Westpoint Corporation Pty Ltd v Deacons (a firm)
[2005] VSC 520
•20 July 2005
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL & EQUITY DIVISION
No. 6882 of 2005
| WESTPOINT CORPORATION PTY LTD & ORS | Plaintiffs |
| v | |
| DEACONS (A FIRM) | Defendant |
---
JUDGE: | Bongiorno J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 19 July 2005 | |
DATE OF JUDGMENT: | 20 July 2005 | |
CASE MAY BE CITED AS: | Westpoint Corporation v Deacons | |
MEDIUM NEUTRAL CITATION: | [2005] VSC 520 | |
---
Agreement for provision of legal services – ‘Legal Services Protocol’ – solicitor’s common law lien in respect of client documents – solicitor’s possession of documents – interlocutory application for discharge of lien – preservation of substance of lien – security for release of documents - RSC r 37.05
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr L. Glick SC | Schetzer, Brott & Appel |
| For the Defendant | Ms K. McMillan SC with Mr S. Maiden | Deacons |
HIS HONOUR:
Westpoint Corporation Pty Ltd is a property developer. Since 1999 it has retained Deacons, a national law firm, as its solicitors in respect of its development activities. It is said to have paid something over $5m in fees to Deacons since that time. Following difficulties over fees and their payments Westpoint entered into an agreement with Deacons on 22 April 2005 designed to provide terms upon which Deacons would provide legal services to Westpoint in future, and, in particular, terms designed to ensure the rapid settlement of fee disputes. It was called a Legal Services Protocol.
Ms McMillan SC for Deacons maintained that the document did not constitute the retainer of Deacons by Westpoint but merely regulated the relationship between the two parties. The retainer was, she submitted, constituted by Deacons' acceptance of each piece of work referred to it by the client. However nothing turns on this distinction in respect of the matter which I must determine.
The Legal Services Protocol contains a clause, Clause 20, which is entitled "Payment Terms". Clause 20.1 commences with the words:
"If Westpoint has genuine (sic) concerns relating to any item in an invoice the Westpoint legal relationship manager must contact the client relationship partner within 30 days after receiving the correctly itemised invoice in the form specified in Clause 8(c)."
The legal relationship manager and the client relationship partner are each persons designated by the agreement. The Protocol also contains a reference to the lien which a solicitor has at common law in respect of his client's documents. Clause 18 appears to modify the common law position by preserving the lien but also preserving a right in Westpoint to obtain copies of documents which are in Deacons' possession. This would appear to qualify the common law right, again not in a way that is relevant to present law purposes.
Almost immediately after the Protocol was signed a dispute arose. That dispute, which is not uncomplicated, is the subject of extensive affidavit material filed by both parties in this application. That affidavit material deposes in not unusual terms to contact between the parties including emails, letters and personal conversations. It would be inappropriate for me at this stage, to embark upon an examination of the competing contentions of fact raised by these affidavits. It would be impossible for me to do so without a trial of the issues raised, facts which of course I am unable to undertake at this early stage of the proceeding.
The dispute between Westpoint and Deacons proceeded until, on 18 May 2005, Deacons wrote to Westpoint saying that it no longer wished to act for it and sought an orderly hand over of files. This did not occur and on 29 June 2005 Westpoint filed an originating motion seeking declarations and consequential orders including orders for delivery up of all of the files and papers held by Deacons. The originating motion sought declarations which related initially to the Protocol and to its alleged unlawful repudiation by Deacons, and then to matters which arise, or are said to arise under the Legal Practice Act 1996. The application is in terms an application for declarations in respect of those matters and then for consequential orders discharging the lien and ordering the delivery up of papers in Deacons possession.
In a summons issued on the same day as the originating motion, Westpoint sought interlocutory relief in the same terms as the originating motion. However when the matter was called on yesterday Mr Glick SC for Westpoint confined his application to the discharge of the lien.
Mr Glick's argument in support of what is, in effect, a mandatory interlocutory injunction is simple. He says that on 18 May 2005 Deacons determined the retainer or retainers that they had with Westpoint, and that that fact alone constituted sufficient grounds for the lien to be discharged. He referred to, and relied upon, a judgment of Gillard, J in McKenzie v. Director General of Conservation and Natural Resources & Ors[1] in which His Honour said:
"The law is that if the solicitor terminates the retainer whether there are grounds or not for termination he is obliged to hand over the documents to the new solicitor usually on an undertaking by the new solicitor to hold them without prejudice to the solicitor’s rights to the lien and to return them intact after the completion of the proceeding. That has been the law for many years."
[1][2001] VSC 220 at [68].
He referred to a very old English case and to a more recent English case of Gamlen Chemical Company (UK) Limited v. Rochem[2] and quoted a passage from Templeman LJ in that case which he was satisfied supported the position which he had already expressed.
[2][1980] W.L.R. 614.
McKenzie’s case relates to a retainer in litigation. The cases to which Gillard J referred in his judgment also relate to retainers in litigation and a closer examination of Gamlen Chemical Company v. Rochem reveals that the court there was concerned particularly with the position of a client who was left without his documents whilst an action was proceeding against him. That may be a distinction which is of considerably more importance than Mr Glick was prepared to concede.
The matter is more fundamental than that in this case. The termination by Deacons, Mr Glick says is clear. He referred to a letter from Deacons to Westpoint of 18 May in these terms:-
"We have gone to considerable lengths over the last few months to lay the foundation for a mutually beneficial working relationship. However recent events leave us in no doubt that such a relationship will not be possible. As a result we confirm that Deacons no longer wishes to continue to act for Westpoint."
Mr Glick says that that ends the matter so far as this case is concerned. Deacons determined the retainer. But Drummond, J in another unreported case of Re Weedman [3] dealt with a not dissimilar problem and commented on the question of termination of a retainer in these terms:
"The critical question whether it is the solicitor or the client who has terminated the retainer is not to be answered by a nice evaluation of who acted first or by an exact analysis of the language used by each party at various times, in isolation from the overall context of the dealings between the parties, especially when, as here, it appears both were aware of the consequences of being the party who determines the retainer and both were, at relevant times choosing their words with care. It is the substance of the matter that is important."[4]
His Honour referred to C Com Pty Ltd v. Jiejing Pty Ltd [5] and Cross v. National Bank Limited [6].
[3]Re Weedman, [1996], BC9606375, (Unreported, Federal Court, Drummond J, 17 December 1996).
[4]Re Weedman, [1996], BC9606375, (Unreported, Federal Court, Drummond J, 17 December 1996), 9.
[5](1992) 36 FCR 524
[6](1992) QConVR 54
In the circumstances of this case it is too easy to say that Deacons determined the retainer. A perusal of the affidavit material shows that a trial of this action could well result in a finding that the retainer was determined by conduct on the part of Westpoint at some earlier time. Again it might not. It may well be that Deacons did determine the retainer. But that matter cannot, be determined on an interlocutory application such as this. All that can be said is that there is a dispute and that there is certainly argument that Deacons determined the retainer but no more than that. In the circumstances it seems to me to be unreasonable to require Deacons to give up a legal right which they have to the documents in their possession without security being supplied by the plaintiff in exchange.
The determination of a legal right by a court must, of course only ever occur in accordance with the law. In the circumstances of this case it is not clear that Deacons determined this retainer so that even if Gillard J is correct, and even if the principles which he enunciated refer to cases other than those involving litigation, the principle does not apply at this stage of this case. Rule 37.05 RSC provide a convenient procedure for the preservation of the substance of a lien whilst permitting the object of the lien to be delivered up. In the circumstances an order should go in favour of the defendant requiring the plaintiff to put up appropriate security as the price of the release of its documents.
Accordingly, the orders sought by Ms McMillan and submitted in her draft are, in general terms, appropriate.
So far as the alteration to the name of the parties is concerned, on reflection it seems to me that the appropriate order to be made is that Deacons be substituted as the defendant for the present defendant, it makes the position somewhat neater and, having regard to the concession made that it is Deacons that has at all times acted for Westpoint, no prejudice could come to the plaintiff by making that alteration.
Accordingly the orders which I shall make are that:
1. Deacons (a firm) (“Deacons”) be substituted for the defendant in the proceeding.
2. Upon the plaintiff paying the sum of $1,150,836.19 into Court, or making appropriate arrangements to secure that sum to the satisfaction of the Prothonotary, Deacons must within two clear business days following that payment;
(a) make available for collection in Melbourne by Jeffrey Appel the files referred to in Paragraph 5(a) of the plaintiff's summons dated 29 June, and
(b) make available for collection in Brisbane by a partner of Freehills the files referred to in Paragraph 5(b) of the same summons;
such files to include all notes and memoranda for which the relevant client has been charged, and all templates, standard contracts, deeds and documents in an electronic form.
3. The plaintiffs must, within 21 days of the date of this order, file and serve upon Deacons a Statement of Claim in the proceeding.
4. The plaintiffs are to pay the defendant’s costs and Deacons’ costs of the plaintiff’s application.
5. This order be prepared by the plaintiffs’ solicitors and signed by a judge pursuant to RSC r 60.04.
---
0
0
0