Attard v James Legal Pty Ltd

(ii) proceedings brought in the District Court by Orlando against FCL; FCL filed a cross-claim against CMG. The cross-claim asserted deficiencies in the building work performed by CMG in relation to the FCL contracts ("the Orlando proceedings");

(iii) proceedings in this Court by CMG against Allatech and another company, the nature of which was not disclosed in evidence ("the Allatech proceedings");

(iv) proceedings commenced by CMG against Supreme Linings Pty Ltd ("Supreme Linings") in the District Court, the nature of which is not disclosed ("the Supreme Linings proceedings").

Counsel, Mr Mel Bloom, held a brief or briefs in relation to some or all of the litigation. 15 Although the evidence is not entirely clear, it appears that, at some time in about June 2000, Supreme Linings took the necessary preliminary steps to have a liquidator appointed to CMG. CMG and Messrs Attard and Henry were then legally represented by Whittens Solicitors. Whittens failed to take the necessary action to avoid the winding up. 16 Because of the failure of the solicitors to take action to avoid the winding up, on 15 June 2000 CMG appointed Mr Peter Hillig as administrator, and, on 28 July 2000 entered into a Deed of Company Arrangement ("the DOCA"). 17 On 19 July 2000 Mr Bloom spoke to Mr James with a view to his (Mr James) taking over representation of the plaintiffs in the various matters. On 21 July 2000 Messrs James, Attard and Henry met, at the offices of James Solicitors. (There is a conflict in the evidence as to the date of the first meeting: according to Messrs Attard and Henry, it was on 1 July, but I am satisfied that it was, as Mr James said, on 21 July. Mr James had file notes and other business records to support his contention: Messrs Attard and Henry had only their recollections. Counsel for the plaintiffs conceded that the date is immaterial and the conflict of little or no consequence.) 18 Notwithstanding counsel's concession, the date has some significance: if, as I accept, the date proposed by Mr James is correct, then CMG had already entered into the DOCA by the time Mr James became involved. This, in fact, adds further support to his evidence; there was never any suggestion that he had been in any way involved in the preparation of the DOCA. Had he been retained on 1 July, it is likely that he would have had, at least, some involvement. 19 Mr James effectively took over the representation of the plaintiffs in respect of all the litigation. That was a not inconsiderable task. At some time, in relation to the FCL proceedings, he received and read 57 volumes of "construction records". Ms Cunningham also became involved. 20 Initially, Mr James opened a file in respect of the CMG proceedings. Thereafter, he opened three files, representing the Supreme Linings proceedings, the Allatech proceedings, and the Orlando proceedings. On 1 August he was provided with a copy of the DOCA. 21 On 2 August 2000, because of the overall complexity of the proceedings, he opened "a Master File". On 3 August he received from Whittens Solicitors the files for the FCL, the Supreme Linings, the Orlando, and the Allatech proceedings. From these files Mr James was able to discern the history of the litigation to that date (Mr James' affidavit para 64 onwards). They disclosed, inter alia, that Mr Marcus Jacobs QC had given advice from time to time. 22 On 10 August Mr James prepared a Litigation Strategic Plan (Ex PJ1-22). 23 There were a number of meetings between Messrs James, Attard, Henry and Bloom and Ms Cunningham, or any combination of these on 23 August. Mr James handed to the plaintiffs an Agreement for the Provision of Legal Services. This related to the FCL, Allatech, Orlando and Supreme Linings proceedings, and to the Master File. Thereafter, in August 2000 and January 2002, he gave either or both of them further such agreements. 24 Mr James was on leave from early September to mid-October 2000. Ms Cunningham assumed carriage of all the litigation. 25 On 29 September Mr James filed, in the FCL proceedings, a notice of motion seeking, inter alia, security "for the retention monies in dispute" in the sum of $320,350 and security for costs in the sum of $100,000. On 23 October he filed an amended notice of motion, seeking, additionally, an order that FCL be restrained from disposing of any assets, and in particular, disposing of or encumbering a specified unit in the Camperdown development. (This was referred to as a "Mareva order" - an order in accordance with the principles stated in Mareva Compania Naviera SA v International Bulkcarriers SA [1975] 2 Lloyd's Rep 509.) 26 Mr James briefed Mr Jacobs to appear on the hearing of the notice of motion. Subsequently, he received advice from Mr Jacobs to the effect that the notice of motion had, if any, only slim prospects of success. 27 On 6 December 2000 consent orders were made. These included an order that FCL provide security for costs in the sum of $150,000. The Court noted an undertaking by FCL that the specified unit in the Camperdown development would not be transferred without FCL giving 48 hours notice (in writing) to Messrs Attard, Henry and CMG. On that basis, the notices of motion were dismissed. 28 Between October and December 2000 Mr James worked on amendments to the defence and cross-claim of CMG to the FCL proceedings. (These had been filed prior to Mr James taking instructions.) 29 In the course of doing so, he had discussions with Mr Bloom and Mr Attard. The conversations with Mr Bloom at times became acrimonious. 30 On 25 October 2000 Mr James filed an amended defence and cross-claim. 31 On 1 December 2000 Mr James briefed Mr Jacobs with the amended defence and cross-claim. Mr Jacobs advised, in effect, of the assertions there made: "… the major part of it is totally unsupportable in fact and law"

and that: "… to persist in it would involve the clients in a very substantial amount of costs in respect of claims that have no possible hope of succeeding, and will (in the hands of a Judge) have a potential of attracting very angry comments." (PJ1-97) 32 Mr Jacobs was briefed to, and did, re-draft the documents. 33 On 30 October 2000 Mr Attard asked Mr James to amend the Allatech pleading so as to include a claim under s 52 of the Trade Practices Act against a named individual (who does not otherwise figure in these proceedings). 34 In November 2000 Mr James began drafting amendments to the CMG/Allatech proceedings. He consulted Mr Bloom, sending various drafts to him from time to time. The consultations were not always congenial and, at times, again became acrimonious. Eventually, on 14 November 2000, Mr James filed an amended document in accordance with the amendments proposed by Mr Bloom. 35 On 4 December 2000 he briefed Mr Jacobs in the Allatech proceedings. 36 The following day Mr Jacobs advised that the pleadings were "a cause of considerable concern" and, in part, failed to disclose a cause of action. He advised "go[ing] back to the drawing board" in respect of all pleadings. He himself subsequently drafted a further amended Commercial List summons and statement. 37 On 9 November 2000 Mr James had a conversation with Mr Grant Hansen, the solicitor representing FCL. In accordance with instructions given to him by Messrs Attard and Henry, he floated with Mr Hansen the idea of a settlement of the FCL proceedings, which, he suggested, could occur if the Trade Practices Act claim against the two men personally were abandoned. He received no response. 38 Mr James had a conversation with Mr Attard, raising concerns he experienced about the contribution made by junior counsel and about his suitability to undertake the kind of work he was briefed to undertake. (It will be remembered that junior counsel had been involved in the plaintiffs' matters before Mr James, and had, in fact, introduced Mr James to the plaintiffs.) 39 On 24 November 2000 Mr Attard instructed Mr James to brief Mr Jacobs for the hearing of the application for a Mareva order, and the application for security for costs in the Allatech proceedings. Mr Jacobs was briefed on 1 December 2000 on the Mareva application and on 4 December 2000 in the Allatech proceedings. 40 Mr Jacobs advised as set out above. 41 On 21 February 2001 Mr James filed a notice of motion in this Court, in the FCL proceedings, seeking transfer of the Orlando proceedings in the District Court to this Court to be heard concurrently with the FCL proceedings. 42 There is a dispute in the evidence as to how this was initiated. In their affidavits, both Mr Attard and Mr Henry attribute the proposal to Mr James. Mr James denied having been the initiator of the idea; he attributed it to Mr Henry. Mr James' position is supported by an email sent by Mr Henry to Ms Cunningham, directing her to: "join it [the Orlando proceedings] in the main case [the FCL proceedings] and stop him [Curtis Mann] from costing us time and money." 43 The notice of motion came on for hearing before Einstein J on 27 April 2001. In an extempore decision given on that day [Franks Centre Lofts Pty Ltd v Construction Management Group Pty Ltd [2001] NSWSC 389] his Honour declined to make the order and dismissed the notice of motion, and ordered each to pay FCL's costs. 44 His Honour rejected some of the arguments put on behalf of CMG, and then said: "39 I am simply not persuaded that notwithstanding the fact that [CMG] and [FCL] are locked into the major litigation the subject of the Supreme Court proceedings, this is an appropriate case in which to direct that the District Court proceedings be heard together with the Supreme Court proceedings.

40 The Court whilst cautious indeed in every circumstance to closely examine possibilities of res judicata type and issue estoppel difficulties coming forward where proceedings are heard in disparate tribunals with obvious difficulties for the parties and for the Court in hearing the later proceeding, is not here persuaded that this case falls into that category.

41 To my mind, it is clear that the Court has a discretion as to whether or not to order proceedings to be moved to the Supreme Court. It is equally clear that although issues in two different tribunals may not be exactly the same, where there is a common thread, and a clear entanglement of issues in two sets of proceedings, the Court's discretion, depending upon the nature and extent of the overlap, will usually be exercised in favour of transferring the proceedings to be heard together with the other proceedings.

42 In the present case, it seems to me that a claim by the subcontractor for in the order of $75,000 or thereabouts where the prospects of significant overlap are as slender as I perceive in this case, the discretion should be exercised against the making of the order in the Notice of Motion." 45 On the morning of 8 March 2001 Mr Attard sent an email to Mr James, identifying the subject matter as the FCL proceedings, which read as follows: "We will be happy to all parties go our own way on the FCL Allatech matters" 46 That day, Mr James again spoke to Mr Hansen in an attempt to settle the FCL and Allatech proceedings. Mr Hansen proposed that each party "walk away and pay their own costs". Mr James replied that his clients were looking for a payment although he did not specify the quantum of the payment sought. On 3 April 2001 Mr Hansen told Mr James that he had no instructions with respect to settlement. The negotiations continued on 9 April, on the same basis, Mr Hansen suggesting abandonment of proceedings by both parties, and Mr James insisting that the plaintiffs were looking to receive some payment. 47 On 10 April he told Mr Hansen that the plaintiffs would "walk away", with all parties to pay their own costs. Mr Hansen telephoned to tell him that the offer had been rejected. A further conversation took place on 20 May. 48 Thereafter, the evidence shows extensive, almost constant, communication between Messrs James, Attard, Henry, Jacobs and Ms Cunningham. A good deal of it concerned the various pleadings; on other occasions it involved the tactical approach to be taken to the proceedings. A significant part of the matters discussed was the funding of the litigation. Messrs Attard and Henry made it clear that available funds were limited. 49 The Orlando proceedings were listed for hearing in the District Court on 26-29 November 2001. Mr Jacobs was briefed to appear. He was instructed by Ms Cunningham. While the proceedings were in progress, Mr Attard had some discussion with Mr Mann concerning settlement. Once again, the proposal made (this time by Mr Mann) was that all parties abandon whatever proceedings they had initiated, and accept responsibility for their own costs. 50 Mr Attard reported this to Mr Jacobs, Ms Cunningham and Mr Henry. Mr Jacobs dissuaded him from following up the proposal. 51 The Orlando proceedings did not conclude in the four days allocated. A resumed hearing was fixed for 21 January 2002. According to Mr Attard's affidavit, it was he who drew attention to the fact that CMG was subject to the DOCA, and that (by reason of s 440D of the Corporations Act 2001) proceedings could not be begun or continued without the leave of this Court (or with the written consent of the administrator). This prompted Mr Jacobs to notify the District Court judge, who adjourned the hearing. 52 FCL then sought leave in this Court to proceed against CMG. On 31 October 2002 leave was granted. 53 On 11 January 2002, by originating process filed in the Equity Division of this Court, Allatech sought orders terminating the DOCA (re CMG), that Mr Hillig be removed as administrator, and that a liquidator be appointed. These proceedings came to be known as "the Hillig proceedings". Messrs Attard and Henry retained James Legal to act in order to resist the application. Ms Cunningham undertook the carriage of the matter. Mr Jacobs was briefed. Mr Hillig was separately represented, and also resisted the application. 54 The evidence does not disclose the progress or outcome of those proceedings. 55 The professional relationship between the present parties came to an end in April 2003. This followed a number of discussions and written communications about the payment of escalating and unpaid fees rendered by Mr James or James Legal. On 5 February 2003 the parties entered into a Deed. The parties to the Deed were James Legal, CMG, Mr Attard, Mr Henry, Elzac and Glowmint. The Deed recited an agreement among the parties that the plaintiffs were indebted to the defendants in an amount claimed by the defendants to be, as at 16 January 2003, $696,374.69 plus GST; and that the plaintiffs reserved their rights to have the costs assessed in accordance with the Legal Profession Act 2004. 56 The Deed included the following operative provisions: "1. Attard, Henry and CMG admit and irrevocably agree that subject only to James issuing accounts for $600,000.00 plus GST and subject to Clause 6 above, the said amount is Work in Progress by James as at 16 January 2003 ("debt").

2. Elzac, Glowmint … guarantee the payment of the amount found to be owing as agreed or as assessed in the sum of $300,000.00 each as if they were the principal debtors.

3. In consideration of the guarantee in the preceding clause the parties agree that: a. James can only enforce the guarantee to the following limits: [The Deed then set out a timetable for payment by instalments, together with interest]

d. James agrees not to enforce any rights to recover the debts, except in accordance with this Deed. In the event of default under this Deed James can enforce its rights in accordance with the Deed against Attard, Elzac, Henry, Glowmint, and CMG …

4. Save for where set out in this Deed all the other terms and conditions of James' costs disclosure provided will remain in place.

5. …" * * * 57 The manner in which the plaintiffs' claims were finally put, bore only a passing resemblance to the pleadings in the Statement of Claim. The case that was put focussed on negligence and breach of contract. No submissions were addressed to the pleaded claims of misleading and deceptive conduct. The claims in negligence asserted various breaches of the duty of care Mr James and James Legal undoubtedly owed to the plaintiffs in the provision of legal services. The claims in contract were, in essence, the same: they asserted an implied term in the contract of retainer that Mr James would exercise reasonable care, skill and diligence in the provision of legal services, and that he failed to do so. There was also a suggestion that, in, one respect, he acted contrary to his instructions. 58 Claims of negligence in the provision of professional services are to be measured against what is expected of the ordinary skilled person exercising and professing to have that special skill: see Rogers v Whitaker [1992] HCA 58; (1992) 175 CLR 479 at 483, and the cases there cited. 59 It will be a rare case in which negligence in the provision of legal services is alleged that does not call for expert evidence. Such cases do exist: the failure to commence proceedings within a statutory limitation period is an obvious example. But they are the exception: ordinarily a judge ought not be put in the position of acting as expert witness, by determining the standard of care and competence that meets the test, or fails to meet the test: see A. I. McLean Pty Ltd v Hayson [2008] NSWSC 927, at [225]-[236] per Bergin J (as the Chief Judge then was). 60 In this case, no expert evidence was called on either side. That has ramifications that will appear. 61 In written submissions filed on behalf of the plaintiffs, eight separate "claims" of breach of contract and/or negligence were identified. These were:

(i) "purporting to act for CMG in the Orlando proceedings whilst there was a stay of the claim against CMG and without the consent of the Deed Administrator";

(ii) "the application to transfer the Orlando proceedings to the Supreme Court of NSW to be heard with the FCL proceedings";

(iii) "the application by CMG in the FCL proceedings for a mareva order against FCL";

(iv) "the embarrassing amendments made by the defendants to the pleadings in the FCL proceedings";

(v) "the embarrassing amendments by the defendants to the pleadings in the Allatech proceedings";

(viii) "the Deed between the plaintiffs and the defendants". 62 It may here be observed that the claim identified as the eighth is more accurately to be perceived as a response to the cross-claim. 63 Detailed submissions were directed to each claim. 64 After dealing with one general matter, I will follow the same course, and deal with each claim in sequence.

The liability of a legal practitioner for negligence or breach of contract of retainer in respect of litigation 65 In two recent decisions the High Court has reaffirmed the immunity of advocates against suit for negligence in respect of the conduct of litigation: Giannarelli v Wraith [1988] HCA 52; (1988) 165 CLR 543; D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1. 66 What was once considered to be an immunity granted to legal practitioners practising as barristers is now known to extend to legal practitioners practising as solicitors who undertake the relevant kind of work: Giannarelli, per Mason CJ p 559, Wilson J pp 576-577, Brennan J p 586, Dawson J p 594; D'Orta-Ekenaike, per Gleeson CJ, Gummow, Hayne and Heydon JJ, at [25], [89]-[91]. So much is beyond challenge. It means that Mr James and James Legal have the benefit of the immunity to the extent that it would protect a barrister who undertook the work that they did. 67 Moreover, although directed to claims in negligence, the reasoning of the High Court in both cases makes it plain that the immunity extends to any cause of action based upon the conduct of litigation. In neither Giannarelli nor D'Orta-Ekenaike was any argument directed to a proposition that a claim in contract stood in a different position to a claim in negligence, and, although such a proposition was therefore not the subject of determination, it is plain that it does not. The evil that the immunity eliminates is the spectre of re-litigation of disputes quelled by judicial determination. A claim in contract over the performance of legal services in litigation raises exactly the same spectre. (It was not contended otherwise.) 68 Of more importance, for present purposes, is the reach, or boundary, of the immunity. All of the work here in question was connected with one or other of the various pieces of litigation I have outlined above. None of what is subject to the claims, however, actually took place in court. There is no claim for negligence or breach of contract related to anything said to have been done (or not done) by Mr James or James Legal in any court. 69 Each claim is connected to the litigation. That, as I have indicated, calls for an examination of the extent of the immunity for work done out of court. 70 In Giannarelli Mason CJ said: "… the grounds for denying liability for in-court negligence have no application to work done out of court which is unconnected with work done in court: Saif Ali [ Saif Ali v Sydney Mitchell & Co [1980] AC 198]. The public policy considerations underlying immunity from in-court negligence have no relevance to a barrister's liability for negligent advice in relation to out-of-court matters … The problem is: where does one draw the dividing line? Is the immunity to end at the courtroom door so that the protection does not extend to preparatory activities such as the drawing and settling of pleadings and the giving of advice on evidence? To limit the immunity in this way would be to confine it to conduct and management of the case in the courtroom, thereby protecting the advocate in respect of his tactical handling of the proceedings. However, it would be artificial in the extreme to draw the line at the courtroom door. Preparation of a case out of court cannot be divorced from presentation in court. The two are inextricably interwoven so that the immunity must extend to work done out of court which leads to a decision affecting the conduct of the case in court. But to take the immunity any further would entail a risk of taking the protection beyond the boundaries of the public policy considerations which sustain the immunity." (p 559-560) 71 His Honour endorsed a statement from Rees v Sinclair [1974] 1 NZLR 180 as: "... the protection exists only where the particular work is so intimately connected with the conduct of the cause in Court that it can fairly be said to be a preliminary decision affecting the way that cause is to be conducted when it comes to a hearing." 72 In D'Orta-Ekenaike, in stating the "central justification" for the advocate's immunity, the majority said: "If an exception to that tenet were to be created by abolishing that immunity, a peculiar type of re-litigation would arise. There would be re-litigation of a controversy (already determined) as a result of what had happened during, or in preparation for , the hearing that had been designed to quell that controversy." (at [45]) (italics added) 73 At [86] their Honours adopted the test from Giannarelli as including: "… work done out of court which leads to a decision affecting the conduct of the case in court"

and a different formulation of essentially the same test as: "… work intimately connected with" work in a court. 74 McHugh J said: "There is no relevant distinction between instructions given on negligent advice and the negligent carrying out of instructions if both are intimately connected with the conduct of litigation." (at [157]) 75 How has the test been applied? The short answer is: broadly - extremely broadly. In D'Orta-Ekenaike McHugh J gave a number of examples of work held to have been intimately connected with the conduct of a cause such as to invoke the immunity. These his Honour stated as: "failing to raise a matter pertinent to the opposition of a maintenance application [ Rees v Sinclair ]; failing to plead or claim interest in an action for damages [ Keefe v Marks (1989) 16 NSWLR 713 at 718]; issuing a notice to admit and making admissions [ Munnings v Australian Government Solicitor [No 2] [1994] HCA 65; (1994) 68 ALJR 169 at 172; failing to plead a statutory prohibition on the admissibility of crucial evidence [ Giannarelli ]; negligently advising a settlement [ Biggar v McLeod [1978] 2 NZLR 9]." 76 The two High Court decisions to which I have referred are themselves illustrative of the breadth of the manner in which the immunity is applied. Both arose out of criminal prosecutions. In Giannarelli, the negligence alleged was failure to advise clients facing criminal charges that they might have a good defence, and failure to object to inadmissible evidence. (The latter, obviously, comes within the immunity for work done in court and does not raise the issue of the boundaries of the immunity for work done out of court.) 77 D'Orta-Ekenaike sought to sue his legal advisors as a result of what he alleged to be negligent advice to plead guilty at committal. He alleged that, as a result of that advice, he entered a plea of guilty, which he subsequently withdrew. On trial, evidence of the plea of guilty was admitted. He was convicted and sentenced and served time in prison. On appeal, the admissibility of the evidence of the plea of guilty was upheld, but a new trial was ordered on the basis of inadequacy of directions to the jury as to how they might rely on the evidence of the plea. On re-trial the evidence was not admitted and D'Orta-Ekenaike was acquitted. He therefore sought to sue on the basis that the advice to plead guilty was negligently given, and resulted in his incarceration for a period of time. (The proceedings were stayed, and it was the stay that was the subject of the appeal in the High Court; the merits of the claim that the advice was negligent were never litigated.) 78 It will be necessary to examine each individual claim in the present case in the light of these considerations. 79 I will follow the claims made as they are set out in the final submissions made on behalf of the plaintiffs. In respect of each claim the first question will involve consideration and application of the principles stated in Giannarelli and D'Orta-Ekenaike.

(i) "purporting to act for CMG in the Orlando proceedings whilst there was a stay of the claim against CMG and without the consent of the Deed Administrator": 80 Although it is a reasonable inference that Mr James did not explicitly turn his mind to the provisions of s 440D of the Corporations Act and therefore make a decision, such as is referred to in Giannarelli and D'Orta-Ekenaike - the whole point of the claim is that he overlooked those provisions - nevertheless, what he did in representing CMG in the Orlando proceedings was "intimately connected with" the litigation, and certainly was preliminary to decisions about how that litigation was to be conducted. 81 If the giving of allegedly erroneous, and allegedly negligently erroneous, advice to plead guilty to a criminal charge, resulting in incarceration, can not be impugned by a claim in negligence (because it might cast doubt upon the subsequent conviction and sentence) then, it seems plain to me, a cause of action in civil proceedings that is "intimately connected with" that litigation can not be so impugned. 82 On this basis alone, the first claim must be rejected. But, even if that were not so, other reasons dictate the same result. 83 In respect of this claim, the damage claimed is the costs of the four days of hearing before leave was granted by this Court to proceed. 84 Section 440D provides for leave to be granted by this Court to proceed. That means that, had Mr James taken the point earlier than he did (after receiving advice from Mr Jacobs), it would have been open to FCL to seek that leave. If it were the case that an application would probably have been successful (as it ultimately was, when made) then CMG has sustained no damage. It is in exactly the position it would have been in had the application been made when Mr James assumed carriage of the matter. 85 This raises a hypothetical question. What, as a matter of the practice of this Court, would have been the likely result of such an application? This is precisely the sort of issue on which expert evidence could have cast considerable light. No evidence was put before the Court to demonstrate that, on the probabilities, FCL would have failed had it made such an application. No evidence was adduced (nor argument advanced) to identify the principles according to which such applications are determined. In answer to a question from me as to the evidence from which I could determine the likely result of such an application, I was told that I could myself assess that probability. 86 For at least two reasons, one factual, one of principle, this is wrong. The factual reason is that I do not routinely sit to determine applications in the Corporations List, or deal with issues of corporate law. I do not have the requisite knowledge of the practice of the Court nor the expertise to apply to that determination. 87 The reason of principle is that, to take the course proposed, would be, in effect, to constitute myself as an expert witness - to make an assessment of the probable fate of a hypothetical application by FCL. To do so would amount to a denial of procedural fairness: neither party would know, until too late, on what factual or legal basis I made the decision; neither would have an opportunity to cross-examine, to call contrary evidence, or to put submissions as to why those matters were correct or incorrect. 88 Because there is no evidence on which I could conclude that FCL would probably have failed in any application to proceed against CMG, there is no evidence of any damage flowing from Mr Jacobs' representation of CMG in the Orlando proceedings. For this reason also, this claim must be rejected. 89 In respect of this claim the plaintiffs claim damages, made up of the cost paid by them in connection with these proceedings; they also claim a declaration that they are not liable to the defendants in respect of work performed in the Orlando proceedings. I will deal with the latter in the context of the cross-claim.

(ii) the application to transfer the Orlando proceedings to this Court to be heard in conjunction with the FCL proceedings : 90 This application did involve a conscious decision by Mr James that was "intimately connected with" the litigation. It cannot be impugned in these proceedings. This claim must also be rejected, for Giannarelli reasons alone - and for other reasons, that follow. 91 The essence of the claim lies in a claim by Mr Attard, that Mr James never advised him that there was any risk of failure of the application to transfer, and that, if he had been so advised, he would have declined to take the risk. Mr Attard gave evidence to that effect. 92 The damages claimed are the costs CMG was ordered to pay to Orlando, and also its own costs incurred in respect of this application. 93 There is no evidence that Mr Attard enquired of the prospects of success of the transfer application; but, as the history above demonstrates, he is an experienced litigator. He can not have failed to appreciate that the application might not have been successful. 94 This claim is similar to the first, in that it involves an assessment, hypothetically, of the prospects of success of the application. That assessment must be made without regard to the actual outcome of the application. No evidence or any material of any kind was placed before me to enable me to make that assessment. I was not, for example, provided with evidence as to the extent to which the issues in the two proceedings overlapped. Indeed, I was not provided with a copy of the judgment of Einstein J, nor with a reference to it. 95 The submission was made: "99. The reasons of Einstein J make it clear that the application was misconceived." 96 This is a serious misstatement of the effect of the reasons given by Einstein J, which I have extracted above. His refusal to transfer the Orlando proceedings was made in the exercise of his discretion. That is not a finding that the application was misconceived. 97 This claim is rejected.

(iii) the application for a Mareva order against FCL: 98 As with the first and second claims, this application was so "intimately connected with" the conduct of the litigation as to fall foul of the Giannarelli and D'Orta-Ekenaike principles. It must be rejected for that reason alone. 99 Further, there is no evidence on which to found a conclusion that the advice to seek, and the steps taken towards claiming, the order, were negligent or in breach of the contract of retainer. 100 On behalf of the plaintiffs, reliance was placed upon the advice given by Mr Jacobs. But that can not be substituted for expert evidence. Mr Jacobs was not called, and could not be cross-examined. His opinion on the merits of the application may have been correct. It may have been incorrect. Even if it were correct, that does not establish that no competent legal practitioner in Mr James' position could have given the advice, or taken the steps, that he did. 101 Finally, the outcome of the application suggests that it went some way towards achieving the desired result: as appears from para [28] above, FCL gave an undertaking that preserved some of the property, and preserved CMG's rights.

(iv) & (v) "embarrassing" amendments made to pleadings in the FCL and Allatech proceedings : 102 Each of these claims is of the kind contemplated in Giannarelli and D'Orta-Ekenaike. Each must be rejected for that reason, as well as others. 103 Again, no expert evidence was adduced to show that the amendments to the pleadings were deficient in such a way as to bespeak negligence. 104 The history of the amendments can be seen in the documents exhibited to Mr James' affidavit; he was extensively cross-examined. 105 That history shows that, on receiving instructions, Mr James began work, and spent a great deal of time and effort in mastering the documentation and preparing for the multiplicity of proceedings. Despite developing doubts as to the capacity of junior counsel to undertake the kind of work for which he was briefed, he continued to consult him; the two disagreed, to the point of acrimonious exchanges. It must be recalled that junior counsel was already briefed when Mr James became involved. Despite his developing doubts, there was not the slightest basis to conclude that he ought to have withdrawn the brief from junior counsel. 106 Underlying this claim is the relationship between solicitor and counsel. Inherent in the arguments put on behalf of the plaintiffs is an assumption that the ultimate responsibility for pleadings lies with the solicitor. In a sense, this is correct. But it is also true that a solicitor is entitled to rely on advice from apparently competent counsel. 107 Even if it be the case that the amendments were ineffective, there is no foundation for the claim that they were negligently so. It is not uncommon in this Court for progressive amendments to be made to pleadings. There may be a variety of reasons for this: new factual information coming to light, recent judicial decisions throwing light on the manner a claim may be pleaded and conducted, or more mature reflection as the case proceeds. None of these is indicative of negligence. There is some irony, that I cannot overlook, in the circumstance that the operative originating process in this case is a Further (Third) Amended Statement of Claim. 108 This claim is rejected.

(vi) the Hillig proceedings : 109 I have found it difficult to identify the precise basis on which this claim is made. All that appears in the statement of claim is to be found in paras 55-57. Those paragraphs read as follows: "55. By Originating Process filed in the Supreme Court of New South Wales, proceedings no. 1053 of 2002 on 11 January 2002 Allatech commenced proceedings against CMG and Mr Hillig (the " Hillig proceedings ").

56. In the Hillig proceedings, Allatech claimed the following orders: a. An order terminating the DOCA;

b. An order that Mr Hillig be removed as administrator of CMG;

d. An order that CMG and Mr Hillig pay the costs of the Hillig proceedings.

57. The Defendants did not obtain the consent of the Administrator or a variation of the DOCA to act for CMG in the Hillig proceedings." 110 In an outline of submissions produced at the commencement of these proceedings, these paragraphs are reproduced. However, no explication was provided of the manner in which it is said that Mr James, through James Legal, was negligent or in breach of the retainer. 111 In final written submissions, paras 55, 56 and 57 were again reproduced; these were followed by the submissions: "137. Mr James accepted that Mr Hillig was represented by solicitors in the Hillig Proceedings and his position was to uphold the DOCA. The defendants did not add any value or advance the interests of Messrs Attard and Henry in the Hillig proceedings.

138. At all times, Messrs Attard and Henry's primary position was to save costs and defend the personal claims made against them in the FCL Proceedings. The Hillig proceedings were against CMG and Mr Hillig. Messrs Attard and Henry were not authorised by the DOCA to give instructions on behalf of CMG in the Hillig proceedings. The defendants did not obtain the consent of the Administrator or a variation of the DOCA to act for CMG in the Hillig proceedings. Accordingly, the plaintiffs claim a declaration that the plaintiffs are not liable to the defendants in respect of work performed in the Hillig proceedings ." (italics added) 112 The last, italicised, sentence suggests that reliance is placed upon this by way of defence to the cross-claim. 113 Whatever Mr James did in respect of the Hillig proceedings was done in such a way as to be "intimately connected with" the litigation. Accordingly, he is protected by the principles in Giannarelli and D'Orta-Ekenaike. 114 Moreover, no evidence was adduced on which to found a conclusion that Mr James acted negligently. 115 It will be necessary to deal with the claim for the declaration when I come to the cross-claim.

(vii) settlement : 116 Nothing about the position in relation to settlement of negotiations - neither the factual substratum, nor the basis upon which the claim is put - ever emerged with any clarity. 117 One thing that has to be borne in mind is that Mr James was acting for two individuals (Messrs Attard and Henry) and a company (CMG) of which each individual was a director. He was receiving instructions from each of the individuals, although, as things happened, he tended to engage more with Mr Attard, while Ms Cunningham engaged with Mr Henry. 118 Mr Attard maintained that his instructions were to focus on the Trade Practices Act claim made against him and Mr Henry. He was prepared to sacrifice CMG, provided he could preserve his reputation by rebuffing the claim of misleading and deceptive conduct made personally against himself. Mr James agreed that that was a principal concern of Mr Attard. 119 Both Mr Attard and Mr Henry wished to contain costs. Mr James also agreed that this was a priority. 120 On 7 March 2001 Mr James had a discussion with Messrs Attard and Henry. During the course of that discussion Mr James raised the possibility of settling the proceedings by each party "walk[ing] away". 121 Mr Henry replied: "There is no way I am walking away. I want to recover the money I have paid out. Why can't we try to negotiate a settlement whereby Curtis pays us an amount of up $350,000?" 122 Mr James repeated that he should give consideration to the value of pursuing the proceedings as against the value of settling on terms that did not incur additional expenditure. 123 Mr Attard instructed Mr James to: "Ask for $350,000. Speak to him on a without prejudice basis." 124 On 8 March Mr Attard sent an email to Mr James, instructing: "We will be happy to all parties go our own way on FCL Allatech matters." 125 On the same day Mr James spoke with Mr Hansen on a without prejudice basis, putting an offer that each party walk away in both of those proceedings. Mr Hansen replied that he would need to take instructions. Mr James told him: "My clients were considering a payment to them to settle. They are considering an amount that they would accept for the resolution of both FCL and Allatech. Would your client be prepared to make a payment of settlement of all matters?" 126 Mr Hansen replied that he would take instructions. 127 Later that day Mr Hansen advised Mr James that Mr Mann would need to discuss the matter with minority shareholders; Mr James told him that: "… the ball is in your Court and when you get instructions please come back to me." 128 Mr James essentially repeated this evidence when cross-examined. It was put to him that, in telling Mr Hansen that his clients were "considering a payment to them to settle" he had acted "completely contrary" to the instructions given to him by Mr Attard. He replied: "… they always wanted some money … my memory at the time was Alfred [Attard] was frustrated at that moment, prepared to make that offer, but he wanted, he would prefer to receive some payment, and so therefore that's why that part - why I included that in the conversation to try and nudge, from Franks Centre Lofts, a small amount." 129 In cross-examination Mr James said that he regarded the instructions in the email as the "bottom line" or "the final position in the negotiating gambit". 130 He agreed that he could have put that position at the start of negotiations with Mr Hansen. However, Mr James said that: "As it eventually ended up, he didn't have those instructions anyway … He told me." 131 Mr James said: "My instructions were, bottom line they would walk away with each party pay their own costs. They would wish to get a payment if they could. In approaching the negotiating I was gently nudging the concept of a payment before going to the final position." 132 It appears that that was the end of negotiations for several months. So far as the evidence goes the next exchange occurred during the course of the hearing of the Orlando proceedings in the District Court in November 2001. Mr Attard's evidence was that Mr Mann approached him with a suggestion that all parties "walk away" from their claims and attend to their own costs. Mr Attard asked him why he would want to settle and said that he (and his associates) had incurred a lot of legal expenses. 133 Mr Attard said that he reported the conversation to Mr Jacobs, Ms Cunningham and Mr Henry. Mr Jacobs urged against accepting the proposal. Ms Cunningham also suggested that CMG was in a strong position against FCL and said: "You normally don't accept the first offer to settle." 134 The proceedings were in fact settled by Deed of Release which bears the date 3 June 2003, but which is pleaded as 27 June 2003. The parties to the Deed were FCL, Allatach, Kalidome Pty Ltd, Curtis Mann, Sverre Rodskog, Morris Tullich, CMG, Civil Management Group Pty Ltd, Mr Attard, Mr Henry and Mr Hillig. The Deed provided for payment by CMG to FCL of the sum of $324,000 (in instalments) and otherwise for release of the claims identified in the Deed by each party of each other party. 135 I turn now to the submissions made on behalf of the plaintiffs. The final submission was: "147. Mr James did not act in accordance with the instructions of Messrs Attard and Henry or in their interests. There is an available inference that if Mr James had complied with his instructions in April 2001 the FCL proceedings and the Allatech proceedings would have settled on terms that each party walk away and pay their own costs. This suggested offer was rejected by Mr James. Approximately 7 months later Mr Mann made an offer on behalf of FCL and Allatech in the terms suggested by his solicitor in April, 2001. By then, significant expenditure had been incurred by the plaintiffs. On the advice of Mr Jacobs QC and Ms Cunningham (for James Legal) this offer was rejected.

148. Mr James and James Legal breached there (sic) duty to Messrs Attard and Henry and did not act in their interest. As a consequence, the plaintiffs have been exposed to costs and charges in connection with the proceedings which ought to have been avoided.

149. In the circumstances, the plaintiffs seek a declaration that [the plaintiffs] are not liable to the defendants in respect of work performed from 1 May, 2001." 136 This last paragraph suggests that this matter, too, is raised by way of defence to the cross-claim. 137 There are a number of reasons why these submissions can not be accepted. Firstly, the "available inference" suggested is entirely contrary to the uncontradicted evidence of Mr James that Mr Hansen did not have instructions to settle on the terms promulgated. There is no evidence that any "suggested offer" was rejected by Mr James. 138 Although the evidence suggests that Ms Cunningham joined with Mr Jacobs in dissuading Mr Attard from pursuing a suggestion made by Mr Mann, the evidence is insufficient to found an inference that, even if he had pursued the suggestion, it would have come to fruition. Nor is there any evidence on which to found an inference that the approach taken by Ms Cunningham was negligent, or even that it was wrong. 139 This claim must be rejected.

(viii) the Deed between the plaintiffs and the defendants : 140 What is said to be "the eighth claim" is a claim for a declaration that the defendants are not entitled to claim costs and disbursements for work performed up to 16 January 2003 in an amount greater than $600,000. This is, in effect, a defence to the cross-claim and will be dealt with in that context. 141 The orders sought by the plaintiffs are identified in the final written submissions as follows: "a. damages in the amount of $123,872.59 in connection with the solicitors costs and the counsel fees paid by the plaintiffs in connection with the Orlando Proceedings and the application to transfer the Orlando proceedings to the Supreme Court to be heard with the FCL proceedings;

b. a declaration that the First, Second and Fifth Plaintiffs are not liable to the defendants in respect of work performed in the Orlando Proceedings;

c. An order that on any assessment of the costs claimed by the defendants, the costs assessor disallow any costs claimed in respect of work performed in the Orlando Proceedings;

d. Damages in the amount of $21,400.50 in relation to the costs paid by the plaintiffs in connection with the defendants charges for work done during the period 10 October, 2000 to 5 December, 2000 in connection with drafting amendments to the Defence and Cross-Claim in the FCL proceedings;

e. damages in the amount of $14,949 in relation to the costs paid by the plaintiffs in connection with the defendants charges for work done during the period 1 November, 2000 to 21 November, 2000 in connection with drafting amendments to the Commercial List Summons and Statement in the Allatech Proceedings;

f. a declaration that the Plaintiffs are not liable to the defendants in respect of work performed in the Hillig Proceedings;

g. an order that on any assessment of the costs claimed by the defendants, the costs assessor disallow any costs claimed in respect of work performed in the Hillig proceedings;

h. a declaration that the Plaintiffs are not liable to the defendants for costs for work performed from 1 May, 2001;

i. an order that on any assessment of the costs claimed by the defendants, the costs assessor disallow any costs claimed in respect of work performed by the defendants from 1 May, 2001;

j. a declaration that the defendants are not entitled to claim costs and disbursements for work performed up to 16 January, 2003 in an amount greater than $600,000;

l. Costs." 142 So far as the orders claimed in paras c, g and i are concerned, no source of power to make the orders sought was identified. 143 The orders may, in general, be divided into those claiming reimbursement (in the form of damages) in respect of fees already paid to the defendants, and protection against any order on the cross-claim for fees said to be outstanding. 144 Given the findings I have made above, it is inappropriate to make any of the orders sought and I decline to do so. 145 The Further (Third) Amended Statement of Claim will be dismissed with costs.

The cross-claim 146 It is not easy to identify the positions of the parties in respect of the cross-claim. It is necessary to start with the pleadings, although these bear little relation to the final submissions. 147 The cross-claim pleads a series of costs agreements between the parties, dated, respectively, 17 August 2000, 3 April 2001, and 25 January 2002. (These were, generally, admitted, although the plaintiffs did not admit that, with respect to each of the costs agreements, relevant work was performed.) The cross-claim pleads that the defendants (Mr James and James Legal) carried out work in accordance with the costs agreements, rendered to the plaintiffs invoices for professional fees, and that the plaintiffs have failed to make payments in accordance with the invoices. The cross-claim then pleads the Deed of 5 February 2003 (which is admitted). It claims, in total, the sum of $903,175.48 (made up of $779,438.42 in professional fees and disbursements, and $123,737.06 with respect to "third party costs"), together with interest and costs. 148 By defence to the cross-claim the plaintiffs challenge the entitlement of the defendants to the fees claimed and assert that from time to time they made payments to the defendants, and that the defendants have not provided them with "a proper overall accounting of the allocation of all payments made" (para 16). 149 The plaintiffs, by reference to the statement of claim, assert a set-off against any amount held to be owing to the defendants. They further assert that the defendants agreed with, or represented to them, that they would arrange for assessment of all bills rendered and that, after assessment, their liability would be limited to the lower of the amount of the bill or the amount of the assessment. They plead that, in reliance upon the asserted agreement or representation, they refrained from seeking assessment themselves, and that the defendants are, accordingly, estopped from bringing the claim compromised in the cross-claim without first having the bills assessed. Alternatively, they plead that the conduct of the defendants constitutes unconscionable conduct within the meaning of s 51AC of the Trade Practices Act. 150 No evidence or argument was directed to the assertions on the part of the plaintiffs that the defendants had failed to render proper accounts, to the assertions that the defendants had agreed to, or represented that they would, arrange for assessment of the bills of costs; nor to the assertions that, in reliance on such agreements or representations, they had acted to their detriment; nor to the (serious) assertion of unconscionable conduct. 151 (It is not without significance that, in January 2004, James Legal applied, pursuant to Pt 11 Div 6 of the Legal Profession Act 1987, for assessment of the costs. Those applications were stayed by Bell J on 11 June 2004, on the application of the plaintiffs, in a decision to which only glancing reference was made: Attard v James Legal Pty Ltd [2004] NSWSC 478.) 152 Although it was not easy to follow, it seems to me that the dispute between the parties with respect to the cross-claim revolves around the effect of the Deed of 5 February 2003. I return to the relevant provisions of that Deed. 153 The Deed recites an agreement that the plaintiffs are indebted to the defendants under the costs agreements, quantified by the defendants as at 16 January 2003 in the sum of $696,374.69 plus GST (recital 3); that the plaintiffs wish to reserve their rights to have the costs assessed under the Legal Profession Act (recital 5); and that an amount is owing by the plaintiffs to third parties in the sum of at least $140,000. 154 The relevant clauses of the Deed are as follows: "1. Attard, Henry and CMG admit and irrevocably agree that subject only to James issuing accounts for $600,000.00 plus GST … the said amount is Work in Progress by James as at 16 January 2003 ('debt').

2. Elzac, Glowmint and the trusts they are trustees for, guarantee the payment of the amount found to be owing as agreed or as assessed in the sum of $300,000.00 each as if they were the principal debtors.

3. In consideration of the guarantee in the preceding clause the parties agree that: a. James can only enforce the guarantee to the following limits: [There follows a timetable for payment by Elzac and Glowmint and provision for interest]

c. James will continue to act in all matters to the completion of those matters subject to its costs being met in accordance with the terms in this Deed;

d. James agrees not to enforce any rights to recover the debts, except in accordance with this Deed. In the event of default under this Deed James can enforce its rights in accordance with the Deed against Attard, Elzac, Henry, Glowmint, and CMG. If James is to enforce its right under this Clause James must give Attard, Elzac, Henry, Glowmint, and CMG 21 days notice.

4. Save for where set out in this Deed all the other terms and conditions of James' costs disclosure provided will remain in place.

…" 155 On behalf of the plaintiffs, a pithy written submission was directed to what was called: "The Eighth Claim and Defence to the Cross-Claim - the Deed between the plaintiffs and the defendants" 156 The effect of these submissions was, as I understand it, that the Deed represents an agreement by the defendants that they would compromise their claims for fees (against all plaintiffs) by accepting an amount of $600,000, and that, therefore, their claim must be limited to that amount. (Although no mention was made of it, I would assume that the plaintiffs recognise their liability to pay interest and GST in addition to that amount.) 157 I reject the submission. The limit of $600,000 ($300,000 each against Elzac and Glowmint) applies to the guarantee given by each of those companies; it in no way limits the liability of Messrs Attard and Henry or CMG. 158 In any event, the acknowledged non-payment by any of the plaintiffs would suggest to me that the agreement has been repudiated. Indeed, by summons filed on 19 February 2004 (No 1555 of 2004, filed in the Equity Division of this Court) Messrs Attard and Henry and Glowmint and Elzac claimed a declaration that the Deed had been repudiated by James Legal (the defendant to those proceedings). On 5 July 2004 those proceedings were discontinued (I became aware of these proceedings only through the judgment of Bell J to which I have already referred.) 159 As I have indicated, I reject the submission made on behalf of the plaintiffs with respect to the cross-claim. 160 However, I am not satisfied that I have been referred to all available material in relation to the cross-claim. I am satisfied that the cross-claimants (Mr James and James Legal) are entitled to recover in accordance with the various costs agreements. What I have not heard is adequate argument on the availability to the plaintiffs, at this stage, of assessment of costs. 161 Accordingly, while there ought to be a verdict for the cross-claimants on the cross-claim, I will refrain from making such an order, or entering judgment, until the parties have had an opportunity of putting further material or argument before me.

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