Coshott v Barry

Supreme Court of NSW|2007-10-11|Before: James J

CITATION : Coshott v Barry [2007] NSWSC 1094

CATCHWORDS : Professional negligence - solicitors - advocate's immunity - omission to advise - whether plaintiff would have taken advice, if given

Bankruptcy Act Evidence Act LEGISLATION CITED : Legal Aid Act Legal Profession Act Limitation Act

Berry v Kanakis [2002] NSWCA 68 Commonwealth Bank of Australia v Hadfield [2001] NSWCA 440 D'Orta-Ekenaike v Victoria Legal Aid & Anor (2005) 223 CLR 1 Giannarelli v Wraith (1987-1988) 165 CLR 543 Keefe v Marks (1989) 16 NSWLR 713 CASES CITED : Legione v Hateley (1982-1983) 152 CLR 406 Lenin v Coshott [2007] NSWSC 630 Midland Bank Trust Co Limited v Hett Stubbs & Kemp [1979] Ch 384 Ryan v Hansen (2000) 49 NSWLR 184 Sellars v Adelaide Petroleum NL (1992-1994) 179 CLR 332 Wilson v Carter [2005] NSWSC 1351

PARTIES : Lijljana Coshott & Anor v Stephen Barry

COUNSEL : Robert Coshott - First and Second Plaintiffs SA Kerr / P Horvath - Defendant

SOLICITORS : Lijljana and Robert Coshott - Plaintiffs Yeldham Price O'Brien Lusk Lawyers - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

JUDGMENT 1 HIS HONOUR: These proceedings were brought by the plaintiffs Lijljana Coshott and Robert Gilbert Coshott, her husband, against the defendant Stephen Michael Barry, who acted as solicitor for the plaintiffs from about mid 2001 until his retainer was terminated on 26 August 2003. Mr Barry practiced as a solicitor under the name of CKB Partners. 2 The plaintiffs made five claims against the defendant, four claims for alleged professional negligence by the defendant and one claim based on estoppel. One of the claims for professional negligence, which relates to a solicitor named George Vardas, contains a number of separate claims. 3 The proceedings were conducted for the plaintiffs by Mr Coshott, without any legal representation, and Mr Coshott appeared in person at the hearing. 4 At the commencement of the hearing Mr Coshott made an application for leave to appear for his wife, as well as himself. This application was opposed by counsel for the defendant. At my request Mrs Coshott attended the Court. I asked Mrs Coshott some questions and she confirmed to me that she wished her husband to appear for her. I then granted Mr Coshott leave to appear for his wife, as well as himself. Mrs Coshott left the courtroom and did not subsequently attend the hearing. 5 I am satisfied that in these proceedings, as well as in the matters giving rise to the claims which were brought in these proceedings, Mrs Coshott, although nominally a party, took no active part and relied entirely on her husband. 6 Mr Coshott was formerly a solicitor and practiced as a solicitor for many years. He is an experienced litigant, having been a party in many court cases, in some of which he has acted and appeared for himself. 7 These proceedings were commenced in 2004. The original pleadings were substantially amended. The final amended statement of claim was filed pursuant to an order made by a judge of this Court on 7 November 2006. The final amended defence was filed, pursuant to leave granted by me, after I had reserved my decision. 8 A direction was made for the filing of affidavits in these proceedings. Two affidavits were filed on behalf of the plaintiffs, an affidavit by Mr Coshott and an affidavit by a solicitor Mr Bryden, who the plaintiffs sought to rely on as an expert witness. Affidavits were filed on behalf of the defendant. 9 At the hearing Mr Coshott did not read his own affidavit. I rejected the affidavit by Mr Bryden, on grounds including that Mr Bryden had not been shown to be an expert in a field of specialised knowledge and that facts which Mr Bryden had been asked to assume as a basis for forming opinions were question-begging and conclusionary. 10 After Mr Coshott had informed the Court that he would not read his own affidavit and after I had rejected Mr Bryden's affidavit, counsel for the defendant did not read the affidavits which had been filed on behalf of the defendant. 11 A consequence of the decisions made by Mr Coshott and by counsel for the defendant not to read affidavits which had been filed was that there was no evidence before me in the form of affidavits or witness statements. Furthermore, no person gave oral evidence at the hearing. 12 Mr Coshott tendered most of the documents in the plaintiffs' tender bundle of documents and, over objection by counsel for the defendant, I admitted most of these documents as exhibit A, although I admitted some of the documents only for limited purposes. 13 Many of the documents in exhibit A were documents prepared by the defendant, which were described as costing reports and which contained extremely detailed records of work which the defendant had done as solicitor for the plaintiffs, including short summaries of telephone conversations, letters, faxes and conferences. Copies of the costing reports were sent by the defendant to the plaintiffs with invoices which the defendant periodically rendered to the plaintiffs for his professional fees and disbursements. I admitted the costing reports as admissions by the defendant of what work he had done for the plaintiffs. The costing reports were so detailed that it could reasonably be inferred, from the absence of any record of it in a costing report, that something had not happened in the conduct of a matter by the defendant. 14 Apart from the plaintiffs' tender bundle, a few other documents were tendered by Mr Coshott and admitted into evidence. I admitted into evidence 20 documents tendered by counsel for the defendant. Apart from facts proved by documentary evidence, some allegations made in the amended statement of claim were established on the pleadings by being admitted in the amended defence. 15 Having regard to the state of the evidence, I had to endeavour to gain an understanding of the course of events giving rise to the five claims against the defendant by piecing together entries in the defendant's costing reports and other documentary exhibits. There was no evidence of a number of allegations made by the plaintiffs in the amended statement of claim and there was no direct evidence from Mr Coshott about his state of mind, when his state of mind was relevant, for example, as to whether he had relied on advice which he alleged the defendant had given or on a representation which he alleged the defendant had made or as to whether he would have taken certain advice, if it had been given by the defendant. 16 At the hearing there was no dispute that the defendant had been retained by the plaintiffs as their solicitor in each of the four matters giving rise to a claim for professional negligence and that as the plaintiffs' solicitor he had owed the plaintiffs a duty in contract and in tort to exercise reasonable care, skill and diligence in acting for them. 17 In relation to one or more of the claims for professional negligence, the defendant denied that he had been negligent, denied that there was a causal relationship between any negligence by him and any loss to the plaintiffs, alleged that the plaintiffs had been guilty of contributory negligence and disputed the damages claimed by the plaintiffs. In a number of matters counsel for the defendant submitted that the defendant, although a solicitor, was entitled to the benefit of what is often described as "advocates immunity". 18 I will now summarise some of the evidence which I accept, in relation to the five matters which gave rise to claims. In my summaries I will refer to some only of the entries in the defendant's costing reports. In each matter the defendant, as is evidenced by entries in his costing reports, did far more work than is referred to in my summary.

The Citibank claim 19 The background to this claim was that Citibank Limited ("Citibank") for whom Deacons solicitors were acting had sold the plaintiffs' house at Vaucluse as mortgagee exercising a power of sale and was holding certain proceeds of the sale. Mr Coshott wished to assert a number of claims against Citibank. 20 On 31 May 2001 Mr Coshott wrote a letter to the defendant (exhibit 1). The first paragraph of the letter was as follows:- "As discussed, Lillian and I wish to get the balance of our monies being held by Citibank/Deacons and to resolve a number of other matters/grievances we have with Citibank. I note your preliminary view was to commence procs in the Sup Ct seeking Accounts. I believe, if possible, we should seek to air the other matters in the same procs, unless tactically or legally it may be unwise to do so." 21 In a handwritten postscript to the letter Mr Coshott wrote:- "P.S. I am having my bank statements checked for interest overcharges. There are also a number of debits for substantial sums which I am having checked/looked at. They may also need to be included in any claims against Citibank." 22 On 8 June 2001 the defendant was retained by the plaintiffs to act in the Citibank matter. On 12 June 2001 the defendant had a conversation with Mr Coshott in relation to potential claims and disputes with Citibank. On 13 June 2001 the defendant had a meeting with the plaintiffs and discussed "course of action to resolve the problem with the Bank". The defendant was instructed by the plaintiffs to retain Mr Geoffrey Moore of counsel to provide an advice. 23 On 10 September 2001 Mr Coshott wrote a letter to the defendant (exhibit 3). In a hand written postscript to this letter Mr Coshott wrote:- " re: Citibank Further to todays phone convo (conversation), I note you have faxed Deacons saying $25,000 is only part of what Citibank owe and the cheque will not be in full and final satisfaction of claims -v- Citibank. I note our discussion re Deacons and the garnishees. As requested, I will deliver in, hopefully tomorrow, copies of the complaint and correspondence with Legal Services/Law Soc. It is essential that we get Citibank procs (proceedings) on foot a.s.a.p. and include all claims, incl $180k guarantee; $25,000 in trust; $3,500 in our Citibank a/c; $7,000 +/- overcharging on costs; $2,700 + taken as costs post settlement; interest; delay of payment of debts; overcharging of removalist fees; locksmiths; executive sales commission, etc. I will call when I can bring in copies to make an appointment to go through Citibank S/C to ensure all claims included (? damages for breach of privacy laws)." 24 An entry in exhibit A for 21 September 2001 reads: "21-Sep-01 Stephen Barry telephone call with client Robert - he is getting transcripts of Deacons - he to fax the analysis of Deacons and Citibank involvement. He will walk G Moore and me through it on Tuesday. 10 minutes. G Moore - to call." 25 An entry in exhibit A for 25 September 2001 reads:- "25-Sep-01 Stephen Barry attending client meeting Robert Coshott and G Moore for meeting - see notes re the tactical decision on which of the claims were to be run against Citibank - see notes especially re Deacons involvement. Robert to fax a finalised list. Engaged from 2.05 to 7.25 on this and other matters - allow 200 minutes." 26 On 19 October 2001 Mr Coshott wrote a letter to the defendant (exhibit 4) in part of which he said:- "I note you shall get the Citbank (ANZ) Statement of Claim/Summons from Geoff Moore today for immediate filing." 27 On 12 November 2001 Mr Coshott wrote a handwritten letter to the defendant (exhibit 5) in part of which he said:- "When the remainder of the claims against Citibank can be commenced please include: Privacy breaches under Privacy Act 1988 and 2000, Banking Code of Practice (s 12) to which Citibank is a signatory. Are these codes picked up by TP Act?" 28 On 3 December 2001 Mr Moore of counsel forwarded to the defendant a draft statement of claim in the Citibank matter. On 4 December 2001 the defendant forwarded to Mr Coshott a copy of the draft statement of claim prepared by Mr Moore. 29 On 7 December 2001 Mr Coshott telephoned the defendant. An entry in exhibit A reads in part:- "He is critical of the statement of claim prepared by G Moore as it is incomplete - his version is 8 pages and will be 9 pages when finished." 30 On 7 December 2001 Mr Coshott wrote a letter to the defendant (exhibit 6) in which he said in part:- "Citibank litigation I have perused Geoff Moore's draft S/C. It is deficient in many respects. It does not appear to be the product of several months work. I have drafted a Statement of Claim which covers all of the claims against Citibank which I wish to raise at this time. Herewith 9 pages. I have not completed the formal parts at the end of the document. You will note paragraph 21A and 21E depend on the answer to a complex question regarding what happened or should have happened to the assets of Citibank Savings Limited, which was de-registered in 1995 as a defunct company and Citibank Limited's alleged status as the Statutory Successor in Title to Citibank Savings Limited. Firstly we need to make enquiries and do full searches at ASIC as to what happened in 1995 and then, if the question is still alive, seek Cashion's advice on this point. Herewith copies of a title search, the first and second mortgages and a Variation of the first mortgage in 1999. The search shows Citibank Limited as the mortgagee under both mortgages, yet both mortgages were originally given to and registered in the name of Citibank Savings Limited. The Variation of Mortgage, particularly annexure A thereto, is very strange and needs consideration as to its effect." 31 The draft statement of claim drawn by Mr Coshott was not a complete statement of claim. It did not include a statement of the claims for relief which are set out at the conclusion of a complete statement of claim and are to be found in the statement of claim which was ultimately filed. However, it included parts headed respectively "Breach of obligations as mortgagee exercising power of sale" with a concluding allegation that by reason of Citibank's breaches the plaintiffs had suffered loss and damage; "wrongful detention of proceeds of sale" with a concluding allegation that by reason of Citibank's wrongful conduct the plaintiffs had suffered the loss of use of moneys and had incurred legal costs and disbursements; and "wrongful overpayment of expenses". The draft statement of claim referred to equitable obligations, common law duties of care and statutory duties allegedly owed by Citibank. 32 On 8 January 2002 the defendant had a meeting with Mr Coshott during which Mr Coshott swore an affidavit verifying a statement of claim against Citibank. On or about 8 January 2002 the statement of claim verified by Mr Coshott, which was substantially in accordance with Mr Coshott's draft, was filed. 33 On 28 October 2002 an amended statement of claim was filed. A copy of the amended statement of claim is at pp 52-59 of exhibit A. 34 In the amended statement of claim, which was in most respects similar to the original statement of claim, it was alleged that Citibank had owed a fiduciary duty and a duty of care, when selling the Coshotts' property, to obtain the best possible result and that Citibank had breached those duties. Claims were also included in the amended statement of claim under the headings, wrongful use of deposit (paid by the purchaser on the sale of the property), wrongful retention of the proceeds of sale and wrongful overpayment of expenses of the sale. Claims were also included under headings "the bank guarantee" and "the company charges involving Schlotsky's Australasia Pty Ltd and Schlotsky's Nominee Company Pty Ltd." The relief claimed in the amended statement of claim included relief concerning the charges from Schlotsky's Australasia Pty Ltd, a declaration that Citibank had wrongfully failed to account to Mr and Mrs Coshott for the proceeds of sale of the property, an order for the taking of accounts between Mr and Mrs Coshott and Citibank, an order that Citibank provide an itemised bill of costs in respect of all amounts deducted by Citibank for legal fees from the proceeds of sale of the property and a claim for damages. 35 In the part of Mr Coshott's letter of 7 December 2001 which I have quoted Mr Coshott raised what was referred to at the hearing before me as "the Bank integration point". An argument which had occurred to Mr Coshott was that Citibank Limited was not, as it alleged, a successor in title to Citibank Savings Limited, which was the entity to which the plaintiffs had originally granted a mortgage. 36 On 30 October 2002 and 1 November 2002 there were conferences between Mr Cashion SC, Mr Coshott and the defendant in which the Bank integration point was discussed. The defendant made handwritten notes of the conferences, copies of which became exhibits 7 and 8. Part of the defendant's notes of the conference on 1 November 2002 reads as follows:- "RC - why not include in proceeding no downside but for costs may lose proportion etc or pay costs of Bank Integration point etc discrete point legally - should not be too much on facts query great deal of legal arguments re 3rd point" 37 On 1 November 2002 Mr Cashion gave a written advice (exhibit 9). This advice was limited to the Bank integration point (see, particularly, para 14 of the advice). Mr Cashion expressed an opinion unfavourable to Mr and Mrs Coshott on an essential part of the proposed argument. Counsel also noted that, if the argument did succeed or if it was thought that the argument might succeed, "there is a risk that there will be an attempt to introduce remedial legislation with retrospective operation". Counsel also noted that he had not been asked to advise whether there would be any defences to a claim based on the Bank integration point. 38 Ultimately, no step was taken to amend the statement of claim so as to raise the Bank integration point. However, Mr Coshott still had the point under consideration as late as August 2003. 39 On 22 November 2002 an amended defence to the amended statement of claim was filed. The defence did not contain any challenge to the form of the proceedings. 40 On 11 November 2002 Mr Coshott wrote a letter to the defendant (exhibit 10). In the letter Mr Coshott said that "we must ensure that (a particular named judge with whom Mr Coshott had a previous association) does not hear this claim or any contested motions". 41 In a fax of 7 August 2003 from Mr Coshott to the defendant (exhibit 11) Mr Coshott said:- "As this matter is listed for hearing in less than 8 weeks, we must ensure we are completely ready for hearing including: a. having given notice re: the invalid sale argument and damages therefrom [(a) - c in my fax 16.7.03) b. amending the S/C or giving notice re: the "in lieu of" argument re: what was the debt secured by the mortgage (if required to avoid an adjournment) c. ensuring that we have locked the defendant into a NIL docs response to the discovery category re: transfer of the mortgages d. immediately briefing Senior Counsel to appear on hearing advise on a and b above; and advise on evidence e. that we had filed and served all our evidence as directed by the Court and the defendant has no grounds for complaint or basis to seek an adjournment (especially at our cost) f. that SC has approved the contents of the "Plaintiff's Bundle of Documents" and this is filed and served as directed My completed notes re: invalidity of sale will follow tonight." 42 On or about 7 August 1003 a brief was delivered to Mr Cashion to appear at the hearing to take place on 29 September 2003. Apart from being briefed to appear at the hearing, Mr Cashion was asked to consider amendments to the statement of claim to reflect the Bank integration point and was also asked to consider potential defences. 43 On 12 August 2003 Mr Coshott sent a fax to the defendant (exhibit 13) in the following terms:- "I refer to my fax 8.8.03 and our lengthy tel conf re: the invalid sale point and note:

You have, some weeks ago put the defendant on notice of our intention to allege invalid sale based on failure to comply with Bank Integration Act. You will today put them on notice of the full range of the matters which may invalidate the sale as per my fax 8.8.03 and today's tel con. It is noted again that the consequences of an invalid sale are: a) Citibank limited does not have any of the protections of s58 Real Property Act nor traditionally afforded to mortgagees exercising a power of sale re: expenses, deductions, etc; b) damages/compensation for the sale without authority (e.g. difference between $6m and current value upon sale). You will also, today, put them on notice of the consequences/our claim. I note that you will seek tel advice from Cashion SC as regards the "cause of action" which would arise from the invalid mortgagee sale for inclusion in the notice to the defendant.
Given the result of your investigations is that George Gear was the Assistant Treasurer at the time, we need to immediately determine (prove) that Ralph Willis (Treasurer) did not execute any authority/ delegation as required by s18 Interpretation Act (Com) which might validate Gear's "designation" of Clayton as an "appointed person" under section 24 of the Bank Integ Act. Please issue Subpoenas to Produce with short return dates on Treasury and the Prime Minister's Department to produce all documents and records evidencing any delegation/authority or request to Gear to sign s12 proclamation published 7.12.94 and/or to sign designation dated 25.11.94 and published 21.12.94.
It does appear that Michael Cashion has a reluctance to run an invalid sale argument. Please ascertain and advise, asap, what other appropriate senior counsel are available to run the case.
In addition to who was authorised to sign points, there are the other potential defects in the sale, which are set out in my fax 8.8.03, including "registered" s24 Notice deficiencies as to content and form, designation deficiencies as to content, and deficiencies in s57(2) notices and defendant's compliance with s57, which may invalidate the sale.
Please obtain a transcript of argument before Bergin J and her judgment on the motion. It is necessary to have this for the hearing and also to consider her reasons for the costs order on the motion. Please also let me have a copy of the affidavits." 44 On 26 August 2003 the defendant's retainer was terminated. 45 After the defendant's retainer was terminated, the plaintiffs retained other solicitors. There are allegations in the amended statement of claim about advices which the plaintiffs were allegedly given by their new legal representatives but no direct evidence of what advice was given. 46 On 29 September 2003 and again on 30 September 2003 the proceedings by the plaintiffs against Citibank were before Einstein J. There are included in exhibit A a transcript of the hearing before Einstein J on 29 September 2003 (pp 73-94), a transcript of the hearing before Einstein J on 30 September 2003 (pp 95-97) and a copy of the orders made by Einstein J on 30 September 2003. 47 Mr Cashion SC did not appear for the plaintiffs before Einstein J. Another counsel, who said during the hearing on 29 September that he had come into the matter only at the end of the previous week, appeared for the plaintiffs. 48 There are difficulties in following the transcript of the hearing before Einstein J, because there are references in the transcript to documents which are not in evidence before me. 49 Counsel appearing for the plaintiffs sought an order for the taking of accounts as between mortgagor and mortgagee but on a common, and not a wilful default, basis. Counsel submitted that the plaintiffs were entitled to such an order as of right but, if the making of such an order was discretionary, the discretion should be exercised in favour of the plaintiffs. 50 Senior counsel for Citibank (Mr Foster) said that it was arguable that the taking of accounts (if not on a wilful default basis) was something a mortgagor was entitled to as of right "and, if that is all he had ever asked for, perhaps we would not even be here". 51 Having been told by counsel for the plaintiffs that the plaintiffs were not pursuing all of the claims in the statement of claim, Einstein J said that the statement of claim should be re-drafted. 52 Counsel for Citibank applied for an order for costs. Counsel said:- "Well, they have to pay the costs, they have to pay the costs of these proceedings to date, including today, your Honour. That should be a condition of any reference, because if this case had been put this way it may well have been that we simply didn't weigh and send it off to have an account, and we pointed out to them as long ago as January this year - last year we pointed out to them that the claims were misconceived and so they are, and that the proper remedy was to seek merely the taking of an account, but at that stage they were either agitating a common law claim for damages or, in the alternative, a wilful default case. That has been in the case right up until late last week and this morning." 53 Einstein J said:- "I will have to at some stage, I must say, between now and when the matter goes off to a reference deal with the question of costs of and occasioned by the amended statement of claim and what has happened to the hearing and of course you will be invited to address submissions, but your side (the plaintiffs) is probably going to have some difficulties in terms of the general layout. Here we are ready for a final hearing and a lot of the gravamen in the statement of claim is simply not proceeded with, but I hear your submissions and it may be that it is appropriate to look at some authorities on how and when costs are dealt with." 54 Einstein J also said: "Well, perhaps what I should be doing today is simply granting leave to the plaintiff to amend its statement of claim by deleting the sections to which you refer and on your application order that an account be taken, possibly by a referee or possibly by a registrar or master, and order that the plaintiff pay the costs of the defendants of and occasioned by the altered landscape which currently is the position in terms of the hearing and of and occasioned by any costs thrown away in preparation for the final hearing in respect of the causes of action which are no longer pressed, and perhaps what I should be doing is staying the order for the taking of accounts until those costs are paid. What would be inappropriate in that sort of exercise of discretion?" 55 Counsel for the plaintiff said that he would wish to make submissions about costs. 56 The proceedings were adjourned by Einstein J to the following day. 57 On the following day Einstein J was informed by counsel that a matter had been settled. Orders were made in accordance with short minutes of orders and the orders made included that the amended statement of claim which had been drawn should be dismissed, with no order as to costs. However, the short minutes included a noting by the Court of an agreement between the parties, para (e) of which was:- "The Defendant will pay to the Plaintiffs the sum of $12,500 out of the $60,000 retained by the Defendant from the proceeds of sale of the said Vaucluse property and the balance of which the Plaintiffs acknowledge the Defendant is entitled to retain on account of the costs of these proceedings, within seven (7) days of execution of this Deed, without prejudice and without admission."

Principal Strategic Options (PSO) claim 58 The background to the PSO claim can be briefly summarised as follows. Mr Coshott (and it would seem Mrs Coshott also) lost at first instance court proceedings between Mr and Mrs Coshott and PSO. PSO brought bankruptcy proceedings against Mr Coshott. On the application of PSO, a Mr Thomas was appointed interim trustee of Mr Coshott's estate pursuant to s 50(1)(a) of the Bankruptcy Act, subject to the giving of an undertaking as to damages. An appeal by Mr Coshott in the proceedings with PSO was allowed by the Court of Appeal. Consequently, the bankruptcy proceedings against Mr Coshott were dismissed and the appointment of the interim trustee was terminated. 59 Mr Coshott decided to bring proceedings against PSO to enforce the undertaking as to damages. He claimed as a head of damages that, while the appointment of the interim trustee had been in force, he had been prevented from purchasing a home to replace the home at Vaucluse which had been sold by Citibank and during that period the price of houses in the suburbs in which Mr Coshott wish to purchase a house had risen. Mr Coshott wished to obtain evidence to establish that the price of houses in those suburbs had risen and by how much. 60 In para 9.1 of the amended statement of claim, which was admitted in the amended defence, the plaintiffs said:- "On or about 10th May, 2001, Mr Coshott retained Barry to act on his behalf on the assessment of damages payable by Principal Strategic Options Pty Limited to Mr Coshott under an undertaking to the Federal Court given by that company." 61 In para 9.3 of the amended statement of claim, which was also admitted in the amended defence, the plaintiffs said:- "The application was filed by Barry in May, 2001 and was eventually listed for hearing before Branson J on 16th September, 2002." 62 On 31 July 2001 Mr Coshott wrote a letter to the defendant (exhibit 2), part of which reads:- "I believe I have found an appropriate valuer to support our claim against PSO for damages in the Fed Ct (undertaking). He is Terry Davis of T.J. Davis & Assocs." 63 On 10 September 2001 Mr Coshott wrote a letter to the defendant (exhibit 3), which reads in part:- "Federal Court damages - The increased cost of buying a house is a very large amount ($300k+), which should be included in the claim for damages. Terry Davis, Valuer, awaits your contact. I have other documentary evidence to support other elements of the claim (rent, photocopying, etc). Please fax me a copy of the affidavit particularising and supporting this claim. I shall collate the evidentiary material." 64 On 22 September 2001 the defendant had a discussion with Mr Davis about what fees Mr Davis would charge. 65 On 25 September 2001, according to an entry in a costing report, the defendant was instructed by Mr Coshott "to retain Davis but on the basis that if he starts to find information that the market did not rise by 10% then he should ring for further instructions". A handwritten note by the defendant of 25 September 2001 reads "T Davis I to authorise but he to stop if less than 10% increase over time". 66 On 3 October 2001 the defendant sent Mr Davis a letter of instructions. 67 The defendant received a report from Mr Davis dated 18 October 2001. An entry in a costing report records that on 7 November 2001 the defendant attended a conference with counsel "re the evidence to date" (which, I infer, included Mr Davis' report). 68 On 21 June 2002 the proceedings were listed for hearing in the Federal Court before Branson J on 16 September 2002. 69 On 24 July 2002 the defendant delivered a brief to advise and to appear on the hearing to Mr Cashion. Enclosed in the brief was a copy of Mr Davis' report of 18 October 2001. In his observations in the brief (exhibit 15) the defendant said inter alia:- "We rely upon the expert report evidence of Mr Davis, valuer, concerning the increase in home prices within Vaucluse or Bellevue Hill. My client's position is that but for the S.50A order, freezing his assets, Mr Coshott and his wife would have purchased a property in those suburbs after the mortgagee sale of their existing home by about February 2001. In the period from January/February 2001 until May 2002 when the funds were released, the cost of houses in the 2 million dollar bracket had increased by 15% and Mr Coshott claims $300,000.00." 70 The hearing date on 16 September 2002 was vacated, (at least partly) because it was a Jewish religious holiday and Mr Davis would have been unable to give evidence. 71 On 1 October 2002 the solicitors acting for PSO sent a letter to the defendant (exhibit D), in which the solicitors said that they would object to Mr Davis' report. However, the grounds of objection taken in the letter were based on the alleged failure to produce documents which had previously been sought by PSO's solicitors. 72 In a letter from Mr Coshott to the defendant of 11 November 2002 (exhibit 10) Mr Coshott said:- "Re: PSO damages URGENT I would like to have this matter finalised this year. Has Cashion done his submissions? Please get a hearing date before Branson before the Christmas Break. Have we included the increased stamp duty in the claim? Do we have Davis' comments on Egan report?" 73 On 23 December 2002 Mr Coshott sent a fax to the defendant (exhibit 16), part of which reads:- "Should we not be specifically arguing/claiming/seeking interest at court rates on the various heads of damage. For example: (1) Loss of increase of the capital value The damages claimed is $300,000 being the increased price from Dec 00 to May 01. Are we not entitled to interest at court rates from 1.6.01 to date of judgment or payment on the $300,000? Are we not entitled to interest on each other head of damage at court rates from the date of the loss to date of judgment/payment by PSO of this damage? Please have Cashion include this in his submissions." 74 On 18 February 2003 the defendant sent a fax to Mr Cashion (exhibit B) part of which reads:- "I enclose for your information a copy of Mr Coshott's notes concerning your draft submissions". 75 On or about 25 February 2003 the defendant received a fax from PSO's solicitor giving notice that PSO would object to Mr Davis' report. The defendant forwarded a copy of this fax to Mr Cashion. There is an entry on 25 February 2003 in a costing report for a telephone conversation between the defendant and Mr Cashion referring to the objection by the other party to Mr Davis' expertise. 76 The costing report records many items of work done by the defendant on 3 March 2003 and 4 March 2003 concerning Mr Davis' report and the objection to it. 77 At the hearing before Branson J on 5 March 2003 her Honour upheld the objection to Mr Davis' report. On 5 March her Honour gave brief reasons for her ruling, which she expanded in a judgment delivered on 13 March 2003. 78 In her judgment her Honour held that the opinions expressed by Mr Davis were not wholly or substantially based on his specialised knowledge, as required by s 79 of the Evidence Act. Her Honour held that the opinions were based on certain published data, on anecdotal evidence of a number of valuers and real estate agents and on sales of properties in a "typical" street. Her Honour remarked that Mr Davis had no expertise in statistics.

Thomas Claim 79 The background to the Thomas claim can be briefly summarised as follows. The house at Vaucluse which was sold by Citibank had in it a chandelier. A dispute arose between Mr Coshott and the purchaser, whose name was Thomas, about whether the chandelier was a fixture which had passed on the sale of the property or was a chattel to which Mr and Mrs Coshott remained entitled. 80 In para 10.1 of the amended statement of claim, which, subject to an immaterial qualification, was admitted in the amended defence, the plaintiffs said:- "In about June, 2001, Barry was retained by Mr and Mrs Coshott to recover a unique crystal chandelier and matching bracket lights. Barry advised that proceedings should be commenced in the District Court in detinue and sought instructions to do so. These instructions were given." 81 In para 10.2 of the amended statement of claim, which was admitted in the amended defence, the plaintiffs said:- "On or about 18th October, 2001, Barry commenced those proceedings." 82 In para 10.3 of the amended statement of claim, which was also admitted in the amended defence, the plaintiffs said:- "The proceedings came on for hearing before Phegan DCJ on 30th July, 2003." 83 In the amended defence the defendant admitted an allegation in the amended statement of claim that on 31 July 2003 the proceedings between Mr and Mrs Coshott and Thomas were settled on the basis that Thomas would pay $50, 000, each party to pay their own costs. 84 In para 10.4 of the amended statement of claim the plaintiffs alleged in part:- "In the course of settlement negotiations on 31st July, 2003, Barry advised Mr Coshott that his unpaid costs and disbursements, excluding Mr Leahy SC's fees, the unpaid witness fees of Rodney Hyman and Mr Herbertson, would not exceed $10,000.00. It was on this basis that the plaintiffs settled for $50,000.00." 85 This allegation was denied in the defendant's amended defence. In para 31.5 of the defence the defendant said:- "He advised Mr Coshott on 31 July 2003 that the unbilled work in progress of CKB Partners up to 30 July 2006 was approximately $11,000, plus disbursements". 86 There was no evidence establishing the plaintiffs' allegation in para 10.4 of the amended statement of claim; hence, the only advice given by the defendant which has been proved or admitted is that admitted in para 31.5 of the amended defence. 87 A costing report shows that the defendant did work in the proceedings against Mr Thomas on 31 July 2003, for which he charged more than $2000. 88 In August 2003 Thomas paid the sum of $50,000 to the defendant. Out of this sum the defendant paid disbursements which had been agreed between Mr Coshott and the defendant. 89 On 6 November 2003 the defendant sent an invoice to Mr Coshott, claiming $22,598.16 for costs and outstanding disbursements.

The Vardas claim 90 The background to the Vardas claim can be briefly summarised as follows. Mr George Vardas was a solicitor who, after Mr Coshott ceased practicing as a solicitor, acted for Mr and Mrs Coshott. 91 The Vardas claim in fact consisted of three claims, which at the hearing were described, for ease of reference, as Vardas 1, Vardas 2 and Vardas 3. 92 Vardas 1 was a claim that the defendant, having been retained by Mr and Mrs Coshott to act for them in proceedings brought by Mr and Mrs Coshott against Mr Vardas for professional negligence, had failed to act in those proceedings with reasonable diligence. 93 Vardas 2 was a claim that the defendant had not carried out instructions given to him by Mr Coshott during his retainer (1) to report to the Legal Services Commissioner irregularities in Mr Vardas' trust account of which the defendant had become aware (2) to make a claim on behalf of Mr and Mrs Coshott against the Fidelity Fund administered by the Law Society for dishonest defaults by Mr Vardas of which the defendant had become aware. 94 Vardas 3 was a claim that the defendant had been negligent in carrying out instructions to seek to recover debts for legal costs owing to Mr Coshott (and Mrs Coshott) by persons who had been clients of Mr Coshott's solicitor's practice. 95 In June 2000 Mr and Mrs Coshott commenced proceedings in the District Court against Mr Vardas claiming damages for professional negligence. A copy of the District Court statement of claim became exhibit 17. 96 On or about 6 July 2001 Mr and Mrs Coshott retained the defendant to take over the conduct of the proceedings against Mr Vardas. 97 During the course of his retainer by Mr and Mrs Coshott the defendant was instructed to apply to transfer the proceedings to the Supreme Court and to arrange for discovery of documents. A notice to Mr Vardas to produce documents was given on 5 October 2001. 98 On 18 October 2001 there was a telephone conversation between Mr Coshott and the defendant. An entry in a costing report records that in the conversation Mr Coshott said that "he (Mr Coshott) will lodge a complaint tomorrow re the failure (by Mr Vardas) to provide trust statements". 99 In a letter of 19 October 2001 from Mr Coshott to the defendant (exhibit 4) Mr Coshott said in part:- "Vardas has not responded to my fax giving him until last Friday to provide Trust Statements. I have been informed by the Law Society (Trust Accounts Section) that the appropriate course is to lodge a complaint with the Legal Services Commissioner. I have completed a Complaint Form which will be posted today. A copy thereof accompanies." 100 On 25 October 2001 consent orders were made in the District Court, which, I infer, included an order for discovery and inspection of documents. 101 On 12 November 2001 Mr Coshott sent a handwritten letter to the defendant (exhibit 5) which reads in part as follows:- " Vardas Have you had contact from Asst Com Milne at Legal Services re: making Vardas produce Trust Statements? I have not heard back from him." 102 On 12 November 2001 the defendant had a conversation with Mr Milne, the Assistant Legal Services Commissioner. An entry in a costing report reads:- "12-Nov-01 Stephen Barry telephone Mr Milne of the Law Society - told him that the complaint was for a number of reasons - one is for Mr Vardas to be persuaded to report on outstanding files, if that led to assistance in the District Court files then so be it but at least we could finalise our affairs etc. Also I was aware of allegations re trust account etc which I would have had to report if my client did not. He to review and consider his position." 103 On 3 January 2002 the defendant wrote a letter to Mr Coshott (exhibit A at 337), in which he reported that his inspection of the documents produced by Mr Vardas was almost complete. In fact, the inspection of Mr Vardas' documents continued much longer. 104 On 6 February 2002 the defendant and Mr Coshott had a telephone conversation. An entry in a costing report reads in part:- "Many apparent defaults by Vardas re trust account and no statements". 105 On 27 February 2002 the defendant and Mr Coshott had a telephone conversation. An entry in a costing report reads in part:- "27-Feb-02 Stephen Barry telephone call with client Robert - he has noted a number of serious problems with the trust statements and also missing accounts etc. He is to finish the schedule. The matter will need to be referred to the trust account section. See notes for the main problems." 106 On 8 March 2002 Mr Coshott wrote a letter to the defendant (exhibit A at 341), which reads in part:- "There are many trust account breaches disclosed by the ledgers and the documents produced. These will be particularised in the notes (to be made by Mr Coshott)". 107 In an entry in a costing report for 5 April 2002 the defendant recorded that the latest bundle of copies of documents had been received from Mr Vardas' solicitors. The defendant recorded that Mr Vardas' solicitor (who was in fact acting for Mr Vardas' liability insurer) had said that he had a dispensation from reporting trust account irregularities. 108 In a letter from the defendant to Mr Coshott of 8 April 2002 (exhibit A at 344) the defendant said in part:- "As a further issue, your position in relation to the apparent contraventions of the Legal Profession Act vis-à-vis the Trust Account Regulations has to be considered. I have spoken to the defendant's solicitor, Mr Kennedy, about this aspect of the matter. His position is that solicitors retained by LawCover have an exemption from the normal requirements that a solicitor should report breaches of the Trust Regulations by fellow practitioners. As I understand it, that exemption does not apply to me." 109 On 30 May 2002 Mr Coshott wrote a letter to the defendant (exhibit A at 346), in which Mr Coshott listed nine classes of documents, which Mr Coshott considered Mr Vardas should discover. Also in the letter Mr Coshott wrote:- "I await your advices as to the results of your call to Virginia at the Law Soc re: reporting Vardas' Trust Account breaches/ defalcation and the results of the Purchaser's Index search on Vardas." 110 On 28 June 2002 the defendant had a conference with Mr Coshott. An entry in a costing report reads:- "28-Jun-02 Stephen Barry attending client in meeting with Robert re his preparation of a draft amended statement of claim. He to finalise in draft. We need to have a conference with Ebsworths re the preparation of the matter. We will then compare my notes re the matters which we may drop." 111 An entry in a costing report for 26 July 2002 records in part:- "He (Mr Coshott) to finalise a draft amended SC over the weekend - there are some gaps". 112 It is apparent that the defendant had been communicating with the Law Society about whether he was obliged to report irregularities in Mr Vardas' trust account. A letter from the Senior Ethics Solicitor, Professional Standards, of the Law Society to the defendant of 30 July 2002 (exhibit 20) reads as follows: "I refer to our recent telephone conversations as to your obligation to report another solicitor's trust account irregularity where the information giving rise to the suspicion was obtained during the course of litigation to which litigation privilege might attach due to the implied undertaking not to use the information for purposes other than the proceedings. I note I have previously informed you of the view of Mr Ray Collins, Manager, Professional Standards, who has indicated that he feels you have an obligation pursuant to Clause 69 to report. However, the Committee thought that you are bound as an officer of the court to do what the court requires and feels that while the Committee cannot give you advice on which you can rely, given the uncertainty of your position you should consider obtaining the leave of the court to satisfy your obligation pursuant to Clause 69 without breaching the implied undertaking to the court." Please let me know if you wish me to take this matter any further." 113 An entry in a costing report for 20 August 2002 records the defendant perusing a draft statement of claim prepared by Mr Coshott. Over the next few weeks there are many entries in the costing reports recording work done by the defendant in reviewing draft amendments to the statement of claim, including amendments drawn by counsel. 114 On 19 September 2002 in a telephone conversation between Mr Coshott and the defendant, Mr Coshott instructed the defendant "not to worry re the missing matters that I identified, … send the draft S/C to Ebsworths (Mr Vardas' solicitors) today asap". The draft amended statement of claim in its then form was forwarded by the defendant to Ebsworths. 115 On 24 October 2002 the defendant wrote a letter to Mr Coshott (exhibit A at 347). In the letter the defendant reported that Mr Vardas' solicitors considered that the draft amended statement of claim required further amendment. 116 On 4 November 2002 there was a telephone conversation between the defendant and Mr Vardas' solicitor. An entry in a costing report reads in part as follows:- "04-Nov-02 Stephen Barry telephone call with solicitor for other party P Kennedy - they object to the statement of claim in its present form and will not identify the areas of objection as they will not assist us in pleading properly. They consent to the transfer. Wants it to go to the professional negligence list." 117 On the same day an order was made by consent for the transfer of the proceedings from the District Court to the Supreme Court. The defendant's costing reports record further work done by him up to 6 December 2002. 118 On 5 February 2003 the defendant had a telephone conversation with Mr Coshott. An entry in a costing report reads:- "05-Feb-03 Stephen Barry telephone call with client Robert - nil action by me recently - we to both consider counsel to vet the statement of claim in view of the comments of the counsel for the defendant - will need silk at the end of the matter especially for the L & E matters and the consequential loss type of claim." 119 On 12 February 2003 the defendant wrote to Mr Vardas' solicitors asking Mr Vardas' solicitors to indicate the parts of the draft amended statement of claim to which objection was taken. 120 On 21 March 2003 a notice of motion for leave to amend the statement of claim was filed (exhibit A at 328), together with an affidavit by the defendant to which the proposed amended statement of claim was exhibited. 121 On 2 April 2003 the notice of motion was stood over by consent. Entries in a costing report indicate that further amendments to the proposed amended statement of claim were still being discussed. 122 On 2 May 2003 the notice of motion for leave to amend was again stood over. An entry in a costing report records that the defendant telephoned Mr Coshott and "he (Mr Coshott) to identify errors (in the statement of claim) and call later today". 123 On 4 June 2003 a further affidavit by the defendant was filed (exhibit 18), to which a copy of the proposed amended statement of claim was exhibited. The proposed amended statement of claim was 157 pages long and contained a table of contents itself occupying 5 pages. 124 On 6 June 2003 the proceedings came before Studdert J for directions. A print out of an entry in the court's computer file for 6 June 2003 reads as follows:- "06/06/03 ADJUD:10 COURT ORDER TERMS: The deft is to present in schedule form a list of objections to the pleading as presently expressed within 4 weeks from today. That is to say, such a list is to be provided to Counsel for the pltf. THE PLTF is to have a period of seven weeks from today within which to present a response to objections to those matters identified by Counsel for the deft. THE PLTF is to provide to HH's Associate within 8 weeks from today a composite document which identifies the objections and the responses of Counsel. THE MATTER is then to be relisted by arrangement with Studdert's Associate on a date to be fixed. Direct that the conference appointed for the date in July is vacated. 125 On 10 June 2003 the defendant had a telephone conversation with Mr Coshott. An entry in a costing report reads as follows:- "10-Jun-03 Stephen Barry telephone call with client Robert - re the developments last Friday. I am to file the motion re use of the material under the notice to produce and also re an application to the Fidelity Fund." 126 On 20 June 2003 a motion for leave to use the documents produced by Mr Vardas was filed. 127 An entry for 30 June 2003 in a costing report reads as follows:- "30-Jun-03 Stephen Barry dictating court document affidavit re NOM to use material from Vardas documents for submission to the Trust Regulators and also for Fidelity Fund." 128 Subsequent entries in the costing report indicate concern about whether an affidavit strictly proving trust account irregularities by Mr Vardas would be required in support of the motion. During this period the defendant was in regular communication with Mr Thawley of counsel, concerning both the application to amend the statement of claim and the application for leave to use documents produced by Mr Vardas. 129 On 22 August 2003 a Scott Schedule relating to objections to the proposed amended statement of claim was filed, pursuant to the directions given by Studdert J on 6 June 2003. The Scott Schedule set out, individually, allegations by Mr and Mrs Coshott in the statement of claim, the objections by Mr Vardas and the response by Mr and Mrs Coshott to Mr Vardas' objections. The Scott Schedule comprised two volumes totalling 695 pages (exhibit 19). 130 On 26 August 2003 the defendant's instructions were withdrawn. Although his instructions had been withdrawn the defendant in a letter of 9 September 2003 reported to Mr Coshott as follows (exhibit A at 354):- "Following our recent discussion I confirm that I appeared before Senior Registrar Robinson in relation to the two motions currently before the Court, namely the Application for Leave to Amend the Statement of Claim and the motion for Use of the Defendant's Documents Produced in Answer to a Notice to Produce for the unrelated purpose of a submission to the Legal Services Commissioner and/or a Fidelity Fund claim. The motion for Leave to Amend is currently part heard before Justice Studdert. The Scott Schedule concerning the objections to the amendment have been filed and an electronic version served. At the present time the parties have leave to approach His Honour's Associate for allocation of a further hearing date. In view of the termination of this firm's retainer that step is yet to be taken. In relation to the motion filed on 30 June 2003 concerning Use of the Defendant's Documents, the following formal orders were made:

The Defendant to file and serve his Affidavits in response to the motion on or before 12 September 2003.
Any Affidavits in reply by the Plaintiff to be filed and served by 26 September 2003.
The motion filed 30 June 2003 stand over for hearing on 3 October 2003. I confirm my earlier advices that Mr Thawley considers that it is more appropriate that certain of the factual matters in connection with the motion namely the denials of authority to deduct funds from trust, should be given by Mr Coshott in an Affidavit. In addition, Mr Thawley considers that there should be a separate bundle clearly identifying the documents which are to be referred to the Legal Services commissioner/ Fidelity Fund, should leave be granted, rather than a general order. Your new advisors will be able to address those issues in the interim." 131 The application for leave to amend the statement of claim eventually came before Bergin J on 3 August 2004. A transcript of the proceedings before her Honour commences at p 314 of exhibit A. A copy of Bergin J's judgment commences at p 307 of exhibit A. 132 Bergin J considered that there were two main classes of objection (1) that the plaintiffs had included in the proposed amended statement of claim evidence, as opposed to material facts (2) that the plaintiffs had not furnished sufficient particulars. Her Honour disallowed all of the objections and gave leave to Mr and Mrs Coshott to file the proposed amended statement of claim. In her judgment her Honour commented that almost a year had passed since the Scott schedule was filed. 133 At the time of the hearing before me the proceedings by Mr and Mrs Coshott against Mr Vardas had not been heard. The evidence before me included an offer of compromise on behalf of Mr Vardas and an offer of compromise on behalf of Mr and Mrs Coshott. Neither of the offers had been accepted. 134 On 25 May 2007 the Law Society wrote a letter to Mr and Mrs Coshott (exhibit A at 385) in the following terms:- "I refer to your letter dated 20 April 2007, received by the Society on 1 May 2007. In your last letter you advised that you expected further claims by you to be unearthed. It would be appreciated if you would advise whether the current claim, being a total of $503,284.70, is the full extent of your claim on the Fidelity Fund. As previously advised, your Supreme Court proceedings against Mr Vardas are relevant to your Fidelity Fund claim. It would be appreciated if you would let me know the position in relation to those proceedings. On receipt of this information I will be in a better position to let you know when your claim will be considered by the Fidelity Fund Management Committee."

The Commonwealth Bank claim 135 In 1995 proceedings were commenced in the Local Court by the Commonwealth Bank of Australia against Mr Coshott for the recovery of amounts outstanding on a credit card (Local Court proceedings 53380/1995). 136 In April 1996 Mr Coshott filed an application for the transfer of these proceedings from the Local Court to the District Court. Exhibit A contains a document headed "Short minutes of orders" signed by the solicitors for the parties, including an order that the Local Court proceedings be transferred to the District Court. However, there is not in exhibit A or anywhere else in the evidence before me a copy of any actual orders. 137 In 1996 Mr Coshott and his wife had commenced unrelated proceedings against the Commonwealth Bank of Australia in the District Court, proceedings 1643/96. In July 2001 the defendant was instructed to take over these proceedings. 138 On 17 June 2002 the proceedings by Mr and Mrs Coshott against the Commonwealth Bank of Australia came before his Honour Judge Sorby in the District Court. Mr and Mrs Coshott were represented by counsel Ms Coulton. The Commonwealth Bank was represented by Mr Bell of counsel. I would infer from the transcript of the proceedings that Mr Coshott was in court. 139 The transcript of the proceedings on 17 June 2002 records the following at p 3 lines 16-51. "BELL: Your Honour, if I just raise an administrative matter. The history of these proceedings is that initially in 1995 the defendant brought proceedings in the Local Court against the plaintiff in these proceedings in respect of a MasterCard debt of some $20/30,000. By way of defence of those proceedings, Mr Coshott raised a set-off by reason of these proceedings in the District Court. In the Local Court proceedings, the only documents ever filed were a statement of liquidated claim and a defence, in other words the pleadings. In 1996, Mr Coshott applied for the Local Court proceedings to be transferred to this court and heard at the same time as the existing proceedings. Orders in relation to that were signed by both the solicitors, but it seems, so I am instructed, that the orders were never made by the court. Could I hand to your Honour a copy of the pleadings in the Local Court proceedings? HIS HONOUR: Is that consented to? COULTON: Yes. BELL: I understand it's not opposed. COULTON: No it's not." 140 In a judgment Judge Sorby gave judgment for the Commonwealth Bank in the proceedings by Mr and Mrs Coshott against the Bank but did not deal with the proceedings by the Commonwealth Bank against Mr Coshott. 141 On 1 November 2003, the matter having been brought back before Judge Sorby, his Honour observed that he had overlooked the proceedings by the Commonwealth Bank against Mr Coshott. His Honour entered a verdict for the Bank against Mr Coshott for the amount claimed, plus interest, and made an order for costs against Mr Coshott. 142 On a later occasion the matter was brought back before Judge Sorby again. On p 1 of a judgment given on 1 March 2005 Judge Sorby said:- "This matter first came before me on 17.6.2002. On that day, among other things, I ordered that Local Court proceedings number 53380/95 (the Local Court proceedings), be transferred to the District Court and be heard together with the other matter listed before me between the parties. The Local Court proceedings were in respect of a Mastercard debt of some $30,000, owed by Mr Coshott (the Defendant in the Local Court proceedings) to the Bank (the Plaintiff in the Local Court Proceedings). Mr Coshott filed a Defence in the Local Court proceedings dated 3.11.1995 in which he raised a set-off by reason of the District Court proceedings listed before me. Apparently Mr Coshott in 1996 applied for the Local Court proceedings (which consisted of a liquidated statement of claim and Defence only) to be transferred to the District Court to be heard at the same time as the District Court proceedings. Short minutes were signed by both sides, but the orders not entered. On 17.6.02, by consent, I made the orders sought, specifically that Local Court matter number 53380/1995 be heard together with District Court matter number 1643/1996." 143 On 1 March 2005 Judge Sorby held that he was functus officio and declined to make any further order.

Advocate's immunity 144 On each of the Citibank claim, the PSO claim and the Commonwealth Bank claim the defendant sought to rely on a defence of advocate's immunity. 145 This defence had not been specifically pleaded by the defendant. I considered that the defence should have been specifically pleaded (see Uniform Civil Procedure Rules r 14.14) but I gave leave to the defendant to amend so as to raise the defence. It had been made apparent to the Court and to Mr Coshott at the beginning of the hearing that the defendant would be seeking to rely on authorities about advocate's immunity. 146 Four cases on advocate's immunity were referred to in argument at the hearing Giannarelli v Wraith (1987-1988) 165 CLR 543; Keefe v Marks (1989) 16 NSWLR 713; D'Orta-Ekenaike v Victoria Legal Aid & Anor (2005) 223 CLR 1; Wilson v Carter [2005] NSWSC 1351 (Rothman J). 147 In Giannarelli proceedings in negligence were brought by the plaintiffs against a number of barristers who had appeared for them at committal proceedings or a trial or an appeal to the Court of Criminal Appeal. A claim which had been made by the plaintiffs against a solicitor who had been their solicitor in the committal proceedings and at the trial was withdrawn. 148 It was held by the majority of the High Court that at common law a barrister cannot be sued by his client for negligence in the conduct of a case in court or in work out of court which leads to a decision affecting the conduct of a case in court. It was stated by the majority that the same immunity attaches at common law to a solicitor acting as an advocate in court. 149 At pp 559-560 Mason CJ, who was in the majority, said:- "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." 150 In D'Orta-Ekenaike the plaintiff had been charged with a criminal offence. He was granted legal aid in defending the charge by Victoria Legal Aid, a corporate body. Victoria Legal Aid briefed a barrister to represent the plaintiff. The plaintiff alleged that a solicitor employed by Victoria Legal Aid and the barrister instructed by Victoria Legal Aid advised the plaintiff to plead guilty to the criminal charge. The plaintiff entered a plea of guilty at committal proceedings but later changed his plea and stood trial. At the trial evidence was admitted of his plea of guilty at the committal proceedings and the plaintiff was found guilty of the charge. 151 An appeal against conviction was allowed by the Victorian Court of Criminal Appeal and a new trial was ordered. At the new trial evidence of the earlier plea of guilty was not admitted and the plaintiff was acquitted. The plaintiff then sued Victoria Legal Aid and the barrister who had first been briefed to represent him. 152 It was held by the majority of the High Court, following Giannarelli, that at common law an advocate is immune from suit whether for negligence or otherwise in the conduct of a case in court or for work done out of court which leads to a decision affecting the conduct of a case in court. 153 At 31 [85-87] Gleeson CJ, Gummow J, Hayne J and Heydon J said in their joint judgment:- "[85] No sufficient reason is proffered for reconsidering the court's decision, in Giannarelli , that an advocate is immune from suit whether for negligence or otherwise in the conduct of a case in court. Should the boundary of the operation of the immunity be redrawn? [86] Again, we consider that no sufficient reason is proffered for doing so. In particular, there is no reason to depart from the test described in Giannarelli as work done in court or "work done out of court which leads to a decision affecting the conduct of the case in court" or, as the latter class of case was described in the explanatory memorandum for the Bill that became the Practice Act, "work intimately connected with" work in a court. (We do not consider the two statements of the test differ in any significant way.) [87] As Mason CJ demonstrated in Giannarelli , "it would be artificial in the extreme to draw the line at the courtroom door". And no other geographical line can be drawn that would not encounter the same difficulties. The criterion adopted in Giannarelli accords with the purpose of the immunity. It describes the acts or omissions to which immunity attaches by reference to the conduct of the case. And it is the conduct of the case that generates the result which should not be impugned." 154 It was further held by the High Court that Victoria Legal Aid under the Victorian Legal Aid Act was in the position of a private firm of solicitors and that a solicitor, even if not acting as an advocate, has the same immunity as an advocate in respect of advice which leads to a decision affecting the conduct of a case in court. 155 At 32 [91] Gleeson CJ, Gummow J, Hayne J and Heydon J said:- "Because the immunity now in question is rooted in the considerations described earlier, where a legal practitioner (whether acting as advocate, or as solicitor instructing an advocate) gives advice which leads to a decision (here the client's decision to enter a guilty plea at committal) which affects the conduct of a case in court, the practitioner cannot be sued for negligence on that account." 156 Keefe v Marks was decided after Giannarelli but before D'Orta-Ekenaike. 157 In Keefe v Marks an injured person brought proceedings for damages. He was successful in the proceedings but no interest was awarded on the amount of damages awarded, no claim for interest having been made by his legal representatives. 158 The injured person sued the solicitor who had acted for him (Keefe) for professional negligence and the proceedings were settled. Keefe then sued the barrister who had appeared for the injured worker, claiming contribution from him. 159 The Court of Appeal, applying Giannarelli, held that the common law immunity of barristers from liability for negligence extended to out of court work intimately connected with or ancillary to the conduct of a case in court. Such out of court work for a barrister briefed to appear at a hearing would include:- "…such matters as interviewing the plaintiff and any other potential witnesses, giving advice and making decisions about what witnesses to call and not to call, working up any necessary legal arguments, giving consideration to the adequacy of the pleadings and, if appropriate, causing any necessary steps to be undertaken to have the pleadings amended". 160 In Wilson v Carter Rothman J, after referring to Giannarelli and D'Orta-Ekenaike, said at [55], with reference to alleged negligence by a barrister:- "The drafting of affidavits, the determination of the contents of those affidavits and the advices relating thereto, indeed all the tactical decisions associated with the preparation for and presentation of the extension application were, in the circumstances of this case, "intimately connected" with conduct of the case in court and affected the hearing. It is difficult to imagine out-of-court work more connected with the conduct of the case in court than the determination of the witnesses to be called and the evidence to be adduced from them. To the extent that these allegations concern out-of-court work, they are fundamentally directed to such matters or to preliminary steps leading only to such matters." 161 At [63], after referring to Keefe v Marks, Rothman J said:- "Inadvertence to some aspects of a decision affecting the conduct of a cause in Court, does not take the matter beyond that which is immune." 162 Mr Coshott made some general submissions about advocate's immunity. He referred to Giannarelli and particularly the judgments of Mason CJ and Wilson J and submitted that it had been held in Giannarelli that it was the function of advocacy which attracted the immunity and that a solicitor was entitled to the immunity, only if he had been acting as an advocate. He submitted that in D'Orta-Ekenaike the majority of the High Court had expressly held that what had been decided in Giannarelli should not be departed from. Mr Coshott contended that a solicitor in preparing a pleading is not functioning as an advocate. Consistently with this contention, Mr Coshott said in oral argument that a barrister in preparing a pleading is not functioning as an advocate and is not entitled to the immunity. 163 Mr Coshott put a further submission that the test laid down by the majority of the High Court in D'Orta-Ekenaike is satisfied, only when a legal practitioner actually gives advice which leads to a decision by a client, and is not satisfied when the legal practitioner omits to give advice; insofar as Keefe v Marks was inconsistent with the submission, I should follow the two High Court decisions and not the decision of the Court of Appeal in Keefe v Marks. 164 There are some essential parts of these submissions by Mr Coshott which I consider that I should not accept. 165 In Giannarelli the High Court was concerned with the liability of barristers and it was in this context that the majority in the High Court held that the same immunity would attach to a solicitor acting as an advocate. Mason CJ, who was in the majority, held that the immunity was not limited to work done in court but extended to work done out of court which led to a decision affecting the conduct of a case in court. 166 In D'Orta-Ekenaike the majority of the Court held that the Court should not depart from the decision of the majority of the court in Giannarelli about the scope of the work to which the immunity attaches. It was confirmed that the immunity attaches both to work done in court and work done out of court which leads to a decision affecting the conduct of a case in court or which is intimately connected with work in court. Such work includes drawing pleadings and considering what evidence will be adduced. The majority also held that the immunity attaches to solicitors as well as barristers. 167 The submission made by Mr Coshott, that the immunity attaches only when the legal practitioner actually gives advice which leads to a decision by the client, is inconsistent with the decision of the Court of Appeal in Keefe v Marks. In my opinion, Keefe v Marks should not be regarded as being inconsistent with either of the High Court decisions and I should follow it. 168 I will return to the subject of advocate's immunity when I deal with some of the individual claims.

The Citibank claim 169 Earlier in this judgment I summarised some of the evidence about the Citibank claim. 170 In the present proceedings Mr Coshott claimed that the defendant had been negligent in the conduct of the proceedings brought by Mr and Mrs Coshott against Citibank ("the Citibank proceedings"), in that he had not advised Mr and Mrs Coshott that the relief claimed in the Citibank proceedings should be limited to an order for the taking of accounts as between mortgagee and mortgagor. Mr and Mrs Coshott as mortgagors would have been entitled as of right to an order for the taking of accounts against a mortgagee which had exercised its power of sale. In the taking of the accounts all of Mr and Mrs Coshott's various claims against Citibank about the way in which it had exercised its power of sale could have been determined. However, in relation to both the original statement of claim of January 2002 and the amended statement of claim of 28 October 2002, the defendant had not given such advice and the claims for relief had not been so limited. 171 It was submitted that the point that the claims for relief should have been so limited had been taken by Mr Foster of senior counsel for Citibank at the hearing on 29 September 2003 and Einstein J had unequivocally indicated that he was minded to make an order that Mr and Mrs Coshott pay Citibank's costs of the Citibank proceedings. In these circumstances Mr and Mrs Coshott in settling the Citibank proceedings had been compelled to concede that they would be liable to pay Citibank's costs of the Citibank proceedings and that the amount of those costs should be offset against the amounts they would otherwise have recovered from Citibank. 172 Mr and Mrs Coshott claimed in the present proceedings the amount of the costs which they alleged had been offset, the amounts of costs and disbursements which they alleged had been thrown away by the defendant's negligence and interest on those amounts. 173 In his submissions Mr Coshott referred to the qualification, "unless tactically or legally it may be unwise to do so", in his letter of 31 May 2001, when he stated his belief that "if possible, we should seek to air the other matters in the same (proceedings)". 174 In his submissions Mr Coshott also referred to the assertion on 29 September 1993 by Mr Foster of senior counsel that in January 2002 "we pointed out to them that the claims were misconceived and that the proper remedy was to seek merely the taking of an account". 175 Mr Coshott accepted that Mr Cashion of senior counsel had been briefed by the defendant but submitted that the only matter on which Mr Cashion had been asked to advise was the Bank integration point. 176 I will now proceed to consider these submissions made by Mr Coshott. 177 It is not as clear as Mr Coshott submitted that the only appropriate relief which could have been claimed in the Citibank proceedings was an order for the taking of an account. Contrary to a submission made by Mr Coshott, the Court of Appeal in Commonwealth Bank of Australia v Hadfield [2001] NSWCA 440, a case to which I was referred by Mr Coshott, did not finally decide that a claim for the taking of accounts is the only appropriate form of proceeding for a mortgagor suing a mortgagee who has exercised a power of sale (see paras 35-49 of the judgment of Beazley JA. Nevertheless, the view that the appropriate form of proceeding was a claim in equity for the taking of accounts was described by Beazley JA as the "orthodox" view and I consider that I should adopt it. 178 I also consider that I should accept that Einstein J on 29 September 2003 clearly evinced an intention, in the event of the Citibank proceedings not being settled, to make an order against Mr and Mrs Coshott that they pay Citibank's costs of the proceedings. 179 As to the qualification in Mr Coshott's initial letter of 31 May 2001, I consider that this qualification was superseded by Mr Coshott's later communications, including the handwritten postscript to his letter of 10 September 2001, what he said at his meeting with the defendant on 25 September 2001 and his criticism of the draft statement of claim drawn by counsel and his conduct in taking it upon himself to draft the greater part of the statement of claim. 180 It is true that the statement of claim as drafted by Mr Coshott did not include the claims for relief which were set out at the conclusion of the statement of claim which was filed. However, the part of the statement of claim which was drafted by Mr Coshott included allegations of breaches by Citibank of a common law duty of care and of statutory duties allegedly owed by Citibank and claims that Mr and Mrs Coshott had suffered loss and damage. 181 On the basis of the evidence which I have summarised, I find that it was Mr Coshott who decided what claims should be included in the original statement of claim and in the amended statement of claim. 182 As to what Mr Foster is recorded as having said on 29 September 2003, I accept that Mr Foster would have had some grounds for making his assertion that the defects in the statement of claim had been pointed out in January 2002. However, it is improbable that Mr Foster as senior counsel appearing in court at the hearing in September 2003 had any direct knowledge of any communication with the defendant, a solicitor, soon after the Citibank proceedings were commenced in January 2002. 183 I have already referred to the extremely detailed nature of the entries in the defendant's costing reports. There is no entry in a costing report for January 2002 about any communication to the defendant from Citibank's legal representatives. There is not any evidence before me of any letter from Citibank's legal representatives at any time alleging any defects in the statement of claim. The defendant's amended defence of 22 November 2002, while containing denials and statements of non-admission of allegations in the amended statement of claim, does not contain any assertion that the form of the proceedings is misconceived or that any of the relief claimed is inappropriate. 184 In all these circumstances, and notwithstanding that the defendant did not give evidence in the proceedings before me, I am not satisfied that in January 2002 or at any other time a legal representative of Citibank pointed out to the defendant that the claims in the statement of claim in the Citibank proceedings were misconceived and that the only appropriate relief was an order for the taking of accounts. 185 It is true that the only matter on which Mr Cashion was specifically asked to advise was the Bank integration point. On the other hand, a brief to appear was delivered to Mr Cashion on 7 August 2003. In the brief Mr Cashion was specifically asked to consider potential defences. As was stated by Gleeson CJ in Keefe v Marks at p 718, the work which would be expected to be undertaken by a barrister to whom a brief on hearing has been delivered would include giving consideration to the adequacy of the pleadings and causing any necessary steps to be undertaken to have the pleadings amended. 186 It is an essential part of the present claim by Mr and Mrs Coshott that, if the defendant had advised Mr and Mrs Coshott that the relief claimed in the Citibank proceedings should be limited to an order for the taking of accounts as between mortgagee and mortgagor, Mr Coshott would have taken that advice: Berry v Kanakis [2002] NSWCA 68 esp at [41] and [42]. It is not essential that a client suing a solicitor for having negligently omitted to give advice should give direct evidence that, if the advice had been given, the client would have taken the advice. However, in the present proceedings, having regard to Mr Coshott's conduct, which amounted to assuming control of the conduct of the proceedings, and in the absence of any direct evidence from Mr Coshott, I am not satisfied that, if the advice had been given, Mr Coshott would have taken the advice. In his letter of 31 May 2001 Mr Coshott noted that the defendant's preliminary view had been to commence proceedings merely seeking accounts. The various steps subsequently taken by Mr Coshott demonstrate his eagerness to include in the proceedings a large number of claims against Citibank. In August 2003 Mr Coshott still wished to raise the Bank integration point, notwithstanding an earlier unfavourable advice from senior counsel. 187 In my opinion, the Citibank claim fails on this ground. 188 I also consider that the Citibank claim fails by reason of advocate's immunity. Determining what claims for relief should be included in the pleading was work done out of court which led to a decision affecting the conduct of the case in court. 189 I conclude that the Citibank claim should be rejected.

The PSO claim 190 Earlier in this judgment I summarised some of the evidence about the PSO claim. 191 In these proceedings the plaintiffs claimed that Mr Davis had been retained to give expert evidence at the hearing of the proceedings to enforce the undertaking as to damages; that Branson J had held that Mr Davis could not give admissible evidence; that the defendant had been negligent in not advising that Mr Davis could not give admissible evidence; and that the plaintiffs were entitled to recover from the defendant the costs which had been thrown away in retaining Mr Davis. 192 It was submitted by Mr Coshott that the defendant had been informed on 1 October 2002 that PSO would be objecting to Mr Davis' report. However, as I noted earlier in this judgment, the grounds of objection taken in PSO's solicitor's letter of 1 October 2002 were based on an alleged failure to produce documents (which were apparently referred to in Mr Davis' report) and not on the ground on which Branson J ultimately held Mr Davis' evidence inadmissible. 193 It was also submitted that Mr Cashion had merely been briefed to appear at the hearing. However, the brief delivered to Mr Cashion on 24 July 2002 was a brief both to advise and to appear. A copy of Mr Davis' report was enclosed with the brief and in the defendant's observations in the brief Mr Cashion was expressly referred to Mr Davis' report. I infer that Mr Cashion read Mr Davis' report and that he did not consider that Mr Davis' report was inadmissible. 194 Mr Davis was a witness who had been found and selected by Mr Coshott himself. He was retained to give evidence to establish a claim which Mr Coshott was eager to press. The hearing date on 16 September 2002 was vacated at least partly out of deference to Mr Davis' religious obligations. Senior counsel, having been briefed with Mr Davis' report, had not queried its admissibility. Mr Davis' evidence was ultimately held inadmissible, not on the grounds of any lack of qualifications as a real estate valuer but on the ground, which was far from being an obvious ground, that such evidence as Mr Davis could give would not be wholly based on Mr Davis' specialised knowledge. 195 In these circumstances and in the absence of any evidence from Mr Coshott, I am not satisfied that, if the defendant had advised that Mr Davis could not give admissible evidence, Mr Coshott would have taken the advice. 196 In any event, work done in deciding what witnesses should be called and what evidence should be sought to be adduced from them is conduct to which advocate's immunity clearly attaches. 197 I conclude that I should reject the PSO claim.

The Thomas claim 198 Earlier in this judgment I summarised some of the evidence about the Thomas claim. 199 The plaintiffs' cause of action in the Thomas claim was not for professional negligence but on the basis of an estoppel. There was some argument at the hearing about what kind of estoppel was being alleged, whether it was an estoppel by representation or a promissory estoppel. However, in my opinion, it is unnecessary to decide how the estoppel alleged by the plaintiffs should be characterised, in order to determine the plaintiffs' claim. 200 As I noted earlier in this judgment, the only representation (or promise) by the defendant which was proved or admitted was that on 31 July 2003 the defendant advised the plaintiffs that the unbilled work in the Thomas matter up to 30 July 2003 was approximately $11,000, plus disbursements. The plaintiffs claimed that they relied on the representation made by the defendant in the settling of the proceedings against Thomas, that the defendant was estopped from charging the plaintiffs otherwise than in accordance with his representation and that the plaintiffs were entitled to recover the difference between the amount which the defendant had represented he would charge and the amount of costs and disbursements subsequently claimed by the defendant, $22,598.16. 201 I do not consider that this claim should succeed. 202 In the case of both estoppel by representation and promissory estoppel, it is necessary that the representation alleged to have given rise to the estoppel should have been clear and unambiguous: see Legione v Hateley (1982-1983) 152 CLR 406 at 435-436 per Mason J and Deane J. In my opinion, the only representation proved or admitted to have been made by the defendant does not satisfy this requirement. The estimate of the costs for unbilled work was qualified by the word "approximately", included an unquantified amount for outstanding disbursements and was not expressed to be the maximum amount which would be charged. 203 Furthermore, and partly because the representation was not clear and unambiguous, I am not satisfied that the defendant in making the charges that he subsequently did departed in a material way from the representation he had made. I note that the representation was limited to unbilled work up to 30 July 2003 and on 31 July 2003 the defendant did further work for which he charged more than $2000. 204 Although evidence from Mr Coshott of reliance on the representation was not essential, in the absence of evidence from Mr Coshott, I am not satisfied that Mr Coshott relied on the representation in settling the proceedings against Thomas. 205 I conclude that I should reject the Thomas claim.

Vardas 1 206 As stated earlier in this judgment, Vardas 1 was a claim that the defendant, having been retained by Mr and Mrs Coshott to act for them in the proceedings brought by Mr and Mrs Coshott against Mr Vardas for professional negligence, failed to act in those proceedings with reasonable diligence. 207 It was submitted by Mr Coshott that I should find that a failure to act with reasonable diligence had been established. Mr Coshott pointed inter alia to the admission in a costing report that the defendant had done no work in the matter between 6 December 2002 and 5 February 2003. 208 Mr Coshott submitted that the plaintiffs should be awarded damages in the nature of interest on the amount of the claim against Mr Vardas during the period of the delay by the defendant. Mr Coshott sought to quantify the amount of the claim against Mr Vardas by averaging the amounts in the offers of compromise made by the parties in the Vardas proceedings. 209 I do not consider that I should find that failure by the defendant to act with reasonable diligence has been established, even taking into account that no action was taken during the period of about two months from 6 December 2002 to 5 February 2003 (which would have included the Christmas break). 210 In reaching this conclusion I have taken into account the evidence about the proceedings which I have already summarised, including the evidence about the great number of documents which were produced and inspected, the drawing of the proposed amended statement of claim, the extraordinary length of the proposed amended statement of claim, the intransigence of the solicitors acting for Mr Vardas' professional indemnity insurer, the opposed application for leave to amend and the preparation of the Scott Schedule of the objections to the proposed amended statement of claim, comprising 695 pages. 211 I note that, after the defendant's retainer was terminated, nearly a year passed before the application for leave to amend was heard by Bergin J and that since then a further three years have elapsed, without the proceedings against Mr Vardas yet being heard. 212 Alternatively, if there was a failure by the defendant to act with reasonable diligence, then I am not satisfied that the plaintiffs have established that they suffered any loss by reason of the breach. Under the principles stated by the High Court in Sellars v Adelaide Petroleum NL (1992-1994) 179 CLR 332 the onus is on a plaintiff to establish on the balance of probabilities that the plaintiff has sustained some loss or damage by reason of the defendant's breach, before the value of the loss or damage is ascertained by reference to probabilities or possibilities. See per Mason CJ, Dawson J, Toohey J and Gaudron J at 355 and per Brennan J at 368. 213 In their proceedings against Mr Vardas the plaintiffs have claimed interest on the principal amount claimed for a period including the period during which the defendant was acting for the plaintiffs. Mr Coshott submitted that there was a possibility that interest might not be awarded in the proceedings against Vardas for the period when the defendant was acting for the plaintiffs. However, generally the compensatory purpose of the discretion to award interest means that any delay in bringing or prosecuting proceedings will not usually provide a basis for refusing to award interest (see Ritchie's Uniform Civil Procedure NSW at 2704 (s 100.35)). In the present case, much of any delay was due to the intransigence of the solicitor for Mr Vardas' indemnity insurer and the number of objections made to the proposed amended statement of claim, all of which were ultimately dismissed by Bergin J.

The Vardas 2 claim 215 The first part of Vardas 2 was a claim that the defendant did not carry out instructions to report to the Legal Services Commission irregularities in Mr Vardas' trust account of which the defendant had become aware. The second part of Vardas 2 was a claim that the defendant did not carry out instructions to make a claim on behalf of Mr and Mrs Coshott against the Fidelity Fund administered by the Law Society for dishonest defaults by Mr Vardas of which the defendant had become aware. 216 The defendant became aware of both the trust account irregularities and the dishonest defaults as a result of inspecting some of the documents produced by Mr Vardas in the proceedings brought by the plaintiffs against him. 217 The defendant was conscious of the implied undertaking (confirmed by rules of court) given by a party to proceedings to whom documents are discovered or produced by another party, not to use the documents for any purpose other than the conduct of the proceedings. 218 The defendant was also aware from his telephone conversation with Mr Coshott on 18 October 2001 and from Mr Coshott's letter of 19 October 2001 that, at an early stage of the inspection of documents, Mr Coshott on his own accord had communicated with the Assistant Legal Services Commissioner and had lodged a complaint with the Legal Services Commission about Mr Vardas' failure to provide trust account statements. 219 As the inspection of documents produced by Mr Vardas proceeded further evidence of trust account breaches by Mr Vardas merged. 220 In 2002 the defendant sought advice from the Law Society about what he should do. I infer from Mr Coshott's letter of 30 May 2002 that Mr Coshott did not object to the defendant taking the course of seeking advice from the Law Society. 221 The defendant received the letter of 30 July 2002 from the Senior Ethics Solicitor, Professional Standards of the Law Society, stating the view of a professional standards committee that, given the uncertainty of the defendant's position, he should consider obtaining the leave of the court, so as to be able to report what he had ascertained from an inspection of documents produced by Mr Vardas, without breaching his implied undertaking to the court. 222 It may be that an obligation to report the irregularities in Mr Vardas's trust account prevailed over the implied undertaking not to use documents which had been produced or discovered for a collateral purpose. I do not propose to attempt to resolve this point, because it was not fully argued before me. 223 However, even if the obligation to report trust account irregularities prevailed over the undertaking not to use documents produced or discovered for a collateral purpose, I do not consider that the defendant acted unreasonably in seeking the advice of the Law Society and then acting in accordance with the advice he was given. 224 The motion for leave to use the documents produced for inspection by Mr Vardas was not filed until June 2003. However, at the hearing I was not directed to any evidence of any previous instruction by Mr Coshott to commence such an application. 225 Nor was I directed to any evidence of any instruction by Mr Coshott to the defendant that the defendant should lodge a claim on the Fidelity Fund on behalf of Mr and Mrs Coshott. 226 I find that the plaintiffs have not established a failure by the defendant to carry out instructions to report irregularities in Mr Vardas' trust account or to make a claim on the Fidelity Fund. 227 As to the first part of Vardas 2, even if the defendant should be held to have acted unreasonably or to have failed to carry out instructions, in not reporting to the Legal Services Commission irregularities in Mr Vardas' trust account, Mr and Mrs Coshott have not established that any such conduct on the part of the defendant caused Mr and Mrs Coshott loss or damage. 228 Likewise, as to the second part of Vardas 2, I consider that, even if the defendant should be held to have acted unreasonably or have failed to carry out instructions, in not making a claim on behalf of Mr and Mrs Coshott against the Fidelity Fund, Mr and Mrs Coshott have not established that any such conduct on the part of the defendant caused Mr and Mrs Coshott loss or damage. 229 Apart from the letter of 25 May 2007 from the Law Society, there is almost a complete absence in the evidence before me of evidence about a claim on the Fidelity Fund. This absence is not remedied by allegations in the statement of claim which were not admitted in the defence or by allegations made by Mr Coshott in his written submissions. 230 The letter from the Law Society indicates that a claim has been made on the Fidelity Fund, that it has not been rejected out of hand, that the pending proceedings against Mr Vardas might be relevant to the claim and that the claim has not yet been considered by the Fidelity Fund management committee. 231 I note that there is no evidence before me about when the claim on the Fidelity Fund was lodged. 232 Mr Coshott submitted that the claim on the Fidelity Fund might be wholly or partly disallowed under parts of s 80 of the Legal Profession Act 1987. However, there is no evidence before me on which I could accept any of these submissions. 233 As the Law Society pointed out in its letter of 25 May 2007 the pending proceedings against Mr Vardas are relevant to any claim on the Fidelity Fund. 234 I reject both parts of the Vardas 2 claim.

The Vardas 3 claim 235 As stated earlier in this judgment Vardas 3 was a claim that the defendant had been negligent in carrying out instructions to seek to recover debts for legal costs owing to Mr Coshott (and Mrs Coshott) by persons who had been clients of Mr Coshott's solicitors practice. 236 In para 11.8 of the amended statement of claim it was alleged:- "On or about 6th December 2002, Barry advised the Coshotts that he would provide them with a list of debt recovery matters not pursued by Vardas which should be pursued by Barry to meet any assertion that the Coshotts had failed to mitigate and also to collect in any debts which could be collected. Barry was instructed to pursue those matters. He failed to act upon those instructions." 237 In para 43 of the amended defence the defendant said:- "As to paragraph 11.8, he: 43.1 admits being requested by Mr Coshott to seek to identify files where the plaintiffs, or either of them, could recover monies from Mr Coshott's former clients; 43.2 says that he discussed with Mr Coshott on 6 December 2002 some matters including matters of Harry Sotiriou, Milosavlejic, Stegnjaic and Kulevska; 43.3 denies that he was at that time instructed to pursue those matters; 43.4 otherwise does not admit paragraph 11.8." 238 Accordingly, the allegation in the amended statement of claim that the defendant was instructed by Mr Coshott to pursue the collection of debts was denied in the amended defence. In his submissions Mr Coshott pointed to a couple of entries in the defendant's costing reports but these entries are insufficient by themselves to establish the disputed allegation in the statement of claim. Hence, the allegation that the defendant was instructed by Mr Coshott to pursue the collection of debts was neither admitted on the pleadings nor proved and on this ground Vardas claim 3 fails. 239 A further allegation made in para 11.20 of the amended statement of claim that the defendant's failure to act upon instructions to pursue the debt recovery matters had caused the plaintiffs loss and damage in respect of those claims which became statute barred between 6 July 2001 and 26 August 2003 was denied in para 54 of the defence and was not established by any evidence. 240 Although it is not strictly necessary to do so, I will consider a further submission made by Mr Coshott in relation to the claim Vardas 3. 241 It would appear that many, if not all, of the debts for legal costs owing to Mr and Mrs Coshott had already become statute-barred by the time the defendant was first retained by Mr and Mrs Coshott. However, Mr Coshott submitted that the debts, although statute-barred, would have been recoverable by the means of procuring an assessment of the costs under Pt 11 of the Legal Profession Act. Under the Legal Profession Act a costs assessor was not part of the Supreme Court and an application for a costs assessment was not an "action" within s 14 of the Limitation Act and hence was not caught by s 14 of the Limitation Act. Under the Legal Profession Act a certificate setting out the determination of the costs assessor could be enforced as if it was a judgment. 242 Submissions of the kind made by Mr Coshott were accepted by Bell J in Lenin v Coshott [2007] NSWSC 630, a proceeding between Mr Coshott and one of his former clients, and would appear to me to be correct. 243 However, the question arises whether the defendant, if he had been instructed to pursue the collection of debts owing to Mr Coshott, should have been aware of this method of collecting debts owing for costs, when court actions for the recovery of the debts would have been statute-barred. 244 This method of collecting statute-barred debts for costs owed to solicitors has developed, largely due to the efforts of Mr Coshott himself, since the defendant's retainer was terminated. However, Mr Coshott pointed to the judgment of Kirby J in Ryan v Hansen (2000) 49 NSWLR 184 esp at 192 [32], where Kirby J held that a costs assessor does not form part of the Supreme Court, which is a crucial step in Mr Coshott's argument. 245 However, Ryan v Hansen was not a case in which a solicitor was seeking to recover statute-barred costs. The principal issue in Ryan v Hansen was whether a costs assessor had power to hear a cross-claim by a client against the solicitor based on the solicitor's alleged negligence. 246 The standard of care required of a solicitor is that of a reasonably competent legal practitioner and not that of "a particularly meticulous and conscientious practitioner" (see Midland Bank Trust Co Limited v Hett Stubbs & Kemp [1979] Ch 384 at 402-403). I do not consider that a reasonably competent lawyer would have been expected to have been aware between 2001 and 2003 that claims by solicitors for costs which had become statute-barred might be recovered by the mechanism of obtaining an assessment of the costs under the Legal Profession Act and then enforcing the assessment as a judgment. 247 Any quantification of the Vardas 3 claim, if the claim was established, would present considerable problems. As the debts for legal costs can be recovered by means of costs assessment, that method of recovering the costs is still available. In assessing the amount of any damages a court would have to have regard inter alia to the costs incurred in assessments, the risks of costs being disallowed in assessments and the chances of actually recovering funds from the debtors. 248 I consider that the claim Vardas 3 should be rejected.

The Commonwealth Bank claim 249 Earlier in this judgment I summarised some of the evidence about the Commonwealth Bank claim. 250 The plaintiffs claimed that on 17 June 2002 the defendant had been negligent in instructing counsel to consent or in not instructing counsel not to consent to the proceedings which had been commenced in the Local Court between the Commonwealth Bank and Mr Coshott being heard in the District Court. The plaintiffs claimed that the proceedings between the Commonwealth Bank and Mr Coshott were deemed to have been dismissed pursuant to Pt 12 r 4C of the District Court Rules and that any fresh proceedings would have been statute barred. 251 Part 12 r 4C of the District Court Rules provided in part as follows:- (1) This rule applies to actions which were commenced before 1 January 1996: (a) by the lodging of an ordinary statement of claim, or (b) by the lodging of a statement of liquidated claim and in which notice of grounds of defence has been filed, which have not been disposed of by judgment or final order. (2) If in an action to which this rule applies no praecipe for trial has been filed before 1 January 1998, the action is on that date deemed to be dismissed." 252 It was submitted by Mr Coshott that the Local Court proceedings were an action which had been commenced before 1 January 1996 and had not been disposed of and that no praecipe for trial had been filed before 1 January 1998 and that, consequently, the proceedings were deemed to have been dismissed. 253 I do not consider that these submissions should be accepted. 254 In my opinion, Pt 12 r 4C should be construed as applying only to actions which were commenced in the District Court before 1 January 1996 and not to actions which were commenced in other courts. 255 It was accepted by Mr Coshott that Pt 12 r 4C could only apply to actions in which it would have been possible to file a praecipe for trial in the District Court before 1 January 1998. Hence, Mr Coshott's argument depended on the Local Court proceedings having been transferred to the District Court in 1996. However, on the evidence before me the Local Court proceedings were not transferred to the District Court until 17 June 2002 and on this ground also Pt 12 r 4C was inapplicable. 256 In any event, any decision made in court on 17 June 2002 not to oppose the Local Court proceedings being heard in the District Court would clearly fall within the scope of advocate's immunity. 257 I reject the Commonwealth Bank claim.

Conclusion 258 I have rejected all of the claims made by the plaintiffs and there should be a verdict for the defendant. **********

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Cases Cited (7)