Sampson v Gluche
[2009] SASC 222
•31 July 2009
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
SAMPSON & ORS v GLUCHE
[2009] SASC 222
Judgment of Judge Withers a Master of the Supreme Court
31 July 2009
STATUTES - ACTS OF PARLIAMENT - ENFORCEMENT OF STATUTORY RIGHTS AND REMEDIES
Legal Practitioners Act 1981 s 39, applied.
Danielsen v Waldowski [2008] SASC 27; Boscaini Investments Pty Ltd & Ors v The Corporation of the City of Kensington & Norwood [1999] SASC 327; William David Shircore & Anor v Andersons (Reg) 22 March 1996, Judgment No S5513, considered.
SAMPSON & ORS v GLUCHE
[2009] SASC 222
JUDGE WITHERS. On 10 February 2009 the seven plaintiffs in this matter applied for an order pursuant to s 39 of the Legal Practitioners Act 1981 (“LPA”) that the defendant, who was their former solicitor, deliver up to their new solicitor the documents he held in relation to their various claims for damages. An interlocutory summons was issued on the same day seeking relief in those terms.
A supporting affidavit was filed on behalf of the plaintiffs by their new solicitor which exhibited authorities that he had received from each of the plaintiffs authorising him to assume conduct of their claim from the defendant. The forwarding of those authorities to the defendant by letter had commenced on 10 July 2008, with some being sent on 11 July, 22 July, 5 August, 19 September and 9 December 2008. Each letter was accompanied by an authority in the same terms. The authority was as follows:
I, [client] of [address], in the State of South Australia HEREBY AUTHORISE [former solicitors] to release and forward to my present solicitors [present solicitors], my entire file and associated documents which relate to a motor vehicle collision which occurred on [date].
I FURTHER INSTRUCT [former solicitors] to cease all work on my file and to ensure that all future correspondence or contact with me, is directed through [new solicitors] and not to me personally.
I HEREBY INSTRUCT [new solicitors] to pay the reasonable Solicitor/Client costs and disbursements of [former solicitors] upon conclusion of my claim and from the proceeds of my claim.
DATED this ……… day of …………. 2008
Signature [client]
[Signature new solicitor]
The letter from the new solicitor commonly sought that the former solicitor provide an account for outstanding solicitor/client costs and disbursements and noted that the new solicitors were instructed to attend to payment of reasonable costs and disbursements on resolution of the matter. It sought transfer of the files as soon as possible to ensure that progress of the claims was not unduly delayed. All matters were motor vehicle accident personal injury claims.
The defendant responded by forwarding an irrevocable authority and direction which he required to be executed by each of the individual plaintiffs and by the new solicitor before he would release the papers. The form of that irrevocable authority and direction was in the following terms:
IRREVOCABLE AUTHORITY AND DIRECTION
IN CONSIDERATION of my former solicitors [former lawyers] agreeing to forebear recovery of any legal fees for work undertaken in relation to my claim for damages as a result of a motor vehicle accident in which I was involved on [details] until finalisation of my said claim, I [plaintiff] HEREBY IRREVOCABLY AUTHORISE AND DIRECT my lawyer [new lawyers] to receive into trust all settlement monies to be paid to me in respect of my said injury claim and to pay my former solicitors [former lawyers] the sum of [specified amount] out of the proceeds of any such settlement monies or any other matters for which he may be acting for me in preference to all other payments other than any statutory payments and to notify [former lawyers] should I take any action either by way of termination of instruction or any other means that is inconsistent with the foregoing. Further, I ACKNOWLEDGE that I am indebted to [former lawyers] for the said sum of [specified amount] and that payment of that amount is not contingent upon the outcome of my said injury claim.
………………………………………
[Plaintiff’s signature]
Dated this …………… day of ………………… 2009
I [new solicitor] hereby undertake to accept the abovementioned irrevocable instructions from my client [plaintiff’s name] and act consistent with the same to ensure payment of the said outstanding fees to [former lawyers] out of the proceeds of my client’s settlement monies. Further, I undertake to accept personal responsibility for the payment of all disbursements incurred by [former lawyers] in respect of my client’s claim and to reimburse [former lawyers] immediately upon receipt of my client’s file the sum of [fixed dollars] being for disbursements already paid by [former lawyers]. Further, I undertake to advise [former lawyers] if my client [plaintiff’s name] should take any action either by way of termination of instructions or any other means that is inconsistent with the above irrevocable authority and direction[.]
[Signature of new solicitor]
Dated this ……………day of …………………. 2009
A like proposed irrevocable authority and direction was forwarded in respect of each plaintiff.
In the meantime, correspondence in the nature of letters and emails had passed between the new solicitors and the former solicitors as to reasonable requirements to enable a transfer of the files.
In a responding affidavit filed on behalf of the former solicitors, it was made apparent that a Mr Fairclough, who had been employed by the former solicitors as a claims consultant, had finished his employment with that firm and then been employed by the new solicitors. The various plaintiffs were persons in the management of whose claims Mr Fairclough had been involved at the former solicitors. It appears that those plaintiffs were seeking to follow Mr Fairclough to his new employment.
The thrust of the correspondence was that the plaintiffs were not prepared to agree the figures claimed by the former solicitor for costs, although they were willing to agree to pay reasonable solicitor/client costs and disbursements. Further, the new solicitor was not prepared to undertake to immediately reimburse the former solicitors the amounts that had been paid out by them for disbursements on any particular file or to guarantee payment of same.
The transfer of the files seemed to deadlock in that position. This is so notwithstanding that Mr Simon Lane, a well known mediator, became involved in endeavouring to assist to resolve the dispute in August 2008. This resulted in a meeting between the new solicitors, the former solicitors and Mr Lane on 25 August 2008 and a further meeting on 29 August 2008.
The former solicitors remained insistent upon the completion of authorities in the terms already set out earlier in these reasons. On 21 October 2008 the matter remained unresolved. Eventually, on 29 December 2008 the former solicitors wrote to the new solicitors advising that as the plaintiffs had not signed the irrevocable authorities provided, the former solicitors would retain the file and would issue proceedings for the recovery of their fees. The former solicitors sought confirmation from the new solicitors that they had instructions to accept service – see FDN 4AE.
On 28 January 2009 the new solicitors wrote to the former solicitors asking that they withhold the issue of proceedings and confirming that they were in the final stages of obtaining instructions to issue proceedings in the Supreme Court pursuant to s 39 of the LPA 1981 – see FDN 4AK.
On 6 February 2009 the former solicitors wrote in response and in so doing said:
…
We suggest that the terms upon which we have advised you that we are prepared to release the file are completely reasonable and invite you to set out in writing why you disagree. Should proceedings be issued, we will set out in affidavit why we are not confident to release the file on the terms as contained in the authority originally sent by you.
[See FDN 4AL]
Proceedings were issued on 10 February 2009. When the matter first came before the court on 27 February 2009, the plaintiffs were represented by their new solicitor and the defendant by senior counsel. The defendant intimated a jurisdiction point if the matter was to be argued. I expressed the view that the practitioners had a considerable professional responsibility to resolve this matter for the benefit of the clients, and directed that there be a settlement conference on 10 March 2009.
A conference was held on that date. It was reported to the Court that as a result of the conference an agreement had been reached and an adjournment was sought to enable new authorities to be drawn and executed and the files transferred.
The final form of authority agreed between the parties is shown in FDN 5C and is in the following terms:
IRREVOCABLE AUTHORITY AND DIRECTION
IN CONSIDERATION of my former solicitors [former lawyers] agreeing to forebear recovery of any legal fees (not including disbursements) for work undertaken in relation to my claim for damages as a result of a motor vehicle accident … I, [plaintiff] HEREBY IRREVOCABLY AUTHORISE AND DIRECT my lawyer [new lawyers] to receive into trust all settlement monies to be paid to me in respect of my said injury claim and to pay my former solicitors [former lawyers] such fees as are agreed, or failing agreement as are determined upon taxation out of the proceeds of any such settlement monies. Further, I IRREVOCABLY AUTHORISE AND DIRECT [new lawyers] to retain out of the said settlement funds the sum of [$ specified amount] in trust until the amount payable to [former lawyers] has been determined and to notify [former lawyers] should I take any action either by way of termination of instructions or any other means that is inconsistent with the foregoing.
Signed: [plaintiff’s signature]
Dated this…….. day of …………….. 2009
I [new lawyers] hereby undertake to accept the abovementioned irrevocable instructions from my client [plaintiff] and act consistent with the same to ensure payment of outstanding fees to [former lawyers] out of the proceeds of my client’s settlement monies. Further, I undertake to advise [former lawyers] immediately if my client [plaintiff] should take any action either by way of termination of instructions or any other means that is inconsistent with the above irrevocable authority and direction, and so far as is reasonable to retain my client’s file received from [former lawyers] in the condition in which it is received and to make the same available to [former lawyers] in the event that there is a requirement for their fees to be taxed.
Signed: [new lawyer’s signature]
Dated this ………day of ……………2009
Accordingly, the substantial issue was resolved by agreement. The form of the final authority is different in significant respects from that originally proposed by the defendant. There is no longer an insistence upon the quantum of their costs being agreed, nor an insistence upon immediate payment of disbursements that had been paid out by the defendant in respect of the particular plaintiff’s file. Nor is there a requirement that the new solicitor guarantee payment for all disbursements incurred by the defendant, whatever the outcome of the case.
The final agreed authority is a considerable advance from the defendant’s point of view on the original authority offered by the plaintiffs, but in my view the differences between that which the defendant was insisting on before the settlement conference and the eventual agreed authority, are significant. The eventually agreed form of authority seems to me to appropriately protect the defendant’s interests and to be reasonable from the plaintiff’s point of view.
Section 39 of the LPA provides as follows:
39—Delivery up of legal papers
(1)The Supreme Court may, on the application of any person, order a legal practitioner or former legal practitioner to deliver up documents—
(a) held by the practitioner or former practitioner on behalf of the applicant; or
(b) relating to proceedings taken or work done by the practitioner or former practitioner on behalf of the applicant.
(2)The powers conferred by subsection (1) may be exercised notwithstanding the existence of a lien on the documents.
(3)An order may be made under this section on such terms and conditions as the Supreme Court thinks fit and, in particular, on conditions protecting the rights of the legal practitioner or former legal practitioner to costs for legal work done by the practitioner on behalf of the applicant.
In many ways, the issue on costs confronting the court in this matter is similar to the issues the court has to consider on a discontinuance. I note that in the matter of Danielsen v Waldowski [2008] SASC 27 at paragraphs [15]-[16] I refer to earlier authorities in relation to costs in such circumstances and set out in paragraph [16] the principles and guidelines that will assist the court in exercising its discretion in such matters. I take those principles and guidelines into account in assessing this matter.
The most relevant principles referred to in Danielsen and which flowed from the decision Boscaini Investments Pty Ltd & Ors v The Corporation of the City of Kensington & Norwood [1999] SASC 327 are those in subparagraphs (3) and (4) of paragraph [16]. The underlying considerations are the reasonableness of the parties in commencing, continuing to defend the proceedings. The principles set out in paragraph [16] of the Danielsen decision are:
(1)Where neither party desires to proceed with litigation the Court should be ready to facilitate the conclusion of the proceedings by making a cost order.
(2)It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a Court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial. This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue.
(3)Depending on circumstances, where the applicant has acted reasonably in commencing proceedings, has an arguable case, and it is reasonable to conclude that the respondent has acted in consequence of the commencement of proceedings, the Court may be prepared to make a costs order in favour of the applicant.
(4)In a particular case it might be appropriate for the Court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation.
(5)Where the proceedings terminate after interlocutory relief has been granted the Court may take into account the fact that that interlocutory relief has been granted. However the grant of interlocutory relief is not conclusive and will be of no force in cases where it is not possible to assess the prospects of success.
(6)The Court will not make an order where the subject matter of the action has ceased to exist through the lawful action of a person who is not a party to the proceedings.
I was referred to a decision of His Honour Judge Burley, a Master of the Supreme Court, on s 39 of the LPA, being William David Shircore & Anor v Andersons (Reg), 22 March 1996, judgment No. S5513. In that matter, his Honour reviewed the common law authorities on a solicitor’s lien which he found to be helpful in presently determining the lien that might be held by a solicitor after the relationship of solicitor and client had ceased. His Honour found that the effect of the common law authorities was that if it is the client who terminates the retainer then the solicitor has an unqualified lien and at common law the court had no power at all to interfere with the exercise of that lien. If on the other hand, the solicitor terminates the retainer then he retains a qualified lien and the court can, and would, order at common law that the solicitor without prejudice, yield up his papers for use in the litigation to the solicitor who replaced him on the undertaking of the new solicitor to return the papers to the old solicitor if there are issues in relation to costs.
Judge Burley noted that the common law approach to solicitors liens was not determinative of the exercise of the discretion under s 39 of the LPA but was a matter to be taken into account by the court. In my view, the provisions of s 39(2) of the LPA make it clear that the powers to make orders for delivery up of documents may be exercised notwithstanding the existence of any lien, whether it be qualified or unqualified. The Court is provided with a much wider discretion than that which existed at common law. That discretion should be exercised according to the interests of justice in the particular circumstances.
The Professional Conduct Rules of the Law Society of South Australia, which do not have the force of law but which may be relevant to whether or not a practitioner breaches his professional obligations, provide for the transfer of files between solicitors in R 23. Rule 23.3 provides that if the client has terminated the first practitioner’s engagement, then the first practitioner may retain possession of the documents until the practitioner’s costs are paid, or their payment to the practitioner is satisfactorily secured.
Rule 23.5 of those Rules provides for circumstances where a practitioner receives a client’s documents from another practitioner pursuant to an agreement between the client and both practitioners. The rule provides that the practitioner receiving the documents will pay the first practitioner’s costs from money recovered on the client’s behalf in respect of the matter to which the documents relate, and that he or she must do all things which are reasonably practicable on the practitioner’s part to ensure compliance with the agreement.
In my view, the primary duty of a practitioner whose client has terminated his instructions is to facilitate, so far he or she reasonably can, the transfer of the client’s papers to a newly instructed solicitor. The former practitioner is entitled to take proper steps to secure his fees having regard to the circumstances of the particular matter, but is not entitled to insist upon conditions that are unreasonable in those circumstances.
These particular cases are all motor vehicle accident personal injury claims. They are all cases where the first practitioner should have been well able to assess the prospects of success of the various plaintiffs and the likelihood therefore of the provision of monies through settlement or otherwise from which the practitioner’s fees and disbursements could be paid. In such matters, in my view, it is not appropriate to insist upon agreement by the former client of the quantum of the first practitioner’s professional fees, nor of the quantum of the first practitioner’s disbursements. Nor is it appropriate to insist upon payment by the new solicitor to the former solicitor of the disbursements personally expended by the former solicitor in support of the client’s case or that the new solicitor undertake to pay disbursements incurred by the former solicitor in any event.
The final authority agreed between the parties is appropriate, having regard to the nature of the client matters. Had an authority been put forward in those terms prior to the institution of these proceedings there is, in my view, no reason on the evidence to suppose that the plaintiffs would have rejected same. The issue by the plaintiffs of these proceedings when they did, in the circumstances that they did, was reasonable. The outcome was reasonably swiftly achieved and the transfer of the plaintiffs’ files has apparently resulted.
In all the circumstances it is appropriate that the defendant should pay the plaintiffs’ costs of and incidental to the application. There are some seven plaintiffs in the matter. As a matter of practicality it would seem just and expedient that the costs of the application, once agreed or taxed, should be divided equally between the seven plaintiffs but I will hear the parties on that if necessary.
There will be a stay on executing this order for costs until such time as the individual claims of each plaintiff have been finished and they have been put in funds to pay the proper fees of the defendant. Costs payable by the defendant in respect of this action can then be offset against proper payment of the defendant’s fees.
For the foregoing reasons, the orders of the court will be:
1.That the defendant is to pay the plaintiffs their costs of and incidental to the action.
2.That the entitlement of each plaintiff to costs shall be one-seventh of the overall costs taxed or agreed, as appropriate to the conduct of the action with liberty to apply as to this order.
3.That execution of the costs order is stayed until such time as each individual plaintiff has resolved their substantive claim, such that the fees outstanding to the defendant are able to be paid by agreement or after adjudication, at which time costs payable pursuant to this order will become payable by the defendant to that plaintiff.
Further consideration adjourned for draft minutes of order to be prepared and filed by the plaintiffs.