STRAHAN & PP LAWYERS

[2017] FamCAFC 22

FAMILY COURT OF AUSTRALIA

STRAHAN & PP LAWYERS [2017] FamCAFC 22

FAMILY LAW – APPEAL – LEGAL PRACTITIONERS – Appeal against declaration that solicitors are entitled to exercise a lien over their former client’s files – Primary judge did not err in concluding the solicitors had just cause for ceasing to act and were entitled to exercise a lien – Primary judge did not err in concluding the lien was not lost because of the solicitors’ claim for ongoing storage fees of the files  – Oral reasons given during submissions were formally incorporated into the reserved judgment and parties could understand basis of the decision – Reasons were therefore adequate.

FAMILY LAW – APPEAL – RE-EXERCISE OF DISCRETION – Error of law conceded in relation to conditions on which files should be made available to new solicitors for use in ongoing litigation – Appeal be allowed in part – Order made for delivery of files conditional upon undertaking from new solicitors – Former solicitors retain lien over the fruits of the litigation.

FAMILY LAW – APPEAL – COSTS – First instance costs order set aside – Timetable provided for submissions concerning costs at first instance and on appeal.

FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – Application to adduce further evidence – Some evidence admitted by consent – Balance not received.

Albemarle Supply Company Ltd v Hind & Company [1928] 1 KB 307
Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430
Bonney v Compass Group (Australia) Pty Ltd [2015] WASCA 6
Chester v Cassidy Gibson Howlin (1995) FLC 92-556
Commonwealth of Australia v Pharmacy Guild of Australia (1989) 91 ALR 65
Ex parte Patience; Makinson v The Minister (1940) 40 SR (NSW) 96
Gamlen Chemical Co (UK) Ltd v Rochem Ltd [1980] 1 WLR 614
Gilgandra Marketing Co-Operative Limited v Australian Commodity & Merchandise Pty Ltd (in liquidation) & Ors (No. 3) [2011] NSWSC 69
Johnson v Johnson (2000) 201 CLR 488
Metall Market OOO v Vitorio Shipping Company Limited [2014] QB 760
R v Lennon (1984) 38 SASR 356
Rafferty v Time 2000 West Pty Limited (No 3) (2009) 257 ALR 503
Re Weedman [1996] FCA 1112
Rigoli Lawyers v Arman (2009) 40 Fam LR 676
Rollings v Rollings (2009) 230 FLR 396
Somes v British Empire Shipping Co Ltd (1860) 8 HL Cas 338
South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd; Mortensen v Laing [1992] 2 NZLR 282
Stark v Dennett [2008] 2 Qd R 72
Stojkovski v Fitzgerald [1989] WAR 328
Stoker v Picken (2012) 209 FCR 132
White v Bini [2003] FCA 669
Worrell v Power & Power (1993) 46 FCR 214

APPELLANT: Ms Strahan

RESPONDENT: PP Lawyers

FILE NUMBER: ADC 360 of 2016

APPEAL NUMBER: SOA 15 of 2016

DATE DELIVERED: 20 February 2017

PLACE DELIVERED: Perth

PLACE HEARD: Adelaide

JUDGMENT OF: May, Thackray & Ainslie-Wallace JJ

HEARING DATE: 11 October 2016

LOWER COURT JURISDICTION: Family Court of Australia

LOWER COURT JUDGMENT DATE: 17 February 2016

LOWER COURT MNC: [2016] FamCA 148

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr Heinrich

SOLICITOR FOR THE APPELLANT: Nick Xenophon & Co

COUNSEL FOR THE RESPONDENT: Mr Stratton-Smith

SOLICITOR FOR THE RESPONDENT: PP Lawyers

Orders

1. By consent, Annexure DP1 to the affidavit of Ms PP sworn on 23 September 2016 be admitted as further evidence in the appeal.

2. The Application in an Appeal filed on 23 September 2016 seeking the introduction of the further evidence in the appeal be otherwise dismissed.

3. To the extent leave may be required, leave to appeal against the orders of Faulks DCJ made on 17 February 2016 be granted.

4. The appeal be allowed in part.

5. Paragraphs 2 and 3 of the orders of Faulks DCJ made on 17 February 2016 be discharged. 

6. In the event the parties cannot within 14 days agree on the other orders required to give effect to the reasons of the Full Court:

   (a)Each party shall within 21 days of these orders file and serve a Minute of Orders, together with written submissions (not exceeding 10 pages) dealing with the areas of difference; and

   (b)Each party may within seven days of service of the other party’s submissions file and serve submissions in reply (not exceeding five pages). 

7. Within 21 days of these orders, the appellant shall file and serve written submissions (not exceeding 10 pages) dealing with the issue of the costs of the proceedings at first instance.

8. Within 14 days of service of the submissions referred to in Order 7, the respondent shall file and serve written submissions in response (not exceeding 10 pages).

9. Within 7 days of service of the submissions referred to in Order 8, the appellant may file and serve submissions in reply (not exceeding five pages).

10. Judgment is otherwise reserved pending compliance with Orders 6 to 9.

11. Upon publication of the final orders of the Full Court:

    (a)Either party be at liberty within 21 days to make an application by way of written submissions in respect of the costs incurred in relation to the appeal by filing such submissions and serving them on the other party;

    (b)Within 14 days from service of the submissions, the respondent to the application for costs shall file and serve written submissions in response;

    (c)Within seven days from service of the respondent’s written submissions, the applicant for costs may file and serve written submissions in reply;

    (d)The submissions filed pursuant to subparagraphs (a) and (b) must not exceed 10 pages and those pursuant to subparagraph (c) must not exceed five pages; and

    (e)In the event either party seeks a costs certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth), such application must be contained within the written submissions.

12. Until further order of the court, the parties and their servants and agents are restrained and an injunction is hereby granted restraining them from publishing any account of the reasons of the Full Court in this appeal to anyone other than their legal advisors and those assisting them in the litigation without leave of a member of the Appeal Division of the Family Court of Australia. 

13. Order 12 does not prevent the parties or their legal advisors from bringing the content of these orders (and the final orders made by the Full Court) to the attention of any judicial officer who has conduct of the matter at first instance.

14. The Judgments Publication Coordinator of the Family Court of Australia is requested to ensure that pending finalisation of the first instance proceedings involving the appellant (ADF 228 of 2005) the copy of the reasons delivered in this appeal maintained on the judgments database and any copy distributed to judicial officers or others is edited to remove reference to the content of communications between the appellant and the respondent.

15. There be liberty to apply to the Full Court for further directions.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Strahan & PP Lawyers has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT ADELAIDE

Appeal Number: SOA 15 of 2016
File Number: ADC 360 of 2016

Ms Strahan

Appellant

And

PP Lawyers

Respondent

REASONS FOR JUDGMENT

1. The appellant has been litigating in the Family Court for many years.  The respondent represented her during an earlier stage of the litigation.    

2. This appeal concerns a lien claimed by the respondent over the appellant’s voluminous files.  The appellant claims that the entitlement to a lien was lost because the respondent ceased representing her without good cause. 

3. For convenience, we will refer to the appellant as “the client”, and the respondent as “the solicitors”.

The hearing before the primary judge and the orders appealed   

1. Faulks DCJ heard the dispute over three days in 2013 and 2014.  After closing written submissions were filed, oral submissions were made on 1 April 2014.  Judgment was reserved, but not delivered until 17 February 2016.

2. The orders which are the subject of this appeal provided as follows:

   1.It is declared that the [solicitors] retain the lien they have in respect of the papers and files of the [client]…

   2.That the [client] … will pay the [solicitors’] costs of and incidental to these proceedings.

   3.This application is removed from the pending cases list.  (It is noted that this in fact is a separate action from the primary action between the [client] and her husband.)

The significant facts

1. The client commenced matrimonial proceedings in the Family Court of Australia in 2005, at which time she was represented by DM Firm. 

2. DM Firm ceased acting in the proceedings in 2008, when the solicitors commenced representing the client after she had executed their retainer agreement.  A further retainer agreement was executed in 2010.

3. In 2009, the solicitors’ principal gave an undertaking to the Supreme Court of South Australia “to preserve and keep intact” the 180 plus boxes of documents they had obtained from DM Firm.   

4. The client’s files, over which the lien is claimed, now occupy 439 boxes.  These were originally housed in premises leased for the purpose.  The client’s counsel conceded on appeal that the client was responsible for the storage costs up until the date on which the solicitors ceased to represent her.[1]

   [1] Transcript, 11 October 2016, p 23. 

5. On 20 December 2010, the solicitors wrote to the client advising that they were ceasing to represent her.  Inter alia, their letter said:

   We refer to “Your Obligations” to our firm and “Termination” as outlined in paragraph 16 and 18 of the Terms of Engagement attached to your retainer agreements signed by you and dated 15 April 2008 and 18 February 2010. Unfortunately amongst other things we do not consider you have fulfilled your duties to us in good faith to give reasonable and proper instructions in your dealings with us and we have continued to experience difficulties in communicating with you directly on numerous issues. Accordingly we are entitled to cease to act on your behalf and we have chosen to do so.

6. Paragraphs 16 and 18 of the “Terms of Engagement” read as follows:

   16.      Your Obligations

   For [us] to best represent you it is important that you reply to correspondence, return telephone calls, respond reasonably to requests for Instructions and pay accounts or pay money into trust when required. You must act honestly and in good faith in your dealings with us. We reserve the right to cease acting for you should our investigations of your matter reveal that your Instructions are not bona fide or are otherwise misleading.

   …

   We also reserve the right to cease acting for you if we experience difficulties in communicating with you.

   …

   18.      Termination

   …

   Furthermore, it is agreed that, should you terminate instructions with us or should we cease to act, then you understand and agree that you are to pay to us the full amount of debt outstanding and payable as a liquidated sum being all and any legal fees, counsel fees and all disbursements of any kind including all costs incurred by us in connection with service within fourteen (14) days of your account being rendered and that it will be recoverable by legal action as a full debt.

   No file will be released unless all fees have been paid. [We hold] an unqualified lien over any file for which outstanding fees remain unpaid. We have devised an internal procedure to allow for handover of your files should you wish to discuss this with us. You will also pay to us the cost of copying the file before we release it and any associated costs incurred for delivery of the file to you.

7. The solicitors filed a Notice of Ceasing to Act in the Family Court proceedings in January 2011.  Thereafter, they had various communications with the client’s new lawyer about the outstanding fees and disbursements, which amounted to nearly $320,000.  The new lawyer also foreshadowed a claim for reimbursement of “a significant part” of the colossal fees already paid.[2] 

   [2]  

8. In February 2011, the client commenced proceedings in the Supreme Court of South Australia seeking, inter alia, orders for the solicitors to deliver up her files.  Those proceedings were resolved by consent in April 2011, without any order being made regarding the files.  At some point thereafter, with the client’s agreement, the files were moved to a facility known as Fort Knox.

9. In September 2012, the client commenced proceedings in the Family Court seeking an order for delivery of her files to her new lawyers. 

10. In the more than four years that have elapsed since the filing of this application, the matrimonial proceedings have continued, with the client being represented by a variety of solicitors.  By the time the appeal was heard, the proceedings had been listed for trial in April 2017.[3]    

    [3]  Earlier trial dates have been allocated without the matter being heard.

The orders sought at trial

1. The client’s application against the solicitors was for delivery up of her files without any conditions; however, in her Case Outline filed in November 2012, she sought an order in the alternative in these terms:

   2.In the alternative to Order 1 above, that upon the written undertaking by [the client’s new lawyers] to [the solicitors] that they will:

   (a)Hold all papers and documents delivered to them by [the solicitors] pursuant to this order subject to the lien of [the solicitors] for costs;

   (b)Afford [the solicitors] and any professional person acting on their behalf, reasonable access to the said papers and documents for the purposes of any costs dispute or other litigation arising as between [the client] and them;

   (c)Keep the said papers and documents intact and within the Commonwealth of Australia; and

   (d)Re-deliver the said papers and documents to the said [solicitors] after the conclusion of the Family Court proceedings … including any appeal to the Full Court,

   the said [solicitors] so soon as may be reasonably practicable hereafter, deliver to [the client’s new lawyers] all papers in this action and other documents in their custody or power belonging to the [client].

   Pursuant to Rule 1.10 any consequential orders required to release [the solicitors’ principal] from her undertaking made to the Supreme Court on 30 January 2009.

2. In October 2012, the solicitors filed their response.  This indicated preparedness to reach an agreement for the delivery of the files on the basis that the client would, by way of “compromise”, pay $99,361 in discharge of all monies claimed by the solicitors.  The response also dealt with the undertaking to the Supreme Court and termination of the arrangements at Fort Knox.

3. In August 2013, the solicitors filed an amended response, seeking much the same orders as previously, save that they now sought payment of all of the monies claimed to be owed, “in full and final settlement of all claims, past, present or future that the [client] may have against [the solicitors]”.

4. Both parties provided a Minute of Orders at the first day of trial.  Although the matter had already been adjourned about six times,[4] the client’s Minute sought an adjournment.  We do not need to recite the orders sought by the solicitors.  It is sufficient to say they wanted reimbursement for the past storage fees and other disbursements, together with security for future storage fees and a payment into court of $375,000 to secure their outstanding fees.   

   [4] Transcript, 3 December 2013, p 6.

5. In their closing written submissions, the solicitors sought different orders again.  In addition to seeking a declaration that they had a lien, the solicitors sought a declaration that storage fees and counsel fees incurred were proper disbursements.  They proposed the files be surrendered upon reimbursement of disbursements and payment into court of $321,420 as security.  They also sought orders dealing with the storage arrangements with Fort Knox, on the basis that the files remained in Adelaide, and be available to them.  (In the alternative, they sought reimbursement of disbursements and a payment to cover storage for the next four years and costs of destruction of the files.)

6. Prior to the trial commencing, the client received an electronic copy of the DM Firm documents.  She therefore did not pursue the delivery of that portion of her files, and we therefore need not concern ourselves with issues arising from the Supreme Court undertaking.   

The written reasons of the primary judge

1. Ordinarily, when written reasons are delivered, it is expected they will contain all of the reasons for the judgment.  However, the solicitors say that the reasons for his Honour holding that they were entitled to their lien had been delivered during the exchanges between bench and bar at the end of the hearing. 

2. To assess the merit in this argument, it is necessary first to set out the relevant portion of the written reasons.  The sentences we have highlighted are those most pertinent to the argument (the emphasis at [21] was added by his Honour, and the errors are in the original):

   2.The parameters of the dispute fell within fairly narrow compass although that did not stop them from being bitterly contested over about three days of Court hearing.  In brief, the solicitor / client relationship between [the solicitors] and [the client] ended.  [The solicitors’ principal] asserts that she terminated her retainer for cause, principally, though not exclusively, because of a failure on the part of [the client] to give instructions when requested to do so. 

   3.On the other hand, [the client] asserted that she had done everything she reasonably could to provide instructions in an appropriate way and that the termination of the retainer was one voluntarily undertaken by [the solicitors’ principal]. 

   4.The consequence of the former would be that the solicitor would be entitled to preserve her lien over the client file.  If the contention of [the client] is correct then that lien would cease to exist. 

   5.I should explain that in this case the file is not a simple manila folder with a few papers inside it, but the contents of a store room at a storage facility called Fort Knox.  Like so many matters between [the client] and her husband, and it appears between [the client] and [the solicitors], even the storage issue was not one entirely without controversy. 

   6.[The solicitors’ principal] asserted, and I accept that it is true, that she entered into the storage arrangements with the consent of [the client].  This fact is important because the contract that exists between [the solicitors] and Fort Knox is a matter outside the purview of this Court’s jurisdiction (no matter how that might be construed) but a factor which has borne upon and will, until it is resolved, bear upon [the solicitors] as a financial burden until the contract between [the solicitors] and Fort Knox is terminated or novated to [the client]. 

   7.I should say by way of further preliminary comment, that it seems to me that ordinarily this would be a matter more appropriately dealt with in the Supreme Court.  The Supreme Court is ordinarily the court which deals with issues about professional conduct of solicitors and the court which regulates the contracts between solicitors and their clients. 

   8.In the end however, while this Court does not have any inherent jurisdiction as such, it does have the power to regulate the conduct of those who appear before it at least in relation to those matters which directly pertain to applications before this Court.  Neither party raised any particular objection to my dealing with the matter, and it proceeded accordingly.

   9.As appears from the concluding comments during the course of the hearing I had indicated to the parties what my view about the resolution of the matter should be.  I invited the parties’ lawyers to consider agreeing to arrangements based upon the indications I had given but no such agreement was forthcoming. 

   10.I did however require the provision of a list of property which was owned by [the client] on the basis that part of the determination I had indicated that I proposed to make was that an equitable charge should be placed upon one of the properties in her name (otherwise unencumbered as some of the evidence suggested might be the case) as one of the conditions for a release of the file. 

   11.I subsequently received communications (in accordance with my invitation) from [the solicitors] which indicated a number of properties in which [the client] had an interest. 

   12.These properties included [there followed addresses of three properties in Adelaide, one of which was owned by the client and her former husband and two of which were owned by a company of which the client and her former husband were directors]. 

   13.I was also provided with a copy of a communication from [the solicitors] to [CW Lawyers] who were then representing [the client] in which it was asserted that [the client] had a caveated [sic] caveatable (?) interest in [two other properties in Adelaide].  The communication sought confirmation that those were available.  I did not receive, nor did I receive via [the solicitors] any response to this communication. 

   14.Accordingly, I am now left with a situation where I do not have the requisite information to make the order that I had foreshadowed that I might in relation to security for [the solicitors] costs as determined, in due course. 

   15.Moreover, it appears from a lack of communication from [the client] in response to a recent invitation from me to reopen the evidence (if either the [solicitors] or the [client] in this particular application wished to do so) and from a communication from the [solicitors], that the solicitors previously representing [the client] are no longer representing her.  I recently offered an opportunity to each of the parties to reopen the evidence.  In response thereto I received an affidavit from [the solicitors] which eventually was the subject of objection from [the client]. 

   16.I began to read the affidavit but ceased to do so when I realised that there was going to be a reference to offers of settlement.  Such offers may or may not have been relevant to the question of costs of these proceedings but in the end for the reasons set out hereafter I do not think that whatever such offers were they would affect the determination I have made.  Accordingly, for the sake of clarity, I do not admit into evidence the affidavit of [the solicitors’ principal] filed on 10 February 2016. 

   17.I concede that in the course of the exchange of e-mails I became aware that those representing [the client] previously were no longer representing her.  (The matter appears to be notorious since [the client] sought recently publicity in newspapers about the fact.) 

   18.[The client], in her most recent communication, indicated she did not wish to put any further evidence before me. 

   19.On balance, after a proper consideration of the evidence of both parties, I cannot accept that [the client] was prompt and reasonable in her response to requests for instructions from [the solicitors].  I am satisfied on the evidence before me that in such circumstances [the solicitors’ principal] was justified in terminating her retainer with [the client].  Accordingly, on that basis, the lien [the solicitors] had over [the client’s] file did not cease when the solicitor / client relationship came to an end. 

   20.There was a significant degree of contention between the parties during the course of the hearing about whether or not the [client] had engaged other solicitors prior to the termination of the retainer with the [solicitors].  As with so much in this matter, the evidence was confused.  There is no doubt that the [solicitors] held a deep-seated and possibly unshakable conviction that either [the client] or her “agent” (her sister) had in fact engaged other solicitors.  I could not and remain unable to be satisfied that that did in fact occur.  However, whether or not it occurred is irrelevant because in my opinion, based on the evidence before me, and in particular the summary of requirements that was in evidence and the purported reply of the [client] and her evidence in Court that she, the [client], had failed to provide reasonable instructions in a timely way.  That in itself is sufficient for a valid termination of the retainer by the [solicitors] and the retention by the [solicitors] of the lien. 

   21.However, even if that lien exists, that does not mean that the file should not be made available for the purposes of the continuing litigation.  As counsel for both parties submitted to me, a solicitor is obliged to make a file available at least on loan to the client or her new solicitors when litigation is continuing to enable that litigation to be completed.  This is however subject to a condition that appropriate security is given for the payment of the solicitor’s fees.  What is appropriate security will vary from matter to matter. 

   …

   30.In publishing my reasons for judgment I have had occasion to reread in some detail the transcript of the proceedings before me. 

   31.During the course of those proceedings I had indicated at a very early point what my view of the resolution of the matter might be.  Notwithstanding that clear indication, those representing the [client] at least, and to some extent those representing the [solicitors] continued to pursue what seemed to be a plague of rabbits down their respective burrows with little relevance to the principal issue in point. 

   32.I do not set out further in these reasons, the exchanges I had with counsel during the course of the proceedings and during the course of their addresses or in relation to their oral comments on their written submissions in response to each other. 

   33.In my opinion, the position is accurately summarised above.  Accordingly, I declare in the course of these reasons that the lien that the [solicitors] have over the file of the [client] remains.  That can of course be discharged at any point by the payment of all proper outstanding fees and disbursements by the [client].

   34.I would have been prepared to make an order that upon the payment of outstanding disbursements for counsel’s fees and storage fees and a proper novation of that storage agreement in favour of the [client] together with an equitable charge which could provide a caveatable interest over a property of the [client], to permit the suspension of the lien - at least to the extent of providing access to the file pending the completion of the proceedings or the other discharge of the lien. 

   35.In default of any information which would enable me to nominate a property in respect of which a charge might be registered, I cannot make that order.

1. His Honour then proceeded to offer some platitudes, before saying:

   39.The orders I make in this matter are quite simple.  The [solicitors] were entitled to terminate their contract of retainer with [the client].  Accordingly, their lien continues.  ^

The oral remarks of the primary judge

1. In order to provide context for the oral remarks made by the primary judge, it is important to record that both parties had filed written submissions before the final closing arguments were made on 1 April 2014.  

2. Counsel for the client commenced his oral submissions by observing that “the parties aren’t really in dispute about what the [legal] principles are concerning the issue of whether there is or isn’t a lien and what your Honour might do depending upon whether you find there is or isn’t a lien” (transcript, 1 April 2014, p 2).  The principles had been identified by counsel in their written submissions, and both had said that the law is well settled.  This is significant, since it provides an explanation for his Honour resolving the dispute without discussing the law.  

3. After the client’s counsel had begun to develop his argument, his Honour said (pp 9–10):

   Now, you can address, if you wish – and you do – the question of the right to terminate the retainer, or just right [sic] to terminate the retainer.  It seems to me there are a number of issues relating to that and probably the most important one, and the one that influences me most strongly at the moment, is the fact that I think the evidence from your client falls far short of convincing me that she was providing all the information that was required in a timely way to her solicitors at the relevant time.  Now, she may have any number of reasons for that, but that doesn’t bring about a situation where it simply permits a person not to be able – not to give their solicitors adequate instructions and then maintain that they are to be accommodated in some other way.  But assuming that, that’s the way I see the evidence at the moment.  I’m telling you that so you can respond to it [if] you wish…[5]

   [5]  His Honour again explained at page 11 of the same transcript that he was informing counsel of his views “so you have an opportunity to respond to convince me to the contrary”.

4. Remembering that comprehensive written submissions had already been made, it is clear the primary judge had already formed a view that the solicitors had made out their case.  Nevertheless, his Honour gave the client’s counsel an opportunity to dissuade him from that view.  Properly, no complaint is made about that approach, which we consider perfectly orthodox.

5. What then followed was a long set of exchanges, occupying nearly 40 pages of transcript, during which one submission after another failed to find favour with the primary judge.  We have attached to these reasons an addendum containing a narrative of the progress of those submissions, which includes the remarks his Honour later incorporated into his written reasons.[6]

   [6]  See addendum 1.

6. Toward the end of the submissions of counsel for the client, his Honour made this statement, which is of great importance, since it can be seen as indicating, in effect, that all the client’s arguments had failed, and that his Honour held to the preliminary view he had expressed in the earlier exchanges (p 45–6):

   I’ve indicated, I think, as clearly as I reasonably can that, subject to [counsel for the solicitors] talking me out of it, I’m reasonably satisfied that there is a lien and that that has been – or that the lien is capable of being exercised because of what I regard at the moment as being your client’s inability or failure, depending on which it is, to provide adequate instructions, and on that basis there is a lien. 

7. Then, in a passage which will also assume importance when we come to the failure to lay down any terms on which the files could be delivered to the client’s new lawyer, his Honour went on to say (p 46):

   I’ve equally indicated that, in my opinion, that lien should be subject to the release of the file for the purposes of ongoing litigation, but that in turn should be subject to conditions about the payment of outstanding disbursements which have been “cherry-picked”, to adopt your word, in favour of your client to be reduced to two particular sorts of disbursements only and that there should be an equitable charge over property owned by your client, or in which she has an interest, pending the final resolution of the litigation.  And the amount of the equitable charge will be determined by the process of taxation or agreement in due course.  That seems to me to be the logical way of proceeding. 

8. The client’s counsel then engaged with the bench about how details were to be given concerning properties which might be the subject of the “equitable charge”.  When this was completed, the following exchange occurred with the solicitors’ counsel after his Honour suggested a short adjournment (p 47):

   [COUNSEL FOR THE SOLICITORS]:   If we could.  I just need – particularly in light of your Honour’s indications, if I could speak with my client briefly, yes. 

   HIS HONOUR:   Well, it would be sensible for you each to talk about it.  I’ve given some indications.  It will take me some time to write a judgment.  There would seem to have been some basis upon which you might reach some agreement about these things, but that’s a matter for you.  I will write the judgment if it’s necessary. 

9. After the adjournment, counsel for the solicitors resumed by saying (p 47–8):

   [COUNSEL FOR THE SOLICITORS]:   If your Honour pleases.  Given your Honour’s indication before the break, I’m not sure it’s necessary for me to address much of what my learned friend has submitted this morning.

   HIS HONOUR:   Yes, well ‑ ‑ -

   [COUNSEL FOR THE SOLICITORS]:   So I will address – I’m sorry, your Honour.

   HIS HONOUR:   No.  I was going to say you take me to what you want to take me to.  But, yes, I think that’s probably a reasonable comment…

10. Given what his Honour had said, the solicitors’ counsel made no submissions about the existence of the lien, and instead focussed on the orders that might be made consistent with a finding there was a lien.  Having completed those submissions, counsel turned to the issue of costs (p 53):

    [COUNSEL FOR THE SOLICITORS]:   This may be premature, because your Honour hasn’t written his judgment, but there is the question of costs.  Given that your Honour is proposing making a finding that the lien exists in favour of [the solicitors], in my submission, they are entitled to their costs of, and incidental to, this application.

11. His Honour engaged with counsel about that issue until the question of offers of settlement arose, when this exchange occurred (p 54):

    [COUNSEL FOR THE SOLICITORS]:   There are various reasons where indemnity costs may be ordered.  Some of them depend on the conduct of the parties, but one is what might be called an imprudent refusal to accept an offer of compromise.  And it’s on that basis ‑ ‑ ‑ 

    HIS HONOUR:   Well, hang on.  That’s a matter that you may need to wait until I’ve made my orders about before you can put that.

    [COUNSEL FOR THE SOLICITORS]:   If your Honour pleases.  Yes.  Then, perhaps, if we wait until the orders ‑ ‑ ‑ 

    HIS HONOUR:   I think that would be sensible.

    [COUNSEL FOR THE SOLICITORS]:   ‑ ‑ ‑ and reserve the question of costs.  Yes.

    HIS HONOUR:   I think that’s sensible, because there have been assertions there have been various offers made.

12. His Honour then reverted to the issue of whether the solicitors were entitled to terminate the retainer, as appears from these remarks directed to counsel for the solicitors (p 54):

    HIS HONOUR: … So if I can just make sure that I haven’t, in some way, misled you from, or guided you away from, making submissions you feel are important.  If I were to disposed to – which, at the moment, I am – to find that your client was entitled to terminate her retainer, because of a failure on the part of [the client], properly, to provide instructions or to cooperate sufficiently to enable the solicitor, properly, to perform her duties – that would generate the lien that was discussed.  And the lien, however, would not suffice to prevent the file being made available, upon request, for the purposes of the continuing litigation.

13. His Honour went on to discuss the terms on which the files might be made available to the client’s new lawyer.  Neither his Honour, nor counsel, returned to the issue of whether the solicitors were entitled to exercise a lien.

Leave to appeal

1. Counsel for the client submitted that the orders impugned are not interlocutory and that leave to appeal was therefore not needed.  Although counsel for the solicitors agreed, we are not convinced.  Even though the controversy relating to the entitlement to a lien was resolved on a final basis, we consider that the decision has not finally determined the parties’ rights.  As there is accordingly reason to consider that leave to appeal is required, and given the parties’ joint position, we will grant leave to appeal to the extent leave is necessary.

The grounds of appeal

1. The grounds of appeal were directed only to the finding that the solicitors were entitled to exercise a lien.  There was no fall-back position challenging the orders his Honour made (or failed to make) in the event we conclude there was no error in the finding that the solicitors were entitled to their lien.  This is a subject to which we will nevertheless return.

Ground 1 – Adequacy of reasons

1. Ground 1 asserts that the reasons delivered on 17 February 2016 “provide no adequate reasoning” and that therefore “there can be no confidence that the decision was based upon a proper reasoned analysis of the evidence and the application of relevant legal principles”.

2. The assumption in Ground 1 is that the only reasons to which we can have regard were those delivered on 17 February 2016.  The solicitors contend that this assumption is wrong, and that we are not only entitled to, but obliged to, consider the “reasons” which were given during the closing oral submissions.

3. We accept that when the trial concluded, the primary judge intended to deliver written reasons (assuming the parties could not reach an agreement).  It is also clear that his Honour intended that his reasons would deal with the argument about the entitlement to the lien, as well as with the terms on which the files could be made available to the new lawyer.  However, it is apparent that when his Honour eventually came to write his judgment, he took time to “reread in some detail the transcript” (written reasons at [30]) and decided it was unnecessary to give more reasons than those already given during the oral submissions.  We read his Honour’s written judgment as formally incorporating those earlier oral reasons.

4. The passages of the reasons we highlighted above, especially those at [32] and [33], satisfy us that his Honour intended that his written remarks about the existence of the lien be treated only as background, or as a summary of reasons already given.  The matter that was the real subject of his written reasons was the security to be provided to permit the release of the files to the new lawyer.

5. We find little to recommend his Honour’s approach, since it requires the parties (and the appellate court) to trawl over the transcript to glean the reasons of the court, which have been given only in the course of “exchanges”.  One of the significant difficulties in such an approach is that it also requires the appellate court to determine whether remarks made during “exchanges” are to be regarded as constituting the reasons or merely as a testing of the arguments.[7] 

   [7]  The approach also denies convenient disclosure of the court’s reasoning to the public, which is another purpose of giving reasons: Commonwealth of Australia v Pharmacy Guild of Australia (1989) 91 ALR 65 at 88.

6. In making these observations, we have in mind what was said in the High Court in Johnson v Johnson (2000) 201 CLR 488 when discussing applications for disqualification of a judge for bias (footnotes omitted):

   13 …At the trial level, modern judges, responding to a need for more active case management, intervene in the conduct of cases to an extent that may surprise a person who came to court expecting a judge to remain, until the moment of pronouncement of judgment, as inscrutable as the Sphinx. In Vakauta v Kelly Brennan, Deane and Gaudron JJ, referring both to trial and appellate proceedings, spoke of “the dialogue between Bench and Bar which is so helpful in the identification of real issues and real problems in a particular case”. Judges, at trial or appellate level, who, in exchanges with counsel, express tentative views which reflect a certain tendency of mind, are not on that account alone to be taken to indicate prejudgment. Judges are not expected to wait until the end of a case before they start thinking about the issues, or to sit mute while evidence is advanced and arguments are presented. On the contrary, they will often form tentative opinions on matters in issue, and counsel are usually assisted by hearing those opinions, and being given an opportunity to deal with them.

7. Nevertheless, we accept that remarks from the bench during the course of submissions are not always to be treated merely as “tentative opinions”.  In R v Lennon (1984) 38 SASR 356, King CJ said at 360–1:

   Generally speaking, it is wrong to have regard to what a Judge may say in argument as indicating reasons for his final decision. Remarks made arguendo are designed to elicit argument and to shape the course of the argument and are made without the full consideration which is given before a final decision is made. In the present case, however, his Honour's remarks to counsel were clearly intended not to elicit argument but to explain his reasons for what he proposed to do. There being no other reasons, it is reasonable to regard them as his Honour's reasons.    

8. While in the earlier part of the addresses, Faulks DCJ expressed his views only for them to be challenged, it is apparent from all that unfolded that the client’s arguments did not find favour.  The essential purpose of giving reasons is to ensure the parties understand why the decision was reached.  The parties could have been left in no doubt, after what was said in court, that the client’s case had failed because the client had not provided “reasonable instructions in a timely way”.  If there was any doubt, such would have been dispelled when the written reasons adopted the remarks made orally. 

9. The primary judge was right to say, as he did at the outset of his written reasons that “the parameters of the dispute fell within fairly narrow compass” (at [2]).  Either the evidence established that the solicitors had a just cause for terminating the retainer or it did not.  We accept that it would have been preferable for his Honour, when resolving that issue, to have laid out, either in an ex tempore judgment or in written reasons, the evidence relied upon.[8]  However, the evidence was in many respects not controversial and was at the forefront of the minds of both bench and bar during the oral submissions.[9] To the extent it was controversial, it is apparent his Honour accepted the solicitors’ evidence, and found the client’s evidence to be   y y”  .[10]

   [8]  Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 at 443 per Meagher JA.

   [9]  For the sake of completeness, we have set out in a second addendum to these reasons a narrative of some of the evidence relating to the difficulty the solicitors experienced in obtaining instructions.

   [10]  Transcript, 1 April 2014, p 41.

10. In being prepared to treat his Honour’s remarks during closing addresses as part of the judgment, we respectfully adopt what Newnes and Murphy JJA said in Bonney v Compass Group (Australia) Pty Ltd [2015] WASCA 6:

    18What is required by way of reasons in a particular case will vary according to the nature of the case and the issues raised by the parties.  Reasons do not need to be lengthy and elaborate, nor do they need to refer to all of the evidence led in the proceedings or every submission advanced by the parties. The function of reasons is to provide procedural fairness to a litigant who is entitled to know why he or she has been successful or unsuccessful, and to allow an appeal court to determine whether the decision was based on an appealable error.  Reasons will be sufficient if they disclose the reasoning process which led to the result with sufficient certainty to achieve those ends:  Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273 [27]; SNF (Australia) Pty Ltd v Jones [2008] WASCA 121 [32]. In cases where no fact-finding is involved, the reasons for decision may be sufficiently apparent from what was said by the judge in the course of argument: see Deeks v Little Moreton Trading Pty Ltd (1995) 14 WAR 58, 60–61, 66.

    19In this case, there was no oral evidence and no issues of fact had to be resolved.  The questions of law raised by Ms Bonney were straight-forward and his Honour’s reasons were delivered immediately following the conclusion of the oral argument.  In the course of Ms Bonney's oral submissions, there had been a number of exchanges between Ms Bonney and the primary judge in which his Honour had attempted to clarify the points Ms Bonney sought to make and had pointed out the difficulties with them.  His Honour’s reasons must be read in the context of those exchanges.

    20There is no substance in the complaint about the primary judge's reasons in respect of the first issue of law identified by Ms Bonney.  His Honour’s reasoning is sufficiently explained.  We might also note that his reasons are, in substance, a reiteration of what he had said to Ms Bonney in the course of argument.

11. To like effect, Brinsden J said in Stojkovski v Fitzgerald [1989] WAR 328 at 335:

    The judge in this case gave an ex tempore judgment and did give some reasons for his decision but the appellant says he has failed to give adequate reasons. In his reasons for judgment, a draft which I have read, Wallace J set out in full what his Honour said when he purported to deliver his ex tempore judgment. However to those reasons should be added what his Honour said in exchanges with counsel for the appellant at the trial during counsel’s final address. I do that for two reasons. First where an ex tempore judgment so closely follows statements made by the judge to counsel of such a kind as to reveal that he has made up his mind, it seems only proper to include those statements along with what was said during the ex tempore judgment as being the whole expression of his reasons. Secondly this ex tempore judgment in fact refers to what he said to counsel during counsel’s final address. In considering therefore whether his Honour’s reasons may be considered adequate I propose to look at what he said to counsel and what he said when delivering his ex tempore judgment.

12. We recognise that the primary judge did not deliver an ex tempore judgment, and that his reasons were published nearly two years after trial.  However, his Honour recorded that he had reread the exchanges that occurred during the argument, and decided that these explained the decision reached.  When regard is had to the written reasons and the oral remarks, the pathway by which the decision was reached is clear.  The finding that the client had failed to “provide reasonable instructions in a timely way” did not require more elaborate reasons than were given during argument.[11]  His Honour also did not err in failing to discuss the “relevant legal principles”, since we consider he was entitled to accept that it was common ground that such a finding would be determinative of the solicitors’ entitlement to exercise the lien.[12]    

    [11]  Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 at 442 per Meagher JA.

    [12]  Our reasons for so concluding will be explained when we come to Grounds 7 and 8.

1. Ground 1 therefore fails.

Ground 2 – Failure to explain delay

1. Ground 2 contends that:

   2.The Reasons make no comment on, and do not provide any explanation about, the delay from the conclusion of the hearing of the proceedings on 1 April 2014 to the delivery of the judgment on 17 February 2016. Having regard to the absence of any adequate reasoning, it appears that the judgment was not based upon a proper reasoned analysis of the evidence and the application of relevant legal principles.

2. It is not clear from reading his Honour’s judgment precisely what occurred between the time the decision was reserved and the time the reasons were delivered.  It is apparent, however, that there were communications between his chambers and the parties, and that part of the delay at least was explained by his Honour waiting for information which would have allowed him to impose the terms of security he had foreshadowed.   

3. In any event, the client accepted that delay in itself does not provide a sufficient basis for an appeal to succeed.  But it was contended that the failure to provide any reason for the delay “gives justification for very carefully scrutinising the Reasons to see whether they disclose that all relevant issues were considered and dealt with properly”.  This submission is in accordance with the authorities discussed by the Full Court in Rollings v Rollings (2009) 230 FLR 396.

4. Given the view we have reached about the status of his Honour’s observations during the oral submissions, the client’s complaint relating to the delay cannot be focused on the decision relating to the existence of the lien.  The delay was in his Honour pronouncing his orders and dealing (or failing to deal) with the terms on which the files might be given to the new lawyer.  We will consider the impact of that delay when we come to consider that part of the decision. 

Ground 3 – Absence of proper analysis of the evidence

1. This ground echoes Ground 1, since it asserts that the reasons of the primary judge “do not contain a proper and reasoned analysis of any of the evidence in relation to any relevant matter”.

2. However valid this complaint may have been if applied only to the written reasons, we do not accept that it has merit when applied to the remarks his Honour made in the oral submissions.  The fundamental facts on which his Honour had to make his decision relating to the existence of the lien were not in issue.  To the extent there were any, the differing versions of those facts were resolved by the credibility finding against the client mentioned earlier. 

3. In our view, the evidence did not require more “analysis” than was undertaken in the course of oral exchanges.  Thus, for example, his Honour had to consider whether the instructions the solicitors sought from the client were reasonably required for the litigation, but his Honour addressed that issue and concluded they were. He also considered, but did not accept, the proposition that adequate instructions had been given in the solicitors’ consultations with the client (and her sister).

4. What was required was for the primary judge to determine whether the evidence established that the client had failed to provide reasonable instructions in a timely way to such an extent that it provided the solicitors with just cause for ceasing to act.  That required the primary judge to apply a subjective judgment, which involved a choice between only two possible outcomes.  Sufficient reasons for that subjective judgment were given during the argument.

5. Ground 3 therefore lacks merit.

Ground 4 – Reliance on extrinsic matters

1. By this ground it is claimed that:

   4.There was no evidence before the trial Court to support the comment at paragraph 17 of the Reasons that the [client] had sought publicity recently. This comment indicates that the learned trial judge referred to extrinsic matters that he should not have and has taken them into account in arriving at his decision.

2. Counsel for the client contended that when this complaint is coupled with other matters mentioned in his submissions, his Honour’s reliance on extrinsic material indicated that he had “failed to follow the correct reasoning process in making the decision”.

3. There is no merit in this complaint.  While his Honour’s reference to a newspaper was unorthodox, we are satisfied that it formed no part of the decision-making process, as it related only to the question of whether the client’s solicitors were still representing her.  His Honour was already aware of that fact as a result of communications between his chambers and the parties. 

4. This ground therefore lacks merit.

Ground 5 – Error in findings relating to client’s responses to solicitors

1. This ground asserts that:

   5. The conclusions stated in paragraphs 19 and 20 of the Reasons to the effect that the [client] was not prompt and reasonable in her response to requests for instructions from [the solicitors]:

   5.1.     Were not supported by any findings of fact;

   5.2.Were not based upon a reasoned analysis of all of the evidence relating to the circumstances leading up to the termination of the retainer;

   5.3.     Were not open on the evidence having regard to:

   (A) The extensive work that the [solicitors] performed for the [client] at all material times before the retainer was terminated (including in October, November and December 2010);

   (B) The communications that occurred between the [client] and the [solicitors] in October, November and December 2010;

   (C) The personal attendances between the [client] and [the solicitors’ principal] during October, November and December 2010;

   5.4.Were wrong having regard to all of the evidence relating to the circumstances leading up to the termination of the retainer.

2. Ground 5.1 lacks merit as the essential facts were not in issue.  To the extent they were contentious, we repeat that his Honour found the client to be an unsatisfactory witness, and largely accepted the evidence of the solicitors.  This included the evidence that the solicitors had closed their office to all other clients over Christmas 2010 to attend to the client’s pressing affairs, only then to receive a message on 20 December 2010 advising she would not see them until 17 January 2011.  In her evidence, the solicitors’ principal agreed that this was the “final straw”,[13] coming on top of what his Honour called the “almost invariably relatively perfunctory” responses to requests for instructions.[14]

   [13]  Transcript, 4 March 2014, p 110.

   [14]  Transcript 1 April 2014, p 17.  And at p 14 his Honour said the client had answered requests for information “in some respects dismissively, saying, ‘I’m not going to tell you,’ ‘I might,’ or whatever else – one-line, one-word answers – when obviously these were crucial matters for the further conduct of the litigation”.

3. Ground 5.2 raises the same issue as Ground 3 and suffers from the same defect.  Further “analysis” was not needed.  His Honour dealt with each of the propositions advanced by the client’s counsel during argument, and explained why he did not accept them.  The cumulative effect was the client’s case failed. 

4. Ground 5.3 asserts that his Honour’s conclusion that the client was not prompt and reasonable in her responses to requests for instructions was not open on the evidence.  In support of this proposition, particular reliance was placed on: the “extensive work” that the solicitors had been able to do in conducting the matrimonial litigation; the various communications between the client and solicitors; and the attendances by the client on the solicitors in the months prior to the termination of the retainer. 

5. However, his Honour was well aware of these things.  This emerges from the exchanges during oral submissions.[15]  His Honour nevertheless concluded that the conduct of the solicitors was “entirely reasonable” and that the conduct of the client was “just not reasonable”.[16]  We consider that these conclusions were open to his Honour on the evidence.

   [15] See especially transcript, 1 April 2014, p 18 onwards.

   [16]  Transcript, 1 April 2014, p 24.

6. We therefore consider Ground 5.3 also lacks merit, and Ground 5.4 does not require separate consideration.

Ground 6 – Failure to find in favour of the client

1. This ground claims that his Honour “should have concluded that the [solicitors] terminated the retainer with the [client] without a proper legal cause to do so”.  This is nothing more than a complaint that the client’s case failed, and is therefore not a proper ground of appeal.

Ground 7 – Failure to find the true reason for terminating the retainer

1. By this ground it is averred that:

   7.The learned trial judge should have concluded that the [solicitors] terminated the retainer with the [client] for one or more of the following reasons, which were not true:

   7.1.     The [client] had instructed other solicitors;

   7.2.The [solicitors were] in a conflict with [their] duty to not mislead the Court and [their] duty to act in the best interests of the [client];

   7.3.     The [client] had not provided honest instructions;

   7.4.The [client] had not at all times provided reasonable cooperation.

2. In order to give context to this complaint, we set out part of the letter the solicitors sent to the client terminating the retainer on 20 December 2010:

   [17]

   [17]  .

   
   

   e

3. The primary judge dealt with the issue raised in Ground 7.1 in his written reasons.  He found at [20] that while the solicitors “held a deep-seated … conviction” that the client had instructed other solicitors, he was not persuaded this was so.  However, his Honour was right in concluding that it was irrelevant whether the client had engaged other solicitors if the client had failed to provide reasonable instructions in a timely way, since it was accepted that that fact alone would provide just cause to terminate the retainer.[18]  Notwithstanding everything they said in their termination letter, it is apparent the solicitors formally relied on the difficulty in obtaining instructions when ending the retainer. 

   [18]  Transcript, 1 April 2014, p 12.

4. The primary judge also dealt with the issue raised by Ground 7.2 in the course of exchanges during the closing addresses.  His Honour accepted there was “no evidence that there was an actual conflict” (transcript, 1 April 2014, p 26), but went on to say that there was

   evidence to suggest that there was, for all practical purposes, a proper basis for saying that the confidence that might properly be expected in the relationship between solicitor and client had been irretrievably broken.

5. The issue raised in Ground 7.3 was also touched on in the course of closing submissions, as can be seen from the following passage (p 10–11):

6. Although we accept that the solicitors implied in their letter terminating the retainer that  , we consider his Honour was correct in understanding that the gravamen of the solicitors’ concerns was that the client had not behaved “cooperatively in providing information as required in a timely manner”.   

7. As to Ground 7.4 his Honour did, in effect, find that the client had not “provided reasonable cooperation”.  We have already said we consider it was open to his Honour to reach that conclusion.

8. Contrary to the argument advanced in support of this entire ground of appeal, it was unnecessary for the primary judge to attempt to ascertain the “real” reason for the solicitors deciding to cease to act.  His Honour only had to consider the reasons given.  If they were accepted and were sufficient to establish a legal basis for ceasing to act, it did not matter if the solicitors also had other reasons.  

9. For these reasons, Ground 7 lacks merit.

Ground 8 – Error in application of legal principle

1. By this ground it is asserted that:

   8.There is no legal principle that permits a solicitor to terminate a retainer with a client where the client is not prompt and reasonable in responding to requests for instructions from the solicitor.

2. Rather than addressing the proposition that there is no legal principle to the effect stated in the ground, the client’s Summary of Argument merely repeated complaints about the adequacy of the reasons. 

3. We were not taken to the record to show that the client ever asserted before the primary judge that failure to provide reasonable instructions in a timely way could never provide just cause for terminating a retainer. [19]  On the contrary, the following exchange occurred during the closing addresses (p 12–13):

   HIS HONOUR …but, leaving that to one side, if, in fact, your client had failed properly to provide the cooperation and instructions that were necessary for the proper conduct of her case, that was a ground in itself for termination, and recited as a ground. 

   [COUNSEL FOR THE RESPONDENT]:   Yes.  Yes, your Honour.  I agree…

   …

   [COUNSEL FOR THE RESPONDENT]:   Yes.  So the assertion, your Honour, that the [client] had failed to give proper and adequate instruction has to be looked at in the level of detail…

   [19]  The client did submit that the clause in the retainer agreement permitting the solicitors to cease acting if they experienced “difficulties in communicating with [the client]” was “not particularly helpful” and would permit a solicitor to “quite easily” make a “subjective decision”, and that this could not be relied upon as “just cause” (client’s closing written submissions at [25]–[26]).  However, the solicitors did not rely at trial on this provision, accepting instead that they needed to show “just cause”. Paragraph 16 of the retainer was mentioned in the termination letter, but was not mentioned in the solicitors’ Case Outline or in their closing written submissions, and to the best of our knowledge it was not mentioned during the trial. 

4. We asked counsel if there was authority to establish definitively that failure to give “prompt and reasonable instructions” could be sufficient to justify a solicitor terminating a retainer.  Counsel could not refer us to any authority, but we accept the submission of the solicitors’ counsel that specific authority is not needed since the test is whether there was “just cause” to terminate.[20]  Counsel for the client did not contend to the contrary.[21]

   [20]  Transcript, 11 October 2016, p 61.

   [21]   Transcript, 11 October 2016, p 68.

5. In our view, the “just cause” test cannot be constrained in the way Ground 8 suggests it might be, since each case will turn on its own facts.  The decision as to whether a failure to give prompt and reasonable instructions amounts to “just cause” requires the application of sound judgment rather than reliance on some formula or principle of law.[22]

   [22] South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd; Mortensen v Laing [1992] 2 NZLR 282 at 294 per Cooke P.

6. There is therefore no merit in this ground.

Grounds 9, 11 and 12 – Failure to consider a legal principle relating to storage

1. Ground 11 contends that:

   11.The learned trial judge gave no consideration to the legal principle that where a solicitor asserts a lien over a client’s file after the solicitor/client relationship ends, the solicitor is not entitled to charge the client for any storage costs.

2. Ground 9 is linked to Ground 11.  It asserts that:

   9.The learned trial judge gave no consideration to the legal principle that a claim to a lien is lost if it is claimed for a wrong cause or the wrong amount.

3. The “wrong cause” or “wrong amount” mentioned in Ground 9 relates to the storage costs for the client’s files after the solicitors had ceased acting.  The “legal principle” is the one set out in the following dicta of Finkelstein J in White v Bini [2003] FCA 669, which counsel for the client cited to his Honour (original emphasis):

   [10]There is another basis for rejecting Mr Bini’s lien. It is trite law that a lien will be lost if it is claimed for the wrong cause or the wrong amount: Automobile & General Finance Co. Ltd v Cowley-Cooper (1948) 49 SR (NSW) 31, 37. A lien will also be lost if a person claims it for two debts (one due and one not due) and intimates that he will not part with possession unless both debts are satisfied: Jones v Tarleton (1842) 152 ER 285; Kerford v Mondel (1859) 28 LJ (Ex) 303. In Albemarle Supply Co, Ltd v Hind and Co [1928] 1 KB 307, 318-319, Scrutton LJ said:

   “A person claiming a lien must either claim it for a definite amount, or give the owner particulars from which he himself can calculate the amount for which the lien is due. The owner must then in the absence of express agreement tender an amount covering the lien really existing. If he does not, unless excused, he has no answer to a claim of lien. He may be excused from tendering (1.) if he has no knowledge or means of knowledge of the right amount; (2.) if the person claiming the lien for a wrong cause or amount makes it clear that he will not release the goods unless his full claim is satisfied, and that amount is wrongful. The fact that the claim is made for more that [sic] the right amount does not matter unless the claimant gives no particulars from which the right amount can be calculated, or makes it clear that he insists on the full amount of the right claimed.”       

4. In his submissions at trial, counsel for the client asserted that the solicitors had impermissibly claimed the storage costs after the termination of the retainer, and had made clear that they would insist upon payment of those costs pursuant to the lien.  It was said they were not entitled to do so because:

   40.Where a solicitor asserts a lien over a client’s file after the solicitor/client relationship ends, the solicitor is no longer holding the file as an agent of the client but is doing so for the solicitor’s own interests and purposes. In those circumstances the solicitor is not entitled to charge the client for any storage costs.

5. The authorities given to support this proposition were Somes v British Empire Shipping (1858) E B & E 353 (“Somes”) and Gilgandra Marketing Co-Operative Limited v Australian Commodity & Merchandise Pty Ltd (in liquidation) & Ors (No. 3) [2011] NSWSC 69 at [17] (“Gilgandra Marketing”). 

6. His Honour did not engage directly with this part of the client’s argument in his written reasons, but he did make passing reference to the issue of the storage costs when he was explaining the effect of his decision:

   26.The lien continues until it is terminated by payment of the solicitor’s fees.  It is open to [the client] to make arrangements directly with [the solicitors] to provide appropriate security for her costs if she wishes to have access to the file, or alternatively to pay the outstanding bill.  That bill includes the cost of storage up to the present time, or until the storage ends by the removal of the file by [the client]. 

   27.I recognise that this arrangement is far from satisfactory so far as [the solicitors] is concerned.  [The solicitors’] contract with Fort Knox continues and no doubt Fort Knox will enforce that contract against the firm and extract from the firm rental for the space in which the file is stored. 

   28.I am satisfied that [the client] acquiesced in the storage arrangements and that the cost of storage is a proper disbursement recoverable from the [client]… 

7. Although his Honour did not deal with the client’s argument on this topic in his written reasons, he had already given short shrift to the proposition during the oral submissions (transcript, 1 April 2014, p 27–8):  

   [COUNSEL FOR THE RESPONDENT]: …I refer to the storage costs issue, your Honour.  At paragraph 38 of my outline I refer to the legal principles there and it’s my submission, your Honour, that what I’ve said there – it’s clear there would be no basis for your Honour to actually make an order now to require a sum of money to be paid to [the solicitors] for storage costs. 

   HIS HONOUR:   What are they supposed to do?  It’s not disputed, and your client conceded, that it was agreed between [the solicitors] and her that the documents would be stored in Fort Knox.  Now, the retainer is terminated.  She wants the file.  The solicitors say, “No, we won’t give you the file for a whole variety of reasons.”  Right or wrong doesn’t matter very much, but assume for a moment that, as at that point, as you suggest in your submissions, the retainer is terminated, what are the solicitors to do?  They can’t just sort of throw them up in the air into some physical cloud and say, “They will remain here.”  And your client was not in a position to do it.  She didn’t – so far as I’m aware, and there was never any suggestion she did – make the offer, “I will continue to pay for these files to be stored here on my behalf now.”  The solicitors could not dispose of the file.  They had to keep them in there.  Therefore, it’s an expense that’s necessarily incurred in relation to your client’s matter.  It just beggars belief that you would suggest that they suddenly become responsible at the end of that time. 

   [COUNSEL FOR THE RESPONDENT]:   Well, firstly, your Honour, the legal principles that I’ve stated in paragraph 40 of my submissions[23] are correct, and that is I submit the law and I would ask your Honour to apply the principles that I’ve stated there. Secondly, your Honour, I have in my outline referred to ‑ ‑ ‑ 

   HIS HONOUR:   Can I respectfully suggest that an 1858 English – and I don’t even know what court it was – decision is scarcely binding upon me, and I would be astonished to find – and I concede I haven’t read it – the Gilgandra Marketing case is certainly not binding on me either, but assuming that it was in some ways similar, I would be very surprised if the particular circumstances of this case were reflected in the ratio decidendi of that case, and I would be astonished that, in a situation where a person has incurred an expense in relation to the matter and the retainer is terminated, they have no choice except to continue the storage, short of shredding the material, which your client could quite rightly complain about – no offer from your client to take it over in some way or to keep it safe or to move it to a neutral locality – there is no other choice for a solicitor but to continue to incur the expenses, which is the evidence.

   Your client hasn’t been paying it, so the evidence is the solicitors have continued to incur the cost, which they should properly do until such time as these matters are resolved, which they have done, by bringing the matter to court to enable it to work.  If you tell me, as you did a moment ago, that this is the law, as if in some way I’m obliged to accept the fact that you tell me it’s the law, then you’re going to have to do a bit better than that.  I will need to have a good look at the New South Wales case but I’m not the slightest bit interested in Soames [sic] & The British Empire Shipping in 1858.

   [23] It was at [40] of his submissions that counsel for the client referred to Somes and Gilgandra Marketing.

1. We would not have been as ready as his Honour to discount an authority in this area of the law merely because of its antiquity.[24]  Had his Honour taken the time to look at the more contemporary “New South Wales case” he mentioned, namely Gilgandra Marketing, he would have found that the judge there relied on that ancient authority when stating the applicable law in these terms at [17]:

   In the general law of liens the principle is clear that a person having a lien on a chattel who keeps it for the purpose of enforcing his lien cannot make any claim against the owner for the cost of so keeping it: Somes v British Empire Shipping Co Ltd (1860) 8 HL Cas 338.

   [24]  His Honour may have realised the importance of Somes had it also been cited by its other citation, namely (1860) 8 HL Cas 338, since that would have drawn attention to the fact that the 1858 decision of the Court of Queen’s Bench was affirmed by the House of Lords.

2. While the “Somes principle” may be clear, it is also “riddled with exceptions”.[25]  The principle, together with its many exceptions, was discussed recently in Metall Market OOO v Vitorio Shipping Company Limited [2014] QB 760 (“The Lehmann Timber”). Having completed his thorough examination of the case law, Rix LJ, with whom the other members of the English Court of Appeal concurred, said at [90]:

   In concluding this passage of my judgment, it is relevant to ask, what is the Somes principle? In my judgment, there are two principles, but no authority has been cited to me that they are of general application outside the case of the artificer's lien. The first is that the common law remedy of an artificer’s lien does not attach to it (or contain within it) a right of claim to the expenses of enforcing or exercising it. It follows that if such expenses are to be claimed they have to be found either in contractual provision or in damages for breach of contract. The second is that there is no lien for such expenses, unless contract provides for one. That second rule must in any event follow from the first. Whereas the Somes case is authority for these principles, the rationale for them is somewhat uncertain, other than the absence of prior authority for them. In any event, the Somes case cannot be regarded as any real authority as to how a contract is to be interpreted, that is a matter of general law and contract interpretation. Moreover, there was no discussion in the Somes case as to what the consequence of the customer lienor’s breach of contract might be. That is a real defect in its rationality.[26]

   [25]  Julian Cooke et al, Voyage Charters (CRC Press, 4^th ed, 2014) at [17.37].

   [26]  The learned authors of Voyage Charters describe the practical effect of the decision in The Lehmann Timber as “far-reaching” and conclude that the general rule might now be more accurately stated as being “that the exercise of a lien may not of itself create a cause of action to recover the expense incurred thereby”.

3. The Somes principle upon which counsel for the client so heavily relied is therefore subject to any binding contract to the contrary.  As Rix LJ pointed out in The Lehmann Timber at [65], the decision in Somes itself ultimately turned on the question of whether it could be inferred that there was a prior contract which incorporated a requirement for payment of what can loosely be called “storage costs”.  That question was resolved in that case in favour of the owner of the property who challenged the right of the other party to exercise a lien. 

4. In the present case, there is no need to infer the existence of a contract for payment of storage costs, since it was not in dispute that a contract existed, and that the client was to be responsible for the costs.  The Somes principle simply did not apply, since the client’s obligation to meet the costs stood to be assessed by reference to the contract.  Although the primary judge may not have been acquainted with the authorities, he readily appreciated that nothing advanced by the client would justify her being excused from her contractual obligation.

5. Even if the solicitors were not entitled to reimbursement of the storage costs, we reject the argument that this meant their lien was lost because they had claimed payment of those costs.  Here we respectfully adopt the analysis in Stoker v Picken (2012) 209 FCR 132, where it had also been submitted that a lien was lost by a wrongful claim for storage fees. Dowsett J said:

   29 In support of this submission, the appellant relies upon the decision of the House of Lords in Somes v British Empire Shipping Company (1860) 8 HL Cas 338 at 344-355; 11 ER 459 at 461-7 (Somes), and that of McGill DCJ in Bowenbrae Pty Ltd v Flying Fighters Maintenance and Restoration Pty Ltd  [2009] QDC 91 (Bowenbrae). Neither case supports the submission. Somes establishes that a bailee may not add storage charges to the lien and that if the bailor pays such amount in order to obtain possession of the chattel in question, he or she may recover the amount so paid. It is true that the decision also suggests that a bailee who makes such a claim is a “wrongdoer”. However there is no suggestion that the lien is terminated by such conduct. The decision in Bowenbrae is also of no assistance to the appellant. The case was a summary judgment application. McGill DCJ held only that the bailee could not retain the chattel pending payment of storage charges. The case says nothing about the bailee’s right to retain the chattel against payment of amounts otherwise payable and secured by the lien.

6. Dowsett J noted that the appellant in Stoker v Picken had relied also on Albemarle Supply Company Ltd v Hind & Company [1928] 1 KB 307 (“Albemarle”).  His Honour recited passages from the judgments in that case, including that of Scrutton LJ who held that the property owner has no answer to a claim of lien until he tenders an amount covering the lien already existing, even if the party claiming the lien “originally claimed for a larger amount and a different cause”. To like effect, Sargant LJ said in Albemarle at 321:

   Though the defendants claimed much too large a lien, they were entitled to a lien to a smaller extent, and the plaintiffs had the materials for ascertaining the true extent of the lien, and for making a tender accordingly. And it is clear that the plaintiffs were concerned, not with the question of amount, but with the question whether any lien at all could be created.

7. Having recited other passages, Dowsett J continued: 

   33 Albermarle [sic] establishes that it is not fatal to a lien that too much is claimed, or that claims are made for amounts which are not secured pursuant to the lien. If the owner wishes to recover possession he or she must tender the amount properly due … The requirement is that the bailor tender the amount due. The appellant did not do so by paying money into court, or by offering to pay money into his solicitor’s trust account to abide the outcome of the proceedings. Thus his claim for detinue must fail unless he was excused from tender.

   …

   36 The appellant also asserts that the respondent demonstrated an intention only to release the lien if the appellant paid the full amount claimed. It follows from Albermarle [sic] that such an assertion must go beyond a mere claim for more than is actually secured. There must be a clear indication that the lienee will only release the chattel if the full amount is paid…

8. Nothing to which we were taken indicated that the solicitors provided any indication that they would only release the documents if they were paid in full.  On the contrary, the termination letter and subsequent correspondence to the new lawyer indicated a desire to be rid of the files, preparedness to compromise on the amount to be paid, and willingness to attend mediation.[27] The client did not tender any amount in payment, under protest or otherwise, and pulled out of the mediation that was arranged.

   [27]  See for example the letters of 8 April 2011, 13 April 2011, 10 May 2011 and 2 May 2012.

9. We note also that at the time of filing of the September 2012 application seeking delivery up of the documents, the client’s new lawyer swore an affidavit in which he deposed to having a conversation with the solicitors’ principal in which she advised that “she would be prepared to discount the amount that she maintained was owed”.[28]  This conversation, taken with all of the correspondence, refutes any suggestion that the solicitors would release the files only upon payment of all outstanding fees, including the storage costs.

   [28]  The solicitors’ principal conceded this at [69] of her affidavit.

10. There is accordingly no merit in Grounds 9 and 11, and there is also no merit in Ground 12 which added nothing to other grounds already discussed.

Ground 10 – Failure to give consideration to evidence regarding wrongful claim

1. This ground asserts that his Honour “gave no consideration to the evidence relating to the issues [as to] whether the [solicitors] asserted a lien for a wrong cause or for the wrong amount”.

2. Even if this complaint was correct insofar as it deals with the written reasons, given what we have said about Grounds 9 and 11, it would not establish error.  In any event, the transcript demonstrates that the primary judge was alive to the evidence relating to the storage costs, and was properly of the view that it remained the client’s obligation to meet them notwithstanding the termination of the retainer.

Ground 13 – Wrongful claiming of storage fees as a disbursement

1. By this ground it is asserted that:

   13.The conclusion at paragraph 28 of the Reasons that the cost of storage is a proper disbursement was not based upon proper reasoning, was not justified on the evidence and was not open having regard to the legal principle referred to immediately above.

2. We have already dealt with the ground as pleaded.  However, in support of this ground, counsel for the client complained that the reasons make no mention of an argument advanced in written submissions at trial “relating to the fiduciary duty of the [solicitors] at the time the agreement dated 10 December 2010 was entered into relating to the rental premises at Carrington Street, Adelaide”.[29] 

   [29]  The premises in Carrington Street were those in which the files were stored prior to the transfer to Fort Knox.

3. The submissions at trial were in the following terms:

   121.[The solicitors] rely upon a written agreement dated 10 December 2010 by which it is alleged that [the client] agreed to pay ongoing storage costs.

   122.The agreement was entered 10 days before [the solicitors] sent the letter dated 20 December 2010 terminating the relationship.

   123.The Court should find that in those circumstances the likelihood was that at the time the written agreement was executed by [the client], [the solicitors] were intending to terminate the relationship.

   124.[The solicitors] had a fiduciary duty to [the client] to frankly disclose to her all circumstances relevant to the relationship, including the intention of [the solicitors] in relation to termination of the relationship, which was implemented shortly afterwards.

   125.[The client] says that if [the solicitors] had disclosed to her that [the solicitors were] about to terminate the relationship, she would not have executed the agreement relating to the storage fees.

   126.In the circumstances none of the alleged storage fees should be taken into account in determining what amount, if any, may have been lawfully invoiced by [the solicitors] and not yet paid by [the client].

4. The fallacy in this argument is that his Honour did not conclude that the client was obliged to meet the storage costs by virtue of the agreement of 10 December 2010, but rather because she had “acquiesced in the storage arrangements” and because “the cost of storage is a proper disbursement recoverable from the [client]” (at [28]). There was no attack made on either of those findings, and accordingly we consider the argument about the circumstances in which the written agreement was entered into is a non-issue. 

5. Furthermore, as already noted, counsel for the client conceded on appeal that the only issue was whether the solicitors were entitled to payment of storage costs for the period after the retainer ended.  Implicit in that concession is that the solicitors were not in breach of their fiduciary duty, or that any breach of that duty did not impact on the client’s obligation to meet the storage costs.

6. There is no merit in Ground 13 or in the argument advanced under its banner.

The conditions on which the files might be released

1. There being no merit in any of the grounds, the appeal should be dismissed.  This would normally follow, as the client did not have a fall-back position in case we held that the solicitors were entitled to exercise a lien.  However, at the hearing we identified what we consider to be an error of law in his Honour’s reasons relating to the approach in a case where solicitors have a lien, but the client requires the documents to prosecute the primary litigation.

2. The error appears in these paragraphs of the reasons (emphasis and errors in the original):

   21.However, even if that lien exists, that does not mean that the file should not be made available for the purposes of the continuing litigation.  As counsel for both parties submitted to me, a solicitor is obliged to make a file available at least on loan to the client or her new solicitors when litigation is continuing to enable that litigation to be completed.  This is however subject to a condition that appropriate security is given for the payment of the solicitor’s fees.  What is appropriate security will vary from matter to matter. 

   22.One of the difficulties in this matter is that [the client’s] projected share of the property of the parties as a result of the Court’s decision, is not property upon which a charge might be placed.  It is not a chose-in-action.  It is at best an inchoate right which may materialise in due course. 

   23.That having been said, there is nothing to stop the parties reaching a sensible agreement between themselves which could be recorded in a deed if necessary to ensure that upon completion of the primary matter, sufficient money will be available to ensure that the solicitors fees are paid or alternatively that some property will be accessible for the purposes of recovery of the fees.  I made this suggestion to the parties at the beginning of the proceedings and on a regular basis throughout the course of the proceedings including in final addresses.  No one seemed to want to listen. 

   24.I am informed, when I offered to both parties recently the opportunity to reopen the proceedings, that there has been no request for access to or attempted access to the client file in its current storage facility since these proceedings ended.  Perhaps the situation has been reached where [the client] does not need to have access to the file anymore.  She has certainly not provided any further information or given me any assistance with information about her financial circumstances. 

   25.In short, the resolution of the matter in my mind, at this point, is as follows:

   26.The lien continues until it is terminated by payment of the solicitor’s fees.  It is open to [the client] to make arrangements directly with [the solicitors] to provide appropriate security for her costs if she wishes to have access to the file, or alternatively to pay the outstanding bill.  That bill includes the cost of storage up to the present time, or until the storage ends by the removal of the file by [the client]. 

3. As his Honour said, at [21], it was common ground that “a solicitor is obliged to make a file available at least on loan to the client or her new solicitors when litigation is continuing to enable that litigation to be completed”.  However, his Honour went on immediately to say that this rule is “subject to a condition that appropriate security is given for the payment of the solicitor’s fees”.Both counsel properly agreed on the hearing of the appeal that this sentence, which his Honour himself emphasised, does not accurately state the law.[30]

   [30]  Transcript, 11 October 2016, pp 32, 47.  We accept that during the course of the oral submissions the primary judge made remarks indicating that he was well aware that it was not mandatory for security to be given for payment of the solicitors’ fees (transcript, 1 April 2014, pp 3, 9 and 44).  However, given the very long delay in delivery of judgment, counsel for the solicitors properly did not submit that we could have regard to the transcript in dealing with this aspect of the dispute.

4. The general rule relating to a solicitor’s lien, together with the “litigation exception” to the rule, was stated in these terms by Templeman LJ in Gamlen Chemical Co (UK) Ltd v Rochem Ltd [1980] 1 WLR 614 at 624 (“Gamlen”): 

   The solicitor himself may determine his retainer during an action for reasonable cause, such as the failure of the client to keep the solicitor in funds to meet his costs and disbursements; but in that case the solicitor’s possessory lien, i.e. his right to retain the client’s papers of any intrinsic value or not, is subject to the practice of the court which, in order to save the client’s litigation from catastrophe, orders the solicitor to hand over the client’s papers to the client’s new solicitors, provided the new solicitors undertake to preserve the original solicitor’s lien and to return the papers to the original solicitor, for what they are worth, after the end of the litigation.

5. The rationale for the “litigation exception” was explained in Rafferty v Time 2000 West Pty Limited (No 3) (2009) 257 ALR 503 (“Rafferty”) where Besanko J said:

   [35]     Difficulties arise where a solicitor’s retainer is terminated during the course of an existing proceeding. A client is likely to need the papers in order to conduct the proceeding. A failure to obtain the papers may have grave consequences in terms of the result of the proceeding. Solicitors are officers of the court and, in order to avoid the grave consequences of a client being unable to obtain his papers, the courts have exercised a jurisdiction of an equitable nature to make an order which effectively qualifies the lien, namely, an order that the papers be handed over to the client or his new solicitor upon an undertaking to return them at the conclusion of the proceeding.

6. Since an order for a solicitor to deliver up documents which are subject to a lien is equitable in character, the court has an inherent discretion to withhold the remedy.  This qualification to the “litigation exception” was acknowledged by Templeman LJ in the following passage in Gamlen at 624–5 (our emphasis):

   I wish to guard myself against possible exceptions to this general rule. The court in fact is asked to make a mandatory order obliging the original solicitor to hand over the papers to the new solicitor. An automatic order is inconsistent with the inherent, albeit judicial, discretion of the court to grant or withhold a remedy which is equitable in character. It may be, therefore, that in exceptional cases the court might impose terms where justice so required. For example, if the papers are valueless after the litigation is ended and if the client accepts that he is indebted to the original solicitor for an agreed sum and has no counterclaim, or accepts that the solicitor has admittedly paid out reasonable and proper disbursements, which must be repaid, the court might make an order which would only compel the original solicitor to hand over the papers to the new solicitor providing that in the first place the client pays to the original solicitor a sum, fixed by the court, representing the whole or part of the moneys admittedly due from the client to the original solicitor. Much would depend on the nature of the case, the stage which the litigation had reached, the conduct of the solicitor and the client respectively, and the balance of hardship which might result from the order the court is asked to make.

1. Gamlen was cited to the primary judge by both counsel, as was Rafferty.  In the latter case, Besanko J said this after his thorough review of the case law:

   [48]     It seems to me that the effect of the authorities is that the general rule is that, where the solicitor terminates the retainer, an order for production will be made. There may be exceptional circumstances which lead to a modification of the general rule. The modification of the general rule will, generally speaking, involve the imposition of terms, such as part payment or payment into court or the provision of security. In an extreme case like A, where the factors identified in [44] are present, that may lead to a refusal of an order for production. However, generally speaking, the presence of exceptional circumstances will lead to the imposition of terms.

2. Both counsel at trial recognised that it was not mandatory for the primary judge to impose terms on the delivery of the documents to the client’s new solicitors.  This can be seen from the succinct and accurate statement of the issues in the client’s Case Outline, which counsel for the solicitors adopted:[31]

   1) Did the original solicitors discharge the client or did the client discharge the solicitors?

   2) If the original solicitors discharge the client, was there good cause for the solicitors do so?

   3) The third question depends upon the first and the second answers. If there was a good cause for the solicitors to discharge the client, and the solicitors did do so, should the Court impose terms on the delivery of the client’s papers and documents by the original solicitors to the new solicitor other than the term which requires the new solicitor to undertake to preserve the lien of the original solicitors?

   [31]  The statement of issues replicates that provided by Templeman LJ in Gamlen at 625 as reframed by Cronin J in Rigoli Lawyers v Arman (2009) 40 Fam LR 676 at [23].

3. Significantly, in the written closing submissions, the third question was recast by counsel for the solicitors in the following form:

   If there was reasonable cause for the solicitors to discharge the client, what is the appropriate remedy? That is, should the court refuse a mandatory order for surrender of the file or should the court impose terms on the surrender of the client’s documents other than a term requiring the new solicitor to undertake to preserve the lien of the original solicitors (for example, by way of an equitable charge over the fruits of litigation) and return the documents at the conclusion of the litigation?[32]

   [32]   The solicitors never sought the imposition of an “equitable charge” over real estate until his Honour himself proposed such a remedy during the oral argument (transcript 1 April 2014, p 56).  

4. These formulations of the critical issues were consistent with the authorities, as they accept that an exercise of discretion is required when a court is asked to order the delivery up of documents that are the subject of a lien.  The primary judge’s failure to recognise this fact satisfies us that the discretion miscarried.[33] While it was not automatic that an order should have been made for the delivery up of the documents, his Honour should have had regard to the type of discretionary considerations referred to in Gamlen, namely “the nature of the case, the stage which the litigation had reached, the conduct of the solicitor and the client respectively, and the balance of hardship…”.

   [33]  It is apparent that his Honour, in referring to “security” at [21] had more in mind than the mere undertaking of the new solicitors to preserve the lien and return the documents at the conclusion of the proceedings.  So much is obvious from what his Honour went on to say at [22] and [23].

5. In these circumstances it was entirely proper that the solicitors agreed that the appeal must be allowed, even though this issue had not been agitated in the grounds of appeal.

Re-exercise of the discretion

1. There was discussion during oral argument about whether we should re‑exercise the primary judge’s discretion, and the possibility was mentioned of counsel having an opportunity to make further submissions about the re‑exercise.  However, having given the matter consideration we have determined that it is unnecessary to hear further from counsel, other than on some of the more specific details of the orders to be made.

2. In re-exercising the discretion, we observe that the authorities lay down that exceptional circumstances would need to exist before an order for delivery up of the files would be denied.[34]  Indeed, such circumstances would generally need to exist before terms of security would be imposed if an order for delivery up were to be made.  As Besanko J said in Rafferty:

   [49]The matters identified by Templeman LJ in Gamlen as going to whether or not a departure from the general rule is justified are as relevant to whether security is provided as they are to whether an order for production is refused. In other words, it is not the case that the only question in determining whether there should be terms such as part payment or payment into court or security is whether the client has negated an ability to pay. That is a relevant factor, no doubt, but it is only one factor among the others which have been identified.

   [34]  For an example of such a case, see A v B [1984] 1 All ER 265, which was referred to in Rafferty at [44].

3. We consider the following to be the most important matters to be taken into account in determining whether exceptional circumstances exist:

   ·The matrimonial proceedings have been on foot for more than a decade and the matter has been listed for trial in just a few months’ time;

   ·The solicitors agreed that it was essential for the conduct of the trial that the client’s new lawyer have the files;[35]

   [35]   Drummond J pointed out in Re Weedman [1996] FCA 1112 that the remarks of Templeman LJ in Gamlen “cannot be read as limiting the cases in which delivery of the former client's papers will be ordered … to those in which the client will suffer a catastrophe, in the sense of irreparable harm in conducting his litigation if denied the papers...”  See also Rigoli Lawyers v Arman (2009) 40 Fam LR 676 at [48].

   ·It could be reasonably argued that the solicitors and the client have a joint interest in the matrimonial litigation being completed,

   [36]

   [36] 

   ·Although the client has received very substantial sums from her husband by way of security for costs in the matrimonial proceedings, we are not persuaded that the client has the capacity to meet any of the amounts claimed by the solicitors, including their disbursements;[37]

   [37]  The client’s capacity to pay the $375,000 security sought by the solicitors was in issue from the outset of the trial (transcript, 3 December 2013, p 12).  Although the primary judge was sceptical about the client’s inability to meet at least the disbursements (transcript, 1 April 2014, pp 4, 5) he made no formal finding about it.

   ·Although there is dispute about the total amount of fees rendered by the solicitors, it is not in dispute that they have been paid more than $2 million for the very substantial work they have done for the client;

   ·The amount of fees outstanding is a very much smaller sum than the amount already paid, and although the client was extremely tardy in seeking to challenge the bills, she has now done so and the solicitors’ entitlement to the amount claimed is therefore in issue;

   ·While there is a vast quantity of documents involved, there is no evidence to suggest any of them will be of any value to anyone after the matrimonial litigation is concluded;

   ·We are not persuaded that the solicitors have acted in anything other than an ethical and professional manner and they appear at all times to have been willing to attend mediation and to compromise the dispute;[38]

   · 

   ·The solicitors never had security for their fees and must therefore have accepted that payment of their fees was dependent upon, inter alia, the success of the client in her matrimonial litigation; 

   ·The solicitors originally did not seek an “equitable mortgage” over property in which the client might have an interest – this idea having come unprompted from the bench;[39] and

   ·Although counsel for the client suggested to us that there may have been an injunction in place which would have prevented the client from giving security, we were not taken to any part of the record to prove this, and nor were we provided with details of such an injunction after the hearing was completed, although counsel said he would look into the position.[40]

   [38]  Although the client submitted it was relevant that the solicitors had taken nearly six years to commence debt recovery proceedings, we accept the solicitors’ submission that this is not a relevant consideration since one of the purposes of solicitors exercising a lien is to obviate the necessity for debt recovery proceedings.

   [39]  Transcript, 1 April 2014, p 56.

   [40]  Transcript, 11 October 2016, p 36.

4. These considerations, viewed together, fall well short of making this one of the exceptional cases where an order for delivery of documents should be denied, or where such an order should be accompanied by onerous conditions.  While the solicitors’ conduct cannot be criticised, the balance of convenience falls in favour of the client who has expended millions of dollars in litigation which may be compromised as a result of the unavailability of the mountain of paper created by the solicitors, for which they have already largely been paid.

5. Our decision not to impose onerous conditions will hopefully assist the client to bring the matrimonial proceedings to an end.  In our view, this is imperative not only in the interests of the client, but in the interest of the court below and other litigants.  We say this in light of the fact that the proceedings have arguably been the most protracted and resource consuming in the court’s history. 

6. We have had no regard to the Australian Solicitors’ Conduct Rules which were raised in the submissions on appeal.  Although referred to in the client’s Case Outline as something that might be cited in argument, to the best of our knowledge no other reference was made to the Conduct Rules in the course of the hearing below.  In any event they are not binding on us.[41]

   [41]  Rafferty at [50].

7. In determining that there should be an order for delivery up of the documents, it is important to bear in mind that independently of their lien, the solicitors retain the right to claim a lien over the fruits of the matrimonial litigation.  This right, and the means by which it can be enforced, were explained by Jordan CJ in Ex parte Patience; Makinson v The Minister (1940) 40 SR (NSW) 96 at 100:

   A solicitor has no lien for his costs over any property which has not come into his possession. If, however, as the result of legal proceedings in which the solicitor has acted for the client, the client obtains a judgment or award or compromise for the payment of money, although the solicitor acquires no common law title to his client’s right to receive the money or to any part of that right, he acquires a right to have his costs paid out of the money, which is analogous to the right which would be created by an equitable assignment of a corresponding part of the money by the client to the solicitor. That is to say, the solicitor has an equitable right to be paid his costs out of the money; and if he gives notice of his right to the person who is liable to pay it, only the solicitor and not the client can give a good discharge to that person for an amount of the money equivalent to the solicitor’s costs . . . If the person liable to pay refuses, after notice, to pay the costs of the solicitor, the solicitor may obtain a rule of Court directing that the amount of his costs be paid to him and not to the client; and payment by the judgment debtor to the client after notice of the solicitor’s claim is no answer to an application for such a rule . . . Further, if the client and a judgment debtor make a collusive arrangement for the purpose of defeating the solicitor’s right, the Court will enforce that right against the judgment debtor notwithstanding the arrangement and notwithstanding that no notice of the solicitor’s claim had been given to the judgment debtor prior to the arrangement.[42]

   [42]  See also Worrell v Power & Power (1993) 46 FCR 214 at 224; Stark v Dennett [2008] 2 Qd R 72 at [50]; and Chester v Cassidy Gibson Howlin (1995) FLC 92-556. In the event that the solicitors’ entitlement to the amount claimed remains in dispute at the time the litigation is concluded, appropriate relief could be sought at first instance to preserve the rights of both the client and the solicitors.

8. We know that a lien over the fruits of the litigation will be worthless if the court finds that the client has already received her entitlement.  However, quite properly, the solicitors continued to act knowing payment was not guaranteed.  Having elected, for good cause, to cease acting, they must now await the efforts of others to see whether they will be paid in full, or will instead have to be content with the couple of million dollars they have already received.[43]    

[43] 

Orders 

1. Our orders for delivery up of the files will be conditional upon the tendering of a satisfactory undertaking from new solicitors.  As presently advised, we consider an undertaking in the form of the alternative order proposed in the client’s Case Outline filed in November 2012 would be appropriate.[44]  It will be recalled that this provided for the new solicitors to undertake to:

   (a)hold all documents subject to the lien of the solicitors for costs;

   (b)afford reasonable access to the documents;

   (c)keep the documents intact and within Australia; and

   (d)return the documents on completion of the primary proceedings.

   [44]  The form of orders replicates those made by Cronin J in Rigoli Lawyers v Arman (2009) 40 Fam LR 676.

2. We recognise that the client has changed solicitors many times, and that she may be unable to obtain solicitors willing to provide such an undertaking and to represent her at trial.  However, the hearing below and the appeal were conducted on the assumption that the client will have such solicitors.  We are therefore not prepared, in making our orders, to contemplate what would need to occur if the client was left unrepresented.  If that scenario were to unfold, the issues arising would need to be first considered in the court below.

3. Although the client no longer seeks delivery of the DM Firm files, the orders we are disposed to make will be conditional upon the client or her new solicitors making arrangements to take over responsibility for the ongoing storage or destruction of those files.  We anticipate that the orders will also need to make provision relating to the release of the solicitors’ principal from her undertaking to the Supreme Court of South Australia. 

4. It is unnecessary for us to make orders dealing with the lien the solicitors will retain over the fruits of the client’s litigation.  Their entitlement to that lien arises independently of the matters which have been the subject of this appeal. 

5. The orders at the commencement of these reasons provide a timetable for the filing of Minutes of Proposed Orders if the parties cannot agree on a form of orders to give effect to our reasons.

6. It is important that confidential communications between the solicitors and the client not become known to the other party in the matrimonial proceedings, or to any judicial officer who may have the conduct of the trial.  We have therefore made provision in our orders for the editing of these reasons to remove reference to the content of privileged communications.

Costs at first instance and on appeal

1. We will set aside the costs order made by Faulks DCJ, since it was based on an outcome that differs from that we consider to have been appropriate.  

2. We did not take submissions concerning who should bear responsibility for the costs incurred in the proceedings below in the event that the appeal succeeded.  Our orders therefore provide a timetable for the filing of such submissions.[45]

   [45]  It is apparent from the transcript and from [16] of the written reasons that “without prejudice” offers of settlement were made in the proceedings below.  His Honour did not consider it necessary to have regard to them in deciding the question of costs, but clearly they may now assume greater importance.

3. We also did not take submissions relating to the costs of the appeal.  Each party has enjoyed some success.  The solicitors retain their lien, but their files are to be provided on terms less onerous than they sought.  There are, of course, other factors that may assume relevance, including offers of settlement.  Our orders therefore also provide a timetable dealing with the costs of the appeal. 

Application in an appeal

1. By Application in an Appeal filed on 23 September 2016, as modified in oral submissions, the solicitors sought that we receive as further evidence a variety of documents annexed to an affidavit sworn by the solicitors’ principal.  

2. The client consented to us receiving the Annexure numbered 1, which was the message she sent to the solicitors on 20 December 2010.  That message was referred to during the evidence at trial.  Having the “document” itself does not advance matters but, given the consent, we will receive it.

3. Counsel for the solicitors abandoned or did not press for the admission of the Annexures numbered 3, 4, 5, 6, 7, 8, 10 and 12.  Counsel for the solicitors also accepted that the Annexures numbered 9 and 11 needed to be relied upon only in the event we were to re-exercise the discretion.  Annexure 9 related only to the amount of the storage costs, and the introduction of this material would not have any impact on the re-exercise, given views we have earlier expressed. The same applies to Annexure 11, which comprises emails between the parties and the chambers of the primary judge relating to the proposed equitable charge.

4. This leaves only the Annexure numbered 2, which comprises a series of emails and letters from the solicitors to the client between 24 August 2010 and 2 November 2010.  In her affidavit in support of the Application in an Appeal, the solicitors’ principal said that these were relevant

1. No explanation was provided as to why these communications had not been put into evidence at trial.  The client has been denied the opportunity to adduce evidence relevant to them, and on that basis alone we should not receive them.

2. For these reasons, we have received into evidence only the Annexure numbered 1.  The Application in an Appeal will be otherwise dismissed.

I certify that the preceding one hundred and forty-six (146) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (May, Thackray & Ainslie-Wallace JJ) delivered on 20 February 2017.

Associate:     

Date:              20 February 2017

Addendum 1 – exchanges in oral argument

The content of this addenda has been suppressed by direction of the Full Court in order to avoid disclosure of confidential communications between the solicitors and the client.

Addendum 2 – difficulty in obtaining instructions

The content of this addenda has been suppressed by direction of the Full Court in order to avoid disclosure of confidential communications between the solicitors and the client.