Slater and Gordon Limited v Kliger Partners Lawyers

[2010] VCC 487

IN THE COUNTY COURT OF VICTORIA Unrevised

Not Restricted

AT MELBOURNE
CIVIL DIVISION
COMMERCIAL

GENERAL DIVISION

Case No. CI-09-01434

SLATER & GORDON LIMITED	Plaintiff
(ACN 097 297 400)
v
KLIGER PARTNERS LAWYERS	First Defendant
and
BARFLY’S NOMINEES PTY LTD	Second Defendant
(ACN 080 123 057)
and
TONY HASHEM	Third Defendant

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JUDGE:	HIS HONOUR JUDGE SHELTON
WHERE HELD:	Melbourne
DATE OF HEARING:	18 March 2010
DATE OF JUDGMENT:	23 April 2010
CASE MAY BE CITED AS:	Slater & Gordon Limited v Kliger Partners Lawyers & Ors
MEDIUM NEUTRAL CITATION:	[2010] VCC 0487

REASONS FOR JUDGMENT

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Catchwords: PRACTICE AND PROCEDURE – Action against firm – need to identify partners – County Court Civil Procedure Rules 2008, Order 17.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr L MacGowan	Slater & Gordon Limited
For the Defendants	Mr S Warne	Kliger Partners Lawyers
HIS HONOUR:

1          This application principally concerns the appropriate method of service upon the first defendant, a firm of solicitors.

Background

2          From about November 2004, the plaintiff acted as solicitors for the second defendant and the third defendant, a director of the second defendant, in a proceeding before the Victorian Civil and Administrative Tribunal (“VCAT”). In early 2006, the first defendant took over the conduct of the proceeding on behalf of the second and third defendants from the plaintiff. The basis upon which this occurred is set out in a letter from the defendant to the plaintiff dated 14 February 2006. The construction of this letter and its meaning are in dispute. The VCAT proceeding was settled and “the fruits of litigation”, $56,994.56, is presently being held in the first defendant’s trust account.

3          This proceeding was issued on 8 April 2009. The Writ was served on 16 April 2009 upon Darren Frank Cain, then and now a partner of Kliger Partners. Judgment was entered in default of appearance against the first defendant on 13 May 2009. The plaintiff conceded that judgment had been entered irregularly, and on 10 December 2009, his Honour Judge Anderson set aside the judgment. His Honour gave leave for the plaintiff to file and serve an Amended Statement of Claim which was to state the “date or dates upon which each cause of action against each defendant is alleged to have arisen”.

4          An Amended Statement of Claim was served on 5 January 2010 upon Aitan Schmideg, a current partner of the first defendant. The causes of action pleaded against the first defendant are conveniently summarised in a facsimile from the first defendant to the plaintiff dated 25 March 2010:

“(a)	breach of the agreement said to be associated with a letter dated 14 February 2009 (which we will refer to as ‘the controversial letter’) from the firm which was trading as Kliger Partners on that date;
(b)	breach of resulting trust said to be associated with that letter;
(c)	breach of an agreement said to have been made between the plaintiff and the ‘first defendant’ on 11 October 2007 (see para 14 of the amended statement of claim); and
(d)	an application in equity to perfect the fruits or litigation lien (see para 23 of the amended statement of claim).”

5          A practical problem here is that between 14 February 2006 and the present there have been eight different partnerships trading as Kliger Partners. Over this period, partners have retired and others have been admitted to the partnership.

6          On 19 January 2010, a Conditional Appearance was filed for “Kliger Partners 2006/2007” by Kliger Partners. In accordance with Rule 8.08(3) and (4) of the County Court Rules of Civil Procedure 2008 (“the Rules”), a Summons was issued on 2 February 2010 seeking an order that the Writ be set aside or, alternatively, that service of the Writ be set aside or, alternatively, that the proceedings be permanently stayed. The Summons was stated to be issued on behalf of eleven applicants, being those who practised under the firm name, Kliger Partners on 14 February 2006, the date of ‘the controversial letter’ and 11 October 2007, the date of the alleged agreement.

7          I was told on the hearing of the application that on 16 March 2010, those who presently practise under the name Kliger Partners filed a Conditional Appearance. I have been unable to locate this upon the Court file. Thus, as Mr Warne, who appeared for the defendants, outlined in a written submission in support of his application, three firms who have traded as Kliger Partners have entered conditional appearances:

(a)	The firm which traded as Kliger Partners at 14 February 2006, the date of the controversial letter;
(b)	The firm which traded as Kliger Partners at 11 October 2007, the date of the alleged agreement;
(c)	The firm which presently trades as Kliger Partners which is the controller of the fruits of the litigation.

8          The major issue before me was whether the plaintiff was obliged to nominate the partners of Kliger Partners whom it was suing or whether it could simply sue “Kliger Partners” and leave the partners of the firm at various times to determine who was being sued and who should appear to the Writ.

9          Unfortunately, an air of distrust, excessive technicality and lengthy correspondence has pervaded this proceeding over the sum of $56,994.56.

10        In this proceeding, the plaintiff also claims the sum of $113,707.01 against the second and third defendants for legal fees outstanding. Unconditional Appearances and Defences have been filed by the second and third defendants.

Relevant Legal Principles and their Application

11 Order 17 of the Rules governs proceedings involving partners.

12        In particular, Rule 17.01(1) provides:

“Where two or more persons carry on business as partners within Victoria, a proceeding may be commenced by or against them in the name (if any) of the firm of which they were partners when the cause of action accrued.”

[my emphasis]

13        No doubt Judge Anderson had this provision in mind when he ordered, on 10 December 2009, that the Statement of Claim should state when each cause of action against each defendant was alleged to have arisen.

14        As to service on the defendants, Mr Warne, who appeared for the defendants who have entered appearances, relied upon Union Bank of Australia Ltd v Lohmann & Co. [1916] VLR 530, where service of a Writ was set aside as the defendant firm was no longer carrying on business in Victoria as required by the then Rule. As appears, Rule 17.01(1) similarly requires the carrying on of business within Victoria. Mr Warne submitted that here, the earlier partnerships trading as Kliger Partners had been dissolved and therefore the partners of those earlier firms could not be sued under the name Kliger Partners.

15        A more liberal interpretation was adopted in Madden v Kirkegard Ellwood & Partners [1983] 1 Qd R 649. The Full Court held that an action could be brought against a firm in its name even after dissolution of the partnership, provided the cause of action had accrued before dissolution. The Court noted that Hood J, in Union Bank of Australia, had not been referred to a relevant English authority.

16        Mr Warne conceded that I was not obliged to follow the decision of Hood J. In my view, it is appropriate that I follow the more recent Full Court authority of Madden, which results in a more sensible outcome. I feel it is inappropriate to impose upon the plaintiff the burden of having to determine who the partners of Kliger Partners were at any particular time and then to serve process upon them accordingly when such information is in the knowledge of the partners of Kliger Partners.

17        The partners of the firm at the relevant times have then appeared as provided for in Rule 17.04.

18        Mr Warne sought to rely upon Rule 17.03(3), which provides:

“Where a partnership has to the knowledge of the plaintiff been dissolved before the proceeding against the partners has commenced, the originating process shall be served on every person sought to be made liable in the proceeding.”

19        He submitted that the plaintiff was well aware of the dissolution of the earlier partnerships. He referred to paragraph 9 of the affidavit of Darren Frank Cain sworn 8 December 2009. Cain deposes that many letters and facsimiles were forwarded by Kliger Partners to the plaintiff which indicated who the partners of Kliger Partners were. He cited, by way of example, a letter of 22 August 2008. This letter, however, only refers at the foot of the first page to “principal lawyers” as well as a consultant, a special counsel and senior associates. It was not, in my opinion, the obligation of the plaintiff to determine whether “principal lawyers” was synonymous with partners. Rule 17.03(3) therefore does not assist the plaintiff.

Other Matters

20        Although no submissions were made to me on the point, it would appear that Kliger Partners Lawyers should be described as “Kliger Partners Lawyers (a firm)” – see Williams ‘Civil Procedure Victoria’, at paragraph 17.0.1.25. I am prepared to give the plaintiff leave to amend the Writ and Statement of Claim accordingly.

21        The possibility of determining some preliminary matters pre-trial, having a staged trial or payment into court of the sum of $56,994.56 pursuant to Order 12 or Order 79 of the Rules was canvassed on the hearing of the application and in correspondence. Although initially attracted to such an approach, in the end, given the history of this matter, I think it preferable to set the matter down for a trial at the earliest possible date.

Conclusion

22        Proper service has been effected upon the first defendant and the appearances which have been entered should stand unconditionally.

23        I will hear from the parties on the appropriate form of orders to make. The second and third defendants will need to be involved so far as orders with respect to interlocutory matters are concerned.

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