Jowett v Kelly

LEGISLATION CITED : (CTH) Family Law Act 1975, ss 79, 79A (NSW) Family Provision Act 1982

Burgoine v Taylor (1878) 9 Ch D 1 Chouman v Margules (1993) 17 MVR 144 Clifton & Stuart (1991) FLC 92-194 Ernst v Mowbray [2004] NSWSC 1140 CASES CITED : Gorman v Gorman; Estate late Jeanette Mary Gorman [2003] NSWSC 647 Liprini v Liprini [2008] NSWSC 423 R v Birks (1990) 19 NSWLR 677 Taylor v Taylor (1978) 143 CLR 1 Wentworth v Wentworth (NSWSC, 4 September 1991, unreported, Young J) Wiblen v Ferros (1998) 44 NSWLR 518

Kenneth Rowland Jowett (plaintiff) PARTIES : Leanne Emeline Kelly (first defendant) Terrence John McLennan (second defendant)

COUNSEL : Mr M K Meek w Ms Christofis (plaintiff) Mr T J Morahan (defendants)

SOLICITORS : Russell McLelland Brown (plaintiff) Bryden's Law Office (defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION DUTY LIST

4376/07 Kenneth Rowland Jowett v Leanne Emeline Kelly & Ors JUDGMENT (ex tempore) 1 HIS HONOUR: On 29 May 2008, McLaughlin AsJ gave judgment in these proceedings, making orders - under (NSW) Family Provision Act 1982 - that the plaintiff Kenneth Rowland Jowett receive from the estate of the deceased a legacy in the sum of $100,000, and that each of the defendants, who are the executors and beneficiaries, restore to the estate a sum of $81,470. An order was also made that the defendants personally pay the costs of Mr Jowett on an indemnity basis and not be entitled to recoup them from the estate; and that a solicitor, who had until then acted for the defendants, pay certain of Mr Jowett's costs, also on an indemnity basis. Liberty was reserved to apply for a designating order in respect of notional estate, it appearing that the estate had been wholly distributed to the executors beneficially. By Notice of Motion filed on 13 August 2008, the defendants claim an order staying the operation of those orders until further order, in aid of an appeal which the defendants have since filed in the Court of Appeal, a holding appeal having been filed within time.

2 In his Honour's judgment, McLaughlin AsJ made observations to the effect that, although the defendants' solicitor was present, the defendants personally chose not to be present; that despite numerous directions and appearances before the Court when the defendants had been represented by a lawyer, they had never filed an affidavit of the nature required by Schedule J, nor served any other evidence in accordance with undertakings proffered by their then solicitor; that the defendants had deliberately and consistently flouted the orders and directions of the Court, were contemptuous of the Court and of its procedures and deliberately trifling with it; and that it was likely that Mr Jowett would need to resort to procedures by way of contempt, with the ultimate sanctions of attachment and imprisonment being invoked against the defendants, to enforce the judgment. Those observations indicate the view he took - understandably in the circumstances as they then appeared - of the defendants' apparent attitude. However, the evidence now before me establishes that although the defendants did instruct the firm of solicitors who then acted for them, they were not kept apprised by the solicitor with the conduct of the matter of its progress, and were quite unaware of their predicament.

3 The second defendant Terrence John McLennan deposes that he saw the solicitor in question on at least two occasions: first, to give him instructions to act and secondly, to provide instructions in connection with a Schedule J affidavit, although he never signed any such affidavit. He said he was never told of, and was unaware of, any orders made by the Court. He assumed the solicitor was looking after his case and that everything was proceeding normally. In about April 2008 - when, as it transpires, there was to be a court ordered mediation - he received a phone call from the solicitor asking him to attend a meeting in the city (which, it would seem, was that mediation). Mr McLennan said that he could not do so, as the meeting was to take place within 20 minutes of that phone call, and he lived well out of the city. The solicitor proffered the excuse that he had himself only received late notice of the meeting. On 29 May 2008 - the date of the hearing - Mr McLennan was contacted by the solicitor - who had previously told him that there was no need to attend, as he was going to obtain an adjournment - and informed of the outcome. Mr McLennan says that he was never advised of any previous court order, nor of the undertakings the solicitor had previously proffered to file affidavits within defined times.

4 The first defendant Leanne Emeline Kelly says that she assumed when instructing the solicitors that everything was under control; that at no stage was she ever informed that the matter was not proceeding satisfactorily; that the solicitor never told her anything to the contrary; that she now understands that several directions were made in respect of the filing of evidence and that various undertakings given but, so far as she can recall, was never informed of those matters; and that she did receive a phone call from the solicitor about making a statement a couple of weeks prior to 29 May, following which she provided a statement but never signed one. Ms Kelly says that she was not advised to attend the hearing, and was told that the solicitor would be seeking to adjourn it - in order to obtain further time to finalise the statements; she said that she was never advised of the possibility or consequences of an adjournment application being refused. On the evening of 29 May, she received a phone call from the solicitor, informing her that judgment had been given.

5 That solicitor is no longer practising. Other solicitors in the firm of which he was an employee have given evidence on this application by affidavit which substantially corroborates that the solicitor's conduct of the matter was, to use the word that appears in one of the intra-firm communications, "woeful".

6 On an application for a stay such as the present the critical questions are first, whether the appeal has prospects of success, and secondly, the balance of convenience and hardship. So far as prospects of success are concerned, this is not an appeal in which the decision of the Associate Judge would likely be criticised on the basis of the material then before his Honour. Mr Meek, for Mr Jowett, has argued with force that the defendants were represented by their duly appointed solicitor, who had authority to conduct the matter on their behalf and who proceeded to do so; and that Mr Jowett was, in effect, entitled to assume that the matter was being properly and regularly conducted.

7 All that is correct. But there are circumstances in which an appellate court can intervene, notwithstanding the absence of error in the reasons or reasoning of the trial judge on the material available at trial. One obvious illustration of this is when evidence not adduced at first instance is permitted to be adduced in the Court of Appeal, and the circumstances in which that may occur, although limited, are not restricted only to those in which the evidence was discovered after the trial. In essence, in such circumstances, what occurs when an appeal succeeds is that the Court of Appeal finds that it can be seen, in retrospect, on the material now available, that the judgment at first instance was wrong.

8 The incompetence of legal representation has been recognised as an arguable ground of appeal. Mr Meek properly referred the Court to the judgment of the Court of Appeal in the R v Birks (1990) 19 NSWLR 677, in which Gleeson CJ, with the concurrence of McInerney J, summarised the applicable principles as follows (at 685): 1. A Court of Criminal Appeal has a power and a duty to intervene in the case of a miscarriage of justice, but what amounts to a miscarriage of justice is something that has to be considered in the light of the way in which the system of criminal justice operates. 2. As a general rule an accused person is bound by the way the trial is conducted by counsel, regardless of whether that was in accordance with the wishes of the client, and it is not a ground for setting aside a conviction that decisions made by counsel were made without, or contrary to, instructions, or involve errors of judgment or even negligence. 3. However, there may arise cases where something has occurred in the running of a trial, perhaps as a result of the 'flagrant incompetence' of counsel, or perhaps from some other cause, which will be recognised as involving, or causing, a miscarriage of justice. It is impossible, and undesirable to do so, to attempt to define such cases with precision. When they arise they will attract appellate intervention.

9 In Chouman v Margules (1993) 17 MVR 144, Kirby P said (at 149): In the Court of Criminal Appeal, it has been recognised that inadvertence on the part of an advocate, or plain incompetence in the presentation of a criminal trial, can in certain circumstances require the intervention of the court in order to avoid the risk of a miscarriage of justice. See eg R v McCall (1920) 20 SR (NSW) 467 at 472 ; 37 WN (NSW) 189 at 192 (FC); R v Birks (1990) 19 NSWLR 677 at 684 (CCA); Re Knowles [1984] VR 751 (FC) and R v Ensor [1989] 1 WLR 497 (CA). This jurisdiction is, however, exercised most cautiously. As Gleeson CJ pointed out in Birks (above) at 68 it is exercised with a full appreciation of the way in which ``the system of criminal justice operates''. The mere fact that a mistake or unwise decision in the conduct of a trial is made on behalf of a client by an advocate will not, without more, justify the setting aside of a conviction to avoid a miscarriage of justice. If this is so in a criminal trial where liberty and reputation are at stake, it is clearly so in civil trials. See eg Burchett v Kane [1980] 2 NSWLR 266 at 268 (CA); Seaton v Burnand [1900] AC 135 at 141 (HL); Skrzypkowski v Silvan Investments Ltd [1963] 1 All ER 886 ; [1963] 1 WLR 525 (CA). Although an appellate court stands as a guardian against serious injustices occasioned by oversight or incompetent representation, its stewardship is exercised within a legal system which depends upon trained advocates who are not admitted to practise law unless and until their basic qualifications and training are verified.

10 Although, admittedly in the slightly different context of an application to set aside orders made under the (CTH) Family Law Act 1975, s 79, in pursuance of the jurisdiction conferred by s 79A of that Act upon grounds of miscarriage of justice, the Full Family Court has recognised that where professional incompetence is such as to be the equivalent of no representation at all, or perverse (for example, if the representative was in league with the other side), that might amount to a miscarriage of justice such as to justify intervention [see Clifton & Stuart (1991) FLC ¶92-194, 78,335, 78,338].

11 While it is true that, as Birks indicates, the principles evolved in the context of criminal practice, the observations of Kirby P in Chouman v Margules suggest that the principles are also capable of application in the context of civil litigation although a still more robust approach may be expected in that field.

12 In my view, it is at least seriously arguable that they would be capable of application in a case such as the present where, in effect, the defendants trusted their solicitor to act competently, and at least on the evidence before me, were not on any notice to the contrary, nor had any occasion to be suspicious, yet were left practically unrepresented, or perversely represented. The law encourages clients to be trustful, not suspicious, of their lawyers. Bearing in mind the panoply of fiduciary obligations which the law attaches to the solicitor/client relationship, it is hardly realistic to expect a client to be suspicious, or vigilant in the supervision, of his or her solicitor, at least in the absence of some special reason. In this case, on the material presently available, all the defendants have done wrong was to trust the solicitor they instructed to act competently. Prima facie, they were seriously disappointed in that trust. 13 Mr Meek made powerful submissions to the effect that the defendants did not offer to do anything to put right the situation. While there is some force in that proposition, ultimately the question also has to be asked, why should the defendants have to do anything to make good a situation not of their making? While on the one hand a lawyer would rightly say the fault was in the defendants' camp; on the other hand, viewed objectively on the evidence as it presently stands, the fault lies fairly and squarely with the solicitor acting for the defendants and not with the defendants personally. 14 I do not accept that leaving the defendants to a remedy against their solicitor meets the justice of the situation. In Taylor v Taylor (1978) 143 CLR 1, 9, the High Court considered the inherent jurisdiction of a superior court of record to set aside orders obtained in circumstances where, although a party was on notice of proceedings, by accident or mistake the party did not attend and was not present during their conduct. In the course of discussing the cases, the Court referred with evident approval to the judgment of the Court of Appeal in Burgoine v Taylor (1878) 9 Ch D 1, in which, at first instance, Fry J had declined an application to set aside a judgment given in the absence of the defendant on the basis that the defendant's remedy lay against his solicitors - who, in his Honour's view, had been guilty of gross negligence. The Court of Appeal peremptorily allowed the appeal, essentially on the basis (often heard in applications for extensions of limitation periods) that an action in professional negligence against a solicitor is but a pale shadow of the substantive cause of action or defence that is lost by the solicitor's negligence. As Gibbs J, as the later Chief Justice then was, observed in Taylor v Taylor (at 9; references omitted): Fry J said that the defendant would have a remedy against his solicitor for negligence, and he refused to set the judgment aside. The Court of Appeal had no difficulty in reversing his decision; indeed Jessel MR expressed surprise that the application to set aside the judgment had been opposed. The application there was made under the specific provisions of a rule of court, and the decision thus throws no light on the question of power, but it supports the conclusion, which I should in any case have reached, that it is no answer to a party who asks the court to set aside an order made against him in his absence at a hearing of which he had no notice to tell him that he has a remedy against his solicitor. In such a case, assuming that there is a real question to be tried, justice requires that the order, having been made in breach of a fundamental principle of natural justice, should be set aside, and that the matter should be reconsidered on its merits.

15 Obviously, not all of that applies in the present case: no question of a breach of fundamental principle of natural justice arises; but the notion that it is no answer to a party, who asks the Court to set aside an order made against him in his absence, that he has a remedy against the solicitor, is capable of application not only where a party is absent, but also where its representation is incompetent or perverse. 16 In those circumstances, I think I must conclude that the appeal has prospects of success. It is not for me, having reached that conclusion, to speculate as to how strong those prospects may be, so long as they are at least arguable.

17 As to the balance of convenience and prejudice, if a stay is granted Mr Jowett will be held out of enforcing the orders made in his favour for so long as the stay remains on foot and, potentially, if the appeal succeeds and a rehearing is ordered, then for longer. However, in any event, it would appear that enforcement of the orders is not going to be a straightforward matter. As has been pointed out elsewhere [Family Provision Act 1982, s 14; Wiblen v Ferros (1998) 44 NSWLR 518, 177-178 (Windeyer J); Wentworth v Wentworth (NSWSC, 4 September 1991, unreported, Young J); Gorman v Gorman; Estate late Jeanette Mary Gorman [2003] NSWSC 647, [19] (Young CJ in Eq); Liprini v Liprini [2008] NSWSC 423, [14] (Brereton J)], orders made under the Family Provision Act do not take effect in the ordinary way as orders of the Court enforceable by procedures for execution or by proceedings for contempt: they take effect as a codicil to the Will of the deceased, and are enforceable only in the same manner as provisions of a Will may be enforced by a beneficiary against an executor.

18 Prima facie, it seems that there are no assets remaining in the estate, following a distribution made about 12 months after the death of the deceased, and, at least on the material before me, before notice of the claim under the Family Provision Act was given - and certainly before proceedings under the Act were commenced, only a few days before the 18-month limitation period expired. Mr Meek has referred to the observations of the Chief Judge in Equity in Ernst v Mowbray [2004] NSWSC 1140, especially at [64], to the effect that where executors have distributed to themselves prematurely they would ordinarily be required to restore the moneys to the estate with interest. As appears on the face of what his Honour said, that may be the "ordinary", but it is not the invariable, position. The cases to which his Honour referred included cases in which the executors were apparently already on notice of a claim under the Family Provision Act or its equivalent when the distribution was made. There is some - albeit very faint - evidence in the present case that notice of intention to distribute may have been given before the distribution was made. I do not think it can be said to be clear, although it is arguable, that in the present case the executors would be required to restore the distributions made to them to the estate. I appreciate that the Associate Judge made such an order on the material before his Honour, but I do not think it follows that that will necessarily be the ultimate outcome when all the facts are before the Court.

19 It seems to me that, save for the costs that have been thrown away, the prejudice to Mr Jowett's position when compared to the position in which he was immediately before the hearing before the Associate Judge, is slight. In reality, he is not substantially worse off as a result of a stay being granted than he was immediately before that hearing. It is true that he will have to wait longer, if he is ultimately entitled to succeed to any extent, and that is an element of prejudice. Against that, if a stay is not granted, then the defendants will be required to restore to the estate immediately some $80,000 approximately each - in circumstances where, at least so far as the evidence of the Mr McLennan discloses, it seems unlikely that he has any resources at all from which such restitution could be made. The inference is that the likely result of not granting a stay will be bankruptcy. Not to grant a stay in these circumstances would probably deprive the defendants of an at least arguable appeal.

20 For those reasons I have come to the view that the stay sought should be granted.

21 However, in circumstances where no grounds of appeal were articulated until this morning, and no offer even of an undertaking as to damages was made until extracted by the Court at the conclusion of the hearing, Mr Jowett was entitled to resist the application for a stay. I do not think that, whatever the outcome of the appeal, Mr Jowett ought be required to bear the defendants' costs of the application. The costs of the motion will be his costs in the appeal.

22 My orders are: (1) Upon the partners of Brydens Law Office by their Chief Executive Officer, Paul Brandalise, giving to the Court the usual undertaking as to damages, order that the operation of orders 1, 2 and 3 made herein on 29 May 2008 be stayed until the hearing of the appeal from those orders or further order of this Court or of the Court of Appeal;

(2) Order that costs of the motion will be the plaintiff's costs in the appeal.

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