Minter Ellison v Lauro - [2014] SADC 14

District Court of South Australia
(Civil)
MINTER ELLISON v LAURO
[2014] SADC 14
Ruling of His Honour Judge Slattery (ex tempore)
29 January 2014
PROCEDURE - INFERIOR COURTS - SOUTH AUSTRALIA - DISTRICT AND LOCAL COURTS PROCEDURE UNDER FORMER LOCAL COURT RULES - OTHER MATTERS
Applications by the defendant (FDN6) inter alia that the plaintiff’s statement of claim be struck out because of mis-joinder of the defendant Silvana Lauro and that Mr Eric Lauro be permitted to speak on behalf of the defendant Natale Lauro because of the indisposition of Natale Lauro due to illness – upon an oral application by the plaintiff for leave to bring an application to appoint Mr Eric Lauro as the litigation guardian on behalf of the defendant, the defendant withdraws application to strike out the plaintiff’s statement of claim
Held:
(1) Defendant given permission to withdraw paragraph 2 of FDN6.
(2) Plaintiff given leave to bring any application as it may be advised to appoint Eric Lauro as the litigation guardian of the defendant Natale Lauro pursuant to R79 of the District Court Rules
Observations in relation to the defendant’s filed defence set-off and counterclaim.
District Court Rules 6R 33, 6R 34, 6R 78, 6R 79, 6R 98, 6R 100, 6R 267 (2) and Rule 4 , referred to.

MINTER ELLISON v LAURO
[2014] SADC 14
JUDGE SLATTERY

Applications by the defendant to strike out the plaintiff’s claim and for Mr Eric Lauro to speak on behalf of the defendant and for other orders.
The first application to be considered is FDN6, an interlocutory application of the defendant dated 27 September 2013, para.2 of which seeks an order that Minter Ellison's proceedings be struck out.
Mr Eric Lauro who again appears as a representative for the defendant has informed me that the principal basis for this application was the alleged contraventions by the plaintiff of 6R 33 and 6R 34 of the District Court Rules. He then informed me of the basis generally for the application and he especially emphasised the mis-joinder of the second defendant, Ms Silvana Lauro, and the failure of the plaintiff firm of solicitors to appropriately disjoin Ms Silvana Lauro after the error of the plaintiff had been drawn to its attention. I have previously been informed that Ms Silvana Lauro was joined to these proceedings as a party in error. That error was realised some time ago: the plaintiff has been slow to remove Ms Silvana Lauro from these proceedings.
I am informed today by Mr Mitchell for the plaintiff that an amended summons has been lodged at Court, which deletes the name of Ms Silvana Lauro as a defendant, and a notice of discontinuance in respect of Ms Silvana Lauro has been lodged at Court; those matters have not reached the file that is before me today. Notwithstanding those matters, Mr Eric Lauro informs me that the defendant, Mr Natale Lauro, presses the application and would seek that that matter be heard and determined. I will return to that matter.
The second matter is FDN16: it is a defence set-off and counterclaim filed on behalf of the defendant, Mr Natale Lauro. There is a handwritten amendment to it, which indicates that it is filed on behalf of the first defendant and the second defendant, Ms Silvana Lauro. It carries a date of document 6 December 2013, however the document was not filed at Court until 15 January 2014, after which time it was then served upon the plaintiff. This pleading was prepared without the assistance of an admitted practitioner of this Court. It appears that the drafting of the document was undertaken by Mr Eric Lauro who is a qualified lawyer, but does not maintain a practicing certificate.
A discussion occurred between bench and bar concerning the content of the pleadings. As matters have turned out I have indicated to the parties that I will make some comments in relation to the pleadings as a forerunner to any further consideration of the pleadings by the defendant. Mr Eric Lauro in particular asked that I announce my views so that, presumably, he may gain assistance therefrom.
The third matter is the content of FDN17, that is an interlocutory application, it seeks the following orders:-
The Defendant, NATALE LAURO, applies for the following orders or directions:
1.   That the Defendant’s son, Eric Lauro, be allowed to speak on their behalf at the hearing of 29 January 2014 and future ones, as required.
2.   That the Court confirm whether its judicial officers in the involved action have any conflict of interest with the Plaintiff law firm, Minter Ellison Lawyers, or the First Defendant’s current legal opponents, and consequential disqualification if any conflict were to exist.
3.   That any hearing or argument on substantive matters including all outstanding applications, be adjourned to the first available date after 30 June 2014.
4.   In the alternative, that this matter be stayed until after 30 June 2014.
5.   That the Defendant/s be granted an extension of time to comply with any outstanding orders or tasks till after 30 June 2014 or prior if legally represented.
The application is supported by a first affidavit of Mr Natale Lauro, sworn 22 January 2014, and received by the Court on 24 January 2014.
It is also supported by a fifth affidavit of Mr Eric Lauro of 24 January 2014, and received by the Court on that date.
Mr Eric Lauro informs the Court in para.2 of his fifth affidavit that in the Court actions involving his father he has been appearing on his behalf as next of kin, mainly to update the Magistrates, District and Supreme Courts of his status.
Mr Eric Lauro has now appeared before me on a number of occasions. On those occasions Mr Eric Lauro has put a number of arguments on behalf of his father, both in respect of the contentions of his father in the proceedings, and also in response to matters put to me by Mr Mitchell who has on all occasions appeared for the plaintiff.
In December 2013 this Court was informed of medical difficulties suffered by the defendant. I have made mention of those in the reasons that I published on 20 December 2013. Subsequent to the comments that I made in the course of my reasons delivered on 20 December 2013 I have received further medical reports, and they are annexed to the affidavit of Mr Natale Lauro, sworn 22 January 2014, . In his affidavit Mr Natale Lauro informs me that he suffered some significant stress and distress on 6 December 2013, and that he suffered cardiac complications leading to emergency hospitalisation. He says that he is now medically unfit to attend Court, to participate in any sort of legal action or to give any legal instructions for a period of six months. This is the second time that I have received medical certificates advising me that Mr Natale Lauro, the defendant, will be incapable of attending in Court, participating in legal actions or giving instructions for a long period of time (usually for six months). I particularly refer to the fact that Mr Natale Lauro also claims in his own affidavit that he is unable to give legal instructions for a period of six months.
Exhibited to the affidavit are medical reports. Dr Mario Giordano, in a letter dated 30 December 2013, informs the reader that the defendant is receiving medical and psychological treatment for post traumatic stress disorder and ischaemic heart disease and hypertension. Dr Giordano says that the defendant will be unable to attend at Court or participate in any sort of legal action, or give legal instructions for a period of six months.
Further attached in the same exhibit is a report of Dr Enzo D'Angelis, dated 16 December 2013. I have previously referred to that document in my reasons of 20 December 2013 and I will not repeat those matters here. A further medical certificate is provided by Dr Martinelli Nadal, who is a cardiothoracic registrar in the cardiothoracic surgical unit of the Royal Adelaide Hospital. Dr Nadal says that the defendant is currently receiving medical and psychological treatment for post traumatic stress disorder and chronic chest-wall pain issues. As such he will be unable to attend at Court or participate in any form of legal action or give legal instructions for a period of at least six months. In a second report of 22 January 2014 Dr Nadal reports further in relation to clinical symptoms of the defendant, and the fact that there is planned a further surgical procedure to deal with complications arising from earlier surgery.
In a report of 25 June 2013 Mr James Kollias, Senior Consulting Surgeon, Breast Endocrine and Surgical Oncology, Outpatient Service of the Royal Adelaide Hospital informs the defendant's GP, Dr Giordano, of difficulties with the defendant's thyroid and makes recommendations in relation to thyroid surgery. That surgery is to take place sometime in the next 12 months.
The fifth affidavit of Mr Eric Lauro, FDN19, relevantly annexes a letter to Dr Giordano of 30 December 2013, Dr Giordano's response of that same date which I have earlier referred to and to Dr D'Angelis' report. I have already referred to those matters, and they do not add anything to the discussion that I have already set out above.
It is apparent from the content of these medical reports that the defendant suffers from a number of medical conditions for which he is receiving treatment from specialists. Those specialists have opined about the capacity of the defendant. It is also clear that the defendant will be significantly disabled for a long period of time. The defendant has not retained solicitors in this action. He has authorised his son, a lawyer, to attend Court hearings in his place.
No proper explanation has been given about why a solicitor has not yet been retained to act in this action by the defendant. The pleadings filed by the defendant say that the defendant may in time instruct a solicitor. No time period is stated nor does the defendant commit to that course of action. This is taking time and expense is being incurred, for very little result or benefit, and the plaintiff’s claim is still very far from reaching the point that it will be set for trial. This is because the defendant has only filed a pleading that is conditional and, to an extent, is perfunctory. It is perfunctory in that it makes allegations without necessarily pleading a factual basis. It is conditional because it pleads that the defendant will not know its position until after inspection.
On one view, this is a quite unsatisfactory position. There are no solicitors retained by the defendant: it would reasonably be expected that any solicitor as retained would, by the application of ordinary skill, judgment and competence be in a position to plead the case of the defendant in a fashion that is a final pleading (and not one that may depend on disclosure and then, if thought fit, the retainer of solicitors). Any solicitors retained by the defendant would in the very short term have taken access to the plaintiff solicitor’s file to assist them to plead any available defence.
These proceedings were commenced in June 2013 and in January 2014 the defendant pleads that it is unable to further inform the Court and the plaintiff of his final defence because, inter alia, he has not taken inspection of documents.
Thus it may be seen that because of the defendant’s choice not to instruct solicitors the defendant has not filed a final pleading because to do so required inspection of the solicitor’s file, a task that should have been undertaken at the outset. The same defendant now is unable to give instructions or to partake in the legal process for a period of at least six months because of his ill health. I use the expression “…at least six months…” advisedly because it is not clear whether the defendant will be in any different position in six months time. By that time he may have undergone thyroid surgery that is currently planned. It is not possible to predict what the position will be. That unpredictability creates an unsatisfactory situation. In my view, some regard must be had by me to the interests of the plaintiff that claims a liquidated sum reflecting unpaid fees claimed by it.
During the course of submissions the operation of 6R 78, 79 and 4 of the District Court Rules was raised. 6R 79 permits the Court on application of an interested person, or on its own initiative to appoint a suitable person to be a protected person's litigation guardian. The gist of the submissions made were that in light of everything that is known about the defendant and in light of the interlocutory application of the defendant, an order be made that Mr Eric Lauro be appointed the litigation guardian on behalf of his father. The basis for that suggestion was that, as has been the case, Mr Eric Lauro has appeared in this Court on a number of occasions - and in other Courts, including the Supreme Court – representing the interests of his father.
Mr Eric Lauro said in his submissions that a suggestion had previously been made about him becoming the litigation guardian, but that was a matter upon which he wished to obtain legal advice. However he did not inform me about when previous suggestions of this nature had been made, nor did he suggest to me whether he had obtained legal advice that he wished to seek in relation to the matter. It is not clear to me what legal advice was being sought by Mr Eric Lauro. As a lawyer, he may be aware of liability for costs issues that once arose for persons acting as a litigation guardian. But that position has now changed. 6R 267 (2) of the District Court Rules stipulates that litigation guardians are not liable for costs unless it is otherwise ordered. The litigation guardian is liable for the costs of solicitors retained by him.
And when it is known that Mr Eric Lauro appears to have had a role in drafting the pleadings of the defendant, the position becomes slightly clearer. This is because, taking the medical reports and the affidavit of the defendant sworn 22 day of January 2014, at face value (and there was no application for cross examination on this affidavit) the defendant appears to have been incapable physically of involving himself in that process since before December 2013.
In light of Mr Mitchell’s intimation of the plaintiff attending to the removal of Ms Silvana Lauro as a defendant from the proceedings, there was no apparent utility in pressing the current application of the defendant. In light of the insistence of the defendant to press that application, the plaintiff announced that it would seek to press for the Court to give consideration to exercising its own initiative under 6R 79 (3) to appoint Mr Eric Lauro as the litigation guardian of the defendant.
Mr Mitchell raised for consideration the operation of 6R 78, 79 and 4 of the District Court Rules (and the possibility of Mr Eric Lauro being appointed as litigation guardian for his father as the defendant), Mr Eric Lauro then informed me that he withdrew para.1 of FDN17. If the application had not been withdrawn I would have dismissed it in any event.
There is a quite curious aspect about the position thus announced by Mr Eric Lauro. The interlocutory application is brought by Mr Natale Lauro. The intimation that para.1 be withdrawn was made by Mr Eric Lauro, presumably on instructions of the defendant and Mr Eric Lauro did not need an adjournment to seek those instructions. He merely announced that he would not press that paragraph in the application. In my opinion this is a significant matter. The timing of the withdrawal of that paragraph of the defendant’s application coincided with the discussion between bench and bar about Mr Eric Lauro being appointed as litigation guardian for the defendant. There is no sufficient evidence before the Court to establish a connection between the two things but I must assume that the defendant had already given some authority or discretion to Mr Eric Lauro to withdraw the application. It is perhaps no leap of faith or logic to infer that the defendant had only a conditional intention to press the application depending on how matters developed in the directions hearing before me. I will leave that to one side as it is, to an extent, speculation. Rather more important in my view is the fact, as I must assume, that the defendant was able to give the appropriate instructions to Mr Eric Lauro on the topic. This capacity to give instructions suggest the capacity of a person with a sufficient grasp of the situation and a capacity to make decisions. There are other examples. The defendant swore an affidavit dated 22 January 2014 (FDN19). In that affidavit the following paragraph appears:-
15. I also respectfully seek confirmation of any conflict of interest between any judicial officer involved in this action and Minter Ellison or any parties in the actions that are the subject of the legal costs dispute. I say this, given that this was the ground relied on by Masters Blumberg and Norman to not preside this action and the fact that, among other things, His Honour Slattery [sic] has acted for one of my current legal opponents, Antonio Tropeano of Fletcher Lawson.
This affidavit was sworn after the date of the medical reports relied upon by the defendant. As no application for disqualification for bias has been taken by the defendant it is unnecessary for me to consider further the mention made of Mr Tropeano.
Upon the announcement by Mr Eric Lauro of the withdrawal of para.1 of Mr Natale Lauro's interlocutory application FDN17, Mr Mitchell for the plaintiff informed me that the plaintiff would bring an application for the appointment of Mr Eric Lauro as litigation guardian under the District Court Rules.
I am prepared to entertain that application. Mr Mitchell informed me that he was prepared to file the application and supporting affidavit by close of business today and he sought an early hearing of that application. I am prepared to accede to that application in light of all of the matters that I have canvassed in these reasons. In particular, it is necessary to emphasise the importance of keeping this action moving towards a conclusion as quickly as possible. This is because of the age of the claim generally, the effluxion of time and its effect on memories, the delays that have already occurred and the health of the defendant. I am also satisfied that the date of an early hearing will allow sufficient time for preparation to the defendants. And Mr Eric Lauro volunteered to me that this possibility had been raised previously. It is not a new matter for him.
Mr Eric Lauro informs me that he has made an approach to JusticeNet but that is not a matter that requires further consideration from me here. It is sufficient to say that this suggested approach is something that he has previously been required to consider.
I intend to make orders and directions in relation to that application at the end of these reasons for hearing of the plaintiff’s application on 7 February 2014.
Mr Eric Lauro has informed me that the date of 7 February 2014 at 4:30pm is not convenient to him. The reason he gave was that he would need to attend to his father, the defendant. I questioned Mr Eric Lauro about what particular duty he may have had on that day. He was not able to state a duty but said that it is his custom to attend to his father’s needs. I pointed out to Mr Eric Lauro that he had attended this Court for several hours for the purpose of this directions hearing. I am not satisfied that there is any proper reason proffered by Mr Eric Lauro, connected with the defendant, that would lead me to amend the date of 7 February 2014, if the plaintiff brings such application. There is no suggestion made that Ms Silvana Lauro or another family member could not stand in his stead. Neither was it said that some other independent arrangement could not be made.

I turn then to the defendant’s filed pleading, called “Defence, Set Off and Counterclaim” in relation to document FDN16 filed on behalf of the defendant. Earlier in these reasons I identified that, with the agreement of both parties, I would express some preliminary views in relation to that pleading. I do so here but emphasise that what I set out here is not a judgment on the status of the pleading. Rather it is an intimation of my thoughts to assist the parties and especially the defendant. It is entirely a matter for the parties about what is to occur henceforth. It behoves me to attempt to avoid disputes about pleadings. I refer in particular to para.4 and 5 of the pleading and also the content of the set-off and counterclaim.
It is first to be recalled that the pleadings of the defendant’s defence are required to comply with R100 of the District Court Rules. However, the position of the defendant is that he wishes to plead a case against the plaintiff firm based upon the alleged failures of that firm in the course of the retainer. The consequence of those assertions then inform the content of the set-off and the counterclaim in which the defendant becomes a plaintiff by counterclaim. It is therefore necessary for the defendant’s pleading of the alleged breaches of the retainer to plead the relevant facts to support that plea. Those facts form the basis of the counterclaim. These comments are made in that background.
In para.4.2 of the pleading there is an allegation of significant failures and anomalies of Minter Ellison during the course of their retainer by the defendant. In my view that is to be understood as a pleading of a breach of retainer or alternatively or together with an allegation of a breach of duty of care by those solicitors. Any allegation of breach of retainer or any allegation of breach of duty of care, must be specified with sufficient particularity, so that the party against whom the allegation is made, understands the case being made against it.[1] That is a fundamental requirement of the District Court Rules when dealing with this particular situation.
[1] 6R 98(2)
The particularity supplied in relation to this allegation by the defendant, is in the following terms:
‘Particulars’
Specifics of known failures and anomalies, have been provided to Grant Mitchell orally and in writing and cannot be fully confirmed until Minter Ellison delivers up to Lauro, all files and renders full account of moneys and property and Lauro is able to receive and obtain legal advice.
It then goes on to plead alleged anomalies and there are then set out four major sub-paragraphs, and in respect of one of those sub-paragraphs, there are 11 sub sub-paragraphs. Many of these subparagraphs concern allegations based upon the failure to comply with a number of solicitors’ professional rules. The pleadings generally allege a failure to comply with the relevant professional rule but do not then plead a factual basis for that plea.
On the question of breach of retainer, it is necessary that a specific allegation of fact be made about the circumstances of the retainer, the obligations under the retainer, the breach alleged and the consequences of any breach. Those matters may be rolled up into one pleading but they are matters that still need to be pleaded. So also in relation to a question of breach of duty, and in particular how it is said that the conduct of the solicitors has departed from the conduct ordinarily to be expected of a solicitor in the position of the plaintiff and then the consequences of those failures.
The second matter to be raised is that the defendant purports to reserve to himself the right to confirm the pleadings after files have been delivered up to him. As I have made known to Mr Eric Lauro today, files will not be delivered up to the defendant but files must be made available for inspection. That is a fundamental right for the defendant Mr Natale Lauro and is a right that he should exercise. In my view, if it was necessary to review the files in order to make good the allegations of breach of retainer and breach of duty, then that inspection should have taken place well before this time. I am informed by Mr Mitchell from the bar table that an offer has been extant since at least November 2013, for the defendant to come and review the files. Mr Eric Lauro put in contest, the factual assertion made by Mr Mitchell, however, it is not necessary for me to resolve that matter. What is important is that access should be taken to those files at any time such a request is made so that any allegation, if it can be made out, is properly pleaded.
Thirdly, the plea states that the firm of solicitors is required to render a full account of moneys and property. As I pointed out to Mr Mitchell and to Mr Eric Lauro, a pleading of this nature is normally associated with the relationship between two parties which can be (but is not necessarily) fiduciary in nature. It is usually contractual in nature. It assumes, for example, mutual debits and mutual credits existing between parties, so that on a proper account being taken, a decision is made whether and if so, how much is owed by which party to the other. Such a pleading does not lend itself ordinarily or at all to the relationship between solicitor and client, save and except in the circumstances of accounting under trust account obligations, insofar as trust moneys have been dealt with on behalf of a client by a firm of solicitors. That relationship and arrangement does not ordinarily lend itself to a description of making “…a full account of money(s) and property…” (my emphasis). An account of property, is an account in respect of a matter other than money. It is a most unusual pleading to see in a proceeding between a solicitor and a former client. It is not necessary that I say more about it at the moment but it is a matter that requires revisitation and review.
The pleading then goes on to say that no further pleadings can be made until Mr Lauro is able to receive and obtain legal advice. The clear indication given to me today by Mr Eric Lauro is that no legal advice has been obtained to date on this matter. An approach has been made to JusticeNet. The fate of that approach is yet to be decided and Mr Eric Lauro is to see JusticeNet on or about 5 February 2014. That date or that arrangement may change and that is not a matter for me here. That is a matter for Mr Natale Lauro through Mr Eric Lauro.
Despite this, it appears that no formal legal advice has been obtained from solicitors by the defendant. Thus, the approach of the defendant has been to file a Defence, Set Off and Counterclaim in which some defences are pleaded that in turn rely on disclosure. Depending on what the defendant, a layman, makes of that disclosure, he will then give consideration to retaining solicitors.
I refer to para.4.2.4 of the pleadings where there is a series of allegations of contravention of applicable legal professional conduct and practice rules. Those are matters of similar nature to the breach of retainer and breach of duty of care issues that I have discussed above. They are matters that would be required to be sufficiently pleaded in order for the solicitors to be clearly aware of the matters alleged against them.
I turn then to the set-off and counterclaim. Para.12.7 pleads that the defendant is prejudiced before this Court by the fact that the firm of solicitors remain on the file despite advising that applications to cease to act would be filed in or about December 2012. I am informed today by Mr Mitchell that applications to cease to act have been filed by the solicitors, as would be expected, and that those matters are in contest. They are put in contest by the defendant. It is therefore a peculiar pleading and to an extent is inconsistent. The defendant complains about the fact that the solicitors remain on particular Court files as the solicitors for the defendant, yet, according to the plaintiff that is only the case because the application of those solicitors to be removed from the file as the solicitors for the defendant has been resisted by the defendant.
Insofar as it may have any relevance, Mr Eric Lauro has made it very clear to me from the bar table that he has not represented his father's interests in contesting the application by the solicitor to be removed from the file as a solicitor.
Paragraph 12.8 of the pleadings alleges that the firm of solicitors is acting (defamatorily) against Lauro and members of his family and the particulars pleaded are as follows:-
Minter Ellison has caused details of the present dispute to be published in a Supreme Court judgment delivered in February 2013 (Marble House matter); and through the issue of the within proceedings against Lauro and his wife, and Magistrates Court proceedings against Lauro's son, Eric (with resultant online and newspaper publications of these actions) notwithstanding the facts that Lauro has not refused to pay fees after a full and independent review and that Lauro's wife and son were at not time signatories to the retainer.
The suggestion that a judgment of the Supreme Court could ever amount to defamatory conduct is a novel proposition. If there is a pleading to be made in this respect then ordinarily it would be made on another basis and not in the tort of defamation.
Paragraph 8 sets out a pleading of estoppel without pleading any factual basis for the estoppel. Paragraph 3 purports to deny the termination of the retainer between solicitors when that is a question of fact and fails to recognise that solicitors do not have to act for clients any longer than the solicitors wish particularly in circumstances where the relationship between solicitors and clients has broken down. This is to be seen in the background of the comments that I have already made about the retainer of the firm of solicitors.
Paragraph 5 alleges aggravating features without particularity of the aggravation. Paragraph 7 pleads forum issues in circumstances where no private or public international law issues arise. These are all matters for consideration by the defendant. The agitation of them is a matter for the plaintiff in the end.
The formal orders then are:-
1.That insofar as it is advised, if the plaintiff wishes to make any application for the appointment of Mr Eric Lauro of 107 Stradbroke Road, Rostrevor, Assistant Director, to be appointed as litigation guardian for the defendant Mr Natale Lauro pursuant to rule 79 of the District Court Rules, that such application should be filed and delivered with any supporting affidavit by close of business today, 29 January 2014.
2.That any responding affidavit to be filed by Mr Eric Lauro shall be filed and delivered by close of business on Wednesday, 5 February 2014.
3.I set for hearing any application brought by the plaintiff under rule 79 of the District Court Rules for 4.30 p.m. on 7 February 2014, one hour set aside.