EVERINGHAM & ANOR v MULLINS & ORS No. SCGRG-00-714 [2000] SASC 448

2 The plaintiffs are a firm of solicitors practising as Stanley and Partners who brought this action against former clients Mr & Mrs Everingham in respect of professional work undertaken on behalf of Ms Everingham in respect of her employment as a teacher by the Education Department. Mr Everingham supported his wife's claim and was involved in giving instructions. It is not disputed that he was responsible for payment of Stanley's fees. There were three sets of proceedings. In the first matter Everingham was successful and the Crown became liable for party and party costs. The second set of proceedings did not proceed after counsel recognised a problem of law. The third set of proceedings were instituted but Stanleys became concerned as to the futility of the proceedings and told Mr Everingham so. The relationship of solicitor and client broke down (according to the Magistrate's findings) and Caldicott and Co took over the file.

3 The plaintiffs sued Mr and Mrs Everingham in the Magistrates Court for professional fees totalling $6883.50 in the Magistrates Court. The matter was referred for taxation to a Supreme Court Master (see King William Law Chambers and Williamson & Co v Mobitel (International) Pty Ltd [1981] 29 SASR 316) but the Master declined to embark upon a detailed taxation when it became apparent that the defendants were not disputing that the work had been done and that in the ordinary course the charges were appropriate. The defendants' complaint was that the work had not been properly carried out.

4 A defence was filed on 3 April 2000. Whether the document was intended to be regarded as giving rise to a set off or counterclaim or both is not clear. The Magistrate treated it as a counterclaim. It is in the following terms:

"It is alleged that services provided by the plaintiff(s) were not of a professional standard and/or unnecessary costs were incurred as specified below, and should not be charged to the client:

1. With respect to charges attributed to matters associated with Teachers Appeal Board Action No.4/1992 the plaintiff;

a. failed to inform the client of potential and/or actual conflicts of interest and/or to advise the client to seek independent advice with respect to:

(i) the plaintiff filing the appeal application out of time.

(ii) the plaintiff's failure to advise client that a medical appointment had not been re-scheduled and/or take appropriate action.

(iii) evidence and or testimony that could be provided by and/or adduced from the plaintiff which was relevant to the matter.

b. continued to advise the client in the matter and failed to fully and/or correctly inform and/or advise the client with respect to the matters referred to in part (a).

2. With respect to charges attributed to Supreme Court Action No. 1248/92 the plaintiff acted contrary to and/or without instruction by accepting $8,000 in full settlement of an order for costs in the action, leaving an outstanding balance of $1530.30 which was debited to the defendant. $1530.30 is therefore claimed as a set off.

3. With respect to counsel fees associated with Supreme Court Action Nos. 1248/92, 2086/94 and 1896/95 the plaintiff failed to fully and properly advise the client in matters related to:

b. costing issues including estimates of counsel fees.

4. With respect to Supreme Court Action No. 2086/94 counsel fees were excessive and/or unnecessary and/or incurred without instruction, and the excessive amount (and adjustment) is claimed as a set off.

5. The plaintiff failed to provide at any time an estimate of solicitor costs with respect to Supreme Court Actions Nos. 1248/92, 2086/94 and 1896/95.

6. With respect to costs attributed to Supreme Court Action No. 2086/94 the plaintiff provided:

a. inadequate, inappropriate or incorrect advice which was relied upon by the client in instituting the action

b. inadequate, inappropriate or incorrect advice either directly or through counsel which was relied upon by the client in discontinuing the action

7. With respect to charges attributed to matters associated with Supreme Court Action No. 1896/95 the plaintiff:

a. provided inadequate, incorrect or inappropriate advice which was relied upon by the client and resulted in the institution of the action.

b. failed to prosecute the action efficiently and diligently.

c. failed to inform the client and seek instructions.

d. failed to inform the client of the reasons for the delays.

e. discontinued to act for the client without good cause or reason.

f. failed to fully inform the solicitor who took over the action."

The plaintiffs joined issue upon these allegations.

5 The Magistrate conducted a trial at which the defendants represented themselves.

6 The Magistrate gave judgment for the full amount of the plaintiffs' claim and dismissed the defendants' counterclaim. The defendants' conduct was such that the Magistrate ordered indemnity costs against them and interest on the solicitors' accounts from the date when rendered.

7 In summary the Magistrate's conclusions were as follows:

"There is not at any stage any evidence of want or lapse of care by Mr Bourne or indeed of any impropriety or lack of application of the appropriate professional standards. At all times he acted and made decisions with the best wishes of his clients uppermost in his mind.

I must say that I have a considerable sympathy for the plight in which Mr Bourne found himself. It is clear that the Everinghams are a couple who seem to have developed what I would regard as an unwholesome liking for litigation. It is clear that they were very particular clients whose particularity at times bordered on outright difficulty. It may be that they are persons who adhere to counsel of perfection. Mr Bourne was not perfect. But I consider that his performance over the relevant period with which this action was concerned was nigh impeccable and nigh flawless. In my view he did all that a reasonable solicitor in his position could possibly do. It does not surprise me that he has been called to account in these proceedings, by the Everinghams, by virtue of their cavilling and nit-picking attitude."

8 There are thirty grounds of appeal in the amended notice of appeal dated 19 September 2000. Mr Everingham conducted the appeal before me. I addressed each of these grounds in turn during oral argument presented on appeal by Mr Everingham. Eventually it was possible to cull the grounds of appeal in the course of debate. As I moved through the grounds with Mr Everingham I then indicated those matters upon which I required counsel for the plaintiffs (respondents) to address. The undermentioned matters are deserving of comment.

9 The appellants complain that they were required to present their case first at trial. However, there was no dispute except as to the matters raised by defendants' case. It was treated as a counterclaim although it was also capable of giving rise to a set off - see Piggott v Williams cited below. The defendants bore the onus of proof on these issues and it was consistent with practice and within the Magistrate's discretion to require the defendants to begin. I do not consider that there was any unfairness resulting from the adoption of this procedure. Mr Everingham was apparently unprepared to proceed in this way. He expected to be able to put his complaints to the plaintiffs' witnesses in the first instance. However, he did not seek an adjournment to further prepare himself. In my opinion the Magistrate was not in error.

10 Mr Everingham notes that a "small claim" under s 3 of the Magistrates Courts Act 1991 (SA) ("the Act") is one where the monetary claim is $5000 or less. A minor civil claim (as now relevant) is an action founded upon a small claim. Mr Everingham argues that he has been disadvantaged in that Stanleys could have subdivided their claim into two parts and instituted two minor claims which would not have attracted any legal representation in the ordinary course (see the Act s 38(4)). In my view the Court does not encourage a multiplicity of proceedings. I can see no justification for two sets of proceedings. There is no substance in this complaint.

11 Mr Bourne of Stanleys negotiated a payment by the Crown of $8000 as party and party costs. He gave evidence as to the reasons why he regarded himself as having obtained a particularly good deal for his clients. He regarded the Crown as having been not ungenerous. Mr Everingham now complains that Mr Bourne exceeded his authority in making this agreement. Put another way, he considered that there should have been no gap between the party and party costs and the solicitor and client costs. The Magistrate's finding was that the defendants failed to establish any loss caused by the solicitor's action. In my view the finding was justified.

4. Third Judicial Review and Reproduction of Contract

12 The appellants maintain that Stanleys undertook an entire job and were not entitled to be paid when they were reluctant to continue the third set of proceedings. The Magistrate found: (par 28)

"There had been a complete breakdown in the solicitor/client relationship. Mr Bourne said that he could not get a simple task done by a junior solicitor without criticism from the Everinghams, and by then he felt that he was in a conflict situation because he had no enthusiasm to act in the third judicial review and therefore he was not any longer prepared to act. By offering the Everinghams the option of going to another solicitor he felt that the conflict would resolve. I should point out that the third judicial review was in turn discontinued, apparently on the advice of Caldicott and Co."

13 The instructions came to an end by mutual consent. Mrs Everingham refused even to speak to a junior solicitor who was sent to a routine listing conference by Stanleys. In my opinion, the Everinghams were not entitled to avoid paying their solicitors by reason of the circumstances in which the relationship came to an end. There was no evidence that the Everinghams suffered loss by reason of the change of solicitors. Indeed, there is no evidence upon which such a claim might be founded - eg for additional reading time to familiarise Caldicott & Co with the matter.

14 The appellants contend that Mr Bourne was dealing with the matter in such a way as to protect himself or as Mr Everingham put it - "to cover his own backside". The submission is based upon the premise that Mr Bourne had carried out his instructions negligently so as to give rise to this need. The Magistrate firmly rejected any suggestion of negligence and commended his handling of his instructions. The appellants' submission has no foundation. The Magistrate was entitled on the evidence to make the findings to which I have referred.

15 It was suggested that Mr Bourne was negligent in his handling of this matter. This flies in the face of the Magistrate's finding. Stanleys acted on counsel's advice and arranged a conference with Mr Everingham and counsel when a problem emerged. The Magistrate found: (par 22)

"Mr Bourne therefore arranged an appointment and a conference with Mr McRae which was held on 30 March or 31 March (there is some doubt about the precise date) in the late afternoon with Mr Everingham present. Mr Everingham agreed that he would consider his position over the weekend, and eventually gave further instructions to Mr Bourne to discontinue the application for judicial review, especially if the Crown would not be seeking costs. That bargain was struck with the Crown and the notice of discontinuance was filed on 4 April 1995. I do not find that any work done by Stanleys on this aspect of the matter was performed negligently."

16 I have reviewed the evidence. I cannot find any basis for the appellants' present complaints.

7. Cost of Barrister's Fees Incurred without Authority

17 The fee in question was $400. The bill was paid without question at the time by Mr Everingham. The matter is not specifically dealt with in the Magistrate's reasons. However, it appears to be covered by the Magistrate's general statements of approval as to the way in which the solicitor acted. I cannot see any basis for the present complaint.

18 Mr Everingham submitted an outline of argument which included the following:

"8. Mr Kleinig SM did not provide sufficient opportunity to present argument and evidence relating to costs incurred due to the actions of the respondent, or give due consideration to the circumstances. (Grounds of Appeal 16, 17, 18, 20 & 21) (paragraphs 9-26 of affidavit of ER Everingham dated 1st December, 2000)."

19 I refused to receive any further affidavit evidence upon appeal. However, I allowed Mr Everingham to make his assertions in argument. (I think that the reference to "costs" is intended to extend to "interest"). Having examined how the Magistrate proceeded I could find nothing which might constitute error on the part of the Magistrate. His decision as regards interest appears to be consistent with principle.

20 Most of Mr Everingham's criticisms upon appeal appear to be based upon the "nit picking" to which the Magistrate referred - see quote above as to the Magistrate's conclusions. The Magistrate did not find any professional negligence and I consider that the Magistrate's decision was justified by the evidence. Therefore the grounds of appeal largely fall away.

21 It has long been established that a client is entitled to an equitable set off of damages for solicitor's negligence against the liquidated claim of the solicitor for his costs - see Piggott v Williams (1821) 56 ER 1027 and article "Equitable Set Offs" by Dr ICF Spry - 43 ALJ 265. The difficulty for Mr and Mrs Everingham is that their complaints are not supported by the Magistrate's findings. The Magistrate treated the defence as raising a counterclaim. I do not consider that the appellants have been disadvantaged thereby.

22 As I have already pointed out to Mr Everingham my task is to deal with appealable error; none has been identified.