Helou v Nguyen; Re Application of LY Lawyers

Judgment 1Before the Court is a motion filed by the former solicitor for the defendants applying for a discharge, or variation, of an order I made in the principal proceedings between the plaintiffs and the defendants (on 22 November 2013) in terms to the following effect: "ORDER, subject to further Order, that [the former solicitor, the present applicant] return to [the defendants' counsel] the papers comprising his Brief to Appear at the final hearing of these proceedings in October 2013, and that [he] do so on or before 26 November 2013." 2That Order was accompanied by a reservation to the former solicitor of liberty to apply (on or before 26 November 2013) for variation or discharge of the order for delivery up of the brief to counsel. 3The former solicitor's application was not made in a timely manner; but his delay has been explained as a consequence of his having been given only belated notice of the Order now under challenge. I do not hold any delay against him. 4The applicant claims, as the former solicitor of the Defendants, an entitlement to a possessory lien over counsel's brief as protection for a claimed entitlement to $40,000 fees (reduced from $44,000) said to be owed to him by the defendants. 5The Order under challenge was made, on 22 November 2013, in the context of a continuation on that date of a freezing order made against the first defendant on 5 November 2013 which was varied on each of 7, 18 and 22 November 2013. 6No freezing order has ever been made in these proceedings against the second defendant, the wife of the first defendant. 7The freezing order was made against the first defendant in the following circumstances: (a)In the principal proceedings the plaintiffs have sued the defendants, at law and in equity, to recover a large sum of money alleged by the plaintiffs to have been stolen from them by the first defendant and used by him in the acquisition or development of two parcels of land, one at Bankstown, the other at Dulwich Hill. (b)The final hearing of the principal proceedings was conducted before me over eight days between 14-23 October 2013, having overrun the parties' original estimate of its length. (c)At the conclusion of the evidence on 23 October 2013 directions were given by me, with the consent of both sides of the record, for the filing and service of written submissions, reserving to the parties an opportunity to request the Court to make time available, if time can conveniently be had, for them to supplement their written submissions orally. (d)Before the timetable for written submissions had run its course, and without notice to either the plaintiffs or the Court, the defendants terminated the retainer of their lawyers (in particular, the retainer of the applicant and, consequentially, the retainer of counsel retained by the applicant) and declined, by omission at least, to explain to the plaintiffs what the defendants had done with the proceeds of an unexpected sale of the Dulwich Hill land. (e)Not having been forewarned of a change in the defendants' legal representation or of an impending sale of the Dulwich Hill land, the plaintiffs sought, and obtained, a freezing order against the first defendant, at first ex parte and subsequently without opposition from the defendants. (f)The defendants acquiesced in a continuation of the freezing order, and filed affidavits responsive to an associated order for discovery of assets, asking only that the freezing order be varied so as to allow an exception for the defendants' payment of counsel's fees, and reasonable remuneration for ongoing work of counsel and the new solicitors through whom they continued to retain him. (g)The freezing order, as initially granted, was varied without opposition on the part of the plaintiffs so as to facilitate a timely completion by or on behalf of the defendants of the process of final submissions contemplated in the principal proceedings. (h)The order presently under challenge was made in light of: (i) an insistence by counsel for the defendants that he could not meet the Court's timetable for the preparation of written submissions in the principal proceedings if not returned papers, comprising his earlier Brief to Appear, he had returned to the applicant; and (ii) opposition by the plaintiffs to any relaxation of the freezing order beyond that (in favour of counsel and the defendants' new solicitors) apparently necessary to get to the end of the final submissions process. (i)Unless and until the Court has the benefit of final submissions from the defendants' counsel, or the defendants have been given a transparently fair opportunity to make those submissions, the Court cannot exclude the possibility (advanced by the plaintiffs) that an order permitting the payment of the fees claimed by the applicant from property presently held by the first defendant would be a utilisation of property for which the defendants may be found, ultimately, in the principal proceedings, to be accountable to the plaintiffs. 8In support of his motion for a discharge or variation of the order under challenge, the applicant has drawn to my attention a number of authorities (including commentary in GE Dal Pont, Law of Costs (Lexis Nexis Butterworths, Australia, 2nd ed, 2009) paragraphs [26.19]-[26.21]) bearing upon the operation of a solicitor's lien, as between solicitor and client, with different approaches depending on whether a solicitor's retainer is terminated by the solicitor or the client. 9My attention has also been drawn to s 728(1)(b) of the Legal Profession Act 2004 NSW (formerly s 209C(1)(b) of the Legal Profession Act 1987 NSW) and rules 8 and 29 of the Revised Professional Conduct and Practice Rules 1995 NSW, colloquially known as "The Solicitors' Rules". 10Those legislative provisions speak to a case in which the rights and obligations under consideration are confined to those affecting a solicitor and client inter se, without regard to the interests of third parties or the course of proceedings in which both the solicitor and the client have actively participated. 11The applicant does not challenge the jurisdiction of the Court to make the order under challenge. He accepts that the Court has a discretion to make such an order; but submits that, upon an application of principles summarised in Re Weedman (Federal Court of Australia, Drummond J, 17 December 1996) BC 9606375 at pp 6-8; Bechara v Atie [2005] NSWCA 268 at [64]-[68] and [69] and PM Sulcs & Associates v Oliveri [2009] NSWSC 456 at [197], the Court should discharge or vary the order so as to protect his entitlement to a lien over his former clients' papers. He invites the Court either to discharge the order under challenge, or to vary it, so as to condition his obligation to deliver up counsel's brief on provision of security for the fees he claims. 12The principles to which the applicant appeals are said to turn, ultimately, upon a consideration of the interests of justice in each case, with particular reference to the nature of the case; the stage which litigation has reached; the conduct of the solicitor and client respectively; and the balance of hardship which might result from an order for the delivery up of papers. 13Into that balance must be factored, on the one hand, the importance of not depriving a client litigant of material relevant to the conduct of the client's case and, on the other hand, the importance of due regard being given to the interests of the Court's own officers, solicitors, who should not be left without payment for what is justly due to them. A material factor, in striking this balance, may be whether it is the client who discharged the solicitor or vice versa, to the extent that that can be discerned. 14None of the law cited by the applicant solicitor really deals with the current situation. Three factors are of particular importance here. 15First, in these proceedings the Court has to take into account, not only the rights and obligations of the applicant solicitor and his former clients inter se, but also the third party interests of the clients' adversaries in the principal proceedings. 16Secondly, at the time directions were given for the filing and service of written submission on both sides of the record, each of the defendants and their then lawyers acquiesced in the timetable for making submissions, expressly put on notice by the Court of the limited availability of time and resources to enable that to be done in a timely way. 17Thirdly, by their participation in that way in the principal proceedings, each of the defendants and their lawyers came under an express statutory obligation, for which s 56 of the Civil Procedure Act 2005 NSW provides, to facilitate the just, quick and cheap resolution of the real issues in the principal proceedings. 18Although, as a matter of form, I am prepared to proceed on an assumption that the applicant's retainer was terminated by the defendants, rather than by the applicant, the fact is that the retainer was terminated in the context of an ongoing dispute about the payment of fees referable to complex litigation that had overrun the time estimated by the parties as needed for its determination. 19I am required to deal with the applicant's motion in circumstances that do not permit a full inquiry into the rights or wrongs of the breakdown of the relationship between the applicant solicitor and his former clients, the defendants. 20Time does not allow it. To pursue it, at this stage of the principal proceedings, would be to pursue a collateral inquiry that could divert, if not derail, an orderly determination of the principal proceedings. To run that gauntlet over an amount (namely, $40,000 or thereabouts) that is substantially less than the amount at issue in the principal proceedings would be to allow the tail to wag the dog. 21The applicant's solicitor and the defendants submitted to directions for the preparation of final submissions without disclosure of a dispute, simmering though it may have been between them, that could, if allowed, impede a fair, orderly determination of the principal proceedings. 22I can well understand that neither the Court nor the plaintiffs were appraised of such a dispute between the defendants and their then solicitor. However, the fact remains, that important case management decisions were made, with the consent of both the defendants and the applicant. 23Weighing in the balance the interests of justice (as they affect the applicant and the defendants inter se, the competing interests of the plaintiffs and the public interest relating to the orderly conduct of civil litigation) I make the following Orders: (1)1. ORDER (supplementary to Order 6 made on 22 November 2013) that, upon finalisation of submissions in the principal proceedings, counsel for the defendants return to the Applicant Solicitor the papers delivered to him by the Applicant in compliance with Order 6, to the intent that those papers remain subject to such lien as the Applicant may have over them. (2)ORDER that the Notice of Motion of the Defendants' former solicitor (for discharge or variation of an order for return of counsel's brief to counsel to facilitate the preparation of final submissions on behalf of the defendants in the principal proceedings) otherwise be dismissed. (3)ORDER that, as between the Applicant on the Notice of Motion (the Defendants' former solicitor) and the Defendants, each party pay his or her own costs of the Motion. (4)ORDER that the Defendants pay the Plaintiffs' costs of the Motion. (5)ORDER that the time for delivery up of counsel's brief to counsel (pursuant to Order 6 made on 22 November 2013) be extended to 3 December 2013. (6)ORDER that the time for service of any written submissions to be made in the principal proceedings by the Defendants (that is, on or before 10 December 2013) be confirmed. (7)ORDER that the listing of the principal proceedings, for hearing or directions as the nature of the case may allow, at 9.30am on 19 December 2013 be confirmed.