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Rafferty v Time 2000 West Pty Ltd (No 3)

Rafferty v Time 2000 West Pty Ltd (No 3)

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Case Copied 9 July 2009 32 min read

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FEDERAL COURT OF AUSTRALIA
Rafferty v Time 2000 West Pty Limited (No 3) [2009] FCA 727
COSTS – application by applicants that second to fifth respondents pay costs forthwith – unsuccessful application by second to fifth respondents for transfer of proceeding to other Registry of Court – successful application by applicants for freezing orders against second to fifth respondents – unsuccessful application by second to fifth respondents for leave to appeal from freezing orders – successful application by second to fifth respondents for vacation of trial date with order made that they pay applicants’ costs thrown away as result of vacation
Held: order that costs be payable forthwith refused – application for adjournment not delaying tactic or result of reprehensible conduct and delay not of substantial order.
LEGAL PRACTITIONERS – costs – lien – application by cross-claimants that cross-respondent produce papers it holds – whether client or solicitor who terminated retainer – general rule where solicitor terminates retainer that solicitor required to produce client’s papers upon undertaking that they will be returned to solicitor upon completion of proceeding – exception to general rule – scope of exception
Held: order for production made – general rule where solicitor terminates retainer should be applied.
Trade Practices Act 1974 (Cth) s 51AD
Federal Court Rules O 25A, O 62 r 3
Trade Practices (Industry Codes — Franchising) Regulations 1998 (Cth)
A v B [1984] 1 All ER 265 distinguished
Airservices Australia v Jeppesen Sanderson Inc [2006] FCA 906 referred to
Australian Securities and Investments Commission v Mining Projects Group Ltd (No 3) [2008] FCA 952 referred to
Gamlen Chemical Co (UK) Ltd v Rochem Ltd [1980] 1 WLR 614 followed
Heslop v Metcalfe (1837) 3 My & Cr 183; 40 ER 894 discussed
In the Matter of an Application by Weedman (unreported, Drummond J, 17 December 1996) referred to
IO Group Inc v Prestige Club Australasia Pty Ltd [2008] FCA 1147 referred to
Ismail v Richards Butler (a firm) [1996] QB 711 distinguished
Jianshe Southern Pty Ltd v Cooktown Pty Ltd (No 2) [2007] FCA 903 referred to
McKellar v Container Terminal Management Services Ltd [1999] FCA 1639 referred to
Rafferty v Time 2000 West Pty Ltd [2008] FCA 1925 referred to
Rafferty v Time 2000 West Pty Ltd (No 2) [2008] FCA 1931 referred to
Robins v Goldingham (1872) 13 LR Eq 440 discussed
Spotwire Pty Ltd v Visa International Service Association (No 2) [2004] FCA 571 referred to
Starke v Dennett [2008] 2 Qd R 72 referred to
Time 2000 Systems (Australia) Pty Ltd ACN 127 853 614 v Rafferty [2009] FCA 216 referred to
Vasyli v AOL International Pty Ltd (unreported, Lehane J, 2 September 1996) referred to
PATRICK CAMPBELL RAFFERTY, SANTORA HOLDINGS PTY LIMITED ACN 128 467 550 and KARAVILLE HOLDINGS PTY LIMITED ACN 009 439 178 v TIME 2000 WEST PTY LIMITED ACN 127 893 270, TIME 2000 SYSTEMS (AUSTRALIA) PTY LIMITED ACN 127 853 614, TIME 2000 OPERATIONS (AUSTRALIA) PTY LIMITED, EMBLETON LIMITED (A COMPANY INCORPORATED IN…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] FCA 727
Decision Date: 9 July 2009

CaseChat Overview and Summary

Rafferty v Time 2000 West Pty Ltd (No 3) involved the cross-claimants seeking the production of documents from Madgwicks, a firm of solicitors that had previously acted for them. The dispute centred on the cross-claimants’ allegations that they suffered losses due to the negligence of Madgwicks in their legal advice and documentation related to the transactions in question. The cross-claimants sought damages and indemnity from Madgwicks. The legal issues before the court were primarily concerned with the scope and propriety of the document production order sought by the cross-claimants and the associated costs implications.

The court examined whether the document production order was justified given the nature of the claims and the role of Madgwicks in the litigation. The cross-claimants argued that the documents were necessary for them to effectively pursue their claims against Madgwicks. The court considered the precedent that such orders are generally appropriate in cases where they are essential for the fair conduct of the proceedings and where the documents sought are directly relevant to the issues in dispute. The court also weighed the importance of maintaining the confidentiality and integrity of the legal process, particularly given that the documents included communications between the parties’ solicitors and draft documents.

After reviewing the submissions and the relevant legal principles, the court concluded that the order for document production was proper. The court determined that the documents were necessary for the cross-claimants to effectively pursue their claims against Madgwicks. The court also noted the cross-claimants' undertaking to return the documents at the conclusion of the proceedings, which addressed concerns about confidentiality and misuse of the documents. Consequently, the court granted the cross-claimants' application for the production of documents. Additionally, the court ordered that the respondents pay the applicants’ costs of a specific notice of motion but refused to order that the costs be paid forthwith.

The final orders of the court were that the second to fifth respondents pay the applicants’ costs of the notice of motion dated 8 October 2008, and that Madgwicks produce all relevant documents to the cross-claimants within seven days, subject to the return of these documents at the conclusion of the proceedings. This decision underscores the balance between the need for comprehensive disclosure in litigation and the protection of sensitive legal communications.

Orders

Orders of the court

1. The second to fifth respondents pay the applicants’ costs of the notice of motion dated 8 October 2008.

2. Upon the undertaking of Cowell Clarke to return such documents at the conclusion of the within proceedings, Madgwicks produce to Cowell Clarke within 7 days all documents, including copies, which they hold in the following categories which relate to the within proceedings:

2.1 pleadings, affidavits, orders, transcript, reasons and all other documents filed at or generated by the Court;

2.2 discovered documents of all parties; and

2.3 all other documents held on file with respect to the within proceedings, including but not limited to communications between the parties’ solicitors, file notes of telephone conversations, draft documents, witness statements and advices.

Note:

Background

Background to the litigation

The order sought by the cross-claimants is as follows:“Upon the undertaking of Cowell Clarke to return such documents at the conclusion of the within proceedings, Madgwicks produce to Cowell Clarke within 7 days all documents, including copies, which they hold in the following categories which relate to the within proceedings:1.1pleadings, affidavits, orders, transcript, reasons and all other documents filed at or generated by the Court;1.2discovered documents of all parties; and1.3all other documents held on file with respect to the within proceedings, including but not limited to communications between the parties’ solicitors, file notes of telephone conversations, draft documents, witness statements and advices.”Background The cross-respondent acted as legal adviser for the cross-claimants in relation to the transactions which are the subject of the claim made by the applicants. It prepared the Heads of Agreement, the Joint Venture and Shareholders’ Agreement and the Rights Agreement. Members of the cross-respondent were involved in meetings held during the period leading up to the execution of the agreements. In addition, the cross-respondent was involved in the implementation of the agreements. Under the Rights Agreement, it received the licence fee of $1 million and was authorised to disburse it in the manner set out in the agreement. In substance, the cross-claimants claim in their cross-claim that, if they failed to comply with the provisions of the TPA, that resulted from negligent advice provided by the cross-respondent. There is also a claim based on s 75B of the TPA, but for present purposes it is sufficient to refer to the cross-claimants’ claim as a claim in negligence. The relief claimed is damages and an order that the cross-claimants be indemnified by the cross-respondent against any amount they are found liable to pay the applicants. The cross-respondent acted for the cross-claimants in this proceeding from the date it was commenced on 14 August 2008 to 1 May 2009. The relationship between the cross-claimants and the cross-respondent broke down in April 2009 and, on 1 May 2009, the cross-respondent filed a notice of ceasing to act for the cross-claimants in this proceeding. Before that date, the cross-respondent had written to the cross-claimants on 23 April 2009, terminating its retainer to act for the cross-claimant in the proceeding. It said that it did so because of outstanding fees and “our difficulty in obtaining instructions”. There is evidence before the Court as to outstanding fees, but no evidence of the alleged difficulty in obtaining instructions. The evidence before the Court is not precise as to the amount of the cross-respondent’s outstanding fees in relation to this proceeding. As far as accounts rendered are concerned, and doing the best I can, the outstanding fees seem to be in the order of $70,000. In addition, legal services have been rendered by the cross-respondent for which accounts have not yet been sent totalling approximately $120,000.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

BESANKO J

In my opinion, it is proper to make the order for production sought by the cross-claimants.Conclusion The respondents should pay the applicants’ costs of the notice of motion dated 8 October 2008. I refuse to order that those costs or the costs the subject of the other two orders identified by the applicants be paid forthwith. The cross-claimants’ application for the production of their papers should be granted.

Ratio Decidendi

Legal Principle Established

Established by: BESANKO J

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