Spence v Gerard Malouf & Partners Pty Ltd
[2010] NSWSC 764
•14 July 2010
NEW SOUTH WALES SUPREME COURT
CITATION:
Spence v Gerard Malouf & Partners Pty Ltd trading as Gerard Malouf & Partners [2010] NSWSC 764
JURISDICTION:
Equity
FILE NUMBER(S):
2010/146014
HEARING DATE(S):
21 June 2010
JUDGMENT DATE:
14 July 2010
PARTIES:
Allan Spence (Plaintiff)
Gerard Malouf & Partners Pty Ltd t/as Gerard Malouf & Partners (Defendant)
JUDGMENT OF:
Bergin CJ in Eq
LOWER COURT JURISDICTION:
Not Applicable
LOWER COURT FILE NUMBER(S):
Not Applicable
LOWER COURT JUDICIAL OFFICER:
Not Applicable
COUNSEL:
A R Lang (Plaintiff)
D W Elliott (Defendant)
SOLICITORS:
Lawjet Lawyers (Plaintiff)
Gerard Malouf & Partners (Defendant)
CATCHWORDS:
SOLICITORS – LIEN – application for production of file – where solicitors retained on “No Win – No Charge” basis – construction of retainer – whether solicitors entitled to demand payment of costs in 7 days if of the view that client will not do better than offer of compromise – whether client or solicitors terminated retainer – whether client “owes” solicitors any fees at time of application - dangers of “No Win – No Charge” retainer
LEGISLATION CITED:
Legal Profession Act 2004
Legal Profession Act 1987
CASES CITED:
Bechara t/as Bechara & Co v Atie & Anor [2005] NSWCA 268
Gamlen Chemical Co (UK) Ltd v Rochem Ltd [1980] 1 WLR 614
Ismail & Anor v Richards Butler (a firm) [1996] 2 All ER 506
Salvatore Blanda v Kemp Strang Lawyers Pty Ltd [2006] NSWSC 48
Spence v Leitch [2010] NSWSC 477
TEXTS CITED:
DECISION:
Defendant is to produce file to plaintiff's solicitors within 7 days. Plaintiff's solicitors to return the file to the defendant after settlement or when Proceedings are terminated or concluded. Defendant is to pay plaintiff's costs of this application.
JUDGMENT:
- 1 -
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
BERGIN CJ in Eq
14 JULY 2010
2010/00146014 ALLAN SPENCE v GERARD MALOUF & PARTNERS PTY LTD T/AS GERARD MALOUF & PARTNERS
JUDGMENT
Introduction
This is a case involving solicitors retained on a “no win no fee basis, subject to terms and conditions for our fees” as described within a list of attributes promoted to the prospective client as to why the solicitors should be selected to represent the prospective client. The solicitors acted for the client for approximately two and a half years. However that relationship came to an end one week before the trial in which the solicitors were to represent the client.
The client, the plaintiff, Allan Spence, seeks an order pursuant to s 728(1)(b) of the Legal Profession Act 2004 (the Act) that the solicitors, the defendant, Gerard Malouf & Partners Pty Ltd t/as Gerard Malouf & Partners (GMP), give to Lawjet Lawyers, the plaintiff’s present solicitors, the file in respect of proceedings No 20034 of 2008 in the Common Law Division of this Court (the Proceedings), unconditionally or alternatively on conditions as the Court may determine. GMP has resisted the production of the file and at the hearing of this matter continued to do so because it is claimed that GMP are entitled to “satisfactory security” and none has been proffered.
The Act
Section 728 of the Act provides as follows:
728 Supreme Court may order delivery up of documents etc
(1)On the application of a client of a law practice, the Supreme Court may order the law practice:
(a)to give to the client a bill of costs in respect of any legal services provided by the law practice, and
(b)to give to the client, on such conditions as the Supreme Court may determine, such of the client’s documents as are held by the law practice in relation to those services.
The applicant is referred to in s 728(1) as “a client of a law practice” and “client” is defined in s 4 of the Act to include “a person to whom or for whom legal services are provided”. Although these terms are in the present tense, no issue was raised in respect of the plaintiff’s standing as a former client to bring an application under the section. It is common ground that: (a) a bill of costs has already been provided to the plaintiff; and (b) that the expression “the client’s documents” in s 728 (1)(b) of the Act is to be understood in this case, as GMP’s file in respect of its retainer by the plaintiff in the Proceedings.
The Proceedings
The Proceedings in respect of which GMP were retained are proceedings in which the plaintiff is suing his previous solicitors for failing to commence personal injury proceedings prior to the commencement of the Civil Liability Act 2002. The plaintiff claims loss and damage by reason of the limitation on the recovery of damages in proceedings initiated after commencement of the Civil Liability Act.
The plaintiff had allegedly suffered personal injuries in an incident with a motor vehicle whilst on the common property of the proposed defendant, the Owners Corporation as owner/occupier of that common property. The personal injury proceedings were initiated after the Civil Liability Act commenced. It is apparent that the plaintiff negotiated directly with the relevant Insurer and settled the personal injury proceedings on terms that included a payment to him of approximately $1 million.
The Retainer
By letter dated 24 August 2007 from GMP to the plaintiff, GMP confirmed the plaintiff’s instructions in relation to the claim for professional negligence against his previous solicitor. That letter included the following:
Why select Gerard Malouf & Partners Insurance Negligence and Personal Injury Lawyers to be your representative:
a.We only do insurance and personal injury law, always acting against giant insurance companies for the individuals;
b.The firm has run in excess of 15,000 claims worth more than $700million for clients;
c.The firm is recognised as a leading legal expert with offices throughout east coast of Australia specialising in Sydney, country New South Wales and South East Queensland.
d. Always aggressively fighting for the client.
e. Will exceed the expectations of our client.
f.Have the experts from medical, financial and negligence backgrounds to assist you to be successful.
g.No win no fee basis, subject to terms and conditions for our fees.
h.We are Accredited Law Society, Personal Injury Specialists.
i.We are members of, Australian Plaintiff Lawyers Association, the Brain Injury Association, the American Trial Lawyers Association, and have staff who advise many public interest groups including, hospitals and nursing associations.
j.We have the “triple C” attitude – ‘Compassion, commitment and competence’ towards all our clients.
The letter referred to the prohibition on solicitors and/or barristers not acting unless there were reasonable prospects of success in the proceedings and continued:
We point out, however, that based upon our investigations to date and assuming the facts as disclosed by you are correct, we believe there are reasonable prospects of success in maintaining your claim for public liability. This does not mean to say that there are no risks in pursuing the claim.
The letter also included the following:
g. “No Win – No Charge” policy
If your claim proceeds to hearing or arbitration and you are successful, you will receive an amount for your legal costs payable by the Defendants as outlined earlier. Please note any litigant that is successful never recovers all of their legal costs from the losing party. You would only be entitled to party/party legal costs and this usually represents approximately 70% of your true legal costs. This rule is applicable if the case cannot be settled and proceeds to a hearing where a Judgment is entered in your favour. A judge will award a certain amount plus legal costs but do not expect those legal costs to be the only legal costs for which you are charged. This is a matter that is applicable not simply to personal injuries ones but all matters run before any civil court in New South Wales.
Kindly note that if it eventuates at the hearing or close to settlement of your claim that you have purposely failed to disclose the truth concerning very important issues, for example whether or not you have been working or about a prior accident that affects the outcome of the case, we will not under those circumstances abide by our agreement in respect of a “No Win – No Charge” arrangement. Clearly it cannot operate if it turns out that you have not been truthful which causes the case to be lost.
Kindly note that the “No Win – No Charge” indicates that we will not charge a fee if your claim is unsuccessful, details as set out hereunder in this letter. It does not mean that the other side whom you sue, if you are unsuccessful will not pursue you for their costs. This is an important matter to understand. We might point that if your case appears to be relatively weak, once we have commenced it or there are problems in it we will bring these matters to your attention at which time you will have an opportunity to negotiate with the other side not to proceed. Generally and in the writer’s experience most of the time it would be possible to withdraw from the action without being responsible for the other side’s legal fees. This would not be the case if the matter proceeded to be fully litigated with a Judgment being entered against you. Kindly note that this firm is successful in at least 98% of claims.
…
Legal costs
As discussed above, we do not propose to charge professional costs unless your claim is successful. If however you leave our firm or change Solicitors, or terminate the matter midway through upon an unreasonable basis, we would request that our reasonable costs and disbursements be paid, or a satisfactory agreement be entered into as to payment of the outstanding costs and disbursements. The writer and his staff, as you are aware, are acknowledged experts in the field of personal injury law. Gerard Malouf and many of the lawyers are fully accredited specialists personal injury lawyers and recognise by the Law Society as such. The firm has in excess of 26 years experience as a specialist personal injury firm and has conduct of numerous major litigation cases currently being litigated through courts in the areas of product liability, child abuse, public liability, medical negligence, workers’ compensation, motor vehicle accidents and industrial accidents involving very seriously injured brain damaged and/or quadriplegic people.
The letter also emphasised that GMP did not charge a 25% contingency/success fee and reiterated the claim that the firm was one of the largest and most highly specialised in the field in New South Wales. After referring to various disbursements that would be incurred, the letter continued:
As an estimate to you regarding our professional costs
SETTLEMENT AMOUNT COSTS FOR SETTLEMENT $20,000.00 To $50,000.00 $15,000.00 To $18,000.00 $50,000.00 To $100,000.00 $18,000.00 To $30,000.00 $100,000.00 To $250,000.00 $20,000.00 To $38,000.00 $250,000.00 To $600,000.00 $30,000.00 To $65,000.00 in excess of $600,000.00 we reserve the right due to size, and complexity of matters to charge at an hourly rate $550.00 plus GST $65,000.00 To $100,000.00 plus * Note much of these costs will be paid by the insurance company!
Please note this schedule is provided as a guide only and we are prepared to consider reducing our claim for professional costs to maximise the amount received by you, particularly in cases which settle in the range of $10,000.00 - $30,000.00 inclusive of costs, depending upon the specific circumstances of the action.
GMP advised the plaintiff that by continuing with the matter and by signing and returning the medical authorities, he was accepting the terms of the costs agreement. Although a signed copy of the letter is not in evidence the parties have proceeded on the basis that the plaintiff signed the letter.
Preparation for trial
Although it can only be gleaned from GMP’s Bill of Costs, it is clear that GMP took steps to have the case prepared for hearing, including filing all the appropriate pleadings, attending directions hearings and conference hearings, and preparing the plaintiff’s evidence. At the directions hearing on 26 August 2009 the matter was set down for trial for 10 days commencing on 22 March 2010.
January 2010
On 15 January 2010 GMP prepared an “extensive brief” on hearing for Mr Elliott for the hearing of the matter in March 2010. GMP also considered the application by the solicitors for the defendant, Yeldham, Price O’Brien Lusk (YPOL), to call evidence by Audio Visual Link from the United Kingdom from Mr McNally, a solicitor with the defendant. A serious factual issue emerged in the Proceedings as to whether the previous solicitors had said to the plaintiff that they would take certain steps to commence proceedings at a particular time to avoid the proposed introduction of legislation limiting the recovery of damages for personal injuries in negligence claims. On 22 January 2010, the plaintiff refused to consent to Mr McNally’s evidence being given by Video Link.
On 29 January 2010, the solicitor at GMP with the day-to-day carriage of the matter, David Cossalter, worked on the matter for approximately one and a half hours, three quarters of which was spent conferring with the plaintiff. It is clear that during this conference a proposed offer of settlement was discussed, as was the prospect of briefing Senior Counsel. After this conference Mr Cossalter wrote to the plaintiff in relation to the conference and confirmed his instructions that Senior Counsel was not to be briefed. However Mr Cossalter advised that he had reviewed the matter with the Managing Partners of GMP “with particular reference as to quantum” and that he and the Managing Partners were of the opinion that “where we are (in) litigation against other firms for a potentially large sum the involvement of Senior Counsel is warranted”. Mr Cossalter also advised that the Managing Partners were “of the strong opinion that a Senior Counsel would add value to your matter if only for the pressure that they (sic) will place on the defendant to resolve the matter” and that “the potential case can bare the added charges that having a Senior Counsel will incur”.
Also on 29 January 2010 Mr Cossalter wrote to the plaintiff by email advising that, “as per our discussions yesterday, I confirm that we will put forward an offer of settlement in the amount of $20 million inclusive of legal fees”.
Plaintiff overseas
The plaintiff travelled to Thailand on 1 February 2010 with a return flight booked to depart Thailand on 15 March 2010 to arrive in Sydney on 17 March 2010.
February 2010
On 1 February 2010 GMP wrote to YPOL enclosing the plaintiff’s statement of evidence and making an offer to settle the proceedings for $20 million inclusive of legal costs.
On 5 February 2010 the plaintiff wrote to GMP by email in the following terms:
Regarding meeting at my house. As no offer has been entered into and in your opinion we will be going to court. I consent to engage a SC on a no win no fee contingency deal.
Offer of Compromise
On 15 February 2010 YPOL served on GMP an Offer of Compromise of $100,000 plus costs as agreed or assessed. In support of the Offer of Compromise YPOL informed GMP that they were of the opinion that the plaintiff would fail on all issues relating to breach of duty of care by the solicitors because: (1) the solicitor in question Mr McNally (who would be flying out from the United Kingdom to give evidence) denied giving an undertaking or advice to the plaintiff that proceedings would be commenced against the Owners Corporation by 11 March 2002; (2) the plaintiff’s own correspondence of 22 March 2002 made it clear that he was aware that proceedings had not been commenced by that date; (3) the plaintiff’s claim that Mr McNally advised him in January 2002 that it was important to commence proceedings to avoid imminent changes to personal injury laws would not be accepted because there was no such information in the public domain at that time, a matter conceded by the plaintiff’s expert; (4) the plaintiff’s allegation that the solicitor had failed to seek unlimited jurisdiction was untrue because consent to such unlimited jurisdiction in the District Court had been obtained; and (5) the plaintiff’s claim that the solicitors had breached their duty by failing to join a Mr Rosinski, the alleged driver, to the proceedings was hopeless because: (a) Mr Rosinski had been subpoenaed but, in any event, denied any involvement with the accident; and (b) the plaintiff had ultimately taken steps to join the driver but abandoned the application of his own accord.
On 17 February 2010 GMP wrote to the plaintiff enclosing YPOL’s letter of 15 February 2010 noting that the plaintiff had 28 days to respond to the Offer of Compromise by 5pm on 17 March 2010. GMP advised the plaintiff that if he did not receive a verdict in excess of the Offer of Compromise he would be ordered to pay the defendant’s costs from the date of service of the Offer of Compromise. GMP requested the plaintiff to arrange a conference to give them instructions.
On 17 February 2010 Mr Elliott wrote by email to GMP at 11:32 AM in the following terms:
We have been offered $100,000 plus costs. This would be an excellent result.
There is an extremely serious risk that the Plaintiff will NOT get a more favourable result and will be ordered to pay the D’s costs on an indemnity basis. The likely consequence for us is that there will be no fund from which to pay our costs even if we win.
I advise, for the reasons discussed in my prior Advices, that the offer should be accepted.
I understand the client will probably be opposed to this course. The Defendant is counting on this and fully expects he will reject it.
I would regard those instructions as a refusal to accept reasonable advice and would have to consider my position under my fees agreement, but my probable response would be to decline further instructions unless and until my fees up to and of the trial are secured.
On 17 February 2010 at 12:28 PM, GMP forwarded Mr Elliott’s email to the plaintiff asking him to “touch base with” Mr Cossalter. On 21 February 2010 at 10:42 PM, the plaintiff responded as follows:
I have consistently reject David Elliot’s advice and informed you of this. The last meeting with QC Elliot in his office he verbally committed to a Settlement in excess of 2 million. At our last meeting 29 Jan 2010 my home. You were extremely confident that we were going to court and convinced me to engage SC Andrew Morrison. For a fresh look and opinion. As you advised he is wizard at this type of negotiation.
I would appreciate SC assessment of this case. Having briefly read the supplied statements received. I get the impression that they are not committing themselves to any reasonable defense. As previously informed it all hangs on Nick McNally evidence in the box. James Hanson goes to great length in NOT recalling.
I am willing to settle for a reasonable amount NOT the ridiculously low figure of $100,000.
On 22 February 2010 Mr Elliott provided a more formal written advice to GMP noting the unexpected Offer of Compromise of $100,000 plus costs. Mr Elliott observed that there may be some more money available but to obtain any further offer the plaintiff would have to put a reasonable offer “at say $200-$250,000 in response”. Mr Elliott advised that offers of multiple millions were not going to engender any worthwhile response and advised as follows:
1This offer is a gift and the Plaintiff must accept it having regard to the risks of this litigation as repeatedly explained by me and discussed from initial Advice and involvement.
2He has in my view very little prospect of obtaining a more favourable result and will probably suffer a punitive costs order should he reject the Offer.
3.Briefly and for the record, the issues which concern me and cause me to advise acceptance include:-
a.The improbability of the Plaintiff establishing the breach of undertaking to commence by 11.3.02 on which the case on liability largely turns;
b.The improbability of establishing any loss arising from any breach of duty, given the ultimate result obtained by the plaintiff from the Insurer of $1,000,000 inclusive for accident for which he suffered no fracture, was not hospitalised and did not even see a doctor for several days;
c.The unconvincing medical evidence, which evidence most fairly establishes a minor aggravation of a pre-existing and symptomatic degenerative condition for a Plaintiff who worked in a sedentary capacity in any event;
d.The unconvincing Economic Loss evidence, for a plaintiff who earned $120,000 in his best year, 1998, in a job he no longer held, and now worked for a company which had yet to make any money and which, just days pre-injury, was prepared to sign an employment contract with the plaintiff granting wages of $4,000pw which it could not honour.
e.The absence of any identifiable loss by failure to commence an MAA claim as opposed to the Occupiers’ claim.
Mr Elliott indicated that he would be available for a conference with the plaintiff and that he reserved his rights under his Fees Agreement (which is not in evidence) to terminate any contingent aspect of his retainer if the plaintiff rejected the advice and the Offer of Compromise.
Four weeks from trial
On 24 February 2010 at 5:48 PM, GMP (Mr Cossalter) wrote to the plaintiff referring to the recent Offer of Compromise of $100,000 plus costs and advising as follows [emphasis added]:
We confirm that Mr Elliott has formed the opinion that even should we be successful in proving the negligence of the defendant, it is unlikely that you will exceed the offer made by the defendant. Mr Elliott also notes that you have received substantial payments from the substantive proceedings and is of the opinion that a Court will find it difficult to determine that you would have done better under the Pre Civil Liability Act regime.
With this in mind, Mr Malouf has reviewed the matter and has also formulated the opinion that such an award will be difficult, thoughts that were expressed in email correspondence to you with the latest being dated 24 February 2010. We confirm that the writer also agrees with this position.
We confirm that we are in the process of finalising a brief for Mr Andrew Morrison, Senior Counsel to advise on the Offer of Compromise and generally.
Mr Malouf has expressed that if Mr Morrison, Senior Counsel, is of the opinion that you will not exceed the Offer of Compromise made by the defendant, we will not continue to act unless you have made arrangements to attend to the payment of our fees within (7) days. In the event that Senior Counsel forms the opinion that you will exceed the defendant’s Offer of Compromise, we will consider acting on a contingency basis as will Mr Elliott, Barrister.
However the writer and Mr Malouf have discussed the matter at length and the likelihood of you exceeding the defendant’s Offer of Compromise is slim thus in the interest of ensuring you receive maximum benefit from the current offer we propose that the offer be accepted. We further propose that our claimable costs from you are limited to $20,000.00 thus ensuring that you receive $80,000.00 clear to you from the Offer of Compromise. We then will seek to recover what we can from the defendant by way of costs to make up the difference and we will not seek to recover funds over and above the $20,000.00 from yourself.
Please note that once we obtain advice from Senior Counsel, we will be unable to limit the amount we will seek to recover from yourself to $20,000.00 and accordingly should his advice be that the offer should be accepted, as we anticipate it will be, we will seek to recover further funds to offset the costs of Senior Counsel for reading the extensive brief and the provision of advice.
We are of the opinion that you will be best served in accepting the defendant’s Offer of Compromise without the further advice of Senior Counsel.
As expressed above and in previous email correspondence. Should you reject this advice, we will brief Senior Counsel for his opinion. We then confirm that should his determination be that you should accept the Offer of Compromise, and you do not accept this advice we will not act further unless provision is made for the payment of our costs and those of Counsel.
If you do not wish us to act further, we put you on notice that the hearing date will not be vacated for a change of solicitors especially since Mr McNally will be travelling from England. We further note that should you request us to cease acting on your behalf, we will be rendering a bill of costs for work done to date.
We await your determination on forwarding the Brief to Senior Counsel, however we again confirm that we are of the opinion that the offer made by the defendant is a good offer and should be accepted without further expenses incurred.
Please note that so there is no detriment to you in our ceasing to act, we request confirmation of your instructions by 4.00pm 25 February 2010.
On 25 February 2010 at 3:23 PM the plaintiff responded to GMP’s letter of 24 February 2010 in the following terms:
By your ceasing to act. I have no options open to me.
If you limit your claim costs to $10,000. As you have already $10,000 to account. I you agree with Mr Elliott. In order to get any further Offer we would have to put a reasonable offer at say $260,000 in response.
Giving me a clear payout of $250,000.
Any moneys owed to LHD [the defendant in the proceedings] are included in this settlement.
If this is acceptable to you. I instruct you to proceed to draft the reasonable offer.
On 26 February 2010 at 10:01 AM, GMP wrote by email to the plaintiff as follows:
As discussed yesterday, I confirm your instructions by both email and phone that you will accept $250,000 clear to you by way of settlement.
As mentioned, we cannot guarantee that we will be able to obtain this however we are of the opinion that the parties should sit down with a view as to getting to this point.
As discussed, you were of the opinion that we should make an offer of $260,000.00 plus costs as a bottom line, however the writer explained to you that if we did this it would be unlikely that we would get close to the figure which you have outlined above. The writer mentioned that we should go in with a figure around $400,000.00 to $500,000.00 mark so as to allow us some room to move on the negotiation table.
We confirm that you instructed the writer to approach the matter in whichever way he thought best with the view of getting you $250,000.00 clear once all expenses have been paid.
In relation to the costs, we confirm that Counsel and ourselves will limit what we will seek to recover from you to 10% of the judgment amount as opposed to the 20% previously mentioned, thus once the defendant has stated what their final position is you will receive 90% of the judgement amount.
We confirm that we have made an offer of $500,000.00 plus costs to the defendant with a view to sitting down to round table discussions in the near future.
We confirm that you are currently looking into getting an earlier flight back from Thailand so that you can be present at these discussions.
We will notify you once we receive a response from the defendant in relation to the offer of settlement.
Three weeks from trial
On 2 March 2010, GMP wrote to YPOL referring to their discussions on Friday 26 February 2010 in which GMP put an offer of $500,000 plus costs as agreed or assessed and advising that the offer was to remain open until 4.00 pm on 5 March 2010.
On 3 March 2010 Mr Morrison SC provided a written advice to GMP in which he observed that whilst the $100,000 plus costs Offer of Compromise was far less than the plaintiff would wish, “it none the less is a significant sum and one which in my view, the plaintiff would be wise to accept”. Mr Morrison advised that if a judge awarded less than $100,000 which he thought was a “real possibility” then the plaintiff would have to pay the defendant’s costs on an indemnity basis and would be left out-of pocket. Mr Morrison also expressed agreement with Mr Elliott’s advice and advised that he had independently reached a similar conclusion before speaking with Mr Elliott. Mr Morrison’s advice concluded as follows:
I note that the brief was sent to me on the basis that should I accept it, I would be paid only on a contingency basis. Given the risks involved, the amount of time required to be set aside and the significantly (sic) likelihood of an adverse outcome, this is not a matter in which I would be prepared to assist on hearing.
On 3 March 2010 YPOL wrote to GMP requesting an indication of their costs and disbursements to date so that YPOL could provide advice to their client in response to the plaintiff’s offer.
On 4 March 2010 at 11:12 AM, GMP, by email from Christina Lord, wrote to YPOL in the following terms:
We have had the opportunity to review our costs in this matter along with counsel.
We confirm that party/party costs and disbursements at this stage are estimated to be approx $195,000.
We confirm that we have received instructions that in the event that the matter settles our client will accept $190,000 by way of costs and disbursements.
We look forward to hearing from you.
On 7 March 2010 at 16:04 the plaintiff wrote to GMP by email in relation to a proposed meeting between GMP and YPOL planned for Monday, 8 March 2010 at 4.00pm. That email was in the following terms:
5 Friday March 2010 you expressed optimism with the defendant’s solicitor responding to your counter offer $500,000 + costs, within the time limit. As they have substantially increased their offer to $190,000 plus costs supplied. It was then increased to $220,000 to secure settlement agreement. You would be recommending a final settlement as noted $245,000 to $250,000 + costs. As you informed me that we may have a chance of increasing this amount by $25,000 to $30,000 when face to face at meeting.
My instructions are to settle on your given assurance that legal rights protected in any settlement for Liability plus all LHD possible claims be included $220,000 + costs. Sunday 7 March 2010.
I am deeply disappointed that I am being pressured into this settlement. As you have plainly and clearly informed me that you will no longer act for me 10 March 2010 and no hearing extension would be permitted by my solicitors ceasing to act.
In accordance with our agreement Increase the settlement due to Allan Spence. Costs as was agreed and confirmed that Counsel and ourselves will limit what we will seek to recover from you to 10% of the judgment limits (26 Feb 2010)..
Settlement $220,000.00
Costs limit 10% -$22,000.00
Paid to account $10,000.00
Balance due in full $208,000.00Signed Allan Spence 7 March 2001 (sic) (Original will be posted).
I give you the opportunity to fulfil any increase for any offer of settlement + costs above the $220,000.00 in hand I will forego and monies paid to account. ($10,000.00) and share the balance gained by 1/3 ONE THIRD to Counsel and yourself.
Two weeks from trial
On 8 March 2010 at 9:35 AM, GMP responded to the plaintiff’s email as follows [emphasis added]:
I notify you of events on Friday afternoon during the ISC, and respond to your email as follows.
You have misconstrued the negotiations on the day, and I confirm your instructions that $145,000.00 clear to you would be accepted. I confirm that an offer to secure you this was made to the defendant as a final position.
Our starting point was $500,000.00 plus costs of $190,000.00 and their starting point was $100,000.00 plus costs.
The first offer made by the defendant at the ISC was $220,000.00 which was broken down as $100,000.00 for damages plus $120,000.00 for costs.
I confirm that I discussed with you the requirement to negotiate in various $40,000.00 to $50,000.00 reductions to elicit a response from the defendant. I confirm your open instructions to do so with the aim of getting you $250,000.00 clear.
I confirm that we made an offer of $460,000.00 plus costs.
The defendant’s response was $250,000.00 which comprised $110,000.00 for damages and $140,000.00 for costs.
Our response was $410,000.00 plus costs of $190,000.00.
At this point the defendant informed me that they were not willing to make any further offers and that unless we were willing to come closer to them that they would not consider any further offers from us.
I proceeded to contact you and I informed you of this position taken by the defendant. I expressed that we needed to make an offer that they would consider and I informed you that there was no possibility of getting $250,000.00 clear. I then proceeded to inform you of the current position and expressed that on the defendant’s current offer you would get $100,000.00 clear to you. I expressed that I may be able to elicit a further $20,000.00 to $30,000.00 from the defendant for you. You mentioned that this was not sufficient and that you would accept $145,000.00 clear to you.
On these instructions I proceeded to make an offer $350,000.00 which comprised of $160,000.00 for damages and $190,000.00 for costs. I expressed that this was a bottom line and that should this not be accepted we would proceed with the matter. The defendants stated that, given the time, they would not be able to get instructions until Monday.
Following this discussion, I contacted you and expressed that the ISC had concluded and that we would discuss the matter again on Monday. I also mentioned that regardless of the response of the defendant on Monday, the current defendant offer was exceptional as both David Elliott Esq and Andrew Morrison SC have expressed that the Offer of Compromise should be accepted.
In relation to the offer of $160,000.00 plus costs, we confirm that we will take a further reduction as to our costs, that as discussed, our costs and disbursements in this matter are in excess of $250,000.00 which includes our fees and both Counsel. We confirm that we will not seek to recover the 10% from you and accordingly should the $160,000.00 plus costs be accepted you will receive the full value of those damages being the $160,000.00. We confirm that we will limit our costs to amounts recovered from the defendant, however any moneys you have paid to date will not be reimbursed.
We further express that in the event that the defendant does not increase their offer of $110,000.00 plus $140,000.00 for costs, we advise you that should be accepted as you will get $100,000.00 clear as opposed to $90,000.00 which the Offer of Compromise would clear you. We advise that the current offer from the defendant is a good offer and that in the event that you instruct us to reject the final offer from the defendant we will file a Notice of Ceasing to Act as both Counsel are of the opinion that it is unlikely that you will do better at trial. We confirm that we will also claim costs at full freight.
If your instructions have changed, please notify me on an urgent basis.
On 8 March 2010 at 1:33 PM the plaintiff wrote to GMP as follows, “My instructions Sunday 7 March 2010 STAND”. GMP responded at 2:45 PM as follows:
I take it that you have withdrawn your instructions from Friday.
As mentioned in my email earlier today, you have seen how the settlement negotiations have gone and until your recent email I had instructions to negotiate.
I note that on your calculation you feel that you are entitled to $208,000.00. I have expressed that in no way will this amount be achieved. The defendants will not offer an amount that will clear you this.
I confirm that we will accept that you can get the total judgement amount therefore reducing the 10% recovery of costs from you to 0% however we will not take any further reduction in costs.
I confirm that I am awaiting a response from the defendant and I will be in contact this afternoon to discuss the matter further.
On 8 March 2010 at 4:29 PM GMP wrote to YPOL noting that it was approaching “close of business” and that should there be no response that day GMP would “be required to proceed in the understanding that the matter will not resolve, which will make resolution of the metter more difficult”. At 16:32 YPOL advised GMP that they “still did not have instructions” but were hopeful of receiving them if not that afternoon, by the following morning.
On 9 March 2010 at 13:22 the plaintiff wrote to GMP in the following terms:
As I have not been informed of the outcome of the meeting with ISC regarding written instructions to settle. Monday 7 March 2010 @ 04:00pm. In letter and meeting 29 Jan 2010. You gave an iron clad guarantees to proceed to court in a no win no fee basis regardless of any offer. You breach this deal.
Yourself and both counsel to cease to act 4/10 March 2010 extremely threatening and jeopardise my position.
I will allow you to 04:00pm 9 March 2010 Sydney time to respond showing clear written scanned copies of all claimed correspondence from defense solicitor. That no monies were misappropriated, stolen, embezzled or moved out of the settlement account to the benefit of Malouf and partners as per again iron clad agreements.
I will be taken steps on advice to protect my interest.
On 9 March 2010 at 1:32 PM, GMP wrote to the plaintiff as follows: “Trying to call and cannot get through. Please call me asap”. At 1:54 PM that same day, GMP responded to the plaintiff asking him to explain the second last paragraph of his email and advising that GMP held no moneys so they did not understand the plaintiff’s assertion. GMP also sought an explanation of what the plaintiff meant by “Iron Clad”.
In a further email on 9 March 2010 at 2:05 PM GMP wrote to the plaintiff in the following terms:
I have been attempting to call you for some time.
The defendant has made another offer of $290,000 which comprises $130,000 for damages and $160,000 for costs.
As mentioned in my previous email we will not seek to recover any costs from yourself and we will limit our costs to that which we recover from the defendant, we also confirm that you forego monies already paid.
We again state that this offer is better than the Offer of Compromise and should be accepted.
We request your urgent attention.
On 9 March 2010 at 3:12 PM Gerard Malouf of GMP wrote to the plaintiff in the following terms [emphasis added]:
We refer to your email. This matter is not settled yet nor have we received any money whatsoever from the defendant, we are not obliged at law to continue acting on a no win basis and I refer to our earlier emails. You have seen all our correspondence and any discussions re settlement which has not concluded but has been discussed orally with the defendant. IF IT SETTLES YOU WILL GET ALL WRITTEN CONFIRMATION REFLECTING THE TERMS.
Presently the increased offer is $290k including costs. $130k to you and $160k in legal costs and disbursements. You are aware that we are reducing our fees so that you have no deduction from your damages contrary to our fees agreement. As a gesture of good faith we propose to split 50/50 the total. You will now receive $145k on condition that you don’t seek recovery of $10k paid towards disbursements. The case commences on the 23/3/2010. We have no counsel who will represent you and we will need to file a Notice of Ceasing to Act tomorrow to abide by Court rules which require seven days for the intention and seven days for the notice to defendants. In any event we have covered in previous emails our requirements and have as a courtesy to you remained in the matter attempting at your request to extricate a reasonable settlement. Unless you abide by the above proposal or as earlier discussed, pay funds of $70k to part cover the hearing, we will file the Notice of Ceasing to Act Wednesday. Thereafter we will alert the defendant to our equitable interests in this matter regarding our costs putting them on notice that they must retain our full, that is undiscounted costs in trust pending resolution of same assuming the case is ultimately successful. Our true undiscounted costs are probably $200k plus.
On 9 March at 11:34 PM the plaintiff wrote to GMP in the following terms:
You have failed to provide me with any copies of defendant’s solicitor’s offers of settlements or how you/they spin to deny me my chance of any closure.
Latter offering a settlement $220,000.00 plus cost
As I am totally bewildered as to how you calculated anything. What if any solution between solicitors I will file a notice of motion to explain. I will file with objection to Cease to act I have lost confidence in the defendant’s solicitors and your manipulation of how both can’t complete this. No bill of costs provided. No further increase in costs since 17 Feb 2010. Despite 26 Feb 10 accepted instruction to settle for $250,000.00 costs.
29 Jan 10Letter + Meeting gave an iron clad guarantees to proceed to court in a no win no fee basis regardless of any offer. Will not cost you anything. GMP + QC + SC
17-Feb-10Offer of settlement Yeldham $100,000.00 clear to me Runs out 15 Mar @ 40:00pm
18-Feb-10 QC Elliott terminates agreement
24-Feb-10GMP Cease to act unless fee of 100K paid QUOTE DUMMPED
26-Feb-10GMP confirm your instructions by both email and phone that you will accept $250,000.00 clear to you by way of settlement.
3-Mar-10 SC A Morrison declines brief
7-Mar-10GMP instructed to settle $208,000.00 clear to me by way of settlement.
8-Mar-10 Settle $220,000.00 + costs.
Final solution $220,000.00 clear NO more ifs or buts why’s and who’s. We both walk away with closure.
On 9 March 2010 at 3:41 PM, Mr Cossalter wrote to the plaintiff questioning his mathematics in the email of 7 March 2010 in relation to the figure of $208,000. Mr Cossalter put two “scenarios” to the plaintiff: the first at $198,000 and the second at $186,000 clear to the plaintiff. Mr Cossalter’s email concluded as follows:
Please let me know what you would like me to do as per Gerard’s email of even date we will be filing a notice of intention of ceasing to act tomorrow.
On 10 March 2010 at 9:59 AM, GMP wrote to the plaintiff as follows:
Thank you for your email and I have reviewed the material you refer to.
I note that on Friday, we discussed the matter and you stated that you would accept $145,000.00 clear to you. Offers were made on this basis and Counsel was informed accordingly.
On Sunday you withdrew those instructions and stated that you would accept $208,000.00 clear to you. Offers were made yesterday on this understanding and again Counsel was advised.
Today you again withdraw those instructions and state that you will not accept anything less than $220,000.00 clear to you.
This method cannot be maintained as offers have been made to the defendant upon your instructions and you subsequently withdraw those instructions.
Please note that costs of Counsel and Senior Counsel combined are approximately $66,000.00. Our costs are in the vicinity of $137,000.00 and disbursements which are still outstanding are $15,000.00. This amounts to $218,000.00.
On the current offer from the defendant which is $290,000.00 comprising of an amount of $130,000.00 for damages and $160,000.00 for costs, we have already taken a significant reduction in our final amount by accepting the plus costs basis. As per Gerard’s email yesterday, we will take a further reduction of $15,000.00 so as to enable you to et $145,000.00 clear to you provided that you do not seek recovery of the approximate $10,000.00 paid.
On your instructions dated 9 March 2010, you emphasis that GMP and Counsel should take a further reduction of $75,000.00 so as to enable you to clear $220,000.00. This is simply not possible as Counsel will not take the sort of reduction you ask, and will pursue you for the full amount of their accounts as opposed to the reduced amounts they are presently willing to accept.
Please note that GMP does not have a problem with the matter going to costing as you are already getting a significant reduction and we are confident that we will receive significantly more for costs at assessment than that which we would accept now. Gerard has expressed that he is willing to assist you in achieving as close as we can to your bottom line however your constant change in instructions is making this difficult for us.
The other option that you have is to accept the Offer of Compromise and walk away with $100,000.00 clear. We would then negotiate directly with the defendant for costs. We advise that both Counsel and Senior Counsel believe that you will not do better than this at Court and we strongly advise that you are currently in a better position by way of bottom line than the Offer of Compromise.
We confirm that the defendant has not made any offers in writing. You were aware on Friday that offers were being made over the phone as I was in constant contact with you.
Please answer your phone this afternoon at 2 pm Sydney time as at 2:30pm I am leaving to go to Court to file the Notice of Intention of Ceasing to Act.
I look forward to discussing this further with you.
On 10 March 2010 GMP filed a Notice of Intention of Ceasing to Act together with an Affidavit of Mr Cossalter sworn on 10 March 2010 which was in the following terms:
1.I am a solicitor belonging to the same firm as the solicitor for the plaintiff.
2.On 15 February 2010 an Offer of Compromise was served on the Plaintiff.
3.On 17 February 2010 I sought Counsel’s opinion on 1) Liability; 2) Quantum and 3) the Offer of Compromise and on 24 February 2010 I sought similar advice of Senior Counsel.
4.On 3 March 2010 I provided the Plaintiff with advice as to the offer of Compromise which comprised of advice that I had received from both Counsel and Senior Counsel.
5.On 5 March 2010 I received instructions from the Plaintiff as to his position on settlement and on the afternoon of 5 March 2010 I entered into negotiations with the defendant solicitor.
6.At the conclusion of the discussions I had received instructions from the plaintiff as to his position and the discussions were left to be concluded on Monday.
7.On 8 March 2010 I received email correspondence from the plaintiff that his instructions given on 5 March 2010 were withdrawn. I received further instructions and proceeded to attempt to negotiate on this basis.
8.On 9 March 2010 I received confirmation that the instructions given on 8 March 2010 by email dated 7 March 2010 stood.
9.On 10 March 2010 I received further correspondence from the plaintiff that his instructions had once again changed.
10.At this point I was unable to negotiate further with the defendant as the plaintiff would not listen to advice and continuously altered instructions.
11.I humbly seek that the Court grant us leave to rely on the Notice of Intention of Ceasing to Act filed on 10 March 2010. I note that the plaintiff has changed the instructions provided to us on a number of occasions and is no longer prepared to listen to and accept advice.
On 10 March 2010 at 2:04pm the plaintiff wrote to GMP as follows:
I accepted $220,000. You dumped me forcing this. I am extremely confident at the hearing the Judge will have the same questions as me.
On 10 March 2010 at 2:15 PM, GMP wrote to the plaintiff in the following terms:
I have attempted to obtain your instructions and you have simply stated that you want to proceed with the matter and that there is no point in talking to me any longer.
I note that at this time we have not dumped you and we are attempting to get a result for you however I take it now from your manner and hanging up on me that you do not want us to represent you in this any longer, and effectively you have withdrawn your instructions.
I will make application to the Court today.
On 10 March 2010 at 3:13 PM, the plaintiff wrote to GMP in the following terms:
My instructions stand. As you sanctioned my medical treatment for life threatening heart condition. I simply can’t take this pressure you are applying and risk death. I am very close to exploding NOW!
On 10 March 2010 at 16:31 the plaintiff wrote to GMP in the following terms:
On your confirmation supplied. Have filled to Cease to act for me to 10 Wed 2010 @ 4:00pm. Being 26 minutes prior.
I will strongly object to the court.
I am politely informing GMP that by doing this. Sabotaged any future relations that I have lost complete confidence and honesty in you ability to protect my well being and interests. I have instructed new Solicitors to proceed directly with the defendant to getting the last offer submitted to you as you have continually refused to supply and reviewing my option to continue.
On 11 March 2010 at 11:51 AM, GMP wrote to the plaintiff in response to his email of 10 March 2010 at 16:31pm in the following terms:
As I have expressed on numerous occasions, the offer made by the defendant was verbal. I have requested that they put it in writing as their final offer is open for acceptance until Friday 4 pm. Once this is received I will forward same onto you.
I note that I have filed a motion for the ceasing to act which will be heard on Tuesday. I will send you these documents in a moment once they have been scanned.
Essentially we are still your legal representation and essentially we still recommend that the matter be settled.
We are willing to negotiate on costs so as to ensure that you get more out of the settlement, however I refer to your original instructions that we would accept the plus costs elements from the defendant and you would accept 90% of the damages amount.
As mentioned we are willing to remove from our maximum position on costs recovered from the defendant so as to give you a higher damages award and should the matter proceed to assessment of costs, we will not be able to offer this reduction.
Allan, I surely hope that you change your position.
On 11 March 2010 YPOL wrote to GMP referring to a conversation on 10 March 2010 and advising as follows:
We confirm our clients’ instructions to convey an offer of settlement to your client in the sum of $290,000 inclusive of costs, disbursements and GST, in full and final satisfaction of all claims made by your client against our clients. This offer is open for acceptance until 5:00pm tomorrow (Friday, 12 March 2010).
On 11 March 2010 at 12:52 PM, GMP wrote to the plaintiff enclosing YPOL’s letter and advising as follows:
This is the final offer I have been mentioning to you and is the only correspondence other than the Offer of Compromise which we have received by way of formal letter.
The defendant is getting back to me on a break down of the offer on a plus costs basis, however they have expressed that a large part of this offer is for costs as opposed to damages.
Once we have received the correspondence from the defendant I will immediately forward same onto you.
We request that you review your position and accept that proposal offered by Mr Malouf where you take $145,000.00 clear to you with no recovery of monies you have paid towards disbursement. We note that in us accepting $145,000.00 for costs and disbursements we are giving you a further reduction in costs by 10% as we do not seek to recover any funds from you and we are going against our agreement that we would accept for costs what we can recover from the defendant as we are contributing funds towards your bottom line from that which we would recover.
Please let me know your thoughts.
On 11 March 2010 YPOL wrote a further letter to GMP referring to the earlier letter that day and advising as follows:
The offer conveyed in that letter represents a conversion of our clients’ offer of compromise served on 15 February 2010, into a costs inclusive offer, based on the information provided in the email received from Christina Lord of your office on 4 March 2010, a copy of which is enclosed.
GMP then wrote to the plaintiff on 11 March 2010 at 2:25 PM in the following terms:
Please see the attached correspondence from the defendant’s solicitor.
You will see from this document that the offer from the defendant of $290,000.00 comprises of $100,000.00 for damages as per the Offer of Compromise and $190,000.00 for costs and then the balance remains the same.
You will note from this that the defendant has not and will not offer more than the $100,000.00 by way of damages and pursuant to our previous agreement in email correspondence dated 26 February 2010, we would be claiming on the full $190,000.00 offered by the defendant for costs.
As expressed in email correspondence since then, Gerard Malouf & Partners are willing to contribute $45,000.00 from the costs figure to you so as to ensure that you get $145,000.00 clear to you. This figure is significantly more than that offered to you in the Offer of Compromise.
You will note that the offer from the defendant is open for acceptance until 4.00pm 12 March 2010.
We await instructions.
On 11 March 2010 at 2:41pm GMP wrote to the plaintiff as follows:
You have not taken my calls for 3 days and you have hung the phone up on me when you did.
Please take my call as it is imperative that I discuss this offer with you.
On 11 March 2010 at 5:37 PM, GMP wrote to the plaintiff in the following terms:
As discussed we are still formally your representation however we have filed a motion for intention of ceasing to act.
Again we emphasise that this matter should be resolved, and as discussed we are prepared to reduce our costs to assist you in achieving a financially better result than the Offer of Compromise.
I remind you that the Offer of Compromise closes on Monday and the defendants, as per my previous emails, have expressed that they will not increase this offer and have made a costs offer of $190,000.00.
We believe that this should be accepted and you should accept $145,000.00 clear to you with foregoing recovery of monies paid to date.
Please find attached:
1. Motion
2. Affidavit of David Cossalter dated 10 March 2010
3. Notice of Intention of Ceasing to Act
4.Correspondence from defendant’s solicitor dated 11 March 2010.
We again express that we would like to assist you in the resolution of the matter and should you wish to accept the defendant’s offer we will discontinue the motion and prepare settlement documents.
We look forward to your reply.
On 12 March 2010 at 9.57 AM GMP wrote again to the plaintiff by email in the following terms:
I sincerely hope that you review this email and decide to discuss the matter with me.
I refer to the emails over the last few days in particular the correspondence forwarded onto you from the defendant regarding the breakdown of the offer as well as the advises (sic) provided to you from both counsel and senior counsel.
I will commence with a short review of the advice of senior counsel. You will note that Mr Morrison, SC, has expressed that the only way that your case will be successful in liability is if your version of the events explained in the report of Mr Meadows is accepted in its entirely. Mr Morrison left (sic) goes on to explain that this eventuality is less than probable. Mr Elliott, Esq, has also formulated simular opinions that have been expressed to you throughout the preparation of this matter.
Clearly what this shows is that the possibility of you being successful at trial is slim, and that the likely result will be that the defendants are successful and accordingly you will be liable to pay as (sic) adverse costs order. Given the size of the matter and preparation which has gone into the furtherance of the claim it is likely that such an order will be in excess of $150,000.00.
I then take you to the damages aspect. You will note that throughout the preparation for the matter Mr Elliott, Esq, has expressed that even if we are successful on liability it will be difficult for a court to find that the report of Hayes Knight should be accepted in light of the injuries received. Mr Elliott, Esq, has expressed that it is unlikely that a court will find that you would have done better than $1,000000.00 under the pre CLA regime and it is a real possibility that even if we are successful at liability that the court will find that no damage was suffered.
It is noted that Mr Morrison, SC, has formed a simular opinion and in his advice has expressed that he will not accept the retainer.
We note that the defendants have made an Offer of Compromise which is to expire on 15 March 2010. We note that this offer is in the sum of $100,000.00 plus costs and as expressed in the defendant’s correspondence of 11 March 2010 the offer on costs is in the sum of $190,000.00. It is noted that the defendant has not and will not increase there (sic) offer as to damages. This offer has been based on the offer of Compromise of $100,000.00 plus costs which is to close on 15 March 2010. It is also noted that the defendant’s final offer as to costs is to close at 4:00pm on 12 March 2010.
In light of the above information and the offer that we have been able to elicit from the defendant it is difficult for Gerard Malouf & Partners to advice (sic) you to proceed to trial. To date we have vigorously fought for your rights however in light of counsels advices and the difficulties we will have at trial on both liability and damages, Gerard Malouf & Partners has formulated the opinion that the costs of proceeding to trial will far out way (sic) the possible benefits. We strongly advise that it is in your best interest to accept the offer made by the defendant of $100,000.00 plus costs of $190,000.00 by 4:00pm today. We again express that as per previous arrangements and instructions on the Offer of Compromise where it was agreed that should the defendant not offer more than the offer of Compromise you would accept that award with 90% of the damages (being $90,000.00) going to yourself with you also foregoing monies previously paid into trust. We also note that as per this agreement Gerard Malouf & Partners were to accept the plus costs offer for their costs and disbursements and only seek to recover 10% from yourself.
As you can see from the correspondence form the defendant dated 11 March 2010 the defendant’s position on the Offer of Compromise has not changed and the only increase in there (sic) offer has been by way of costs. As expressed in previous emails from Mr Malouf and myself we are willing to reduce our costs further so as to enure a greater benefit to yourself we express that we will not seek to recover the 10% from you and we will also contribute $45,000.00 from the costs aspect towards your damages which ultimately would mean that you will be left with $145,000.00 clear to you provided you forego reimbursement of funds monies previously paid into trust on acct of costs and disbursements.
Essentially what this means is that Gerard Malouf & Partners are contributing $55,000.00 from our costs towards your damages. Should the offer from the defendants not be excepted (sic) and our instructions withdrawn Gerard Malouf & Partner will not be able to take such a reduction and will ultimately claim our full costs thereafter. We are of the opinion that this a best case scenario for you as the defendants have expressed that they will not make any further offers on the damages aspect and have expressed that the offer of costs is also their final position.
In light of the opinions of counsel and the prospects of success at trial we are of the opinion that this offer should be accepted, as you are in a much better position than when instructions were taken as to the Offer of Compromise originally.
We note as per emails on 11 March 2010 we have filed a motion that will be heard on Tuesday 16 March 2010 so as to obtain leave from the court to cease acting on your behalf. We note that we should seek that this motion be dismissed should you accept the offer of the defendant.
We again express that the above advice and all of counsels advice as to liability and quantum should not be lightly dismissed and accordingly we would seek your instructions as to your position. We note that we have had some difficulty contacting you via telephone however strenuously request that you be available by telephone between 2:00pm – 3:00pm Sydney time today 12 March 2010 so that formal instructions may be taken and the matter can be formally discussed with you.
We look forward to discussing this matter with you further.
On 12 March 2010 at 14:30 the plaintiff wrote to GMP and his treating doctor in the following terms:
I have been in urgent contact with my treating DR. Papacostas due to warned threatening calls which has severely deteriorated my health.
As you were aware of my medical treatment and time returning Tue 16 March early in the morning.
I request the motion received last night would be impossible to attend without complete medical examination as scheduled.
Please inform the court well in advance.
On 12 March 2010 at 2.41 PM GMP responded to the plaintiff in the following terms:
I will not inform the court of your non attendance as the matter is to commence Tuesday week and accordingly we are seeking to be taken off the register as you refuse to listen to advice.
You have refused to take my calls to discuss the matter and while I believe that the offer from the defendant is exceptional you do not want to discuss this or your options with me.
You may inform the Court of your position and we again note that if we cannot discuss this with you openly prior to Tuesday, we will be pressing for the Motion to proceed.
Again I will attempt to call you in 15 minuted for the 3rd time today and I hope that we will finally be able to discuss this matter.
On 12 March 2010 at 4:00 PM GMP wrote to the plaintiff in the following terms:
I have just called you for the 4th time today, again you do not take my call.
As I have not spoken to you since Tuesday when you said that although then hung up, it is impossible for us to have made threatening calls.
One week before trial
On 16 March 2010 Harrison J heard GMP’s Motion for leave to file a Notice of Ceasing to Act as the plaintiff’s solicitor. The affidavit relied upon by GMP in support of the Motion was that of David Cossalter sworn on 10 March 2010 referred to earlier.
The plaintiff had apparently filed an Affidavit with the Court electronically in which he sought an adjournment of the Motion because of “serious medical reasons and overseas at present”. That Affidavit included the following:
3.Object to intention of ceasing to act Filled (sic) 10 Mar 2010. All proceedings halted, both defendant and plaintiff solicitors are investigated by the Supreme Court and NSW police for attempted murder charges based on known medical evidence. ADT, law society be instructed to investigate the corrupt action and blatant illegal practice, stand over, collusion and endangering life.
4.I will need court appointed Barrister under the appropriate act to attend on my behave (sic) to protect and instruct the Supreme Court, Informed Supreme Court judges and previous appointed Barrister under the Court.
Harrison J said:
The plaintiff, although not present today, has, so the evidence reveals, been informed that his present solicitors are proposing to make this application. It seems to me, having regard to Mr Cossalter’s affidavit, that the relationship of solicitor and client between them and the plaintiff has already broken down, and that, given the shortness of time between now and the commencement of the hearing scheduled on 22 March next, there is little, or in practicable terms, no, likelihood that either alternative solicitors could be retained in time or that, having regard (sic) the other material before me, the plaintiff would be in a position to proceed to conduct the litigation by himself.
Trial vacated
Harrison J granted leave to the defendant to file a Notice of Ceasing to Act. His Honour also vacated the hearing date and reserved the question of costs.
GMP served a Tax Invoice dated 12 March 2010 on the plaintiff in the amount of $233,804.20.
On 17 March 2010, GMP notified YPOL that it had filed the Notice of Ceasing to Act; that it was in dispute with the plaintiff with regard to costs, fees and disbursements on a solicitor-client basis; and that it had advised the plaintiff that it was notifying YPOL of its asserted entitlement to be paid its solicitor-client professional costs, inclusive of GST, disbursements inclusive of counsels’ fees and inclusive of GST for a total of $233,804.20 plus reasonable enforcement costs and disbursements on the basis of a ‘fruits of the action’ lien. GMP requested YPOL to notify them and not distribute any moneys to the plaintiff unless they consented and sufficient moneys were put aside for their costs.
On 22 March 2010 the matter was listed for directions before Harrison J. There was no appearance for the plaintiff and YPOL appeared for the defendant. YPOL advised the plaintiff by letter of 23 March 2010 that his Honour had adjourned the directions hearing to Friday 30 April 2010 to give the plaintiff an opportunity to obtain legal representation and “to respond to the events, particularly those occurring last week”. YPOL also advised the plaintiff that Harrison J had reserved the costs of the Notice of Motion on 16 March 2010 and the costs of 22 March 2010.
April-May 2010
On 28 April 2010 the plaintiff's present solicitors, Lawjet Lawyers, wrote to GMP requesting the file. On 3 May 2010 GMP advised that they were in the process of “identifying the extent of the lien that we can hold over the client file” and that they would be in touch shortly. On 12 May 2010 Lawjet wrote again to GMP asking whether they would be providing a copy of the file. On 13 May 2010 Lawjet wrote to GMP as follows:
We refer to our previous correspondence with respect to this matter and that you have been considering your position for some time. You are fully aware how advanced this matter was at the time you sought to cease to act and now to simply ignore our request is causing delay in costs for both the parties and the courts. You would be aware that we are at liberty to make application to the Supreme Court of NSW in accordance with s728 to obtain this file. We intend to file such application failing you providing our client with his file within (7) days. Please note we will be seeking orders against you should it be necessary to make such application.
Harrison J heard the costs applications on 30 April and 12 May 2010. Mr AR Lang, of counsel, and his present solicitors Lawjet represented the plaintiff in those applications. His Honour delivered judgment on 20 May 2010: Spence v Leitch [2010] NSWSC 477. His Honour noted that the plaintiff travelled to Thailand on 1 February 2010 and did not return to Sydney until 16 March 2010 and said at [4]:
During the time the plaintiff was in Thailand he would on one view appear to have become ill with what is described as a heart condition. When he returned to Sydney he attended Canterbury Hospital where he stayed between 16 March 2010 and 18 March 2010. He was discharged with a recommendation that he see his usual cardiologist. He sent an email to his former solicitor the following day advising him that he had been in hospital with a suspected heart attack.
After setting out some of the correspondence between the plaintiff and GMP on 10 March 2010 and 12 March 2010, his Honour concluded:
[15]It seems to be a clear and available inference that the plaintiff did not take up the solicitor's request in his email sent on 12 March 2010 to provide him with further instructions and that the solicitor's attempts to speak to the plaintiff by telephone as foreshadowed in that email were also unsuccessful.
His Honour noted, at [17], that the plaintiff did not dispute that there had been a breakdown in the relationship between him and his former solicitor. Relevantly his Honour also said:
[19]There is another matter that should not be overlooked. The plaintiff's current solicitor and counsel have not yet received the file in this matter from the former solicitor. Although no submission is made that I should postpone consideration of the costs issue until the file is available, and even though the defendants have offered to supply missing documents to the plaintiff (although not free of cost), I remained concerned that the whole picture may not have yet fully emerged.
…
[22]In my opinion the plaintiff's submission should be accepted. I have a strong impression that the plaintiff's failure to be able to proceed to run his case on 22 March 2010 was not altogether or by any means only as the result of factors over which he had complete control. Some allowance for these factors, including what appears to be his emotional inability to deal with what was confronting him in middle to late March 2010, needs to be made. Although the defendants are entirely blameless, they will be entitled to their costs if in due course the plaintiff's case is found to be without merit.
His Honour ordered that the costs of the appearances before him and the costs thrown away by reason of the vacation of the hearing were to be the defendants' costs in the cause: at [23].
On 21 May 2010 GMP advised Lawjet that the material sought by the plaintiff formed part of their current file “as it was utilised to formulate the opinions of counsel, myself and the expert. As these documents form part of the file, accordingly we hold lien over them”. GMP noted that their account was “months overdue” and that they would be commencing “recovery litigation should the account remain unpaid for a further 21 days”. Lawjet, wrote to GMP on 26 May 2010 disputing GMP’s entitlement to be paid and requesting that the file be delivered to them.
On 27 May 2010 GMP responded and claimed that the plaintiff had left their firm and referred to the plaintiff’s email of 9 March 2010 where he had expressed the view that he had lost confidence in their representation. That letter included the following:
We feel confident that your application will be unsuccessful, as pursuant to our agreement Mr Spence has left our firm by order of the Court.
It is also noted that pursuant to Mr Spence’s affidavit of 14 March 2010 he no longer wished to be represented by our firm.
We press the lien and note that your client has not even offered to enter into a tripartite deed for our consideration. We again rely on Solicitors Rule 8, in particular 8.4.2 in this assertion.
On 8 June 2010 GMP served a Solicitor/Client Bill of Costs on the plaintiff in the amount of $240,909.28.
Present Proceedings
The plaintiff commenced these proceedings by the filing of a Summons on 10 June 2010.
The matter was heard on 21 June 2010 when Mr AR Lang, of counsel, appeared for the plaintiff and Mr DW Elliott, of counsel, appeared for GMP. Although Mr Elliott was briefed to represent the plaintiff in the Proceedings, no objection was taken to him appearing for GMP in these proceedings.
Consideration
The plaintiff submitted that he does not owe any fees to GMP and accordingly GMP are not entitled to maintain a lien over the file. It was submitted that in accordance with the “No Win – No Charge” policy, the pre-requisite of a “win” to GMP’s entitlement to charge the plaintiff any fees has not eventuated.
GMP submitted that they are entitled to be paid costs and disbursements because the plaintiff left the firm, or changed solicitors as those expressions are to be understood in the following part of GMP’s Retainer referred to earlier but extracted here for ease of reference:
As discussed above, we do not propose to charge professional costs unless your claim is successful. If however you leave our firm or change Solicitors, or terminate the matter midway through upon an unreasonable basis, we would request that our reasonable costs and disbursements be paid, or a satisfactory agreement be entered into as to payment of the outstanding costs and disbursements.
GMP indicated that it is willing to produce the file to the plaintiff so long as their costs are secured as contemplated under the Solicitors Rules. The Solicitors Rules, originally made pursuant to s 57B of the Legal Profession Act 1987, but which remain in force by virtue of clause 24 of Schedule 9 of the Legal Profession Act 2004, provide relevantly as follows:
8.3Upon completion or termination of a practitioner's retainer, a practitioner must, when requested so to do by the practitioner's client, give to the client, or another person authorised by the client, any documents related to the retainer to which the client is entitled unless:
8.3.1the practitioner has completed the retainer; or
8.3.2the client has terminated the practitioner's retainer; or
8.3.3the practitioner has terminated the retainer for just cause and on reasonable notice;
and the practitioner claims a lien over the documents for costs due to the practitioner by the client.
8.4Despite Rule 8.3, a practitioner who claims to exercise a lien for unpaid costs over a client's documents, which are essential to the client's defence or prosecution of current proceedings, must:
8.4.1deal with the documents as provided in Rule 29, if another lawyer is acting for the client; or
8.4.2upon the practitioner's costs being satisfactorily secured, deliver the documents to the client.
…
29.3If the client has terminated the first practitioner's retainer, 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.
29.4If the first practitioner has terminated the retainer and the client's documents are essential to the defence or prosecution of proceedings which are continuing before a Court, the practitioner must surrender possession of the documents to the client, upon the terms prescribed in Rule 8.4.2 or to the second practitioner, if so directed by the client, and, provided that the second practitioner -
29.4.1holds the documents subject to the first practitioner's lien, if that is practicable, and ensures the first practitioner's costs are satisfactorily secured; or
29.4.2enters into an agreement with the client and the first practitioner to procure payment of the first practitioner's costs upon completion of the relevant proceedings.
In support of GMP's submissions, Mr Elliott relied upon Salvatore Blanda v Kemp Strang Lawyers Pty Ltd [2006] NSWSC 48, a case in which James J dealt with an application by the plaintiff for an order pursuant to s 728 of the Act in circumstances where the defendant, Kemp Strang Lawyers, had ceased to act for the plaintiff. That was not a case in which the solicitors agreed to act on a “No Win – No Charge” basis. Rather the solicitors in that case had estimated their costs and indicated that they would send a bill of costs to the plaintiff at the end of each month. After two years the costs payable to the solicitors were in arrears in the amount of $67,815.23 and an arrangement was made for the plaintiff to pay the costs by instalments. The plaintiff failed to comply with that arrangement, albeit that some moneys were paid. There was an issue as to who had terminated the relationship. After reviewing the relevant authorities James J concluded that it was the plaintiff who had terminated the solicitors’ retainer. His Honour then proceeded to decide whether the defendants' costs were “satisfactorily secured”. In this regard his Honour referred to the following passage of McColl JA’s judgment in Bechara t/as Bechara & Co v Atie & Anor [2005] NSWCA 268 at [64]:
The expression “satisfactorily secured” should be understood, both by reference to the authorities dealing with possessory liens, and in its textual context, to refer to the provision, in lieu of payment, of something of monetary value which would ensure the satisfaction of the possessory lien. Like should be replaced with like.
The costs agreement in Bechara purported to be “a conditional costs agreement” which provided for the client to pay the solicitors’ costs if the action was successful. That agreement contained an estimate of costs of the proceedings to be $10,000 to $15,000 plus $2,000 for disbursements. It also included a “premium of 25%” on both costs and disbursements. When the client instructed new solicitors who requested the file from the original solicitors, there was debate about the basis upon which the file would be produced. There was delay in this process by reason of the first solicitor requiring to be “satisfactorily secured”. The appeal related to costs awarded by the trial judge by reason of the trial date having to be vacated because of the delay in the production of the file.
There was no issue in that case that the solicitors were entitled to claim a lien over the file notwithstanding that the solicitor’s entitlement to recover costs was based on a conditional costs agreement, recovery under which depended on the success of the action. In the present case there is such an issue.
McColl JA also said:
43A solicitor may have the benefit of two types of liens: a possessory lien, pursuant to which the solicitor may retain a client’s personal property in the solicitor’s possession until all costs owed by the client for the provision of legal services have been paid and a “fruits of action” lien, pursuant to which a solicitor whose efforts result in the recovery of money for his client [can] have his proper costs and disbursements paid from the money so recovered. It is the possessory lien which finds expression in rules 8 and 29 of the Solicitors Rules.
44 The principles concerning the “fruits of the action” lien were comprehensively reviewed by Campbell J in Firth v Centrelink (aka The Dept of Social Security (No 2)) [2002] NSWSC 564; (2002) 55 NSWLR 451 where (at [33]) his Honour described it as the equitable right of a solicitor “whose efforts result in the recovery of money for his client ... to have his proper costs and disbursements paid from the money so recovered”. The solicitor need not still be acting for the client at the time that the money was recovered in order to enforce the “fruits of the action” lien: ibid (at [35] (d)).
GMP’s reference to the Solicitors Rules can therefore be understood to be a claim of a possessory lien over the file. As McColl JA said in Bechara at [43], in the case of a possessory lien, the solicitor is entitled to retain the file until all costs owed by the client for the provision of legal services have been paid.
Does the plaintiff “owe” costs to GMP?
If the plaintiff owes costs to GMP then GMP are entitled to claim a possessory lien over the file and have their costs “satisfactorily secured” on the production of the file to the plaintiff.
The circumstances described in the Retainer in which GMP would “request” that their reasonable costs and disbursements be paid or a “satisfactory agreement” be entered into as to payment of those outstanding costs and disbursements, falls into two categories. The first is conduct of the plaintiff in leaving the firm or changing solicitors. The second is the conduct of the plaintiff, whilst remaining with GMP, “terminating the matter midway through on an unreasonable basis”.
The Retainer uses the word “matter” in a number of contexts: (1) in the warning given to the plaintiff as to when he would have to pay the other side’s legal costs with advice that he would have to do so if “the matter proceeded to be fully litigated with a Judgment entered against” him: (2) in the explanation of the time it would take to “settle the matter” with a request for the plaintiff to be patient with the “progress of the matter”: and (3) in the context above of “terminating the matter midway through on an unreasonable basis”.
I am satisfied that the parties intended that the expression “terminating the matter” to mean the termination of the Proceedings, upon an unreasonable basis. The expression “midway through” is rather imprecise, however I am satisfied that the context suggests that the parties intended it to mean before the work, the subject of the retainer had been completed. The concept of the termination of the Proceedings was not further explained or explored in the letter and although such an expression lends itself to a number of different circumstances, I am of the view that it was intended to mean that the Proceedings were not pursued to either a successful settlement or judgment.
There is a question as to whether the term “upon an unreasonable basis” is limited to the conduct of “terminating the matter midway through” or whether it also applies to the plaintiff’s conduct of leaving the firm or changing solicitors. The conduct of leaving the firm or changing solicitors is conduct of the client irrespective of the status of “the matter”. The latter conduct of “terminating the matter” is a reference to bringing the Proceedings to an end on an unreasonable basis. I am satisfied that the expression “on an unreasonable basis” is limited to the termination of the matter/Proceedings. That construction is supported by the condition that GMP were not entitled to be paid unless there was a “win” or the plaintiff’s claim was successful. If the plaintiff were to terminate the Proceedings, GMP's capacity to secure a “win” for the plaintiff, either in court or by way of settlement and to secure the payment of fees for themselves, would be removed. Accordingly the parties agreed that if the plaintiff terminated the Proceedings unreasonably, removing that capacity, GMP would be entitled to request payment of their costs and disbursements or request that there be a “satisfactory agreement” in respect of payment of their reasonable costs and disbursements. It is only the first category of conduct, leaving the firm that is relevant for consideration in this instance. GMP does not have to prove that the departure was unreasonable because that condition is limited to the termination of the matter.
The Retainer does not provide that if the plaintiff leaves the firm, the plaintiff is to pay GMP's reasonable costs and expenses. It provides that if the plaintiff leaves the firm GMP “would request” payment or entry into a “satisfactory agreement” for payment. Having regard to the conclusions I have reached in respect of the termination of the relationship between the plaintiff and GMP, referred to below, it is not necessary for me to decide whether these provisions would be amenable to an order for specific performance or whether they amounted only to an agreement to agree.
In Gamlen Chemical Co (UK) Ltdv Rochem Ltd [1980] 1 WLR 614, the English Court of Appeal considered a case in which the solicitors acted for the defendants pursuant to a retainer that included a term that the defendants would make periodical payments on account of costs. A complication arose when one of the partners of the solicitors’ firm was joined as a defendant. There was then a dispute between the solicitors and the clients in relation to the quantum of the fees. There was debate about the solicitors’ willingness to proceed with the case culminating in a letter from the solicitors advising that if the account issued to date had not been paid within a week the solicitors would apply to the court to be removed from the record as solicitors for the client. The account was not paid and the solicitors applied for that leave.
At first instance, Oliver J concluded that by filing the Summons for leave to be removed and in further correspondence the solicitors had “unequivocally intimated” that they were not prepared to go on unless some arrangement was made as to their costs and “that seems to me to be a clear case of the solicitor discharging himself”.
On appeal Goff LJ said at 621:
I agree that each case must depend upon its own facts, but in my judgment Oliver J’s view of the inference to be drawn from the facts in the present case was clearly right.
Mr Bueno [counsel for the appellants/solicitors] said that all his clients were doing was to fire “warning shots” across the defendants’ “bow,” but after earlier warnings they took up a categorical position by their letter of June 25 and by issuing and serving a summons forthwith and that under a rule which applies where a solicitor has ceased to act and, as Oliver J pointed out, they emphasised that position in their letters of July 3.
For my part, I do not think that they can complain now and say “We did not discharge ourselves; you discharged us,” because the defendants, not being willing to meet the bill, took the appellants at their word and instructed other solicitors …
Goff LJ also observed at 623:
… a solicitor who has discharged himself is not allowed so to exert his lien as to interfere with the course of justice - he has, as it has been put, only a qualified lien.
In the same case, Templeman LJ observed that the appeal illustrated the difficulties that arose when “a client and his solicitor part company in the midst of litigation”. His Lordship said at 624:
A solicitor who accepts a retainer to act for a client in the prosecution or defence of an action engages that he will continue to act until the action is ended, subject however to his costs being paid.
The present case is distinguishable from Gamlen Chemical Co (UK) Ltdv Rochem Ltd because the solicitors promised that, subject to the circumstances referred to above, they would not charge the plaintiff any fees unless there was a “win”, that is, unless the plaintiff’s claim was successful. In Gamlen Chemical Co (UK) Ltdv Rochem Ltd there was an agreement for the payment of the solicitors’ fees as the matter progressed.
In describing the “No Win - No Charge” policy, GMP were careful to describe the circumstances in which that policy “cannot operate” as being if either at the hearing or close to settlement, the plaintiff “purposely failed to disclose the truth concerning very important issues”. GMP specifically warned the plaintiff that “under those circumstances” GMP would “not abide by our agreement in respect of a “No Win - No Charge” arrangement. GMP also advised the plaintiff to note that the “No Win - No Charge” indicated that GMP “would not charge a fee” if the plaintiff's claim “is unsuccessful”. GMP were also careful to “point out” to the plaintiff that if after they commenced the plaintiff's case it appeared to them to be “relatively weak” or “had problems in it” they would bring those matters to the plaintiff's attention and the plaintiff would have the opportunity to negotiate with the other side “not to proceed”. GMP then advised the plaintiff that in their experience “most of the time it would be possible to withdraw from the action without being responsible for the other side's legal fees”. GMP warned the plaintiff that this would not be the case if the matter proceeded with a judgment being entered against him. However that warning was tempered with the statement, “kindly note that this firm is successful in at least 98% of claims”.
The Retainer included the following:
Solicitors and/or barristers are not to act unless there are reasonable prospects of success and must not provide legal services and/or commence a claim unless there are reasonable prospects of success. In the event that your lawyer commenced your action without reasonable prospects of success, that lawyer may be held responsible for any costs incurred. We point out, however, that based upon our investigations to date and assuming the facts as disclosed by you are correct, we believe there are reasonable prospects of success in maintaining your claim for public liability. This does not mean to say that there are no risks in pursuing the claim.
The Retainer made no mention of the prospect of GMP ceasing to act for the plaintiff if they, or counsel, formed the view that the plaintiff would not achieve a better outcome than any Offer of Compromise. The Retainer made no provision for circumstances that would require the plaintiff to pay GMP’s outstanding fees within seven days if GMP formed the view that the plaintiff would not achieve a better outcome than any Offer of Compromise. Nor did the Retainer contain any provision or explanation that if the plaintiff refused to take GMP’s reasonable advice, they would be entitled to cease acting for him and he would be liable to pay GMP’s fees for the legal services provided up to that time.
GMP’s letter of 24 February 2010, one month before the trial, in which they advised the plaintiff that they would not continue to act if Senior Counsel’s opinion was that the plaintiff would not exceed the Offer of Compromise, unless he made arrangements to attend to payment of their fees within seven days, was in my view, a most unreasonable threat. That threat was compounded further by GMP’s less than veiled threat in the same letter that the plaintiff would have to go to trial without legal representation because the hearing date would not be vacated for a change of solicitors. These were extraordinary threats in circumstances where three days earlier the plaintiff had indicated that he was willing to settle for a reasonable amount but not for $100,000.
It is not surprising that the following day, 25 February 2010, the plaintiff responded by stating that by GMP “ceasing to act” he had “no options open” to him. However the plaintiff agreed that in order to get any further offer, a reasonable counter-offer would have to be put giving him a “clear payout of $250,000”. The plaintiff instructed GMP to proceed to draft that “reasonable offer”.
It is quite unclear how GMP were in a position on 4 March 2010 to advise YPOL that the plaintiff had agreed that $190,000 would be accepted by way of costs and disbursements if the matter settled. During submissions Mr Elliott advised that such instructions were oral. However there is no evidence of this and GMP's email to the plaintiff on 8 March 2010, although referring to an offer made by them of $410,000 plus costs of $190,000, makes no mention of the plaintiff having agreed to such a figure for costs. That email also referred to the defendant's offer of $110,000 plus $140,000 for costs, as a “good offer” and advised the plaintiff that if he rejected it they would “file a Notice of Ceasing to Act” and charge costs at “full freight”, whatever that was supposed to mean.
On 9 March 2010 the pressure of the threats was intensified with the managing partner, Mr Malouf, weighing in to the communications with the plaintiff. Mr Malouf informed the plaintiff that GMP were “not obliged at law to continue acting on a no-win basis” and reminded the plaintiff that the case commenced on 23 March 2010 (although it appears it may have been 22 March 2010). Mr Malouf then advised the plaintiff that: (1) GMP had no Counsel who would represent him; (2) GMP would need to file a Notice of Ceasing to Act the following day; (3) GMP had “as a courtesy” to the plaintiff remained in the matter attempting at his request to extricate a reasonable settlement; and (4) unless the plaintiff paid $70,000 to “part cover” the hearing, GMP would file the Notice of Ceasing to Act. That same afternoon Mr Cossalter asked the plaintiff to instruct him as to what he would like him to do as per Mr Malouf's email.
The correspondence between the plaintiff and GMP establishes the emotionally distressed state into which the plaintiff declined after the threats were made. I have little doubt that the letter of 24 February 2010 triggered the decline of the relationship between the plaintiff and GMP leading to the rather florid allegations subsequently made by the plaintiff. I am also satisfied that there was no proper basis on which GMP could require the plaintiff to pay their costs or fees within seven days. As I have said above it was an extraordinary threat.
It is clear that although the plaintiff claimed in his email on 10 March 2010 that he had instructed new solicitors, GMP advised him the following day that they were still his legal representatives. It is also clear that the plaintiff had not secured new solicitors by that time. The counter-offer of $100,000 on 15 February 2010 to the plaintiff’s offer of $20 million on 1 February 2010 was clearly a surprise to the plaintiff. It is not clear to me what had been said to the plaintiff in conference about his prospects of success, however GMP were willing to put an offer of $20 million in early February 2010.
It is also clear that the plaintiff wished to object to GMP ceasing to act and requested GMP to advise the Court of his return to Australia on the morning of 16 March 2010, with the irresistible inference that he was seeking an adjournment of their application for leave to cease to act. The affidavit relied upon by GMP in support of its application for leave to cease to act made no mention of GMP's advice, to use a neutral term, to the plaintiff that it would cease to act unless he paid their costs within seven days of Senior Counsel’s opinion. The presentation to the Court was that the plaintiff's erratic conduct was unwarranted and inexplicable.
The refusal by a solicitor to continue to act unless he is put in funds has been regarded as the effective discharge of his retainer: Gamlen Chemical Co (UK) Ltd v Rochem Ltd per Goff LJ at 621; Ismail & Anor v Richards Butler (a firm) [1996] 2 All ER 506 at 522. However after GMP made the series of threats to cease acting they remained instructed and advised the plaintiff that they were still his legal representatives. GMP then sought the leave of the Court to cease acting for the plaintiff and was granted such leave. It was then that the relationship between the plaintiff and GMP was terminated. As was the case with the solicitors in Gamlen Chemical Co (UK) Ltd v Rochem Ltd, GMP cannot now claim that it was the plaintiff who terminated the relationship or left the firm.
There is nothing in the Retainer dealing with GMP's entitlement to payment of costs if GMP terminates the Retainer. However it has not been argued in these proceedings that GMP does not, or may not have a fruits of the action lien. All I am dealing with is the application for the production of the file and whether the plaintiff presently owes GMP any costs. GMP has already served notices in purported protection of its claimed fruits of the action lien. That may be a matter for another time, if necessary.
The plaintiff did not leave the firm. The firm discharged itself and terminated the relationship with the plaintiff. There being a “no-win” either in Court or by way of settlement at this stage, the plaintiff does not presently “owe” GMP any costs. Accordingly GMP do not have a possessory lien over the file and are not entitled to resist production of the file. Nor are they entitled to be “satisfactorily secured” as that term is understood under the Solicitors Rules. However, I am satisfied that it is appropriate to require the solicitors for the plaintiff to return the file to GMP after settlement or when the Proceedings are terminated or concluded, to enable GMP to pursue the claimed fruits of the action lien.
This case has exposed some unsatisfactory by-products of retainers on the basis of a “No Win- No Charge” policy. It is obvious that the promotional statements made in the Retainer were made for the purpose of luring the plaintiff to instruct the firm. The claim that GMP “is successful in at least 98% of claims”, clearly conveying that they “win” one way or the other, not less than 98% of the claims, would give any prospective litigant cause for comfort.
It is clear to me that the solicitors were very concerned that if they did not secure a settlement they would not be paid any fees or costs. I am satisfied that this concern caused the highly inappropriate threat to be made in the letter of 24 February 2010. In a “No Win – No Charge” retainer when solicitors’ livelihoods and incomes are bound up with and dependent upon the client taking a particular step in litigation, it seems to me that the capacity to provide the client with objective advice about taking that step is compromised. The greater the amount of fees to be lost the greater the prospect of compromise. These types of retainers are fraught with difficulties if they are not drafted with exquisite clarity. Experience shows that there are always prospects of a client wanting to take a second opinion or change solicitors. Great care must be taken to explain the circumstances in which a client will be responsible for the solicitors’ fees. In the competitive world of securing clients, it is also very important that prospective clients are informed of the specific circumstances in which a solicitor may terminate the retainer, particularly on the basis that there will be an entitlement to do so if the client refuses to accept reasonable advice.
Orders
GMP is to produce the file to the solicitors for the plaintiff, Lawjet Lawyers, within 7 days. The solicitors for the plaintiff are to return the file to GMP after settlement or when the Proceedings are terminated or concluded, to enable GMP to pursue their claimed fruits of the action lien. The defendant is to pay the plaintiff's costs of this application.
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LAST UPDATED:
16 July 2010
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