FOWLER, CORBETT and JESSOP trading as HAYDON FOWLER CORBETT JESSOP v TORO... [2008] NSWCA 178 | Case summary

(b) if so, whether the belief was reasonable because material then available to him provided a proper basis for alleging that Toro was involved. 16 The second issue involves a paraphrase of s 345(2). That provision identifies when a fact is provable, which in turn incorporates a further reasonable belief. That belief must be based upon "the material then available" to the practitioner. The test which he or she must apply is whether that material provides "a proper basis for alleging that fact". That calls attention to the limits of proper pleading, a matter not expressly dealt with in the Legal Profession Act. Approach of Court in assessing application 17 The proper approach to an application under s 348 must be identified by reference to the purpose of the power, which in turn appears from its statutory context in Part 3.2, Div 10 of the Legal Profession Act. Its clear purpose is to discourage practitioners from bringing before the courts matters of fact which should not properly be alleged or claims based upon a legal principle which is not reasonably arguable. These are sometimes described as hopeless, spurious or vexatious claims, although such language should not be allowed to distract attention from the terms of the statute. In addition to the possibility that such conduct may lead to disciplinary consequences (s 347(1)), it may also lead to economic consequences pursuant to a costs order against the practitioner personally. However, the too ready imposition of such sanctions may undermine the statutory purpose (including by increasing litigation) or may have other unintended consequences for the proper role of legal practitioners in the administration of justice with respect to damages claims. The purpose would be undermined to the extent that litigants were forced to proceed in person without professional assistance and to the extent that litigants who might have arguable claims were unable to pursue them. 18 The importance of making orders under s 348 only in circumstances where a clear case has been made out is a protection against overuse of the power which, if called in aid improperly, will pit the interests of the practitioner against those of his or her client. The result of a costs application against a practitioner will generally be that the client must obtain new representation, perhaps, as in this case, for the purposes of an appeal. The former solicitors will in turn often employ independent legal representatives to resist the application. 19 It is no doubt inevitable that a power of this kind, if invoked, will give rise to "satellite litigation". Such litigation will, however, be minimised if it is borne steadfastly in mind that the power should only be availed of in clear cases. There will also be a tendency, of which the courts must be conscious, for litigants to seek to recover costs from solicitors for the opposing party, where that party would otherwise be responsible for the costs, but may not be worth pursuing. 20 The need for the power to be exercised "with care and discretion and only in clear cases" was identified by the English Court of Appeal in Ridehalgh v Horsefield [1994] Ch 205 at 229 (Bingham MR, Rose and Waite LJJ) and other authorities referred to with approval by McColl JA in Lemoto v Able Technical Pty Ltd [2005] NSWCA 153; 63 NSWLR 300 at 92 and [93]. 21 Moreover, the test has a temporal element: whether or not there are reasonable prospects of success may depend upon the time at which that question is to be assessed. In the present case, it was treated as involving, in an ambulatory sense, any time between the date on which proceedings were commenced against Toro and the date on which they were discontinued. 22 It may be noted that an applicant for a costs order under s 348 obtains the benefit of a rebuttable presumption if the trial court "finds" that the facts "established by the evidence before the court" do not form a basis for a reasonable belief that the claim had reasonable prospects of success: s 349(1) and (3). The person seeking to rebut the presumption "bears the onus of establishing that at the time legal services were provided there were provable facts … that provided a basis for a reasonable belief that the claim … on which they were provided had reasonable prospects of success": s 349(3). Apart from the insertion of the words "on which they were provided", the meaning of which is obscure, this provision appears to reflect the test in s 345(1). 23 The operation of the presumption may involve temporal and other difficulties. However, they can be put to one side as the trial judge did not make any finding for the purpose of s 349(1) and the onus therefore remained on Toro to make good its case. 24 It is necessary to consider further a matter which is central to the operation of s 348, namely what provides a proper basis for alleging a fact. This test appears to have been taken from the NSW Barristers' Rules, r 36, and r 23.A.6 of the Law Society's Solicitors' Rules which are in similar terms. In the absence of statutory definition, any further guidance must be obtained from general law principles relating to the proper conduct of practitioners. However whether, and if so to what extent, this test varies from that by which courts exercising their supervisory jurisdiction under the general law may award costs against practitioners personally is unclear. Reference to general law authority in Lemoto, in the judgment of McColl JA (with whom Hodgson JA and Ipp JA substantially agreed), may suggest that there has been no change through the adoption of the statutory language. Alternatively, the point may not have been taken there, as it was not in this case. 25 In any event, the test to be applied under s 345(2) will vary according to the circumstances. For example, allegations of criminality or fraud will be treated differently from allegations not carrying a degree of opprobrium; allegations which may depend on the veracity of the client may be treated differently from allegations of facts derived from other sources. Where some investigation may be reasonably necessary before making an allegation, the degree of investigation may depend upon the resources of the client, the amount in issue and other factors. More exiguous material may be sufficient in relation to the commencement of proceedings, especially if a limitation period is about to expire, than would be sufficient at the commencement of the trial. By the time of the trial, it may be expected that the defendant will have responded to the allegation and the plaintiff's solicitor will no doubt need to give attention to the response. That is not, of course, to say that the solicitor must accept a denial or even a response supported by other material, unless reasonably viewed the new material removes any possible justification for continuing the allegation. Material available to plaintiff's solicitor prior to joining Toro 26 Approximately three weeks after the plaintiff commenced proceedings against, amongst others, Downview, the solicitors for that company wrote to the plaintiff's solicitors on 11 May 2005 setting out various assertions in support of a denial that Downview owed the plaintiff a duty of care and making a Calderbank offer that Downview would bear its own costs if the plaintiff discontinued by 8 June 2005. Amongst the statements made in that letter were the following: "3. Downview does not own any concrete pumps and is not experienced in concrete pumping work. Downview sub-contracted the concrete pumping work to Toro Constructions Pty Ltd ( Toro ). 4. Toro was responsible for the concrete pumping work at the site and in this regard had a semi permanent static line at the site. 5. On 7 March 2003 a concrete pump belonging to Toro failed and Toro was unable to use that pump to do the concrete pumping work. 6. As a result Toro arranged for Aggforce Concrete Pumping Pty Ltd ( Aggforce ) to bring its concrete pump to the site so as to complete the concrete pumping work. 7. Aggforce, or an entity it sub-contracted the concrete pumping work to, came to the site and performed the concrete pumping work. Whilst employees of either Aggforce, Toro or another sub-contractor, but not Downview, were performing the concrete pumping work your client was allegedly injured." 27 On the following day, 12 May 2005 the allegation that Downview had subcontracted to Toro was repeated by Downview's solicitor in a telephone conversation with the solicitor having the carriage of the plaintiff's case, Mr Corbett. In an affidavit of 26 March 2007 Mr Corbett stated that he had no prior knowledge of Toro's involvement. However, he was aware of Mr Still's involvement and wrote to Downview's solicitors seeking information as to Mr Still's relationship with either Downview or Toro. On 17 May the solicitors responded, denying that Still was involved with Downview but further stating: "We are further advised Quentin Still may be an employee of Toro Constructions Pty Limited." 28 No doubt on the basis that many operators in the construction industry were small businesses, Mr Corbett carried out a company search of Toro to see if it revealed any connection with Mr Still. It did not. 29 Seeking further information in relation to Mr Still, Mr Corbett contacted both his own client and Mr John Martin, a proprietor of Aggforce. Mr Martin confirmed that Mr Still had rung him to obtain the pump which was used on the site on 7 March 2003, but had no further information in relation to Downview or Toro. 30 Throughout the exercise to this stage, Mr Corbett had kept counsel briefed for the plaintiff informed of his inquiries and each item of information obtained. On 15 July 2005, he conferred with counsel by telephone, counsel advising that he issue a subpoena to Leighton. 31 An inquiry of the plaintiff himself obtained an indication that Mr Still had been on the site some 12 months before the accident and that he had once owned his own pump truck, but had sold it prior to the accident. 32 On 1 August 2005 a total of seven subpoenas were issued including one to Toro. A response was received from the solicitors for Toro dated 18 August 2005, advising that Toro had no documents responding to the subpoena but volunteering the following information: "Mr Still was a subcontractor for approximately 6 weeks from the 15th March 2004 and not during the period 01/01/03 to 30/06/03." 33 The return on the subpoena issued to Leighton produced two documents of significance. One was a letter dated 13 March 2003 (written six days after the accident) from Mr Michael Raines, the director and site manager for Downview, addressed to Leighton. It was a report clarifying certain details regarding the accident and read: "On March 6, 2003, I rang Toro Construction, my pumping subcontractor informing him about the pour on Friday, 7-3-03. They have been doing all previous concrete pumping with us without any problems. They have been inducted by [Leighton]. On, March 7, the day the accident happened, I arrived from my lunchbreak, pumping had already started. Quincy [Still] from Toro Construction was there. I left them, and went to the other parts of the job. On my way home, I had a phone call notifying me about the accident. It's only then that I found out that Toro Construction used another Pumping Contractor because his pump was held up on another job. I did not know anything about this Pumping Company who employs the injured worker." 34 The other document produced by Leighton was a report from Milne & Associates Pty Ltd dated 4 July 2003 and prepared for the workers' compensation insurer for Aggforce Concrete. The report did not mention Toro, but it did provide a mobile telephone number for Mr Still. Mr Corbett stated in his affidavit that on and from 6 September 2005 he telephoned Mr Still on the mobile number on "numerous occasions", but the number was never answered and there was no message service. As a result, he did not speak to Mr Still until the first day of the hearing, in circumstances noted below. 35 On 13 September 2005 Mr Corbett wrote to the solicitors for Toro enclosing the letter from the solicitors for Downview alleging that Toro had been a subcontractor to Downview on 7 March 2005. On the following day, he wrote to the solicitors for Downview seeking confirmation of the involvement of Toro. By letter dated 16 September, Downview's solicitors confirmed their previous advice, including their client's belief that Mr Still "may be" an employee of Toro. There appears to have been no further response from the solicitors for Toro prior to the issue of the amended statement of claim joining Toro. 36 In the course of September and October 2005, Mr Corbett continued to pursue both Toro's and Downview's solicitors for further documents. Toro's solicitors did not respond, but he had a telephone conversation with the solicitor for Downview on 22 September 2005, who advised that "Downview and Toro got kicked off the job following the accident". 37 On 28 October 2005 Mr Corbett inspected further documents produced by Downview, including diary entries for 30 January 2003 and 4 February 2003, relating to the Hilton Hotel work. The former included a note: "Toro, Delivered some 5" pipes to site." 38 The entry for the latter day included the note: "Toro Const (Quintin only) set up some pipeline. Approx (8-4)." 39 On 28 October 2005, Mr Corbett briefed counsel with the further documents and the correspondence to Toro's solicitors. On 8 November 2005 he wrote to counsel enclosing Downview's defence and further stating: "It is becoming clear that Toro Constructions Pty Ltd does not wish to cooperate and therefore I consider that we have no alternative but to join them as a party." 40 On 10 November, he spoke with counsel who "advised to join Toro as it appeared Still must be an employee/servant or agent of Toro". 41 On 28 November 2005, a solicitor acting for Leighton swore an affidavit seeking leave to issue a cross-claim against Toro and Downview. In support of that application, she stated: "8. In the course of our investigations it has become apparent that there is another party which faces exposure to liability, namely Toro Constructions Pty Ltd ("Toro") which according to our investigations was the pumping subcontractor for the second defendant [Downview]. 9. According to our investigations it was under Toro's instructions that the plaintiff was acting at the time of his injury…." 42 On 2 December 2005, approximately three months prior to the expiration of the relevant limitation period, the solicitors for the plaintiff filed an amended statement of claim adding Toro, in accordance with counsel's advice, in which view Mr Corbett plainly concurred. 43 The material summarised above demonstrates two broad propositions. The first concerns the material available to Mr Corbett when he filed the amended statement of claim on 2 December 2005. He was then aware (a fact not in dispute) that Downview was the party which contracted with Leighton to undertake the concreting work. It followed that if anyone knew who was responsible for the concreting work being carried out at the time of the accident, it must have been Downview. Mr Corbett had contemporaneous records created by Downview (both Mr Raines' report and the diary notes) which unequivocally identified Toro as the subcontractor carrying out the concreting work. (It may be inferred that the same material persuaded the solicitors for Leighton to issue a cross-claim against Toro.) 44 The second broad proposition is that, given his client's ignorance of Toro and any relationship Mr Still (whom he did know) may have had with Toro, together with the lack of documentation supporting a subcontracting relationship between Downview and Toro, there was a degree of uncertainty as to any role Toro may have had. Accepting the uncertainty, Mr Corbett carried out significant investigations, including the issue of seven subpoenas and the pursuit of parties which had either not responded to the subpoenas or which had responded in ways Mr Corbett thought may have been inadequate. He also made numerous (unsuccessful) attempts to contact Mr Still, who was the individual most likely to know of any involvement of Toro. Further, he kept counsel instructed in the matter informed at all times of developments and sought his advice before taking the step of joining Toro. 45 Given the reasonable nature of the investigations carried out by Mr Corbett and given the material available to him, it is impossible to conclude that when he commenced proceedings on behalf of the plaintiff against Toro, he did not have available to him material providing a proper basis for alleging that Toro was involved. His belief that he did have such material was therefore reasonable and the criterion for a provable fact set out in s 345(2) was satisfied. It follows that the proceedings were not commenced "without reasonable prospects of success". Approach of primary judge 46 Whether her Honour found that the proceedings were inappropriately commenced is unclear. Because the application did not seek an order for costs in respect of the period prior to 29 March 2006, it appears that her Honour did not think it necessary to make a finding with respect to the justification for the commencement of the proceedings. Strictly, that is no doubt correct, although it might have assisted in a methodical disposition of the application, to consider that fact. It is convenient to deal with her Honour's assessment of the evidence following the commencement of the proceedings in three discrete periods. The first period covers the time from the commencement of the proceedings to the joinder of Toro. (a) First period: 21 April 2005-2 December 2005 47 Mr Corbett gave evidence before her Honour and was cross-examined. In the course of a lengthy judgment her Honour set out extracts from the cross-examination. That material commenced with an issue which arose on the first day of the hearing, 30 October 2006, and which had no obvious relevance to the previous year: Judgment at 4-5. In relation to the events of 2005, her Honour set out a passage in the cross-examination which sought to elicit the concession that the solicitors for Downview in May and September 2005 were merely stating that Mr Still "may" have been employed by Toro, in contrast to Mr Raines' report of 13 March 2003 which explicitly stated that Downview had subcontracted the concrete work to Toro. Mr Corbett fairly acknowledged that the solicitor's letter did not categorically adopt Mr Raines' statements, although, because the solicitors' letter related to Mr Still and Mr Raines' report to Toro, the respective documents were not addressing precisely the same issue. It is difficult to see anything of substance in the solicitors' letters undermining the basis of Mr Corbett's belief. 48 Her Honour set out the statement in the letter from the solicitors for Downview of 17 May 2005 that they were "further advised that Quentin Still may be an employee of Toro Constructions Pty Limited": Judgment at 11. She noted that Mr Corbett was conscious of the "limited value of that comment". Her Honour then set out the following cross-examination of Mr Corbett: "Q. Downview had represented through its solicitors, they did not know who Mr Still was employed by at any relevant time? A. Contrary to their letter of 13 March. Q. Are you referring to Downview's letter of 13 March 2003? A. Yes. Q. But certainly they took by May or September 2005 a position inconsistent with that earlier letter in your view? A. Yeah, it's inconsistent to the extent that they say may. Q. Yeah, that's fairly significant is it not when a critical allegation is whether or not someone was an employee or not? A. I would rather they would have repeated it. … Q. Alright, do you say - may I take it from your last answer that on the basis of what is there asserted that there was a sufficient basis upon which you as a solicitor on the record for Mr Fox could assert that Mr Still was an employee of Toro? A. It can be asserted. Q. Well I'll be more precise Mr Corbett, do you think there was a sufficient basis based on that letter at that time upon which there were provable facts, namely that Mr Still was an employee of Toro or not? A. No." 49 Her Honour commented in the following terms: "That answer is of some significance, as is the fact that information did not change in the time that followed. That was the only source of the suggestion that Mr Still may have been employed by Toro Constructions Pty Limited. Toro Constructions Pty Limited denied this. Mr Still denied this. No documents suggested the contrary. The plaintiff's former solicitor was conscious that there may be no relationship between Mr Still and Toro Constructions Pty Limited. He wrote to his client on 16 May 2005 saying: Could you please make some enquiries and find out for whom Quentin Still works. Does he work for Downview Pty Limited or Toro Constructions Pty Limited or for some other company?" 50 The passage of cross-examination set out in the judgment and the consequential comments are misleading. Working backwards, the last comment that Mr Corbett was conscious that there may be "no relationship" between Still and Toro and that he wrote to Mr Fox on 16 May 2005 asking him to make enquiries is conveyed as a continuation of the level of uncertainty, elicited in cross-examination, arising from the letter from Downview's solicitors of 17 May. Clearly that could not be correct: Mr Corbett was in a state of uncertainty prior to receiving the letter of 17 May, which was why, on 16 May, he wrote both to Downview's solicitors and to his own client seeking further information as to the relationship between Mr Still and either Downview or Toro. Further, that uncertainty arose out of the letter of 11 May from Downview, set out two pages earlier in the judgment but not directly connected with the cross-examination, which unequivocally stated that Downview had subcontracted the concrete pumping work to Toro. Mr Corbett's uncertainty arose because there was no reference in that letter to Mr Still, whom he understood to have been involved with the concrete pumping work. His enquiry related to Mr Still's relationship with Toro or Downview: his uncertainty in that respect did not directly equate to the uncertainty about the involvement of Toro. 51 Next, the last two questions and answers from the quoted cross-examination in her Honour's judgment suggest a concession that a particular letter did not provide a sufficient basis for a "provable fact" that Mr Still was an employee of Toro. Her Honour's inference that the answer was significant bore a number of possible meanings. First and obviously, the answer appears to relate to Mr Still's role, not to that of Toro. If it were to be inferred that Mr Still was the only connection with Toro, that required explanation because the enquiry arose out of the letter of 11 May, connecting Toro directly with the concrete work, but not referring to Mr Still. Secondly, there is some doubt as to whether the letter of 17 May was seen as in some way diminishing the materiality of Mr Raines' report of 13 March. Indeed, from the manner in which the cross-examination was set out, it was not entirely clear which letter was the subject of the last question. Thirdly, her Honour did not comment on whether the cross-examiner's reference to a provable fact was a reference to the statutory concept or a reference to a fact provable by admissible evidence. 52 The commentary is also objectionable for an entirely separate reason. Contrary to the impression which might be drawn from the manner in which the cross-examination had been set out, the last two questions and answers preceded the earlier questions and answers by some six pages of transcript. The subject matter of the earlier cross-examination was itself confusing and ran over a number of pages (Tcpt, 17/04/07, pp 27-31). What the cross-examiner had there sought to do was to note that, despite the clear references to Toro in the letter of 11 May, that letter had contained no reference to Mr Still and the ambivalent statement in the letter of 17 May did not, taken in isolation, provide a basis for an allegation that Mr Still was an employee of Toro. That cross-examination was not directed to Mr Raines' letter of 13 March 2003, nor any possible inconsistency between that letter and the letter of 17 May 2005. 53 Mr Corbett's concession, such as it was, was of quite limited significance. He had ample evidence to make an allegation based on the conduct of Mr Still. Mr Still was undoubtedly brought onto the site, either as an employee or as a subcontractor, by whichever entity was responsible for pouring the concrete. Mr Still may have been an employee or subcontractor of Downview or, as Downview clearly suggested, the responsible party may have been Toro. If the latter were correct, it followed that Mr Still was either an employee or subcontractor of Toro. Downview had been unequivocal in its assertion that the concrete was being poured by Toro and that it, Downview, had no direct association with Mr Still. Downview was, understandably, equivocal as to a possible relationship between Mr Still and Toro. However, its equivocation in that regard was not the basis on which Mr Corbett thought it appropriate to join Toro: he joined Toro on the basis of Downview's unequivocal rejection of its own responsibility and despite its equivocation as to any relationship between Mr Still and Toro. 54 The imprecision of the "significance" attached to the cross-examination by her Honour and the confusing impression created by taking two extracts from the cross-examination, separated by a significant gap, and placing them in the reverse order to that in which they occurred, require that the inference be disregarded. Properly understood, there was little significance to be drawn from the answer, adverse to the interests of the plaintiff's solicitors; there is no reason to think that the trial judge had some unexpressed basis for drawing such an inference, flowing from her position as the court which heard the evidence. 55 A number of other passages in her Honour's reasons give rise to concern. First, by 2 December 2005, Mr Corbett had in his possession Mr Raines' report of 13 March 2003, which provided substantial material upon which to form a belief as to the role of Toro in the construction work, it being a categorical statement by the director and site manager of Downview, which was the party responsible for that work. Her Honour considered that letter early in her consideration of the material available to the solicitors (Judgment at 9-10), but appears to have given it little weight because its existence was not known to Mr Corbett until 26 August 2005 "by which time company searches and other enquires had cast some significant doubts upon the existence of a relationship between Mr Still and Toro …". 56 That assessment was never revisited in the light of those events. It should have been. For example, the company search of Toro, which failed to reveal that Mr Still was a director or shareholder of Toro, was either neutral or, at best, mildly inconsistent with Mr Raines' statement that Downview had subcontracted to Toro. Ironically, the only significant piece of further information which became available to Mr Corbett prior to 26 August was Toro's response to the subpoena issued to that company. Toro disclaimed possession of any relevant documents and knowledge of "any of the entities or individuals referred to other than Quentin Still". It identified its relationship with Mr Still as a subcontractor for a period of some six weeks, although a year after the date of the accident. 57 There is no doubt that Toro's response was inconsistent with other material available to Mr Corbett. However, that does not mean that the contemporaneous statement of the director of Downview (Mr Raines) that he had contracted with Toro was to be dismissed as having no weight. Mr Corbett had conflicting statements from persons in authority in the two parties possibly involved, namely Downview and Toro. In that circumstance it would have been entirely reasonable to join both parties in the proceedings: assuming the plaintiff would lose against one, he would have had reasonable prospects of obtaining a Bullock order in relation to the costs of the successful party. 58 Against this background, her Honour's assessment that Mr Corbett was acting without a proper basis because he "refused to hear any explanation" or accept the denial of Toro (Judgment at 14) by September 2005, had little to support it. Somewhat out of chronological context, in commenting on the affairs in September-November 2005, her Honour extracted a passage from Mr Corbett's affidavit, sworn 26 March 2007, dealing with a specific response to Toro's solicitors in April 2006, shortly prior to the expiration of a Calderbank offer (Judgment at 15) which read in full: "I confirmed her client was to remain in the proceedings for the time being. I was still concerned at the polar positions taken by Downview and Toro. I formed the view that Downview must know to whom it contracted the very substantial works. If there was a fraud then it was a matter for the Court to decide, not for Counsel nor myself. Further, Toro had a great deal of self-interest in putting up this version of Still." 59 It will be necessary to return to the assessment of Mr Still, but in quoting that passage and apparently relating it to the situation some nine months earlier, her Honour introduced the extract with the remark: "Unfortunately whatever was said, unless it could be construed or misconstrued to support that which the plaintiff's former solicitor wished to believe, was greeted with suspicion and rejected …." 60 Following the extract she remarked at 16: "That prism of belief distorted the plaintiff's former solicitor's response to each and every attempt, and there were many attempts, to inform him that [Toro] had nothing to do with the plaintiff's accident." 61 Not only was this assessment chronologically inapt, but it was coloured by retrospective reasoning. The fact (as later established) that Toro had nothing to do with the accident cannot demonstrate the unreasonableness of Mr Corbett's beliefs in that regard when confronted with conflicting statements. Immediately after reference to the filing of the amended statement of claim in December 2005, her Honour said (Judgment at 17): "By this point, the plaintiff's former solicitor's disbelief of anything said to him by the legal representatives for the other parties was so entrenched that it coloured everything he was told." 62 This appears to be a view her Honour took of his conduct generally: at the outset of her discussion of the role of Toro (Judgment at 3) she said that Mr Corbett "clung obdurately to a mention of that name in correspondence by Downview … long past the point where any such belief unquestionably fell outside the range of views which could reasonably be entertained". Her Honour continued: "In so doing, the plaintiff's former solicitor consistently and persistently rejected [Downview's] repeated explanations for the references to the name Toro …." 63 This reasoning is unsupportable. By 2 December 2005 the solicitors for Downview had said nothing which "explained" the references to the name Toro in their client's documents as demonstrable error. Further, Mr Corbett's state of mind was characterised as refusal to acknowledge an obvious fact, whereas the contemporary circumstances were that the true facts were unknown to him and to his client, but contemporary documentation of those who should have known pointed to the involvement of Toro. No doubt in advising a client, a practitioner may seek to make an assessment as to the likely resolution of inconsistent evidence if a matter goes to trial. However, except in extreme cases, it is no part of the practitioner's obligation, in deciding what may properly be alleged, to resolve such inconsistencies in his or her own mind. In the circumstances, it was inappropriate to described Mr Corbett as "obdurate" up until 2 December 2005. The next question was whether he was properly described in such pejorative language during the period from 2 December 2005 until 26 March 2006. (b) Second period: 2 December 2005-26 March 2006 64 There were three relevant events which occurred in the second period. First, on 10 February 2006 Leighton issued a cross-claim against Toro. Secondly, on 5 March 2006 the limitation period expired. Thirdly, on 29 March 2006 the solicitors for Toro wrote to the solicitors for the plaintiff on a "without prejudice save as to costs" basis. The letter enclosed a statement signed by the sole director of Toro (Mr Tony Barillaro) to which reference will be made shortly. However, the letter commenced by noting that the allegation against Toro was grounded on the allegation that Mr Still was an employee of Toro. The letter continued: "We understand the allegation of employment by Toro is based on induction forms which were held by [Leighton]. Still apparently completed his induction form on 3 February 2003 and stated that he was employed by Toro. The employer contact was nominated as Jason Cook …. Similarly, Cook and Chris Gelle … completed induction record forms stated that they were employed by Toro." 65 When precisely Mr Corbett obtained the actual induction forms is unclear, but they appear not to have been produced by any party in response to a subpoena. They appear to have been obtained by Mr Corbett in late March or early April 2006: Tcpt, 17/04/007, p 45. The forms provided further contemporaneous documentary evidence that Mr Still (and the other three men) had been inducted at the Hilton Hotel site on 3 February 2003 and had each identified himself as employed by "Toro Constructions", giving contact details which were in fact the address and telephone number of one of their number, Mr Cook. 66 All of this material tended to strengthen the case against Toro; the denial of Mr Barillaro no doubt tended to weaken it, though Mr Corbett might have been entitled, as he asserted, to treat the statement with some suspicion. It contained the following inconsistent statements: "4. Toro has never provided concrete pumping services to any company or person. … 7. I know Jason Cook …, as I have occasionally sub-contracted his company High Line Concrete Pumping Pty Limited to perform concrete pumping services." 67 In addition, Mr Barillaro referred to Mr Still in the following terms: "8. I know Quentin Still … as I have in the past utilised his company to provide labour on sites. Still would provide his own services and as many labourers as needed at the time. The last time before the plaintiff's accident that I subcontracted his company was 1 March 2003 at Leichhardt. I have utilised Still's Services since that date in 2004 at a site in Swaffham Road, Minto." 68 The reference to a subcontract on 1 March 2003 appeared to be inconsistent with the denial in the letter from Toro's solicitors of 18 August 2005, set out at [32] above. A further reason for not accepting Mr Barillaro's statement at face value was that, in conceding a relationship with Mr Still, he provided no explanation as to why documents which might have existed to demonstrate the accuracy of the statement had not been produced and why no documents had been produced in response to the earlier subpoena. Another letter from Toro's solicitors dated 29 March 2006, further stated: "The writer has spoken with Still who confirmed that at the date of the plaintiff's accident, he and Cook were working together on the site in their own right. He confirmed that Toro was not the subcontractor but that Toro's name had been utilised on the induction form. We are hoping to [obtain] a signed statement to that effect shortly." 69 At that point, the material supplied by Toro was inconclusive, was open to reasonable doubt as to its accuracy and was incomplete. There was no reason to treat the continuation of the proceedings against Toro at that time as unreasonable. (c) Third period: 30 March 2006-30 October 2006 70 The final period ran through to the commencement of the trial. Material obtained in that period provided little that was capable of resolving the issue one way or the other, although the plaintiff's solicitors continued to pursue investigations into the possible involvement of Toro on the site on the day of the accident. 71 The first event of significance was the provision to Mr Corbett on 4 April 2006 of a statement signed by Mr Still and witnessed by a licensed private investigator. Mr Corbett would have been entitled to doubt that the statement reflected Mr Still's words: it clearly did not. Amongst the information provided in the statement was the claim that he was "a self employed Concreter by occupation" and had been so employed "for about ten years". There was no suggestion that he provided services through a company, as suggested by Mr Barillaro. 72 Mr Still further stated: "This job was sub contracted by me [sic] and Jason Cook to Downview Pty Limited, the Director of which is known to me as Michael Raines who had contacted me to ask me if I wanted to do the job." 73 He further stated: "At the time of the accident a company known to me as Toro Constructions had no involvement in any of the work at the Hilton Hotel and I believe that their name came up as Jason had used Toro Constructions concrete pump log book to record whatever work is being done." 74 There was nothing in the statement which explained why Mr Raines was apparently of the view that he had been contracting with Toro; nor was there any explanation as to how the induction forms came to be signed, not only by Mr Cook, but also by Mr Still himself, identifying Toro as their employer. The statement was clearly unsatisfactory in these respects. 75 On 12 April 2006 the plaintiff informed his solicitor that he had never heard of Cook, Gelle, Highline or Raines and believed that "most of Still's statement was 'bullshit'". (That may have been partly in response to Mr Still's remark that both Mr Fox and Mr Raines, who appears not to have been on site at the time of the accident, were drunk.) 76 On 17 May 2006 Toro filed a defence, verified on oath by Mr Barillaro, denying its involvement with the Hilton Hotel site and denying that it had employed Mr Still or permitted him to assist in the carrying out of works as its agent. Depending on what was meant by saying that the company was "not on site at any time", this denial may have been sufficient to constitute a denial that it had hired the services of Mr Still or his company to do work on the site. 77 On 23 May 2006 Leighton discontinued its cross-claim against Toro. 78 On 16 June 2006 Mr Corbett received a copy of an affidavit prepared by the then solicitor for Downview (Mr Simons) of the same date. The purpose of the affidavit was to resist the fixing of a hearing date on the basis that there was real uncertainty as to the involvement of Toro. Mr Simons also stated that he had attempted to contact Mr Still "on numerous occasions" but his telephone calls had not been answered. He concluded that it was "imperative that [Downview] clarify precisely which entity was carrying out the works when the plaintiff's incident occurred and to ensure that the correct entity is sued". He said that he had been instructed to retain an investigator to seek to procure a statement from Mr Still "clarifying the outstanding issues and discrepancies in the statements provided by the solicitor for [Toro]". 79 No further evidence was forthcoming in this period, but the plaintiff's solicitors took a number of steps themselves in an attempt to clarify outstanding issues. On 19 June 2006 they obtained a business names search indicating that there was a business known as "High Line Concreting" which was registered in the relevant period, but which did not reveal any connection with Mr Cook or any other person or entity involved in the proceeding. This gave further cause to doubt the accuracy of Mr Barillaro's statement. 80 On 21 June 2006 the plaintiff's solicitors issued subpoenas to Messrs Cook and Still. Letters were sent to Mr Still on 10 and 26 July and 31 August 2006. 81 They also maintained contact with counsel throughout this period. On 28 April they advised counsel of the discontinuance by Leighton of its cross-claim against Toro and were advised to maintain Mr Fox's claim "at this stage". On 2 June 2006 further advice was sought in relation to the involvement of Toro, Still and Cook and, in accordance with counsel's advice received on 15 June, subpoenas were duly issued. Mr Simons' affidavit was supplied to counsel on 19 June, together with further correspondence. On 23 June counsel advised that Toro should not be released from the proceedings. After further advice was sought on 23 August, counsel advised that Mr Still should be subpoenaed to give evidence at the hearing. 82 Mr Corbett gave evidence that at all relevant stages during 2006 he treated Mr Still as an unreliable person. That view was not shown to be unreasonable. When Mr Still attended on the first day of the hearing, he was interposed to ensure that his evidence was obtained, in case he failed to appear on the following day. At end of the hearing on the first day, her Honour noted that Mr Still "seems to be pretty adamant that Toro had nothing whatsoever to do with him": Tcpt, 30/10/06, p 111. She also noted that "no-one even suggested to Mr Still that he was employed by Toro". That was principally a matter for counsel. However, Mr Corbett was cross-examined as to whether he had spoken to Mr Still at the commencement of the hearing. He agreed that he had spoken to Mr Still, but could not recall at which stage of the proceedings on that day and could not recall the detail of the discussion. The cross-examination proceeded (Tcpt, 18/04/07, p 170): "Q. Two of the critical issues so far as Toro was concerned were who Mr Still was employed by? A. Yes. Q. The other was whether Toro was on the site? A. Yes. Q. And they are matters which as a matter of course you probably would have asked Mr Still? A. I might have asked him or Mr Tonner [of counsel] but my recollection is that my questioning was directed towards the accident. Q. So far as you understood Mr Tonner spoke to him in any event independently of you? A. I think he did, yes." 83 Of that conversation, her Honour said that Mr Corbett "manifested his lack of focus upon the central issue, relevantly the relationship (if any) between Mr Still and [Toro]": Judgment at 4. That was a curious inference to draw. Understandably, given the prospect of calling a witness who had not been proofed and who had been uncooperative to give evidence as to the accident, on the first day of the trial, Mr Corbett was "focused" primarily upon what evidence Mr Still would have given as to the accident. He agreed that there were critical issues so far as Toro was concerned, but noted that both he and Mr Tonner had separately spoken with Mr Still. Mr Corbett's real concern in relation to the role of Toro was better demonstrated by steps taken prior to the trial, which have been outlined above. If on the first day of the trial he failed to demonstrate proper "focus" on the issue, given the involvement of counsel at that stage, his conduct could not have resulted in any costs order, in circumstances where the proceedings were discontinued on the following morning. In any event no order appears to have been sought in relation to any such confined period. Conclusions 84 Although her Honour noted authority to the effect that claims against solicitors should not be allowed to turn upon contestable facts and should be rejected unless a clear case has been made out, her Honour appears not to have applied that principle. A finding against the plaintiff's solicitors required 37 pages of closely typed explanation and reasoning. The fact that the conclusion could only be reached after extensive examination of affidavit evidence and cross-examination of a solicitor, should have provided cause for doubt about the propriety of an order. 85 At a time from which her Honour thought that the claim against Toro was untenable, solicitors for Leighton had filed and were then maintaining a cross-claim. Three months later, the solicitors for Downview were seeking further time to investigate the role of Toro and whether it should make a cross-claim against Toro. When Downview decided to abandon that course is not known. Finally, it was clear that Mr Corbett had counsel's advice at all stages of the proceedings and acted upon it. (The other defendant, Warren Stewart Pty Ltd, was either unrepresented or not taking an active part in its defence.) It therefore followed that each of the legal representatives involved in the preparation of the claim (other than the solicitors for Toro, who were protecting their client's interests) was expressing doubt and uncertainty during the period in which her Honour found that the plaintiff's solicitors were acting without reasonable prospects of success. This circumstance alone should have given cause for careful consideration, before making the orders sought. It appears, however, to have played no part in her Honour's reasoning. 86 Joining a party to litigation in circumstances where there is a clear basis to recover damages, but the identity of those involved in relevant events is uncertain, is a matter for anxious consideration. The fact that a solicitor, with the advice of counsel, gives such anxious consideration (as was clearly done in the present case) is not a reason for mulcting the solicitors in costs because, at the end of the day, the decision to join the additional party is seen to be wrong. 87 Although her Honour stated, no doubt correctly, that a solicitor responsible for litigation cannot hide behind the coat tails of counsel, the fact that he obtained counsel's advice; the fact that he and counsel were of the same opinion at all critical times and the fact that no order is sought against counsel are all factors which militate against the conclusion that the solicitor had alleged a fact without "a proper basis". 88 In the present case, there is no suggestion in her Honour's judgment that any adverse inference was drawn as to Mr Corbett's credibility apart from the assessment that his subjective beliefs were untenable. Assessing the material referred to above, including Mr Corbett's cross-examination, the Court should have concluded that Toro had failed to establish that the plaintiff's solicitors, on the material available to them, did not reasonably believe that they had a proper basis for alleging Toro's involvement in the concreting job which led to the accident. The costs order made against them below should be set aside, with consequential results for the costs of Toro's application and costs in this Court. 89 I would propose the following orders:

FOWLER, CORBETT and JESSOP trading as HAYDON FOWLER CORBETT JESSOP v TORO CONSTRUCTIONS PTY LTD

At a glance

Court

Decision date

Before

Source

Judgment (36 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (2)

Cited By (13)