Whyked Pty Ltd v Yahoo!7 Pty Ltd - [2008] NSWSC 477

No judgment structure available for this case.

CITATION: Whyked Pty Limited v Yahoo!7 Pty Limited [2008] NSWSC 477
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 18 April 2008 and 21 April 2008

JUDGMENT DATE :
2 June 2008

JUDGMENT OF: McDougall J at 1

DECISION: See paragraphs [188] and [189] of the judgment.

CATCHWORDS: COSTS – indemnity costs – costs orders against legal practitioner – whether serious neglect, serious incompetence or serious misconduct – reasonable prospects of success – s99 Civil Procedure Act 2005 – r42.3 Uniform Civil Procedure Rules.

LEGISLATION CITED: Civil Procedure Act 2005
English Supreme Court Act 1981
Federal Court of Australia Act 1976
Federal Court Rules 1979
Legal Profession Act 1987 (NSW)
Legal Profession Act 2004
Trade Practices Act 1974
Uniform Civil Procedure Rules 2005

CATEGORY: Principal judgment

CASES CITED: Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500
Degiorgio v Dunn (No.2) (2000) 62 NSWLR 284
Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 81 ALJR 1107
General Steel Industries v Commissioner for Railways (1964) 112 CLR 125
Harley v McDonald [1999] 3 NZLR 545
H & E Van der Sterren v Cibernetics (Holdings) Pty Ltd (1970) 44 ALJR 157
Ideal Waterproofing Pty Ltd v Buildcorp Australia Pty Ltd [2006] NSWSC 155
In the matter of Bauhaus Pyrmont Pty Ltd (in liq) (2006) 67 NSWLR 289
Karwal v Skrzypczak [2007] NSWSC 931
Knight v FP Special Assets Limited (1992) 174 CLR 178
Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300
Levick v Commissioner of Taxation (2000) 102 FCR 155
National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514
Poulton v The Commonwealth (1953) 89 CLR 540
Radaich v Smith (1959) 101 CLR 209
Rickard Constructions v Rickard Hails Moretti [2004] NSWSC 1041
Rickard Constructions v Rickard Hails Moretti Pty Ltd [2006] NSWCA 356
Ridehalgh v Horsefield [1994] Ch 205
Robinson v Harman ((1848) 1 Ex 850; 154 ER 363
White Industries (Qld) Pty Ltd v Flower and Hart (a firm) (1998) 156 ALR 169
Whyked Pty Limited t/as Ezysend v Yahoo Australia and New Zealand Pty Limited [2006] NSWSC 650

TEXTS CITED: Dal Point: Lawyers’ Professional Responsibility in Australia and New Zealand (Second Edition)
New South Wales Law Almanac for 2008

PARTIES:
Whyked Pty Limited t/as Ezysend (ACN 110 782 048) (First Plaintiff)
Darren Gibson (Second Plaintiff)
Yahoo!7 Pty Limited (ACN 110 782 048) (First Defendant)
Michael Dwyer (Second Defendant)

FILE NUMBER(S): SC 50044/06

COUNSEL: D Studdy (Applicant)
D R Pritchard SC (Respondent)

SOLICITORS:
Watson Mangioni Pty Limited (Applicant)
Middletons Lawyers (Respondent)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

McDougall J

2 June 2008

50044/06 WHYKED PTY LIMITED t/as EZYSEND & ORS v YAHOO!7 LIMITED & ORS

JUDGMENT

1 HIS HONOUR: The substantive issues in these proceedings relate to an agreement made on 15 January 2003 (the agreement). The parties to the agreement were, on one side, a partnership known as “Ezysend” comprised by Messrs Darren Gibson and Michael Dwyer and, on the other, the defendant (Yahoo). The proceedings have been stayed because the plaintiffs have not complied with an order of the Court that they provide security for Yahoo’s costs. In circumstances where the corporate plaintiff is in liquidation and those standing behind it lack resources to provide security and fund the litigation, it is unlikely that the proceedings will be revived. Against that background, Yahoo seeks orders that its costs of the proceedings to date be paid by the plaintiff’s solicitor (the solicitor), and that those costs be paid on the indemnity basis.

The issues

2 Yahoo’s claim against the solicitor is brought pursuant to s99 of the Civil Procedure Act 2005 and r 42.3 of the Uniform Civil Procedure Rules 2005. I set out s99 and r 42.3, so far as they are relevant, at [7] to [9] below.

3 A legal practitioner may be ordered to pay costs occasioned by his or her serious neglect, incompetence or misconduct (s99(1)(a)) or incurred improperly or without reasonable cause, in circumstances for which he or she is responsible (s99 (1)(b)).

4 Although Yahoo relied on both limbs of s99(1), as enlivening the power to order costs under s99(2)(c), it is I think fair to say that the parties’ submissions focused more extensively on s99(1)(a). Yahoo did not submit that if the solicitor’s conduct in commencing and prosecuting the litigation did not fall within s99(1)(a), nonetheless it could fall within s99(1)(b), nor did it submit that there were other circumstances that, whilst they might not fall within s99(1)(a), nonetheless could enliven s99(1)(b).

5 In those circumstances, the essential issues for decision can be stated as follows:

(1) Did Yahoo incur costs in defending the litigation because of the serious neglect, serious incompetence or serious misconduct of the solicitor?

6 Yahoo’s claim was for the whole of the costs incurred by it. However, Mr Studdy of counsel (who appeared for Yahoo) submitted in the alternative that the costs should be paid from 1 July 2006. That was the day after Bergin J ordered that all but one of the “pleaded” claims for relief be struck out: Whyked Pty Limited t/as Ezysend v Yahoo Australia and New Zealand Pty Limited [2006] NSWSC 650. (For convenience, I will adopt the parties’ conventional but inaccurate use of the term “pleadings”.) Mr Pritchard of Senior Counsel, who appeared for the solicitor, submitted that Yahoo should not be permitted to limit its claim in this way, in circumstances where a limited claim had not been made by the notice of motion. He submitted that if a claim limited to costs incurred from 1 July 2006 had been made, it would have been necessary to consider whether to seek to call the barrister who had been briefed for the plaintiffs to give evidence. Mr Pritchard submitted that the late change to the ambit of Yahoo’s claim (made in final submissions) was thereby likely to cause prejudice to the solicitor, and that Yahoo should not be permitted to advance the alternative claim. On the view to which I have come, it is not necessary to resolve this question.

The relevant principles

The statutory power

7 The general power of the court to order costs is found in s98(1) of the Civil Procedure Act:

98 Courts powers as to costs

8 That general power is cut down by UCPR r42.3:

(1) Subject to rule 42.27, the court may not, in the exercise of its powers and discretions under section 98 of the CivilProcedure Act 2005 , make any order for costs against a person who is not a party.

of the whole or any part of the costs of a party to the proceedings occasioned by the failure or the breach, or

9 The court’s power to make a costs order against a legal practitioner is found in s99(1), (2) of the Civil Procedure Act:

99 Liability of legal practitioner for unnecessary costs

10 There is no doubt that, considered alone, the power conferred by s98 includes the power to order costs against non-parties: Knight v FP Special Assets Limited (1992) 174 CLR 178. However, the power to order costs against non-parties is cut down by r42.3. That rule does not limit the court’s power to make costs orders against legal practitioners, and there is thus no need to consider the question of who is (or is not) a “party” for the purposes of the rule (as to which, see for example the decision of Austin J in In the matter of Bauhaus Pyrmont Pty Ltd (in liq) (2006) 67 NSWLR 289 at 291- 295 [7] to [26]).

11 The Federal Court of Australia has essentially similar powers in relation to costs generally and costs orders against legal practitioners. See, respectively, s43 of the Federal Court of Australia Act 1976 and order 62 r9 of the Federal Court Rules 1979. There does not seem to be anything in the Federal Court of Australia Act or the Federal Court Rules equivalent to UCPR r42.3.

Some relevant authorities

12 The parties referred me to many decided cases. Some of those cases dealt with other legislation, such as s198M of the Legal Profession Act 1987 (NSW) (see now s348 of the Legal Profession Act 2004): Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300; Degiorgio v Dunn (No.2) (2000) 62 NSWLR 284. Others related to the Federal Court of Australia Act and the Federal Court Rules; Levick v Commissioner of Taxation (2000) 102 FCR 155; White Industries (Qld) Pty Ltd v Flower and Hart (a firm) (1998) 156 ALR 169. While I accept that those and other cases may provide valuable guidance to the exercise of the discretion, they need to be read by reference to the statutory powers with which they are concerned. Further, and more generally, it is necessary to bear in mind that the power to order costs against a legal practitioner is that now found in s99 of the Civil Procedure Act, and to be exercised in accordance with the terms of that section. There is a danger in substituting analyses of, or glosses upon, the section for the language employed in it.

13 Sully J considered the power conferred by s99, and authorities bearing on the exercise of that power, in Ideal Waterproofing Pty Ltd v Buildcorp Australia Pty Ltd [2006] NSWSC 155. His Honour concluded at [17] that s99 should be applied consistently with the principles stated in Ridehalgh v Horsefield [1994] Ch 205, with what his Honour referred to as “two additional riders”.

14 Ridehalgh concerned s51 of the English Supreme Court Act 1981. There is no relevant distinction between the terms of that section and the terms of s99. At 223-233, the Court of Appeal in Ridehalgh considered the adjectives “improper”, “unreasonable” and “negligent”. Their Lordships said:

“’Improper’ means what it has been understood to mean in this context for at least half a century. The adjective covers, but is not confined to, conduct which would ordinarily be held to justify disbarment, striking off, suspension from practice or other serious professional penalty. It covers any significant breach of a substantial duty imposed by a relevant code of professional conduct. But it is not in our judgment limited to that. Conduct which would be regarded as improper according to the consensus of professional (including judicial) opinion can be fairly stigmatised as such whether or not it violates the letter of a professional code.

The term ‘negligence’ was the most controversial of the three. It was argued that the Act of 1990, in this context as in others, uses ‘negligence’ as a term of art involving the well known ingredients of duty, breach, causation and damage. Therefore, it was said, conduct cannot be regarded as negligent unless it involves an actionable breach of the legal representative’s duty to his own client, to whom alone a duty is owed. We reject this approach.

But for whatever importance it may have, we are clear that ‘negligence’ should be understood in an untechnical way to denote failure to act with the competence reasonably to be expected of ordinary members of the profession.
In adopting an untechnical approach to the meaning of negligence in this context, we would however wish firmly to discountenance any suggestion that an applicant for a wasted costs order under this head need prove anything less than he would have to prove in an action for negligence : ‘advice, acts or omissions in the course of their professional work which no member of the profession who was reasonably well-informed and competent would have given or done or omitted to do;’ an error ‘such as no reasonably well-informed and competent member of that profession could have made;’ see Saif Ali v Sydney Mitchell & Co [1980] AC 198, 218, 220, per Lord Diplock.

15 At 233-234, their Lordships pointed out that a legal practitioner did not act improperly, unreasonably or negligently simply because he or she acted for someone whose case was doomed to fail; their Lordships appeared to consider that something more, amounting in effect to abuse of process, was required:

16 At 239, their Lordships noted that a finding that the legal practitioner had acted improperly, unreasonably or negligently did not mean that he or she must be ordered to pay wasted costs. Such a finding enlivened the discretion to make such an order, and required, in their Lordships’ view, that their be some reason why the discretion should not be exercised in favour of the parties seeking it:

“Even if the court is satisfied that a legal representative has acted
improperly, unreasonably or negligently and that such conduct has caused the other side to incur an identifiable sum of wasted costs, it is not bound to make an order, but in that situation it would of course have to give sustainable reasons for exercising its discretion against making an order.” [at 239F]

17 The “two additional riders” to which Sully J referred in Ideal Waterproofing were:

(1) the jurisdiction to order costs against a legal practitioner personally is one to be exercised sparingly, because (among other things), the court would not always know all the details and circumstances of the practitioner’s instructions. Thus, for the jurisdiction to arise, the conduct must involve some serious dereliction of duty or gross negligence (Dal Pont: Lawyers’ Professional Responsibility in Australia and New Zealand (Second Edition) at 374-375); and

Harley v McDonald

18 I am not entirely sure that the views expressed in Harley are directly applicable to the exercise of the power conferred by s99 of the Civil Procedure Act. Harley was a case on the inherent jurisdiction of the court. That is why their Honours talked about conduct amounting to a serious dereliction of the duty owed by a legal practitioner to the court. For better or for worse, the legislature has seen fit to enact a statutory test that is framed in the terms now to be found in s99, and not by reference to the test of serious dereliction favoured by the Court of Appeal in Harley.

19 With that qualification, however, I propose to do as Windeyer J did in Karwal v Skrzypczak [2007] NSWSC 931 at [9], and proceed substantially on the basis outlined by Sully J in Ideal Waterproofing. I note in passing that Windeyer J at [10] appeared to share my doubt as to the relevance of cases involving the inherent jurisdiction to the exercise of the power conferred by s99.

20 I see little point in analysing further the numerous decisions to which I was referred. I intend no disrespect thereby either to the submissions or to the decisions in question.

The substantive proceedings

21 The recitals to the agreement provide a description, adequate for present purposes, of the relationship that the parties sought to establish (the reference to “ezysend” is a reference to the partnership between Messrs Gibson and Dwyer trading as Ezysend):

RECITALS:

A. ezysend conducts a business of providing online discounted freight managements services;

B. Yahoo conducts an online marketplace and online stores has agreed to promote ezysend as a preferred supplier of freight management services to confirmed registered users of Yahoo.

22 In essence, as I understand it, Yahoo offered among other things to “promote” the services of Ezysend by placing Ezysend’s promotional material on the webpages of Yahoo’s “online market place and online stores”, and in other ways.

23 The case against Yahoo was that, both in precontract negotiations and in the agreement itself, Yahoo undertook to offer Ezysend a minimum of 300,000 page impressions per month per site on those of Yahoo’s website pages that carried “banner advertisements”. (Yahoo said, and it appears to be the case having regard to the language of the agreement, that its obligation was only to use its best endeavours to provide that level of service.) It was further alleged that Yahoo represented (and again the agreement confirms this) that the service would extend to a large number of websites, including both those directly specified and others referred to as “Yahoo branded affiliated sites”. It was said that Yahoo had failed to provide anything like the number of page impressions per month (11,000 as against 300,000) and that those page impressions had been provided in relation to one only of the specified or identified sites. Accordingly, it was said, Ezysend received far less by way of business than it would have received had Yahoo provided the relevant services to the level represented and promised.

24 The agreement came to an end after 12 months, in accordance with its terms (see cl11.1). Mr Dwyer wished to “move on” from Ezysend. Accordingly, he and Mr Gibson sold the business of Ezysend to Whyked.

25 The case that Whyked brought against Yahoo was based on what purported to be assignments by Messrs Gibson and Dwyer to Whyked of the various causes of action. In essence, Whyked asserted:

(1) breach of contract;

(2) breach of fiduciary obligation;

(3) unconscionable conduct in connection with the supply or possible supply of services;

(4) misleading or deceptive conduct; and

26 The allegation of breach of fiduciary duty was based on an assertion that the relationship between Ezysend and Yahoo was one of joint venture. The claims of unconscionable or misleading or deceptive conduct were based on ss51AC and 52 of the Trade Practices Act 1974.

The first strike-out application

27 It will be seen that the case that I have outlined had a number of problems. One problem related to the attempts to assign the asserted causes of action. Another problem, in relation to the claim based on breach of fiduciary duty, was that by cl 14.5 of the agreement the parties declared that they were independent contractors and that no relationship of, among other things, joint venture was intended or created. Another problem, in relation to any claim based on assignment of rights, was that the agreement forbad assignment or novation without consent (cl 14.7). Another problem, in relation to any case based on alleged pre-contractual representations, was an “entire understanding and agreement” clause in the agreement (cl 14.8).

28 Shortly after the summons and list statement were served, Yahoo’s solicitors (to whom I will refer to as “GT”) wrote to Whyked’s solicitors (to whom I will refer as “RMB”). GT pointed out the problem relating to the prohibition against assignment without consent (although they mistakenly referred to cl14.8 rather than cl14.7), and invited an amendment to nominate Messrs Gibson and Dwyer as plaintiffs. That was not done. On the return of the summons, the Court gave directions for Yahoo to file and serve its list response and for the plaintiff to serve evidence including expert evidence.

29 On 9 May 2006, GT wrote to RMB, referring to the contention that Whyked was the wrong plaintiff, and stated that if that contention were wrong, Yahoo would seek security for costs. There is no doubt that at that time – and indeed, at all times material to this dispute – Whyked was, and barring some windfall would remain, incapable of satisfying any costs order made against it.

30 On 15 May 2006 GT filed for Yahoo a notice of motion seeking, among other things, an order for summary dismissal pursuant to UCPR r 14.4 or the striking out of paragraphs 12 to 17, 18 to 24 or 25 to 27 of the list statement pursuant to UCPR r 14.28.

31 By letter of 18 May 2006 GT set out for RMB the grounds of Yahoo’s application:

… So that the position is clear, the grounds of our client’s application are as follows:

· that the contractual prohibition on assignment in the Services and Promotion Agreement dated 15 January 2003 (Agreement) means that any assignment is ineffective;

· that bare rights of action are not assignable;

· that causes of action which may accrue pursuant to ss 52 and 51AC of the Trade Practices Act 1974 (Cth) are not assignable;

· that causes of action in negligence are not assignable; and

· that by reason of clause 14.5 of the Agreement, there can be no joint venture relationship as alleged.

On the basis of those contentions, our client will be submitting that the proceedings as presently constituted are frivolous or vexatious, alternatively, no reasonable cause of action is disclosed in the proceedings as presently constituted and, in the further alternative, that the proceedings are an abuse of the process of the court.

32 The letter referred also to vacation of the orders that had been made (for the filing of Yahoo’s list response and for the serving of Whyked’s evidence).

33 On 23 May 2006, GT served on RMB an outline of Yahoo’s submissions in relation to the strike-out application. Those submissions amplified, and supported by reference to authority, the propositions advanced in GT’s letter of 18 May 2006.

34 Bergin J heard the strike-out application on 2 and 19 June 2006. Her Honour gave judgment on 30 June 2006 ([2006] NSWSC 650). In essence, her Honour refused the application for summary judgment based on r 13.4, but struck out all claims other than the claim in contract, and directed Whyked to file an amended summons and amended commercial list statement.

35 At this stage, it is convenient to note that the claim in contract also faced a substantial problem. Clause 10 of the agreement limited each party’s liability to the other, and in particular purported to exclude liability for lost profits and consequential damages:

To the extent permitted by law each party specifically limits its liability to the other Party under this Agreement in respect of any non-excludable implied warranties and conditions, and neither party will be liable for any lost profits or any special, incidental, or consequential damages (however arising, including negligence and recklessness) arising out of or in connection with this Agreement.

36 There was some debate before me as to whether, in light of cl 10, anything other than nominal damages would be recoverable if Whyked otherwise succeeded in making out its cause of action.

The second pleading

37 On 6 July 2006, RMB filed for Whyked an amended summons and an amended list statement. The amendments did nothing more than delete those paragraphs of the list statement that had been struck out, and the claims for relief based on those paragraphs.

38 On 6 July 2006, GT wrote to RMB referring again (among other things) to the question of security for costs.

The third pleading

39 On 26 July 2006, RMB wrote to GT noting to that Whyked wished to join Mr Gibson as a plaintiff (no doubt, with his consent) and Mr Dwyer as a defendant. They provided a draft further amended summons and further amended list statement. It is clear that one of the purposes of the amendment was to circumvent clause 10 by reinstating the claims under ss 51AC and 52 of the Trade Practices Act and for fraudulent or negligent misrepresentation.

40 GT replied to this by letter dated 28 or 31 July 2006 (the copy in evidence has the printed figures “28” deleted and the handwritten figures “31” substituted). The letter pointed out that the case now sought to be made out was inconsistent both with the solicitor’s evidence (on the strike-out application) as to dissolution of the partnership and submissions put by the barrister “on 20 [sic] June 2006”.

41 The letter pointed out further difficulties with the proposed claim, including that Mr Gibson could not bring in his own right and for his own sole benefit a claim that, if it were maintainable at all, had belonged to the partnership.

42 On 14 August 2006, RMB filed for Whyked a notice of motion seeking leave to amend. That notice of motion was returnable on 25 August 2006. Einstein J heard it on that date and 1 September 2006. On the latter date, his Honour directed the “that the plaintiffs file and serve by 6 September 2006 the form of further amended commercial list statement to be propounded in the light of the submissions…”. His Honour directed that by 13 September 2006 Yahoo either file a notice of motion seeking to strike out the further amended list statement or its list response.

The fourth pleading

43 The further amended list statement was filed on 11 September 2006. In paragraph 3A, it asserted that Whyked “sues in respect of the contractual causes of action specified in paragraphs 1 to 11 herein as assignee of the said choses in action under statute and/or at law and/or in equity”. It then asserted

3B In the alternative to 3A and in the event that the court should hold as asserted by the First Defendant that the sale and/or assignments of the said contractual choses in action to the First Plaintiff are ineffectual under the general law which is denied by the Plaintiffs, then Ezysend sues in respect of the said contractual causes of action, with any judgment in Ezysend’s favour to be held in trust for the first Plaintiff or as the Court shall determine.

3C Further, Ezysend sues in respect of each of the non-contractual causes of action alleged herein namely those alleged in paragraphs 18 to 27 herein as the owners of the business at the time the causes of action arose and as sellers and/or assignors thereof under statute and/or at law and/or in equity to the First Plaintiff, and will contend that any judgment in favour of Ezysend be held in trust for the First Plaintiff herein or as the Court shall determine.

44 Otherwise, the list statement set out the causes of action to which I have referred at [25] above.

45 Yahoo’s list response was filed on 18 September 2006. It is not necessary to go into the detail of that document save to note that, among other things, it denied that the causes of action were assignable, denied that Mr Gibson could prosecute any cause of action that would have belonged to the partnership, and relied on cl10 of the agreement.

Whyked serves its evidence

46 Whilst the parties were engaging in the flurries of activity that I have described relating to Whyked’s attempts to plead its case, Whyked proceeded with the service of its evidence. On 24 August 2006, RMB served a report of an accountant, Mr Eon Chapman, which purported to quantify Whyked’s loss. On the same day, RMB served a copy of an affidavit sworn by Mr Gibson on 23 August 2006 and a report prepared by Dr Raymond Wong dated 25 May 2006. As I understand it, Dr Wong’s report dealt with some technical aspects of Whyked’s case against Yahoo.

47 It is convenient to note at this stage that the solicitor was criticised for serving Whyked’s evidence whilst the various pleading issues remained unresolved. It was put to him in cross-examination that he would have expected Yahoo and its legal advisors to give careful consideration to the evidence, and that Yahoo would incur substantial costs in so doing: particularly since Mr Chapman purported to quantify damages at an amount in excess of $143,000,000.00. Not surprisingly, the solicitor accepted the substance of the proposition put to him.

48 For reasons that I must say I do not understand, Yahoo submitted that the solicitor’s action, in serving evidence at the time he did, was an example of serious misconduct within s99(1)(a) (see for example paragraph 39 of Yahoo’s amended outline of submissions dated 31 January 2008).

49 The solicitor said that he understood that the Court’s directions required his client to serve its evidence when it did. This aspect (among many others) of the solicitor’s evidence was challenged. It was put to him that he knew that the orders for service of evidence made by Bergin J on 5 May 2006 had been vacated. In fact, on 26 May 2006 and on the application of Yahoo, her Honour “suspended” those orders. Whilst I accept that the solicitor did become aware of this, the challenge is beside the point. On 7 July 2006, Bergin J ordered Whyked to serve its evidence in chief, including expert evidence, by 25 August 2006. The orders of which that order forms part were made by consent. They were never varied, set aside or “suspended”. I must say that I find the submission, that a solicitor who acts to ensure that his client complies with extant directions of the Court is acting unreasonably, is extraordinary.

50 I return to the narrative of relative events.

Security for costs

51 GT wrote to RMB on 25 September 2006. The letter referred to five earlier letters, written between 9 May and 15 August 2006, which had touched on the question of security for costs. The letter then referred to paragraphs 3B and 3C of the further amended commercial list statement, and referred to UCPR rule 42.21(1)(e): dealing with the circumstances in which security for costs may be ordered against plaintiffs who sue not for their own benefit but for the benefit of others. The letter agitated issues relating to security and stated that Yahoo would not “take any further steps in relation to the conduct of this matter,” and in particular that Yahoo “will not be in a position to comply with the timetable pursuant to the consent orders made… on 7 July 2006”. (Reverting to the previous topic: the letter made no complaint that Whyked had served its evidence in accordance with those directions.)

52 On 4 October 2006, Yahoo filed a notice of motion seeking security for costs in the sum of $225,000.00, and that the proceedings be stayed pending the giving of security. Ultimately, Einstein J heard that notice of motion on 3 and 17 November 2006. On the latter date, his Honour ordered that the plaintiffs give security in the sum of $175,000.00. His Honour expressed the view that the security should be paid into two instalments: $100,000.00 by 31 May 2007 and $75,000.00 by 31 August 2007.

53 Orders were made accordingly on 24 November 2006. His Honour ordered further that the proceedings be stayed until the first instalment of security was paid.

54 The solicitor understood that neither the plaintiffs nor those who stood behind them could provide security. He approached litigation funders. No funder was prepared to support the litigation. The plaintiffs did not provide security for Yahoo’s costs, and thus the stay remains in force.

The fifth pleading

55 Notwithstanding the stay, on 11 September 2007 RMB filed and served a notice of motion seeking orders that the second plaintiff (Mr Gibson) have “leave to proceed with the action in his own interest”, alternatively that the stay be lifted insofar as it affected Mr Gibson, and that Mr Gibson have leave further to amend the summons and commercial list statement.

56 The background to those applications, to the extent that the evidence reveals it, includes that on 29 January 2007, Mr Gibson entered into an agreement with the other shareholders in Whyked noting that Whyked was to discontinue its action, that Mr Gibson was to continue to prosecute it, and that he would disburse any damages received between the shareholders in accordance with their shareholdings. On that basis, Mr Gibson would be suing both for his own benefit and for the benefit of the other shareholders.

57 The amendments sought to be made included deletion of paragraphs 3A, 3B and 3C of the contentions and deleting the contract case. The amendments further sought to propound causes of action against Yahoo based on ss 51AC and 52 of the Trade Practices Act, and on fraudulent or negligent misrepresentation.

58 The notice of motion was heard by Hammerschlag J on 21 September and 26 October 2007. On the former date, the barrister appeared for the applicant, on the instructions of the solicitor. In the course of argument, the barrister sought an adjournment to consider reformulating the pleadings. That adjournment was granted on terms as to costs and that the applicant give security for Yahoo’s costs of the motion in the sum of $5,000.00. (That security was provided.)

59 On 26 October 2007, no further reformulation of the pleading was propounded. Accordingly, Hammerschlag J gave judgment in which he said in substance that his hitherto tentative view that the draft pleading contained patent deficiencies had “solidified” into a firm view. His Honour ordered that the notice of motion be dismissed with costs.

The solicitor ceases to act

60 Whilst the application for leave to amend was pending before Hammerschlag J, the solicitor realised that he had misled the Court in an affidavit. I accept that he did not intend to do so. The solicitor acted promptly and properly. He sought advice from the Law Society and the barrister, swore an affidavit that set out the true situation, and gave notice of intention of ceasing to act. Thereafter, the solicitor filed notice of ceasing to act.

61 Once the solicitor ceased to act, the barrister treated his retainer as at an end. It would appear to be the case, and I am appeared to assume, that at least one of the reasons why no further amendments were propounded on 26 October 2007 (see [59] above) is that by then the solicitor and the barrister had ceased to act for the remaining plaintiff (Mr Gibson), and that Mr Gibson was unable to arrange other representation.

62 For all practical purposes, the proceedings have come to an end. They have been permanently stayed. No one suggested that there is any real possibility that the stay will be lifted, and the proceedings prosecuted.

The application for costs against the solicitor

63 On 26 November 2007, Yahoo filed its notice of motion seeking an order that RMB pay Yahoo’s costs, and on the indemnity basis.

64 In the course of argument, Yahoo sought and was granted leave to amend its notice of motion so that the claim was brought against the solicitor only, and not against the firm. That amended notice of motion was filed on 23 April 2008.

The solicitor’s performance of his retainer

Background

65 The solicitor has been in practice for more than seven years. He has worked for RMB, first as a clerk, and subsequently as an employed solicitor and salaried partner, for more than eight years. He swore a lengthy affidavit on 6 March 2008 in which he deposed (paragraph 5) that his fields of practice were personal injury, industrial law and commercial litigation; and that the matters for which he had had responsibility were conducted in numerous jurisdictions. His experience, in matters for which he was responsible, ranged from taking initial instructions and carrying the matter through to completion to taking carriage of matters already commenced and seeing them through to hearing. Of course, his experience included instructing counsel when appropriate.

66 The solicitor said that:

(1) when the summons was filed, he genuinely and honestly believed that Whyked had reasonable prospects of success, and that he would not have filed the summons had he not held that belief;

(2) he understood that his obligations under the Legal Profession Act 2004 were “ongoing”;

(3) he understood the consequences of acting for a client in litigation without a belief in the reasonable prospects of success, including that it might expose him to disciplinary action or personal liability for costs; and

67 The solicitor’s affidavit then deposed at great length (438 paragraphs, extending over 95 pages) to the performance of the retainer. I do not propose to canvas in detail the matters covered by the solicitor in that affidavit.

68 The solicitor was cross-examined extensively. At the end of the day, Mr Studdy did not submit that I should not accept the solicitor as a witness of truth. Had he done so, I would not have accepted the submission. In my view, considering the solicitor’s evidence overall, he appeared to have a good recall of relevant matters. His recollection was supported by copious file notes and other contemporaneous documents. I formed the view that the solicitor sought to tell the truth to the best of his ability. From time to time, he appeared to be defensive or, on occasion, hostile. I think that these aspects of his evidence were an understandable reaction both to the nature of the allegations being made against him and to some of the particular questions put (often with a degree of repetition) in cross-examination. I have taken those aspects of the solicitor’s evidence into consideration in forming the view that I have expressed of his credibility.

Initial instructions

69 Mr Gibson (who had been acquainted with the solicitor from childhood, but who had not hitherto been a client of the solicitor) contacted the solicitor on 14 December 2004. He outlined the possible claim against Yahoo. A conference was arranged for 22 December 2004. Before then, the solicitor received a bundle of material from Mr Gibson, including a copy of the agreement.

70 At the conference on 22 December 2004, Mr Gibson outlined the nature of Ezysend’s business, its dealings with Yahoo and the nature of the claim that he wished to be brought. The solicitor suggested that Mr Gibson put together all available “paperwork… in relation to the contract” and that he prepare a chronology of relevant events.

71 The solicitor said that RMB would “act on a speculative basis” and would “try and arrange a barrister to act on that basis as well”. He said: “[i]f the barrister believes you have reasonable prospects of success then we will continue to act on this basis. But if the barrister doesn’t think you have a case, we won’t act for you.”

72 The solicitor said that after the conference he reviewed his notes and the material that Mr Gibson had given him, and thought that further information would be required before he could come to a view on the prospects of success. He said further “that, because of the changes to the partnership, … it would be appropriate to obtain counsel’s advice as to who the proper plaintiff should be as well as the potential causes of action against Yahoo”.

73 The solicitor went on leave over Christmas. After he returned to work, and in about March 2005, he had further contact with Mr Gibson. Mr Gibson provided the solicitor with, among other things, copies of recent emails passing between Mr Gibson and Yahoo. The solicitor formed the view, based on those emails (and in particular, the way that Yahoo had responded to what Mr Gibson had put to it) “that there may be a proper basis for Mr Gibson’s complaint”.

74 The solicitor had a further conference with Mr Gibson on 11 April 2005. He reviewed further documents that Mr Gibson had produced. They discussed the claim further. At some stage, Mr Gibson provided the solicitor with a copy of a report from Mr Chapman dated 8 April 2005, in which Mr Chapman purported to assess damages. So far as I understand this report, it appeared to assess damages at about $7.7 million (comprised of about $5.6 million being the value of lost advertising and about $2.1 million in lost profits).

75 At that stage, the solicitor “formed a preliminary view, based on the material which had been provided by Mr Gibson that there may be a cause of action.” He thought however “that it would be prudent to obtain counsel’s opinion before providing Mr Gibson with advice as potential causes of action and prospects of success.”

The barrister is briefed

76 The solicitor then discussed with a partner in RMB the choice of counsel. (The solicitor had already offered the brief to a barrister regularly briefed by the firm in personal injuries work, but that barrister said that he would not take the brief on a contingency basis.) The partner recommended that the solicitor make inquires of the barrister who ultimately was briefed. The partner said that he had used that barrister before “in commercial type matters and he was good. He also acted on a spec basis”.

77 The solicitor contacted the barrister on 11 April 2005. The solicitor asked the barrister “to review the material and see if there is a cause of action” and inquired if the barrister would “act on a spec basis”. The barrister agreed to those requests.

78 The solicitor briefed the barrister on 13 April 2005. At that time, the solicitor said, it was his view “that there was more likely than not a cause of action against Yahoo in respect of breach of contract, and potential breaches of the Trade Practices Act”.

79 On 15 April 2005, the solicitor had a telephone conversation with the barrister. The barrister said that he had read the brief and that “[t]here two options for commencing the proceedings”. The barrister also pointed out that “[t]here is a problem with the accountant’s report”, and problems with mitigation of damages.

80 On 15 July 2005 (after there had been numerous interchanges between the solicitor and the barrister, the solicitor and Mr Gibson, and Mr Gibson and Yahoo) the solicitor had a further conference with Mr Gibson. They discussed the facts of the case, and a proposal to sell the business of Ezysend. Mr Gibson inquired if this would “impinge on our rights to take this action”. The solicitor said that he would speak to the barrister.

81 The solicitor spoke to the barrister on the same day, putting Mr Gibson’s question. The barrister said that he would consider it and “get back to you”. Later that day, the solicitor had a further telephone conversation with the barrister in the course of which the barrister said “[o]kay. If he sells the business, he still has a cause of action. You need to look closely at the business, its activity and structure. You need to include in the contract for sale terms that his cause of action does not pass”.

82 On the same day, the solicitor prepared a draft statement for Mr Gibson and sent it to him by email. Mr Gibson reviewed the statement and returned it, signed, on 21 July 2005. The solicitor sent a copy of the signed statement to the barrister.

83 On 5 September 2005, the solicitor had a telephone conversation with the barrister in the course of which the solicitor asked the barrister “[h]ow is the draft pleading going?” The barrister replied “I’m going on leave. I’ll be back in three weeks. I should have the pleading completed by the end of the month.”

84 Perhaps not surprisingly, the solicitor formed the view based on this conversation, coupled with what had gone before (including the instructions from Mr Gibson) “that a claim against Yahoo had reasonable prospects of success”. The solicitor said of the barrister that: “I believed that [the barrister] had sufficient experience to adequately advise and appear in any proceedings including the subject of the then current dispute. At all times in my dealings with [the barrister], he appeared to be an experienced, competent counsel. He gave me the impression of having a grasp of the relevant legal and factual issues. He appeared to be diligent and attentive to the matter and learned in the law. I was confident [in the barrister’s] ability to properly represent the interest of my clients in the proceedings…”

85 It was not put to the solicitor that he did not genuinely hold those beliefs. It was not submitted that they were irrational, or that there was no foundation for them. I accept that the solicitor did hold those beliefs, and that on the material available to him it was reasonable for him to do so.

The barrister advises in conference

86 On 18 October 2005, the solicitor and the barrister conferred with Mr Gibson at RMB’s offices. The barrister said that he had “done the first draft of the pleadings and we’re just about ready to proceed.” He asked for further information and then said that certain persons “should be the first plaintiff and Whyked should be the second plaintiff”. He discussed the basis on which damages should be assessed, referring to Robinson v Harman ((1848) 1 Ex 850; 154 ER 363). The barrister characterised such damages as “expectation loss” and said that they were “calculated on the basis that you are put into the position that you would have been in had the promise been performed”.

87 The barrister’s view of the case was not completely rosy. In the same conference, he referred to cls 10, 11 and 14.8 as posing problems. However, he concluded that there was “a reasonable claim”, but that care needed to be taken “on how the claim is termed [sic] because of cls 10 and 11. A claim in fraud will get around this”. The barrister gave some brief advice on the evidence that would be required.

Further advice

88 On 19 October 2005, the barrister sent an email to the solicitor in which he said that “[g]enerally speaking I think the company/partnership may have a worthwhile cause of action, subject to attending to various matters raised in conference.” The barrister said that there were matters to be attended to, including “a follow-up statement from [Mr Gibson] on the negotiations with eBay and then Yahoo…”. He said that “I have commenced preparation of a statement of claim, but will not be able to finalise this until I have the further material and” other information.

89 Not surprisingly, the solicitor said that after he received this email he “continued to share [the barrister’s view] that there were reasonable prospects of success although further work was needed before commencing proceedings.”

Draft pleadings

90 Also on 19 October 2005, the barrister sent the solicitor an email attaching a draft statement of claim. The barrister requested further information. On 31 October 2005, the solicitor conferred with Mr Gibson to discuss the further information required.

91 The solicitor carried out further work. On 8 November 2005, he prepared a revised draft of a statement for Mr Gibson and sent it to the barrister. The barrister settled the statement and returned it to the solicitor. In the covering email, the barrister said: “I think we should file ASAP. This sort of case has reasonable prospects – but we need to keep the pressure on!”

The sale to Whyked

92 Thereafter, the solicitor drafted documents to give effect to the sale, and discussed that and other matters (including the availability of evidence) with Mr Gibson. On 23 November 2005, the solicitor had a telephone conversation with the barrister. In the course of that conversation, the barrister said “I’d like to file ASAP” but that “we’ll wait until you get the assignments completed”.

93 The solicitor prepared deeds of assignment and sent them to the barrister for review. He said: “[i]n drafting the Deeds of Assignment I formed the view that the Deeds of Assignment were formally recognising the true position of what actually happened. I asked [the barrister] to review the Deeds of Assignment because I knew that without out the proper drafting and execution of the Deeds of Assignment, it would be difficult for Whyked… to bring a claim against the Defendant.”

94 After this had been done, Mr Gibson confirmed that his former partner Mr Dwyer would speak to the solicitor. The solicitor spoke to Mr Dwyer to ensure that Mr Dwyer would assign his interest in the partnership.

95 The solicitor discussed with the barrister the effect of the assignment. The barrister said “[i]t is an equitable assignment” but that there might be a need to join Mr Dwyer as a defendant.

96 On 12 December 2005, Mr Dwyer signed the deed of assignment. The solicitor informed the barrister of this. The barrister said “[o]kay. I’ll settle the summons”. The next day, the barrister sent a draft commercial list statement to the solicitor. The barrister wished to commence proceedings straight away, “before Christmas”. The solicitor discussed this with Mr Gibson and said that the assignment had to be signed before this could be done. In fact, it was not done until 9 January 2006 and the summons and commercial list statement were not filed until 5 April 2006.

Commencement of proceedings

97 The solicitor said that at the time he commenced proceedings he thought that Whyked had reasonable prospects of success. He based that on some nine matters, which did not in terms include the views from time to time expressed by the barrister. However, in a supplementary affidavit filed and read without objection, and in respect of which there was no requirement for cross-examination, the solicitor said that his view was based also on “the advices and draft pleadings from time to time provided by the barrister.”

98 The other matters on which, the solicitor said, he formed that belief were (I collapse his list down somewhat):

(1) the terms of the agreement itself;

(2) instructions given in conference by Mr Gibson on a number of occasions (including in the conference with the barrister on 18 October 2008 and in telephone conferences);

(3) Mr Chapman’s report of 8 April 2005; and

99 The solicitor said that he had assessed Mr Gibson as a reliable witness. He said also that he was aware of the ability to obtain material on discovery and through subpoenas. He said that at no time after commencing proceedings did he “ever cease to have belief that the claim against Yahoo did not [sic] have reasonable prospects of success”. It is clear that the double negative (see paragraph 131 of the solicitor’s principal affidavit) was unintentional.

100 The solicitor said that he did understand that clause 10 of the agreement “was likely to be an issue in the case” but that he did not think the clause “meant that there was no claim”. Further, the solicitor said, “I believed that its possible effect could be avoided.”

101 Before filing the summons, the solicitor discussed the matter “with… an experienced litigation partner at [RMB].” The solicitor explained to that partner the nature of the claim, and that the barrister had drafted the summons and commercial list statement. The partner then signed the certificate under s347 of the Legal Profession Act. Thereafter, the solicitor said, he had regular discussions with that partner “as to the progress and the issues in the matter”.

Analysis: the prima facie effect of the evidence

102 The solicitor’s lengthy affidavit was supported by some four lever arch folders of exhibits, comprising almost 400 separate documents (and many more than 400 pages). In general, the documents show that the solicitor was meticulous in keeping file notes of conferences and telephone attendances. They show further that, once the barrister had been briefed, the solicitor referred every important issue to him: sometimes by telephone and, frequently, by email. When the solicitor and the barrister discussed something by telephone, the solicitor kept a file note. Frequently, in addition, the barrister sent an email confirming the substance of what had been discussed.

103 Although it is clear that in general the solicitor looked to the barrister for advice, and acted upon the advice given, it is also clear that the solicitor was no mere conduit. Both his affidavit evidence and his documents show that he applied himself independently to the investigation and preparation of the case. To an increasing extent, his investigations were guided by the barrister; but I do not think that this is any criticism of the solicitor.

104 I have set out above the principal steps in the litigation from the time the summons and the commercial list statement were filed until the failure of the last attempt to revive the proceedings by amendment. I do not propose to recapitulate that history here. Nor do I propose to supplement it by referring in more detail to the correspondence passing between GT and RMB. (I have not referred above to the totality of that correspondence, insofar as it was put in evidence; in the interests of brevity, I have confined myself to what seemed to me to be the more significant aspects of it.) The material shows that, just as in the period leading up to the filing of the summons and commercial list statement, the solicitor was assiduous in discussing every step, every issue, and every development with the barrister. He referred contentious correspondence from GT to the barrister, and took and acted upon the barrister’s advice both as to the substance of the issues raised in that correspondence and, from time to time, as to how RMB should reply.

105 Equally, when Yahoo’s first notice of motion was filed (see [30] above), the solicitor referred that to the barrister, and took the barrister’s advice on the issues raised.

106 At the same time, and again as before, the solicitor was no mere conduit . He pursued his own investigations (usually in accordance with the barrister’s advice) and applied his own mind to the issues that from to time were raised.

107 In principle, therefore, it seems to me that the solicitor acted appropriately and responsibly in performing his retainer. It is correct to say that he was guided by, and in the main relied upon, the barrister. But, as I have said, the solicitor was no mere conduit. This is not a case where the solicitor, having accepted instructions on a contingency basis, left everything up to the client and the barrister, and in effect withdrew from active participation in the conduct of the litigation.

108 At this stage, I should note that no submission was made that the solicitor should have perceived that the barrister was incompetent, or that his advice was so obviously wrong that it ought not be accepted. (Indeed, no submission was made that the barrister was in fact incompetent; although I recognise that, as a matter of logic, many of the criticisms levelled at the solicitor could be levelled also at the barrister.) There is, therefore, no basis for saying that the solicitor should not have relied upon the advice and guidance of the barrister.

109 In this context, I note that according to material extracted from the New South Wales Law Almanac for 2008 and the website of the New South Wales Bar Association, it appears that the barrister has been in practice for almost 30 years and that his practice areas are said to have included commercial law and trade practices and competition litigation. The barrister was thus vastly more experienced then the solicitor; and I repeat that a senior partner in the firm had recommended that the solicitor seek the barrister’s services.

110 Further, so far as the material before the Court reveals, the barrister was prompt and diligent in attending to the many requests made of him, and generally in the performance of his instructions from time to time. The material also shows that the barrister was alive to many of the problems that Whyked faced in the litigation, that he gave consideration to them, and that he was of the view (which he communicated to the solicitor) that there were ways in which the problems could be overcome.

Outline of Yahoo’s submissions

111 Notwithstanding the matters to which I have referred, Yahoo submitted that the solicitor’s conduct in the performance of his retainer fell so far short of the requisite standards of diligence and competence that it amounted to serious neglect, serious incompetence or serious misconduct within s99(1)(a) of the Civil Procedure Act.

112 Yahoo submitted that there were some seven reasons why the solicitor should be liable for Yahoo’s costs:

(1) the causes of action were legally unsustainable; the Court did not need to consider whether the reasonable character of the advice needed to be tested against the instructions given to the solicitor;

(2) the plaintiffs from time to time did not have standing to sue on the causes of action alleged; and those causes of action had no foundation in law and no reasonable prospects of success;

(3) GT, and counsel retained for Yahoo, informed RMB of those deficiencies on numerous occasions;

(4) the solicitor gave no proper consideration to the impact of the foreshadowed application for security for costs;

(5) RMB served evidence “with no regard to the state of the pleadings or the Court timetable, forcing Yahoo to incur unnecessary costs”;

(6) the solicitor and the barrister unduly prolonged the hearing of various applications and did not deal appropriately with issues raised by Yahoo’s legal representatives; and

(7) The solicitor was aware at all material times that none of his clients could or would meet any costs orders, or provide security for costs.

113 At a level of generality, I have to say that the submissions for Yahoo are marked not only by an extremely partisan mode of analysis (which, perhaps, might be expected); but also by the circumstance that what is put is informed very heavily by hindsight. I note also, although it is not of dispositive significance, that Yahoo pressed its claim not just against the solicitor but against RMB up until a relatively late stage in the hearing. Mr Studdy was never able to articulate any basis on which the Court might make an order under s99 against RMB rather than against the solicitor. Some of the epithets applied by Yahoo (through its legal representatives) to the solicitor could be applied, with justification, to this aspect of Yahoo’s claim.

114 Yahoo organised its submissions by reference to some eleven matters. It is convenient to deal with them one by one.

The contract claim by Whyked

115 Yahoo submits that the contract claim had no reasonable prospects of success. It puts this submission notwithstanding that Bergin J did not strike out the claim. I have to say that I regard her Honour’s decision as posing insuperable difficulty for this aspect of Yahoo’s submissions. Once her Honour had declined to strike out the contract claim, it can hardly have been incompetent or negligent for the solicitor to think that, at least as a matter of law, the claim might be sustainable.

116 Yahoo rely on clause 10 of the agreement. The submissions point out that once the claims under the Trade Practices Act and for misrepresentation had been struck out, Whyked’s case was limited to the contract case, and damages in contract were limited by cl 10.

117 It does not follow from clause 10 that no, or merely nominal, damages would be recoverable. For example, if Yahoo’s conduct, in relation to the performance of the agreement, could be said to have to be repudiatory then there would be a real question as to whether Yahoo could rely on cl 10 to limit or exclude damages flowing from that hypothetical repudiatory conduct: H & E Van der Sterren v Cibernetics (Holdings) Pty Ltd (1970) 44 ALJR 157 at 158; Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 509 – 511.

118 It is fair to say that, although the barrister and the solicitor had recognised the difficulties that cl 10 posed (which was why the alternative causes of action had been pleaded, and why so many attempts were made to revive those causes of action), they do not appear to have turned their minds to the point that I have just made. Nonetheless, in considering whether it is incompetent or negligent, to the requisite degree, to pursue a claim in contract in the face of a clause limiting damages, it is necessary to bear in mind that the operation of the clause, or more particularly its application to the claim, is a matter to be assessed on a case by case basis according to the facts that are pleaded, proved and found.

119 In this context, Yahoo relies also on the orders made by Einstein J that Whyked and Mr Gibson give security for costs. Yahoo’s submissions state that the solicitor must have known that neither Whyked nor those who stood behind it could have met an order for costs, and that they have no means of providing security. It is convenient to consider this when dealing with the submissions based on security for costs.

The contract claim by Ezysend

120 Yahoo submits that this claim had no prospects of success, because:

(1) Ezysend was a partnership between Messrs Gibson and Dwyer;

(2) That partnership had been dissolved; and

121 The first two points are correct. It is also correct, as Yahoo submits, that Mr Gibson was a plaintiff and Mr Dwyer was a defendant when the claim was pleaded as one by the Ezysend partnership.

122 The submission falls down at the third point. Yahoo relies not on any judgment given by Hammerschlag, or on orders made by his Honour pursuant to any judgment, but on remarks by his Honour in the course of argument on 21 September 2007 (in the hearing referred to at [58] above).

123 His Honour pointed out (T12.12) that the relevant damage was that suffered by the partnership, and said (T12.20) that “[i]f the partnership sued for the damage, the money would come back into the partnership and he [Mr Gibson] would be made whole.” The barrister sought to oppose this, by submitting that Mr Gibson’s loss “is distinct from the loss of the partnership” (T12.24).

124 A little later on, Hammerschlag J reiterated that “[t]he partnership could sue for whatever damage is suffered” (T12.40). The barrister replied “[t]he short answer to that is both members of the partnership are already parties to the proceedings” (T12.43). Mr Studdy, who appeared then as before me for Yahoo, interjected “that the partnership is dissolved” (T12.45) Hammerschlag J then said that “[t]he receiver would have to sue. You would have to get a Court appointed receiver to sue” (T12.47).

125 It is not correct to say that observations made by a judge in the course of argument amount to a “finding” or conclusion. The adversary system of civil litigation, as it is practised today, includes the interchange of views between advocates and the court, in the course of which relevant issues are exposed and irrelevant issues are discarded. It is wrong to say that a judge, by expressing a view in the course of argument, is thereby “finding” or “holding” the point so expressed.

126 In this case, it seems to me, the point made by the barrister – that both members of the partnership were parties to the proceedings – was an answer to his Honour’s point. During the subsistence of the partnership, the partners held the assets of the partnership in accordance with their respective shares. That situation did not change on dissolution. The fact that a receiver may be appointed to wind up a partnership does not mean that a receiver has to be appointed before the assets of the partnership can be got in and realised. There is no reason why the partners themselves could not get in and realise all the assets of the partnership, pay all of its liabilities, and distribute the proceeds among themselves without the intervention of any third party.

127 In this case, assuming for the moment that the benefit of the contract claim against Yahoo was an asset of the partnership, it remained an asset owned by Messrs Gibson and Dwyer after the partnership was dissolved. Messrs Gibson and Dwyer could have sued to enforce the claim. In that sense, each was a necessary party. But if one of them – in this case Mr Dwyer – did not wish to sue, it was open to the other – in this case Mr Gibson – to sue, provided that Mr Dwyer was joined as a defendant. The proceedings were regularly constituted, because all of those having an interest in the asset were parties, and would be bound by the outcome.

128 In those circumstances, I think that it was open to the plaintiffs to proceed as they did. It follows that I reject the submission that the claim was never sustainable in the circumstances in which it was advanced.

129 In this context, Yahoo relies also on its submissions relating to clause 10 and in relation to security for costs. As to the former: I refer to what I have said already. As to the latter: I will deal with this when considering Yahoo’s submissions based on security.

The joint venture claim

130 Yahoo submits that the joint venture claim was never sustainable, and had no reasonable prospects of success, in the face of clause 14.5 of the agreement.

131 I recognise that clause 14.5 is a powerful obstacle to the joint venture claim (and Bergin J appears to have shared this view, because her Honour struck out this aspect of the claim). However, I note that the characterisation of an agreement, or more accurately of the relationship between the parties to an agreement established by that agreement, is a matter to be determined having regard to the substance and effect of all of the provisions of the agreement; and the parties’ characterisation of their relationship may be disregarded in an appropriate case. Thus, for example, an agreement expressed to be one of licence may be found to be a lease: Radaich v Smith (1959) 101 CLR 209.

132 It is fair to say that neither the barrister or the solicitor appear to have turned their minds to the point that I have just made; and it is equally fair to say that, if the point had been raised before Bergin J, it did not find favour with her Honour. In those circumstances, I have to say that I do not really understand the basis on which the barrister and the solicitor advised or permitted Whyked to press the joint venture claim: particularly once GT had brought to their attention the problems flowing from clause 14.5 of the agreement (see GT’s letter of 18 May 2006 to RMB, and the outline of Yahoo’s submissions on the strike out application served on 23 May 2006).

The Trade Practices Act and misrepresentation claims by Whyked

133 Yahoo submits that those claims were never sustainable because Whyked’s title to sue depended on the assignments, and the claims were not capable of being assigned.

134 I accept that, in respect of claims under the Trade Practices Act (and its statutory analogues) only the person who suffers loss by the relevant conduct can sue in respect of it. See (by way of example only) the decision of Lindgren J in National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514.

135 I do not think that the position is so clear in respect of tortious claims. Certainly, in Poulton v The Commonwealth (1953) 89 CLR 540, it was said that causes of action in tort are not assignable at law or in equity. See Fullagar J (at first instance) at 571; and see Williams, Webb and Kitto JJ (on appeal) at 602. What their Honours said was obiter, because all of them concluded that there had been no assignment or purported assignment. Nonetheless, I accept that courts of first instance should not generally regard themselves as at liberty to depart from the considered dicta of a majority in the High Court of Australia.

136 That having been said, things have moved on since 1953. I reviewed the situation (as at December 2004) in Rickard Constructions v Rickard Hails Moretti [2004] NSWSC 1041 at [42] and following. I concluded, on a review of the authorities to that time, that I could and should depart from the dicta in Poulton. An appeal from my decision was dismissed (Rickard Constructions v Rickard Hails Moretti Pty Ltd [2006] NSWCA 356), although the Court of Appeal did not consider what I had said in relation to the assignability of causes of action. I summarised my reasons at [53], and do not wish to repeat what I there said. I acknowledge that, since I gave my judgment in Rickard Constructions, the High Court of Australia has reinforced the point that it is not appropriate for an intermediate court of appeal to depart from “seriously considered dicta of a majority of” the High Court: Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 81 ALJR 1107 at 1140 [135]. I acknowledge that the point made by their Honours applies a fortiori to judges of first instance. Nonetheless, I think, the developments that I traced in Rickard Constructions at [42] and following justify what, otherwise, must be an unacceptable course.

137 Yahoo relied also on clause 14.7 of the agreement, prohibiting the assignment of rights under the agreement without consent. I do not think that any claim in contract based on assignment was necessarily doomed to fail because of cl 14.7. At the least, there is a question of construction as to whether cl 14.7 applies to an assignment (or purported assignment) of a cause of action for breach, where the assignment was made after the contract had come to an end by effluxion of time.

138 Thus, I do not accept that Whyked’s case, insofar as it was based on assignment of a cause of action for misrepresentation, should have been perceived to have been hopeless.

139 I should note that this is one of the matters that the solicitor did discuss with the barrister, after receiving Yahoo’s strike-out application and submissions in support. According to the solicitor, the barrister acknowledged that “there is some pretty heavy authority against us on the assignment point”, but suggested some possible answers.

140 It is also worth noting that, on 1 June 2006 (the day before the strike-out application was listed for hearing) the solicitor and Mr Gibson had a telephone conference with the barrister in which, among other things, the barrister estimated Yahoo’s prospects of success at “50/50”, but noted as a “fallback position… that you and Michael Dwyer become the plaintiffs in the proceedings”. Mr Gibson said that Mr Dwyer would be a plaintiff if he were indemnified for costs.

141 I have to say that I do not understand why the solicitor should have been required to make his own assessment of the issue, when the barrister, having apparently researched the relevant issues, had indicated that the solicitor’s client had a “50/50” prospect of success. Nor do I understand why it was relevantly delinquent, by which I mean to call up s99(1)(a) of the Civil Procedure Act, for the solicitor to continue to run a case apparently having “50/50” prospects of success or failure.

The Trade Practices Act and misrepresentation claims by Ezysend

142 Yahoo submits that the claims were not sustainable and had no reasonable prospects of success. It relies upon its submission, which I have already rejected, that Hammerschlag J had “found that the only party capable of bringing the… claims in the name of the partnership, was a receiver appointed to the Ezysend partnership” (amended written outline para 36(b)(i)).

143 In this context, Yahoo relies also on the question of security for costs: a matter to which I shall turn in due course.

Trade Practices Act and misrepresentation claims by Mr Gibson

144 Again, Yahoo founds its attack on the supposed “finding” made by Hammerschlag J, although this time it refers more accurately “to a “statement by” his Honour (paragraph 37(a)).

145 For the reasons I have given, I accept that the claim was one belonging to the former partners. I conclude, however, that it was open to Mr Gibson to prosecute the claim in an action in which the other partner, Mr Dwyer, was a party.

146 In this context, Yahoo relies on the agreement that any proceeds recovered by Mr Gibson would be split among Whyked’s shareholders in proportion to their holders. I have to say that I do not know why this makes the claim unmaintainable, although I accept that it is relevant in relation to security for costs: the topic to which I now turn.

Security for costs

147 Yahoo submits that it was relevantly improper or unreasonable for the solicitor to permit the proceedings to go forward, so that Yahoo would incur costs in defending them, in circumstances where it was apparent that neither Whyked nor those standing behind it had the ability to meet any substantial costs order that might be made against them, or to provide any substantial sum by way of security for costs.

148 I accept that Yahoo through GT raised the question of security for costs relatively soon after the summons and commercial list statement were served. It did so by GT’s letter to RMB dated 9 May 2006. The issue was referred to in subsequent letters dated 16 May, 4 July and 6 July 2006. I accept also that:

(1) the solicitor knew, relatively soon after the issue of security for costs had been raised, that there was no realistic prospect that Whyked or those standing behind it could provide any substantial sum by way of security; and

149 As to the first issue: when the solicitor received the letter of 9 May 2006, he discussed the question of security for costs with Mr Gibson. Mr Gibson said that he was investigating ways in which security could be formed. As at 16 May 2006, the solicitor’s view, as expressed in his affidavit, was that:

“… Mr Gibson was exploring avenues to obtain security. My instructions from Mr Gibson and the documentary material that I reviewed up to that date did not indicate that security would not be provided by one of the persons standing behind the company or a person financially interested in the proceedings if a security for costs order was ordered against it.”

150 Nonetheless, by 22 May 2006, the solicitor knew from Mr Gibson that those standing behind Whyked were “financed out”. The solicitor understood that, by this, Mr Gibson was conveying that neither Whyked nor those standing behind it had the resources to provide any substantial sum by way of security.

151 The solicitor referred to the proposition, apparently advanced by Mr Gibson in an email, “to the effect that the poor financial position of the Plaintiff had been caused by the conduct of the Defendant”. The solicitor said that he “appreciated that this was a recognised ground as a significant discretionary matter in determining whether” the Court should order security at all, and, if so, in what amount. I do not think that this reasoning was open to the solicitor in circumstances where the “Plaintiff” at the time was Whyked. Whyked was not a party to the agreement with Yahoo. It may have been arguable that the poor financial position of Messrs Gibson and Dwyer had been caused or contributed to by the conduct of Yahoo – I express no view on this. But the same does not apply to an assignee (or purported assignee) from them. At the time the Ezysend partnership business was assigned to Whyked, the agreement between the partnership and Yahoo had come to an end. The business may have been in a poor shape. But Whyked, presumably knowing of that, agreed to take the assignment. Nothing done or omitted to be done by Yahoo caused Whyked so to act.

152 Yahoo submits that the question of security had not been resolved by the joinder of Mr Gibson as a plaintiff. It submits that he was suing not for his own benefit but for the benefit of Whyked. I think that this is correct, to the extent that in the draft further amended commercial list statement provided by RMB to GT on 26 July 2008, the statement of the nature of the dispute includes a statement that the rights of Messrs Gibson and Dwyer, in respect of the Ezysend partnership business and the agreement, were assigned to Whyked before the commencement of the proceedings. In those circumstances, I think, Mr Gibson’s participation could only have been for the benefit of Whyked. He may have been a necessary party; but on the face of the statement of the nature of the dispute, any amount recovered by him would be held as trustee for Whyked, having regard to the fact of assignment.

153 However, the salient feature of this aspect of the case is that Yahoo did not press for security for costs until well after the strike-out application had been dealt with. It chose to pursue other interlocutory steps, and did not file the application for security for costs until 4 October 2006.

154 In substance, Yahoo chose to move to have the claim dismissed before it moved for security. Of course, it had announced its intention to seek security at an early stage; but it then engaged in other interlocutory manoeuvres. In those circumstances, I do not understand why it was relevantly unreasonable or negligent of the solicitor to refrain from turning his attention to the impact of an order for security until such time as Yahoo chose to seek it. It is plain that if Yahoo had sought security for costs by notice of motion filed shortly after 9 May 2006, that notice of motion would have been heard and disposed of – inevitably, in Yahoo’s favour – well before 30 June 2006. In those circumstances, all the costs incurred by Yahoo in relation to the strike out application and other matters could have been avoided. I do think that in this sense Yahoo is the author of its own misfortune, although that conclusion is not an answer to this aspect of Yahoo’s claim.

155 It is worth noting in this context that once the solicitor appreciated that his clients were not in a position to provide any substantial security for costs, he:

“… also appreciated that there had been no security for costs application then brought and that the issue of any security for costs actually ordered or actually dealt with, would be if and when the Court made an order for security of costs. … it was possible that such an application would not be made or perhaps more realistically, not made in the full amount sought by the Defendant.”

156 In other words, I think, the solicitor resolved to deal with the issue if and when Yahoo chose to push it. He said, in this context, that he was:

“… also aware that security or some form of personal undertaking may ultimately be able to be raised or otherwise be satisfactory to the Court.”

157 The solicitor did not lose sight of this question of security for costs. He raised it in conference with the barrister on 20 July 2006. The barrister said, in substance, that if there were “a real person instead of a company as the plaintiff” it might “help defeat an application for security for costs”. Nonetheless, the solicitor said, the primary reason for joining Mr Gibson as a plaintiff was to seek to reinstate the struck-causes of action, not to avoid an order for security for costs.

158 When, finally, Yahoo made its application for security for costs, the solicitor discussed it with Mr Gibson. They went through documents that Whyked and Mr Gibson were to produce in answer to notices served by Yahoo. The solicitor drafted an affidavit for Mr Gibson, and discussed its contents with the barrister. The barrister suggested a change. The affidavit was sworn in accordance with the barrister’s suggestion.

159 On 3 November 2006, the solicitor and the barrister discussed the application for security for costs, which was listed that day. The barrister suggested that there be further evidence, from those standing behind Whyked, as to their financial situations; and said that the matter would have to be adjourned. This in fact happened.

160 When the order for security was made on 20 November 2006, the solicitor discussed it with Mr Gibson. He suggested among other things that Mr Gibson “obtain a bond or see a litigation funder”. A few days later, Mr Gibson said that he could “get an extension on our home loan to cover the first payment of $100,000.00”. He discussed whether the amount would need to be drawn down.

161 On 23 November 2006, the solicitor discussed the question of security with Mr Gibson. One suggestion made was to see if a litigation funder would be interested in underwriting the action.

162 Thereafter, the solicitor had a number of discussions with litigation funders, including Hillcrest Litigation Services Limited, Australian Litigation Fund Pty Ltd and IMF (Australia) Ltd. The first two funders do not appear to have been interested, but IMF, through its managing director Mr John Walker, investigated the application in some detail. The barrister and the solicitor conferred with Mr Walker on 19 December 2006 (after RMB had furnished IMF with information requested by Mr Walker). They discussed a number of issues. Mr Walker pointed out that cl10 of the agreement had an adverse impact on the contract claim.

163 The barrister at least appears to have got the impression that if Mr Walker’s concerns were satisfied, IMF would fund the litigation. As the barrister understood it, Mr Walker’s concerns were:

(1) reaching an agreement with Mr Gibson as to the terms on which IMF would fund the litigation;

(2) amending yet again, and discontinuing the claims by Whyked;

(3) resolving partnership issues between Messrs Gibson and Dwyer, so that Mr Dwyer need not remain as a party; and

164 The solicitor followed up the matters raised in conference. However, on about 22 December 2006, he received a letter from IMF stating that it would not fund the litigation.

165 In these circumstances, I do not think that the solicitor’s conduct, in relation to the question of security for costs, fell so far short of the requisite standards of diligence and competence that it amounted to serious neglect, serious incompetence of serious misconduct for the purposes of s99(1)(a) of the Civil Procedure Act.

166 The solicitor was aware that Whyked and those standing behind it were impecunious. He was aware that they had little chance of providing any substantial sum of security (although, as I have said at [160] above, Mr Gibson did suggest on 21 November that at least the first instalment of security might be provided). When the question of security was agitated, the solicitor turned his mind to ways in which it could be raised: including by seeking the assistance of litigation funders.

167 In essence, Yahoo’s submission is that the solicitor should not have acted because he must have known that, if an application were made for security for costs, no security could be provided and the action would be stayed. That submission seems to me to be tantamount to saying that no solicitor could ever accept instructions from an impecunious corporate plaintiff. Such an approach would mean that many cases, including cases of merit, could not be brought to trial. The courts should be slow to take such an approach, having that consequence.

168 In my view, as I have indicated, the solicitor’s conduct, in respect of the question of security for costs, does not warrant the making of the order sought against him.

The serving of evidence

169 I have dealt with this at [46] to [49] above. I regard this aspect of Yahoo’s submissions as flying in the face of reality; and, in this context, I am tempted to repeat what I have said at [113] above.

Conduct at hearings

170 Yahoo submits that “RMB took an unreasonable approach to court hearings” (amended written outline, paragraph 40).

171 It relies on the number of appearances, “all of which could have been avoided if RMB had taking [sic] into consideration the issues raised in correspondence and submissions by Yahoo”, and on what it says were unnecessary amendments, and the raising of unnecessary issues.

172 There seem to be a number of answers to this aspect of Yahoo’s submission:

(1) in substance, it was the barrister and not the solicitor who was responsible for the conduct of the hearings;

(2) the number of hearings could have been reduced substantially had Yahoo moved promptly for security for costs, rather than choosing to pursue other interlocutory procedures; and

173 The first two points are self explanatory. As to the third: I accept that any order made for indemnity costs would not have borne fruit. Nonetheless, I think, if Yahoo were of the view that any of the interlocutory hearings had been conducted in an unreasonable fashion, the proper forum to ventilate that complaint was the judge before whom the hearing was conducted. The failure to do so may well indicate that this is another application of hindsight analysis, rather than something perceived by Yahoo at the time.

Conduct in respect of costs offers

174 The complaint appears to be that the solicitor acted unreasonably in relation to the quantification of costs the subject of orders in Yahoo’s favour. It is said that this was relevantly unreasonable or improper in circumstances where the solicitor was aware that Whyked had insufficient funds to meet any costs order, and could not obtain litigation funding.

175 I am somewhat puzzled by the proposition that a solicitor is acting improperly in seeking to ensure that costs payable by his client pursuant to an order of a court do not exceed what ought properly to be allowed. But in any event, the problem with this argument appears to be that it was not until late December 2006 that the solicitor knew that litigation funding could not be obtained. As late as 19 December 2006, the barrister suggested to the solicitor that it was likely that IMF would fund the litigation (see [162] above).

Section 347 certificates

176 Yahoo says that, by reason of the matter to which I have referred, the various attempts to plead Whyked’s or the plaintiffs’ case were cast in a way that had no reasonable prospects of success. It points to the certificates given on 4 April, 6 July and 8 September 2006. The first two of those certificates were signed by another partner of RMB and not the solicitor. The submissions in respect of those certificates may have been relevant to the (now withdrawn) claim against RMB. They do not seem to me to have anything to do with the claim against the solicitor.

177 The solicitor did sign the third certificate. However, that can only avail Yahoo if the major premise – that the case adumbrated by those pleadings had no reasonable prospect of success – is accepted. For the reasons that I have given, I do not accept that major premise.

Analysis

178 So far, I have dealt with the various complaints individually. On the view to which I have come, the only complaints that are made good are those in respect of the attempt to assign (so that the assignee could sue upon) causes of action under the Trade Practices Act, and the claim based on joint venture.

179 I do not think that either of those matters is sufficient by itself to justify the conclusion for which Yahoo contends. Nor are they, taken together. Further, and to the extent that (as I think is the case) they should be examined against the background of the entire conduct of the litigation, I see no reason to change that conclusion.

180 On the solicitor’s evidence – which, as I have said, I accept – he did not at any stage subjectively form the view that the proceedings reasonable prospects of success. A subjective view cannot be determinative. But one is then left to ask: what is there in the objective circumstances that should have brought this home to the solicitor?

181 I do not think that there is anything. At least some of the complaints made by Yahoo are in my view wrong. As to other complaints: there were arguments in favour of the position that Whyked or the plaintiffs took, even if (in some cases) the solicitor did not appear to perceive those arguments.

182 The solicitor was diligent in his performance of the retainer. He took and acted on the advice of counsel, whom he believed to be experienced and capable. In my view, it was open to him to do so, in circumstances where he did not just relinquish all responsibility to the barrister, but discussed the issues with the barrister either by telephone or through emails.

183 The case sought to be advanced was a difficult one. It faced problems. But in my view, notwithstanding the fate that parts of it suffered, it cannot be characterised as hopeless. The real problem is that the plaintiffs lacked the resources to bring it, and made what I think was a mistaken tactical decision to frame it in such a way that an application for security for costs was bound to succeed and, having succeeded, was bound to have the practical effect of bringing the litigation to an end.

184 I do not think that the exercise of the power given by s99 of the Civil Procedure Act should be undertaken in such a way as to deter legal practitioners from advancing difficult cases, or from accepting instructions from impecunious clients. As a matter of general policy, someone with a case that is not manifestly hopeless should not be denied the opportunity to litigate it: see, in a different but analogous context, the well known decision in General Steel Industries v Commissioner for Railways (1964) 112 CLR 125.

185 In theory, the courts are open to all. In practice, access to the courts is often dictated by the availability of financial resources. That is an unfortunate fact of life. It does not mean that those without resources should be barred from the courts, particularly where legal practitioners are prepared to accept instructions on a contingency basis.

186 The policy underlying the power of the courts to order for security costs is based on different considerations. Undoubtedly, the exercise of that power has the effect from time to time of preventing arguable cases from being run. Where that happens, it should be pursuant to an order of a court on an application for security for costs, after balancing all relevant considerations. It should not be pursuant to a decision of a legal practitioner who is afraid to accept instructions from an impecunious client because the defendant, if successful, may obtain an order for costs against the legal practitioner personally.

187 I do not think that there is anything in the complaints advanced by Yahoo to deflect the “in principle “ conclusion express at [107] above.

Conclusion and orders

188 The application for costs fails.

189 I make the following orders:

(1) order that the amended notice of motion be dismissed;

(2) subject to order (3), order the applicant to pay the respondent’s costs;

(3) direct any party seeking to discharge or vary order (2) to give notice to the other within 14 days of the date of publication of these reasons; such notice to specify the orders sought and, in brief, the reasons why they are sought; a copy of any such notice to be provided to my Associate;

(4) reserve liberty to apply on seven day’s notice in respect of costs;

(5) order that the exhibits be retained for 28 days and that thereafter they be dealt with in accordance with the rules.

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11/06/2008 - Judgment date on coversheet - Paragraph(s) Coversheet

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Citations

Whyked Pty Ltd v Yahoo!7 Pty Ltd [2008] NSWSC 477

Most Recent Citation

Puruse Pty Ltd v Council of the City of Sydney [2009] NSWLEC 163

Cases Citing This Decision

20

Beau Timothy John Hartnett trading as Hartnett Lawyers v Anthony Robert Bell as Executor of the Estate of the late Mabel Dawn Deakin-Bell [2023] NSWCA 244

Abi-Rizk v BB Dundas Pty Ltd in its capacity as Trustee of the BB Dundas Trust [2025] NSWSC 1063

Alexiou v Alexiou [2024] NSWSC 1340

Cases Cited

18

Statutory Material Cited

8

Whyked Pty Ltd v Yahoo Australia and New Zealand Pty Ltd [2006] NSWSC 650

Knight v FP Special Assets Ltd [1992] HCA 28

In the matter of Bauhaus Pyrmont Pty Ltd (in liq) [2006] NSWSC 879

CITATION:	Whyked Pty Limited v Yahoo!7 Pty Limited [2008] NSWSC 477 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	18 April 2008 and 21 April 2008
JUDGMENT DATE :	2 June 2008
JUDGMENT OF:	McDougall J at 1
DECISION:	See paragraphs [188] and [189] of the judgment.
CATCHWORDS:	COSTS – indemnity costs – costs orders against legal practitioner – whether serious neglect, serious incompetence or serious misconduct – reasonable prospects of success – s99 Civil Procedure Act 2005 – r42.3 Uniform Civil Procedure Rules.
LEGISLATION CITED:	Civil Procedure Act 2005 English Supreme Court Act 1981 Federal Court of Australia Act 1976 Federal Court Rules 1979 Legal Profession Act 1987 (NSW) Legal Profession Act 2004 Trade Practices Act 1974 Uniform Civil Procedure Rules 2005
CATEGORY:	Principal judgment
CASES CITED:	Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 Degiorgio v Dunn (No.2) (2000) 62 NSWLR 284 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 81 ALJR 1107 General Steel Industries v Commissioner for Railways (1964) 112 CLR 125 Harley v McDonald [1999] 3 NZLR 545 H & E Van der Sterren v Cibernetics (Holdings) Pty Ltd (1970) 44 ALJR 157 Ideal Waterproofing Pty Ltd v Buildcorp Australia Pty Ltd [2006] NSWSC 155 In the matter of Bauhaus Pyrmont Pty Ltd (in liq) (2006) 67 NSWLR 289 Karwal v Skrzypczak [2007] NSWSC 931 Knight v FP Special Assets Limited (1992) 174 CLR 178 Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300 Levick v Commissioner of Taxation (2000) 102 FCR 155 National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514 Poulton v The Commonwealth (1953) 89 CLR 540 Radaich v Smith (1959) 101 CLR 209 Rickard Constructions v Rickard Hails Moretti [2004] NSWSC 1041 Rickard Constructions v Rickard Hails Moretti Pty Ltd [2006] NSWCA 356 Ridehalgh v Horsefield [1994] Ch 205 Robinson v Harman ((1848) 1 Ex 850; 154 ER 363 White Industries (Qld) Pty Ltd v Flower and Hart (a firm) (1998) 156 ALR 169 Whyked Pty Limited t/as Ezysend v Yahoo Australia and New Zealand Pty Limited [2006] NSWSC 650
TEXTS CITED:	Dal Point: Lawyers’ Professional Responsibility in Australia and New Zealand (Second Edition) New South Wales Law Almanac for 2008
PARTIES:	Whyked Pty Limited t/as Ezysend (ACN 110 782 048) (First Plaintiff) Darren Gibson (Second Plaintiff) Yahoo!7 Pty Limited (ACN 110 782 048) (First Defendant) Michael Dwyer (Second Defendant)
FILE NUMBER(S):	SC 50044/06
COUNSEL:	D Studdy (Applicant) D R Pritchard SC (Respondent)
SOLICITORS:	Watson Mangioni Pty Limited (Applicant) Middletons Lawyers (Respondent)