously, the process, and that is plain from Mr Mason's active engagement early on. Secondly, Mr Coren was not obliged under the policy, to make submissions. Indeed, he was entitled to take a passive role if he chose to do so.

1. It seems to me LawCover was entitled to proceed upon the basis that Mr Mason was giving advice to Mr Coren who was prepared to proceed on the basis of the materials supplied to Mr Studdy and the approach suggested by LawCover. After all, this was the second opinion on the very same topic on identical materials except for some minor additional evidentiary materials.

1. It seems to me that, particularly given the absence of evidence from Mr Mason, I can readily draw the inference that Mr Mason is likely to have kept Mr Coren updated, orally or otherwise, in what was occurring. His absence and the failure on the part of Mr Coren to call him reinforces my view in relation to that.

1. It seems to me that there was, in the terms of the correspondence passing between the parties, a binding and express agreement to proceed pursuant to clause 34 in relation to the obtaining of the opinion from Mr Studdy. It does also seem to me that Mr Coren had ample opportunity to make submissions but simply failed to do so. When he belatedly did so, it is important in my mind, when one looks at what he wanted to submit to Mr Studdy, that it simply failed to address any issue germane to the costs question.

1. Mr Coren complains about the failure on the part of LawCover to communicate with him. There was simply no occasion for LawCover to communicate directly with Mr Coren. They were entitled to assume that he was working in collaboration with Mr Mason in relation to his case. Mr Mason did not respond but he did not indicate at the relevant time prior to 15 November that his retainer had been terminated.

1. LawCover submits, alternatively, that if I were to find no express agreement, I should find that Mr Coren is estopped from raising any of his complaints. It relies on a number of matters as giving rise to the estoppel and refers to a course of conduct during which Mr Coren's solicitor was for a time communicating with LawCover with respect to obtaining Mr Studdy's opinion.

1. Mr Mason, as I have already said, never indicated that he ceased to act for Mr Coren at any relevant point in time. He was clearly Mr Coren's agent.

1. Mr Coren, having agreed to Mr Studdy, it seems to me he had an obligation in any event to cooperate with LawCover in order to obtain a second opinion which, after all, he insisted upon.

1. In addition, I think LawCover made it clear at all times that it wished to progress the matter efficiently and in any event Mr Mason was told by Mr Studdy of his intention to proceed.

1. LawCover says it relied upon this conduct and continued with the process instead of approaching the court earlier for relief. Instead they stayed their hand. To that extent they suffered a detriment.

1. In the decision of the Court of Appeal in Delaforce v Simpson-Cook [2010] NSWCA 84 Allsop P said at [5]:

"That the party encouraged cannot show that he or she would have been better off in the posited alternative reality is not fatal to the making out of the estoppel. Indeed, the inability to prove such things reveals a central aspect of the detriment: Being left, now, in that position. Of course, if it is self-evident or can be clearly demonstrated that the case was fanciful or otherwise doomed to fail, there may be no real detriment; but that was not the case here".

1. I think in these circumstances there is detriment because LawCover could have had this matter resolved much sooner and in doing so saved additional costs. In all the circumstances I consider an estoppel does arise.

1. In summary, therefore, it seems to me there were binding agreements both in respect of Mr Darke and Mr Studdy's opinions and I do think in any event the estoppel case should succeed.

1. As I have said, I think Mr Coren's complaints about Mr Darke or the process undertaken in relation to Mr Studdy are unsustainable and quite frankly have no substance. I see nothing wrong, clearly, then as a matter of law in LawCover proceeding with the settlement in the sum of $263,000 including interests and costs.

THE APPROPRIATE REMEDY

1. LawCover, in my opinion, has bent over backwards to settle this matter, quite frankly in all parties' interests.

1. Mr Coren has, for reasons best known to himself and which are not entirely clear to me, engaged in a process that has thwarted or obstructed the efficient resolution of this matter. I can find no rational basis for his persistent opposition.

1. I consider, therefore, that a declaration in the circumstances is of utility. The dispute between the parties is a real one, as I see it and not merely theoretical. The parties in the proceedings want the comfort that LawCover is able to settle finally with some certainty.

1. It is entirely appropriate in my view to make the declaration sought, in accordance with paragraph 1 of the summons.

1. I also make an order in accordance with paragraph 2 of the summons.

1. I order that the defendant, Mr Coren, pay the plaintiff LawCover's costs of this summons.

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Decision last updated: 13 February 2013