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Smits v Roach

Smits v Roach

Case [2002] NSWSC 241 19 June 2002

Breach of Contract

Unconscionable Conduct

Abuse of Process

Commercial Law

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Reported Decision:
(2002) 42 ACSR 148
(2002) 55 NSWLR 166

New South Wales

Supreme Court

CITATION: Smits & Ors v Roach & Ors [2002] NSWSC 241

CURRENT JURISDICTION: Equity Division
Commercial List

FILE NUMBER(S): SC 50099/99

HEARING DATE(S): 11 - 14 March 2002
18 March 2002
20-21 March 2002

JUDGMENT DATE: 19 June 2002

PARTIES :

Leonardus Gerardus Smits (1st Pltf)
John Anthony Leslie (2nd Pltf)
Plantoy Pty Limited (3rd Pltf)
Walter Edward Roach (1st Def)
Valerie Anne Roach (2nd Def)
Winnote Pty Limited (In Liq) (6th Def)
Sydtech Pty Limited (In Liq) (7th Def)

JUDGMENT OF: McClellan J

COUNSEL : G Lindsay SC/W Haffenden (Pltfs)
J Sheahan SC/E Finnane (Defs)

SOLICITORS: Smits Leslie, Solicitors (Pltfs)
McCabe Terrill Lawyers (Defs)

CATCHWORDS: COMMERCIAL - maintenance and champerty - retainer agreement between solicitors and clients provided for payment of a percentage of any damages recovered in a litigation matter - negotiation between solicitors, clients and litigation funder - further agreement between solicitors and liquidator securing the time costs of the solicitors - application of the Legal Profession Act 1993 and Maintenance and Champerty Abolition Act 1993 - discussion of the common law of champerty - whether agreements were contrary to public policy - whether recovery on quantum meruit is permissible - whether the common law position in regards to enforceability of champertous agreements has been changed - whether commencement of multiple proceedings amounted to an abuse of process.

LEGISLATION CITED: Legal Profession Act 1987
Trade Practices Act
Fair Trading Act
Maintenance and Champerty Abolition Act 1993

CASES CITED: Denist v Freethy (1890) 24 QB 519
Wild v Simpson (1919) 2 KB 544
Re Trepca Mines Ltd (No 2) [1963] 1 Ch 199
DJE Constructions Pty Ltd v Maddocks (1982) 1 NSWLR 5
AG Australia Holdings Limited v Burton & Anor [2002] NSWSC 170
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221
Clyne v NSW Bar Association (1960) 104 CLR 186
Hogarth & Ors v Gye & Anor [2002] NSWSC 32
Thai Trading Co v Taylor [1998] QB 781
Roux v Australian Broadcasting Commission (1992) 2 VR 577
Magic Menu Systems Pty Ltd v AFA Facilitation Pty Ltd (1997) 72 FCR 261
Montague Mining Pty Limited v Gore & Ors (t/as Clayton Utz) [2001] FCA 791
Gore v Justice Corporation Pty Ltd [2002] FCAFC 83; [2002] FCA 354
Wallersteiner v Moir (No 2) [1975] 1 QB 373
Awwad v Geraghty & Co [2000] 3 WLR 1041
Re William Felton & Co Pty Ltd (1998) 145 FLR 211
New South Wales Bar Association v Cummins (2001) 52 NSWLR 279
New South Wales Bar Association v Somosi (2001) 48 ATR 562
Murphy v The Bar Association of New South Wales (2001) 49 ATR 48
Rondel v Worsley [1969] 1 AC
Giannerelli v Wraith (1988) 165 CLR 543
Mallesons Stephen Jaques v KPMG Peat Marwick (1990) 4 WAR 357
Re a Firm of Solicitors [1992] 1 All ER 353
Thompson v Australian Capital Television Pty Ltd (1994) 54 FCR 513
Corporate…

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.

Continue reading Smits v Roach

Details

AGLC: Smits v Roach [2002] NSWSC 241
Case: [2002] NSWSC 241
Decision Date: 19 June 2002

CaseChat Overview and Summary

The case of Smits v Roach involved a dispute regarding the enforceability of agreements between solicitors, clients, and a litigation funder. The matter was heard by the Supreme Court of Queensland, where the primary issue was whether the agreements in question contravened public policy. The agreements included a retainer between the solicitors and their clients that stipulated payment based on a percentage of any damages recovered, as well as an additional agreement with the liquidator that secured the solicitors' costs. The court had to determine whether these agreements were contrary to public policy under the Legal Profession Act 1993 and the Maintenance and Champerty Abolition Act 1993, and whether the common law position on the enforceability of champertous agreements had been altered.

The court considered the statutory framework provided by the Legal Profession Act 1993 and the Maintenance and Champerty Abolition Act 1993, examining whether these agreements breached public policy by facilitating champerty and maintenance. The court also reviewed the common law principles concerning champerty, including whether the agreements were enforceable and if recovery on a quantum meruit basis was permissible. Additionally, the court assessed if the commencement of multiple proceedings by the liquidator was an abuse of process.

The court held that the agreements were contrary to public policy and could not be enforced. The court found that the agreements facilitated champerty, which is against public policy, and that the common law position on the enforceability of champertous agreements had not been altered by statute. The court also determined that the commencement of multiple proceedings by the liquidator was an abuse of process. Consequently, the agreements were unenforceable, and the court ruled in favour of the liquidator. The court ordered that the solicitors were not entitled to recover their costs from the clients or the litigation funder, and that the liquidator's actions were an abuse of process.

Orders