Marshall v Prescott

Principles 150In Coco v AN Clark (Engineers) Ltd [1969] RPC 41 at 47, Megarry J specified the following conditions for the existence of an action for breach of an equitable obligation of confidence arising independent of contract: "First, the information itself ... must 'have the necessary quality of confidence about it.' Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it." 151This formulation was adopted by Mason J in Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 51, and Gleeson CJ in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; 208 CLR 199 at [30]. It was adopted by Barrett JA (with whom Meagher and Ward JJA agreed) in Streetscape Projects (Australia) Pty Ltd v City of Sydney [2013] NSWCA 2; 295 ALR 760 at [157] and is binding on me, subject to the qualification that it is uncertain whether proof of detriment is an element of the cause of action (see Del Casale v Artedomus (Aust) Pty Ltd [2007] NSWCA 172 at [105] per Campbell JA, with whom McColl JA agreed, and the cases cited therein; and Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 22 FCR 73 ("Smith Kline & French (No 1)") at 112 per Gummow J). 152In Streetscape at [158] Barrett JA noted that two propositions were implicit in these conditions, namely that the "particular information is specifically identified" and the "confidential nature of the identified information is established". In respect of the former "[p]recise delineation is necessary" (at [159]; see also Smith Kline & French (No 1) at 87 and O'Brien v Komesaroff [1982] HCA 33; 150 CLR 310 at 327 to 328 per Mason J, with whom the other members of the Court agreed). Otherwise Streetscape treated these conditions as also governing the elements that must be shown to obtain equitable damages for breach of confidence. 153In relation to the first requirement noted in [150], information has been said to have the "necessary quality of confidence" where it is not "public property and public knowledge" or, if it has been "constructed solely from materials in the public domain", in circumstances where the "skill and ingenuity of the human brain" have been applied (Del Casale at [103], citing Coco at 47). 154In relation to the second requirement, solicitors have a duty to keep the confidences of their clients (Baker v Campbell [1983] HCA 39; 153 CLR 52 at 65). This obligation extends to any confidential information obtained during the period of the retainer relating to the client's affairs, whether this information is obtained directly from the client or from third parties (Gurry on Breach of Confidence, 2nd Ed (2012) at p 400). 155With the third element, it is important to note that it does not involve a strict prohibition on disclosure but instead a restriction on the "misuse" of the information. Thus in Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services & Health (1991) 28 FCR 291 ("Smith Kline & French (No 2)") at 304 the Full Court of the Federal Court stated: "To avoid taking unfair advantage of information does not necessarily mean that the confidee must not use it except for the confider's limited purpose. Whether one adopts the 'reasonable man' test suggested by Megarry J (in Coco v A.N. Clark] or some other, there can be no breach of the equitable obligation unless the court concludes that a confidence reposed has been abused, that unconscientious use has been made of the information." 156Thus their Honours stated that at least in cases where the interests of the confider and confidee are "quite different, and known to be so" (at 303) then the confider's purpose of disclosure will not be determinative.

All the information obtained by Mr Prescott 157As noted, the wide formulation of the confidential information exclusive to Mrs Marshall said to have been possessed by Mr Prescott was that "all information coming into the hands of Mr Prescott between the start of his retainer ... until its termination ... was confidential to Mrs Marshall ... and Kim [Marshall]". Given the manner in which their case was prepared, the Marshalls were effectively forced to adopt this formulation. The difficulty for them in relying on a case that isolated particular items or categories of confidential information is that, even allowing for a potentially wider test of causation in equity than in common law, their evidence and submissions did not enable any assessment of how the alleged misuse of any particular item, or even limited category, of confidential information by Mr Prescott was productive of any loss or damage they claim to have suffered. 158The obvious problem with this wider formulation is that it clearly embraces information that was not confidential to anyone. Thus to the extent that Mr Prescott acquired any knowledge of, say, the law of Pennsylvania, then that knowledge was not confidential information (O'Brien v Komesaroff at 327 per Mason J). Further, to the extent that it is said to embrace the personal background to the disputes between the Marshalls and Ms Carruthers including the terms of Mr Marshall's will, that was all extensively canvassed in the judgments of Macready AsJ and the Court of Appeal in the FPA proceedings and the proceedings in the Compensation Court. Thus in the end result this wide formulation is "so general that [I cannot be satisfied] ... that [this information] was ... imparted in circumstances which gave rise to an obligation of confidence and that it does not include material which is common knowledge" (O'Brien v Komesaroff id). For this reason the wider formulation of the confidential information said to have been misused by Mr Prescott should be rejected. It simply fails to conform with the long established requirement for precision in its formulation. I address the point made by Mr Kelly SC that the confidential information that was imparted to Mr Prescott was "joint confidential information" below at [164]ff. 159At this point it is appropriate to address Mr Bevan's submissions concerning the judgment of Gummow J in National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209. The plaintiffs' final written submissions in reply dated 9 October 2013 rely almost exclusively upon that judgment and appear to seek to invoke it to support this wider formulation of the confidential information said to have been misused by Mr Prescott. Mr Bevan noted that in Sentry at 230 Gummow J referred to an article by Professor Finn which advocated either a rebuttable or irrebuttable presumption to the effect that "a prior retainer has resulted in the acquisition by the lawyer of confidential information so that he cannot act in the same or in a substantially related matter for an interest adverse to his former client unless the former client consents or unless the Court is satisfied that no confidential communication of possible relevance to that matter were in fact made". Mr Bevan submitted that his Honour "appears to have accepted that a rebuttable presumption arises in Australia to that effect". Thus Mr Bevan contended that Mr Prescott bore the onus of proving that the information was not confidential (plaintiffs' final written submissions in reply dated 9 October 2013 at [39]). 160These submissions are misconceived. First Gummow J did not accept that Professor Finn definitively stated the applicable law in Australia. In Sentry his Honour was dealing with an application to injunct a party from pursuing proceedings commenced in New York to restrain Australian based solicitors from acting for a client in litigation in Australia. One contention made in support of allowing the proceedings to continue in New York was that the law of New York was more stringent in addressing the circumstances in which a court would restrain a client's former solicitor from acting for the client's opponent in litigation and thus if the client was restrained from pursuing the New York proceedings a legitimate advantage accruing to them would be lost (Sentry at 228). Based on Professor Finn's article, which was said to be consistent with the position in New York, Gummow J only found that there was a "real possibility" that the law in Australia is "no less stringent" than what was said to be the law in New York (at 230). Clearly this was not a finding that Professor Finn's view represented the law. In any event, the suggestion that there is a shifting onus of proof has since been rejected (Worth Recycling at [42] per Hodgson JA, with whom Spigelman CJ and Campbell JA agreed). 161Second, both the analysis of Professor Finn and the judgment in Sentry proceeded on a basis, since invalidated in this State, that the former solicitor's fiduciary duty continued to subsist after the retainer was terminated (Sentry at 233). Thus in Beach Petroleum at [205] the Court of Appeal cited a passage from Prince Jefri to the effect that the solicitor's fiduciary duty ceased on the termination of the retainer and then added "(Compare National Mutual Holdings v Sentry Corporation (1989) 22 FCR 209)". 162Third, Mr Bevan's reliance on Sentry overlooks the fact that his clients are not seeking an injunction against a former solicitor. At [43] of the plaintiffs' final written submissions in reply dated 9 October 2013 Mr Bevan invoked Gummow J's discussion in Sentry of various cases which appear to establish a reasonably low threshold to obtain injunctive relief (such as Mills v Day Dawn Block Gold Mining Co Ltd (1882) 1 QLJ 62). Mr Bevan appeared to suggest that a similar low threshold was applicable in this case. The currently prevailing jurisprudential basis for injuncting a client's former solicitor from acting against them was stated by Brereton J in Kallinicos, which has already been noted. However this is not an application for an injunction. Instead the Marshalls seek damages for breach of an equitable obligation. The Marshalls must prove each element of that claim which I have already identified. In doing so the continuous stream of judicial statements requiring the identification of the relevant confidential information with particularity apply with full force.

Schedule A information 163Next it is necessary to address the particular items of information described in Schedule A and which are said to have the necessary quality of confidentiality. Before doing so it is appropriate to address Mr Kelly SC's submission that I have noted above (at [144]) to the effect that any confidential information imparted to Mr Prescott during the subsistence of his retainer was jointly owned by the Marshalls and Ms Carruthers. 164Critical to addressing this contention is to consider the circumstances in which any such information was imparted to or received by Mr Prescott. I have already discussed those circumstances in addressing the scope of the fiduciary duty owed by Mr Prescott during the course of his retainer by Mrs Marshall. The critical matters to note are that (i) it was known and accepted by all that Mr Prescott also acted for Ms Carruthers; (ii) Ms Carruthers at the very least was a potential competing claimant upon any funds obtained as compensation in respect of Mr Marshall's death; (iii) Mr Prescott only undertook a co-ordinating and reporting role in respect of the Marshalls; (iv) there were agreed restrictions excluding Mr Prescott from accessing communications from Mr Goldberg in which he may have imparted personal information of the Marshalls and sought advice on quantum (see [118] to [121]); and (v) these matters came about from dealings between Mr Prescott and a solicitor acting on behalf of Mrs Marshall (and Kim Marshall), namely Mr Goldberg. Mr Prescott's retainer from both the Marshalls and Ms Carruthers was directed to the common objective of maximising the amount recovered in respect of the death of Mr Marshall (see [122] and [133]). 165These considerations warrant a partial acceptance of Mr Kelly SC's submission. To the extent that Mr Prescott received information which reflected the common objective of his respective retainers then it was the information of both the Marshalls and Ms Carruthers. The categories of information identified by Mr Kelly SC's submission are examples of this (see [144]). In terms of the elements of an action for breach of confidence noted in [150] it means that any disclosure of these categories of information by him in the course of disputation between the Marshalls and Ms Carruthers did not represent a "misuse" of the information. It would not constitute the "taking of [unfair] advantage" (Smith Kline & French (No 2)) for him to deploy information that his client, Ms Carruthers, was entitled to use. This is so either because it was her information which she was free to use as she wished or at the very least it was free to be used in a dispute between her and the Marshalls. There was no suggestion that Mrs Marshall was not free to use whatever information she had obtained about the Pennsylvania proceedings in her case against Ms Carruthers. If the material obtained by Mr Prescott was not common to both Mrs Marshall and Ms Carruthers then why have a separate agreement excluding Mr Prescott from receiving the correspondence between Kreindlers and Mr Goldberg concerning quantum? The position would be different if Mr Prescott had disclosed this information to third parties (see Murray v Yorkshire Fund Managers Ltd [1998] 1 WLR 951 at 957). 166However, I cannot accept the entirety of Mr Kelly SC's submission principally because, consistent with the authorities, there must be a close consideration of the particular information in question. One category of information that was exclusively confidential to Mrs Marshall was the communications that passed between Mr Goldberg and Kreindlers in respect of which it was agreed that Mr Prescott would be excluded from. Ms Carruthers had no interest in that information. If Mr Prescott came into possession of that information then it would be unfair for him to deploy that material on Ms Carruthers' behalf. 167Against that background it is necessary to consider the individual items in Schedule A. 168The first item in Schedule A was a letter that Mr Prescott sent to Mr Reiders on 8 June 2005 noted above at [82]. In the letter Mr Prescott stated that he had been referred to Mr Reiders by Mr Green. He set out the background to the dispute. He sought his assistance in "clarifying the position under the relevant Court rules involving claims being made through a deceased person" and asked five questions for which he sought Mr Reiders' response. 169Schedule A asserts that the confidential nature of the information is the "subject matter of the US proceedings, relationships between the parties, analysis of the competing claims on the Marshall estate funds [and the] terms of [the] will of Neil Marshall". 170The terms of Mr Marshall's will that are referred to in the letter are referred to in the Court of Appeal's judgment in the FPA proceedings (Marshall v Carruthers [2002] NSWCA 47 at [7]). Mr Prescott's analysis of the claims derived from applying his understanding of the law to the facts as found is also not Mrs Marshall's information. I infer that it was undertaken after his retainer from Mrs Marshall was terminated. Certainly the contrary has not been shown. Otherwise to the extent that the letter recites aspects of the background to the dispute which had not been publicly disclosed, it was certainly not the exclusive confidential information of the Marshalls. Its deployment on behalf of Ms Carruthers was not an unfair or unconscientious use. 171The second item listed in Schedule A was a letter from Mr Prescott to the GIO's solicitors, Turks Legal, dated 2 August 2005. Mr Prescott referred to the time he had spent with counsel and Teece Hodgson & Ward addressing a request for particulars. In relation to discovery Mr Prescott stated: "I can foresee however that the pleadings will be resolved in the not too distant future and in particular once we have gained information in relation to US Law from the United States. The issue then of discovery becomes very important indeed and from the point of view of Mrs Carruthers and your client it is fundamental. There is no doubt, and David Greenwell despite his current illness, has confirmed that there is a lot of very powerful documentation located in the files of Kreindler & Kreindler. The issue is making sure we can get hold of that documentation in a very short time ... I think it is hard to overstress the importance of ensuring that there is a thorough examination of their file and extraction of as many of the relevant documents as possible. This is because I am fully aware of the fact that there are is a great deal of correspondence ... between Turner Freeman and Kreindler & Kreindler. It is important to note that at all times Turner Freeman refused to allow the writer to have any involvement in the quantum aspects. I am equally aware that they wrote to Kreindler & Kreindler seeking full details as to how precisely ... American law worked in relation to the assessment of damages. Equally I am aware that there is some correspondence between them in respect of a refusal of Turner Freeman to pay the funds to Ms Carruthers pursuant to their recommendations." 172Schedule A asserts that this letter reveals that Mr Prescott had an "[a]wareness of the contents of the Kreindler[s] file in respect of conduct of the Pennsylvania proceedings for the Marshalls" and the "application of US law on the assessment of damages to known facts of the Marshall estate". In relation to the latter aspect there is nothing in the letter that reveals he was in possession of knowledge of US law on the assessment of damages to known facts, but even if he was it would not be confidential. 173The position with the former is less clear. It is likely that Mr Prescott was frank in this letter. It is highly improbable when he wrote it that he ever contemplated it would be the subject of external scrutiny by reason of the loss or waiver of legal professional privilege. Consistent with what was agreed between Mr Prescott and Mr Goldberg, this letter suggests that during the course of his retainer Mr Prescott did not receive copies of the correspondence passing between Mr Goldberg and Mr Green concerning quantum or the refusal of Kreindlers to unconditionally provide the settlement moneys as demanded by Mr Goldberg. However he clearly became aware that there was such correspondence and of the topics which it covered, namely the details of US law and the stand off over the disbursement of funds. 174Mr Bevan's submission on this topic amounts to a contention that knowledge of the fact that there was correspondence on the topic of entitlements under US law and disbursement of funds was confidential to Mrs Marshall to the exclusion of Ms Carruthers. I do not agree. Such knowledge is really no different to supposition from the accepted fact that Mr Prescott was during his retainer excluded from receiving that material and was aware of the demarcation. 175The third item is a letter from Mr Prescott to the GIO's solicitors dated 4 August 2005. His letter recounts that he had contacted lawyers at Kreindlers but they (wisely) stated they would not assist with the provision of information without authority from Mrs Marshall. Schedule A describes the confidential nature of the information in this letter as being an "[a]wareness of the contents of the Kreindler[s] file in respect of their conduct of the Pennsylvania proceeding[s] for the Marshalls". The letter does not reveal that. At most it reveals an awareness that they had a file. That was not confidential information and it was certainly not confidential to the exclusion of Ms Carruthers. 176The fourth item in Schedule A is a letter from Mr Prescott to Teece Hodgson & Ward dated 11 August 2005 which was copied to the GIO's solicitors. Mr Prescott recounts a conversation with Mr Greenwell who was then in hospital. Mr Prescott recorded: "Of interest are his comments in relation to the documentation in the United States and, of course, I am referring to the Kriendler & Kriendler [sic] file. Firstly he indicates that he is aware of the fact that there is correspondence between Kriendler & Kriendler [sic] and Turner Freeman which directly relates to the issue of the dispensation of the settlement funds. From discussions that he has had with Mr Green it becomes clear that that correspondence was to the effect that the monies gained through the deceased Marshall did not flow from the information and dependency of Mrs Marshall except possibly to a very small degree. As such they did not believe that the funds should be dispensed to Mrs Marshall but should have been dispensed in accordance with their entitlements. It is evident that they did their very best to prevent the funds being moved to the Turner Freeman Trust Account as they felt there was a potential to deprive [Ms] Carruthers of her just entitlements. Mr Greenwell also indicated that in his view and on the basis of his knowledge of Kriendler & Kriendler [sic] they are firstly not interested in our domestic dispute and, secondly, and as you would expect, do not have a great deal of understanding of the Australian legal system." (emphasis added) 177Schedule A describes the nature of the confidential information referred to in this letter as the "[c]ontents of discussions with Justin Green; awareness of the contents of the Kreindler[s] file in respect of their conduct of the Pennsylvania proceeding[s] for the Marshalls; the manner of determination of the claim by [the] Marshalls and negotiation of its settlement with [Lycoming] and others in the US". 178The latter aspects of this description are not touched upon in this letter, but the former are. The letter confirms that, prior to speaking to Mr Greenwell, Mr Prescott was not aware of the contents of the correspondence between Mr Goldberg and Kreindlers. However, Mr Greenwell appears to have been aware of the contents of the correspondence concerning the dispute over the dissemination of the settlement funds and passed that knowledge on to Mr Prescott. The contents of that correspondence, which Mr Prescott was excluded from, were confidential to Mrs Marshall. 179Thus, prima facie, it appears that Mr Prescott has at this time acquired information which he knew or should have known was information that was exclusively confidential to Mrs Marshall, and then disclosed it to the GIO's solicitors and Teece Hodgson & Ward. It appears to have been the very class of information which he was deliberately excluded from receiving. 180The fifth item is a letter from Mr Prescott to the GIO's solicitors dated 15 August 2005. In the letter Mr Prescott comments on what appears to be a request for him to produce documents in response to a discovery request and inquires about being paid for providing "assistance". In one part he states, inter alia, "... I have already gained a disc dealing with the emails between Mr Greenwell and [Kreindlers]. I have to say that there are an awful lot of them and it will take some time to go through them". 181Schedule A described the contents of the disc as containing "all available confidential information relating to the conduct of the claim by the Marshall estate against [Lycoming] and others in Pennsylvania held in electronic format". 182The disc was not tendered. The only evidence of its contents is the description that it contains the emails between Mr Greenwell and Kreindlers. I do not infer that it contained the letters passing between Mr Goldberg and Kreindlers. I accept that it may contain information about the proceedings generally, but I am not able to be satisfied that, in receiving this disc, Mr Prescott acquired information that was confidential to Mrs Marshall to the exclusion of Ms Carruthers. 183The sixth item in Schedule A is a letter from Mr Prescott to Mr Greenwell dated 8 September 2005. Mr Prescott wrote to Mr Greenwell enclosing a draft affidavit for his consideration, the terms of which are unknown. In one part of the letter he stated "... I attach details of I Audio NP3/MPG Player that I referred to you when I visited you in the [hospital]". 184Schedule A asserts that the contents of the "diskette" as referred to in this extract from Mr Prescott's letter contain "all available confidential information relating to the conduct of the claim by the Marshall estate against [Lycoming] and others in Pennsylvania held in electronic format". 185There is no evidence that this letter refers to any diskette, if that is meant to be a different disc to the one referred to in the letter of 15 August 2005. The phrase "I Audio NP3/MPG Player" was not explained but it appears to be a reference to software designed to play audio or video files. I am not satisfied that anything in this letter suggests or refers to some category of confidential information that Mr Prescott had acquired that was confidential to Mrs Marshall to the exclusion of Ms Carruthers. 186The seventh item in Schedule A was paragraphs 1 to 20 of the affidavit of Janette Kveytel sworn 31 October 2005. Ms Kveytel was a solicitor employed by Teece Hodgson & Ward. She swore this affidavit in support of the notice of motion seeking an extension of time for Ms Carruthers to comply with the Court's timetable in the Marshall proceedings (see [87]). Paragraphs 3 to 7 of the affidavit set out the background to the proceedings. These are said to be based on information provided by Mr Prescott and Mr Greenwell. Paragraphs 8 to 11 described various difficulties the deponent had encountered in obtaining assistance from Mr Greenwell. Paragraph 12 recorded that Mr Prescott had undertaken to make contact with attorneys in the USA to obtain an opinion on the law of Pennsylvania. Paragraphs 13 to 20 annexed correspondence between Mr Prescott and Mr Reiders and other lawyers in the USA. 187Schedule A describes the contents of this affidavit as being based on "instructions provided by Mr Prescott to Ms Kveytel which recount the facts and circumstances of the Pennsylvania proceeding[s] and the importance of the requirement to obtain more information from Mr Prescott for the success of the Carruthers' claim". In essence this is a reference to the common background to the Pennsylvania proceedings. I am not satisfied that anything in this part of the affidavit suggests or refers to some category of confidential information that Mr Prescott had acquired that was confidential to Mrs Marshall to the exclusion of Ms Carruthers. 188The eighth item in Schedule A is a letter from Mr Goldberg to Mr Prescott dated 14 November 2005. It was sent just prior to the return of the notice of motion that led to the making of the Interlocutory Orders on 16 November 2005 (see [90]). It was sent in response to a letter from Mr Prescott also dated 14 November 2005. In that letter Mr Prescott had debated various matters with Mr Goldberg. He had referred to the execution of a funding agreement with ILF by Ms Carruthers and enclosed a letter from Mr Goldberg to Mr Bowman dated 10 April 2003. In his response of the same day Mr Goldberg referred to three ILF funding agreements executed by his clients, namely two by Mrs Marshall and one by Kim Marshall (see [21] and [27]). Mr Goldberg also complained about Mr Prescott being in possession of his letter to Mr Bowman. One part of the plaintiffs' final written submissions in reply dated 9 October 2013 contends that Mr Goldberg complained "bitterly" about the misuse of these agreements by Mr Prescott ([44(g)]). Mr Goldberg made no such complaint. 189Schedule A asserts that the confidential information referred to in this exchange was the three ILF funding agreements executed by the Marshalls and the letter of 10 April 2003. 190In relation to the ILF funding agreements, the submission is misconceived as there is not a hint of any use or deployment of them by Mr Prescott. It is Mr Goldberg who refers to them not Mr Prescott. 191In relation to the letter that Mr Goldberg sent to Mr Bowman dated 10 April 2003, I infer that Mr Prescott obtained that letter from Mr Greenwell shortly after being served with the notice of motion seeking to restrain him from acting in the Prescott proceeding. If he had it earlier I expect he would have referred to it in the correspondence referred to above. The sending of that letter back to Mr Goldberg was not an abuse of any confidence given that Mr Goldberg acted for Mrs Marshall and Mr Prescott was seeking to respond to allegations that had been made against him.

Conclusion 192Except in one limited respect, I am satisfied that the Marshalls have failed to establish that Mr Prescott misused any of their confidential information. The only limited respect concerns his conduct in receiving from Mr Greenwell and then passing onto Teece Hodgson & Ward the contents of the communications between Mr Goldberg and Kreindlers in early 2003 concerning the distribution of the proceeds of the settlement. With respect to this conduct I am not prepared to make a definitive finding that this involved a misuse of the Marshalls' confidential information because, as explained at [233] to [235] below, such an allegation was not part of the pleaded case and in those circumstances it would be unfair to Mr Prescott to do so.

The pleaded case 193During the course of the hearing, it was submitted on behalf of Mr Prescott that the Marshalls' written and oral submissions made allegations that went outside the pleaded case in a number of respects. Eventually this led to an application to further amend the statement of claim being made on behalf of the Marshalls after oral submissions had concluded. I determined that application and only allowed some of the amendments sought. I made orders allowing for further written submissions on certain limited issues (Marshall v Prescott (No 2) [2013] NSWSC 1254). 194In Marshall v Prescott (No 2) at [22], I reiterated that this case would be determined on the pleadings. While this is, or should be, axiomatic in any litigation, it is particularly apposite to this case involving as it does events that occurred a long time ago and the making of serious allegations. To that end I will address the specific allegations made by the pleadings below. To the extent that the submissions made on behalf of the Marshalls allege matters against Mr Prescott that are said to give rise to a liability on his part which are not pleaded, I will ignore them (see for example [59], [71], [73], [74], [75], [96] to [97] of the plaintiffs' written submissions dated 15 August 2013). 195The structure of the FASOC was that at various points certain matters were defined as constituting some form of misconduct by Mr Prescott, eg the "Prescott's first Marshall misconduct". Each identified form of misconduct was later alleged to be actionable in various ways such as by a tortious conspiracy, a breach of a term of his retainer, a breach of the fiduciary duty it was said he owed to Mrs Marshall or the Marshalls, negligence, etc. To address the pleaded case it is necessary for this judgment to adopt the same nomenclature but nevertheless I consider this to be a regrettable form of pleading. It defines certain matters involving Mr Prescott as "misconduct" so that the suggestion he engaged in misconduct is assumed rather than justified. It means that a judgment such as this which is published and text searchable will have numerous references to Mr Prescott and "misconduct" even though I reject all of the pleaded causes of action against him. 196This problem with the FASOC is exemplified by [87] which pleads: "It was necessary for [Mrs Marshall] to bring the Prescotts proceedings because of the need to ensure the success of the Carruthers proceedings for the benefit of the [Marshalls] to restrain Prescott from assisting Carruthers in her defence and cross-claim in the Carruthers proceedings to the detriment of the [Marshalls] (Prescotts' fourth Marshall misconduct)." (emphasis in original) 197Another part of the pleading already accuses Mr Prescott of misconduct in assisting Ms Carruthers in her defence and cross claim. Thus, properly analysed, this paragraph does not allege any "conduct" by Mr Prescott, much less anything that could amount to "misconduct" by him, yet the label "Prescott's fourth Marshall misconduct" remains.

The (so called) Prescott's First Marshall Misconduct 198The only sensible means of describing this allegation is to set out the relevant parts of the FASOC that describe the Prescott first Marshall misconduct in full: "34. On 25 April 2003, after receiving further notice of a claim on the net settlement amount by Carruthers from two sources, namely, from David Greenwell, and from Prescotts, Kreindler and Kreindler entered into a confidential understanding, arrangement or agreement with those legal representatives of Carruthers having the following terms: (a) Kreindler and Kreindler promised to keep secret from the plaintiffs the fact of the making of the Carruthers' claim until Kreindler and Kreindler had procured the plaintiffs' execution of the release documents required by Lycoming on behalf of the Pennsylvania defendants as a term of payment of any gross settlement amount under the in-principle compromise to the plaintiffs; (b) Kreindler and Kreindler also agreed to facilitate or otherwise assist Carruthers' legal representatives to make a claim on her behalf on the net settlement amount after it was paid to a third party stakeholder in Australia on behalf of the [Marshalls] and Carruthers by undertaking the conduct referred to in paragraph (a) above together with a process of advising Carruthers' legal representatives in Australia on the law in Pennsylvania under which the legal entitlement to damages for wrongful death and survival actions would be determined (the Kreindlers' confidential arrangement). PARTICULARS ... 35. When David Greenwell (Greenwell) made the Kreindlers' confidential arrangement he did so: (a) on behalf of the defendant for the ultimate benefit of his other client, Carruthers; (b) on instructions from, and as the duly authorised agent of, the defendant; (c) in breach of the terms of the defendant's retainer from the plaintiff (both express and implied); (d) in breach of the defendant's duty of care to the plaintiffs as their solicitor; (e) in breach of the defendant's fiduciary duty to the plaintiffs as their solicitor. 36. In making the Kreindlers' confidential arrangement through the agency of Greenwell the defendant committed a conspiracy with Kreindler and Kreindler to: (a) commit an unlawful act or acts, being the various breaches of duty pleaded in the immediately preceding paragraph, with the intention of harming the plaintiff's legitimate financial interests; or (b) perform a lawful act or acts, being the various breaches of duty pleaded in the immediately preceding paragraph, which had the predominate purpose of harming the plaintiff's legitimate financial interests, and in both cases that conduct caused the plaintiffs to suffer loss and damage (Prescott's conspiracy conduct). 37. The making of the Kreindlers' confidential arrangement on 25 April 2003 constituted breaches of various duties owed by Prescott to the plaintiffs (Prescott's initial breaches of duty), in addition to the Prescotts conspiracy conduct, namely: (a) a breach of the terms of the Prescotts retainer (express and implied); (b) a breach of the duty of care owed by Prescott to the plaintiffs as their solicitor under his retainer; (c) a breach of the fiduciary duty owed by Prescott to the plaintiffs as their attorneys under their retainer of him, and Prescotts' [sic] initial breaches of duty and Prescotts' [sic] conspiracy conduct are collectively referred to as 'Prescott's first Marshall misconduct'." (emphasis in original) 199Paragraph 34 identifies certain conduct said to be the "Kreindlers' confidential arrangement". It is not clear whether Mr Prescott is one of the "legal representatives of Carruthers" referred to. Paragraph 36 alleges that the Kreindlers' confidential arrangement was made "through the agency of Greenwell". The allegation that Mr Greenwell was Mr Prescott's "agent" was not elaborated upon other than the assertions in paragraph 35. The proposition that merely because Mr Prescott had briefed Mr Greenwell then any acts or knowledge of Mr Greenwell are imputed to Mr Prescott especially for the purpose of forming a tortious conspiracy is not one that I accept, although I will assume it in the Marshalls' favour. 200There are only three items of evidence that point to any possible conduct by Mr Prescott in the period embraced by this part of the pleading, whether undertaken via Mr Greenwell or in his own right. The first is the email from Mr Greenwell to Mr Green of 13 April 2003 noted in [59] above. The email confirms that Mr Prescott had provided Mr Greenwell with a copy of Mr Goldberg's letter of 22 March 2002. I infer that he did so because he was aware that Mr Goldberg on behalf of Mr Marshall was seeking to have the entirety of the net proceeds of the settlement released to his clients to the exclusion of Ms Carruthers and, in doing so, was asserting that Kreindlers owed no duty to Ms Carruthers. To that end Mr Prescott via Mr Greenwell was seeking to preserve Ms Carruthers' position. 201The second potential item of evidence is the email from Mr Green to Mr Greenwell which was copied to Mr Bowman on 25 April 2013 (see [63]). There is no evidence that that email was sent to Mr Prescott and the exchanges in 2005 discussed above suggest it was not. It refers to a lawyer in the United States having been contacted by "the solicitor for Carruthers" who "wanted to know what could be done in the U.S. to prevent all of the Marshall settlement being paid to Mrs Marshall and Kim [Marshall]". It seems unlikely that the "solicitor for Carruthers" being referred to is Mr Prescott as Mr Green would simply refer to him by his name given that Messrs Green, Greenwell and Bowman all knew him. It is more likely that that solicitor was someone from the firm Teece Hodgson & Ward, but I infer any contact by anyone from that firm was done with at least Mr Prescott's knowledge and most probably his encouragement. 202However there is no evidence that either Mr Greenwell or Mr Prescott joined in Mr Green's request to "keep this confidential" and I am certainly not satisfied that Mr Prescott did. Not only is there is no evidence from which that could be inferred, there is a significant piece of evidence strongly suggesting against it, namely the third item of evidence which was the letter from Teece Hodgson & Ward to Kreindlers on 16 May 2003 requesting that it not disseminate the proceeds of the settlement to Mrs Marshall (see [68]). Again I infer that this was sent with the knowledge of Mr Prescott and he would have been aware that it was likely to be passed onto Turner Freeman, as it duly was. 203One aspect of paragraph 34(a) of the FASOC is the assertion that somehow there was some secrecy about "the fact of the making of the Carruthers' claim" pending the execution of a release by Mrs Marshall (and the funds being secured). This contention has no substance. Mrs Marshall was not sent the Deed of Release until some time around 23 May 2003 but, as just noted, by 16 May 2003 Teece Hodgson & Ward had expressly stated that Ms Carruthers would make some form of claim on the settlement monies and this was passed onto Mr Goldberg. Further, Mr Greenwell and Mr Prescott had informed Mr Allen from Turner Freeman's Adelaide office of that in late February 2003. In cross examination Mr Goldberg accepted that he knew a claim was being asserted on Ms Carruthers' behalf although he did not consider it was genuine. 204In any event, as I have stated it should have been obvious to Mrs Marshall that Ms Carruthers was always a claimant or potential claimant on any funds obtained from the Pennsylvania proceedings. Whether the claim would be against the fund directly or the estate is immaterial for present purposes. From the very outset Mr Prescott stated that he acted for her. Neither Mr Goldberg nor Mrs Marshall was ever advised to the contrary. As stated, the background was that Mrs Marshall and Ms Carruthers had been making competing claims against each other in other litigation for a number of years. Mr Goldberg either did know or should have known that, unless there was some agreement, Ms Carruthers was overwhelmingly likely to make a claim in some form. 205The events of February to May 2003 are not especially difficult to gauge at least so far as Mr Prescott is concerned. It was clear to him and Mr Goldberg that he acted for Ms Carruthers and Mr Goldberg acted for Mrs Marshall and her son. From the outset they were both aware or should have been that there was a strong likelihood that there would be disputation between the Marshalls and Ms Carruthers about the distribution of any proceeds from the Pennsylvania proceedings. However in the meantime there needed to be some cooperation to pursue those proceedings to maximise the prospects of obtaining a recovery. To that end Mr Prescott assumed an obligation to Mrs Marshall in relation to the pursuit of the proceedings while still being retained by Ms Carruthers. In April 2003 Mr Goldberg made a pre-emptive strike. In cross examination he accepted that he sought to capture the whole of settlement and deprive Ms Carruthers of the entirety of it. In response Mr Prescott sought to at least preserve Ms Carruthers' position by providing Mr Greenwell with the letter of 22 March 2002 and then either consented to or encouraged Teece Hodgson & Ward to write its e-mail of 16 May 2003. 206It follows that the factual allegation in subparagraph 34(a) of the FASOC completely fails. I am not satisfied that Mr Prescott either in his own right or somehow via Mr Greenwell entered into an "understanding, arrangement or agreement" that involved Kreindlers (or anyone else) "keep[ing]" secret from Mrs Marshall the fact that Ms Carruthers was making any form of claim at any point, including prior to the execution of the release by Mrs Marshall. There is no evidence to support that factual allegation and in fact the evidence is all to the contrary. The fact that Ms Carruthers was or would make a claim was obvious or should have been to all involved from the outset. In the events that happened Mrs Marshall via Mr Goldberg was advised of that fact well before his client was presented with a proposed release. He was sent the file note of the meeting that occurred in late February 2003. He received Kreindlers' email forwarding the email from Teece Hodgson & Ward. 207The factual allegation in subparagraph 34(b) of the FASOC is a difficult one to unpack. The paragraph opens with an allegation that Kreindlers entered into a "confidential understanding, arrangement or agreement" with the "legal representatives of Carruthers" pursuant to which Kreindlers agreed to facilitate the making of a claim on behalf of Ms Carruthers on moneys paid to a third party stakeholder by two methods. The first was said to involve "undertaking the conduct referred to in 34", an allegation that I have already rejected. The second was said to involve a "process of advising Carruthers' legal representatives in Australia on the law in Pennsylvania under which the legal entitlement to damages for wrongful death and survivors actions would be determined". I have searched in vain for any evidence that there was any agreement amongst the relevant players to undertake that step. There is no such evidence. 208Mrs Marshall has failed to establish the factual allegations in [34] of the FASOC and that part of [36] that alleges Mr Prescott made the Kreindlers' confidential arrangement. 209To this point I have not considered the position of Kreindlers in this period as it is not the defendant. Mr Prescott is. However it is appropriate to record one finding I make concerning Kreindlers because of its significance to so much of the Marshalls' case as alleged that the conduct of Mr Prescott in this period was causative of the loss sought to be recovered. In particular it was contended that, if it were not for Mr Prescott's conduct, Kreindlers would have paid over the net settlement proceeds to Turner Freeman without conditions. In that event it is said that the Marshall proceedings would not have been commenced (because there would not have been any undertaking given to Kreindlers to commence them). The Marshalls further contended that, having lost in the Court of Appeal in the FPA proceedings, Ms Carruthers would not have commenced proceedings in her own right and thus Mrs Marshall would have avoided incurring the legal costs that she did in the Prescott proceedings and the Marshall proceedings. 210The difficulty with that contention is that I am satisfied that, irrespective of any intervention on the part of Mr Prescott (or Mr Greenwell), unless Ms Carruthers abandoned her claim entirely Kreindlers would either not have released the funds to Turner Freeman without the undertakings that it sought, or would have retained the funds itself. Mr Goldberg launched his pre-emptive strike in his letter of 8 April 2003 (see above at [52]). Kreindlers' response was quick and emphatic. Its letter was sent back the same day and concluded with the statement "[u]nless an agreement can be reached, we will have to hold the settlement until a court of competent jurisdiction" decided the issue (see [54]). The only subsequent change from that position was that it eventually released the funds subject to an undertaking they would not be distributed by Turner Freeman without an appropriate court order, and that proceedings of the kind it envisaged would be commenced. In context that change was immaterial. 211The submissions lodged on behalf of the Marshalls contended that this was only a prima facie view and that it was Mr Prescott, either in his own right or via Mr Greenwell, who caused it to become a final one. I reject this submission. The argument in support of it was as follows (at [5] of the plaintiffs' written submissions in reply dated 19 August 2013): "... the [Marshalls] contend that Mr Green never believed, on the available evidence, that Carruthers had any entitlement whatsoever under Pennsylvania law. He well knew her to be persona non grata under Pennsylvania law [footnote]. His acceptance of her potential entitlement to the fund was wholly based on what Mr Greenwell told him (on instructions from Mr Prescott) [footnote], which was that Ms Carruthers' rights (if any) arose under the law of Australia [footnote]. He readily accepted whatever Mr Greenwell told him." 212The footnotes to this submission reveal that the evidence that is said to support the assertion as to Mr Green's belief concerning Ms Carruthers' entitlement is Mr Bowman's handwritten file note which I have already addressed (at [65] to [66]). The footnotes also reveal that the evidence that is said to support the contention that Mr Prescott via Mr Greenwell talked Mr Green into having the opinion attributed to him was the email of 13 April 2003 (see [59]). The email of 13 April 2003 merely asserts that Mrs Marshall had a fiduciary duty in respect of Ms Carruthers because of the terms of the letter of 22 March 2002. It is silent about Ms Carruthers' status as a de facto under Australian law and its interaction with the law of Pennsylvania. Any opinion that Kreindlers formed about Ms Carruthers' status appears to have been based on its own assessment of the Court of Appeal's decision in the FPA proceedings. There is no evidence that it ever sought any opinion from Mr Prescott or Mr Greenwell on that issue. 213In a similar vein Mr Bevan also sought to argue that Mrs Marshall lost the "opportunity" to persuade Kreindlers to the contrary because of Mr Prescott's conduct. I reject that contention also. There was no lost opportunity to persuade Kreindlers because it was never going to change their mind. The position stated by Kreindlers in its letter dated 8 April 2002 was completely consistent with its statements as to its understanding of its own role throughout 2002. Thus in his letter of 1 August 2002 Mr Green stated that his firm would not involve itself in "intra or inter-family disputes" and the "distribution of the monies is a separate issue" to the role it assumed, namely "maximis[ing] the recovery for each decedent's estate" (see [42]). 214Kreindlers was said to be a firm experienced in the bringing of proceedings on behalf of multiple claimants arising out of the same event or events whether they be class actions or a collection of actions. Mr Prescott's role so far as they were concerned was to coordinate the various claimants in Australia. Kreindlers was in a position to and no doubt did make its own assessment of the appropriate course to adopt in response to Mr Goldberg's pre-emptive strike. Mr Green's immediate response on 8 April 2003 to the suggestion that Kreindlers unconditionally release the funds to Turner Freeman and the subsequent resistance of Kreindlers was completely consistent with what it described as its role. It reflected Kreindlers' assessment that Mrs Marshall and presumably it would be exposed if it agreed and it turned out that Ms Carruthers had a valid claim (either on the funds directly or through the estate). Kreindlers' letters consistently reflected a belief on its part that Ms Carruthers had an arguable claim on any funds that might be recovered. 215Paragraph 36 of the FASOC alleges that Mr Prescott engaged in a conspiracy by unlawful means ([36(a)]) and lawful means ([36(b]). This was expanded upon in [107] of the FASOC. It follows from my rejection of the factual contentions that support those allegations that the conspiracy claim, at least so far as it involves the Prescotts first Marshall misconduct, is not made out. Paragraph 37 of the FASOC alleges that the first Marshall misconduct constituted a breach of Mr Prescott's retainer, negligence and a breach of the fiduciary duty he owed Mrs Marshall. Again these paragraphs were expanded upon at [103] to [106] of the FASOC. Again, at least so far as they involve the Prescott's first Marshall misconduct, these paragraphs are not made out for the same reasons. In relation to the allegation that he pursued a conspiracy by lawful means, it also fails because any conduct undertaken by Mr Prescott was for the advancement of the interests of Ms Carruthers (Crofter Handwoven Harris Tweed Co Ltd v Veitch [1942] AC 435). 216Further, the finding that I have made at [210] means that no damage was occasioned by any conduct undertaken by Mr Prescott prior to the termination of his retainer on 23 May 2003. This suffices to deny causation both at common law and equity (Beach Petroleum at [449]). 217Finally I note that the question of whether or not the conduct of Mr Prescott in procuring the sending of the letter of 22 March 2002 to Mr Green on 13 April 2003 (see [200]) breached the fiduciary duty he owed to Mrs Marshall and Kim Marshall was not one that was raised by the pleaded case and I have not addressed it. I rejected the Marshalls' attempt to amend to include a further claim against Mr Prescott based on this aspect of his conduct in Marshall (No 2) at [32] to [54] and [55] to [62].

The (so called) Prescott's first, second, third and fourth GIO misconduct (collectively the so-called Prescott's second Marshall misconduct) 218The next part of the FASOC defines various forms of conduct and events as follows: "Prescott's first GIO misconduct 66. On 17 July 2003, in the immediate aftermath of the giving of the [Marshalls] written undertaking and the commencement of the Carruthers proceeding in pursuance of that undertaking, the defendant commenced a course of conduct of procuring Carruthers to make a formal claim upon the net settlement amount and GIO Worker's Compensation (NSW) Limited ACN 0454 523 698 (GIO) to fund a defence and cross-claim in the Carruthers proceeding in the name of Carruthers for her own benefit as to part of the net settlement amount and as the nominee of GIO in order to recover an amount to enable GIO to reimburse itself for the $201,906 paid to Carruthers under a judgment given in her favour on 26 July 2001 in the Compensation Court of NSW as the dependent spouse of the deceased in respect of his worker's compensation death benefit entitlement (Prescott's first GIO misconduct). PARTICULARS ... 67. On 15 October 2004 Carruthers filed a defence and cross-claim in the Carruthers proceeding on behalf of GIO as its nominee and at the expense of GIO in which she: (a) denied that the [Marshalls] had any entitlement at all to the net settlement amount; (b) asserted that she alone was entitled to the whole of the net settlement amount; (c) claimed the payment of the net settlement amount to her beneficially; (d) asserted that the net settlement amount was held on trust for her by Turner freeman and not for the plaintiffs; (e) failed to identify whether her alleged right to the net settlement amount arose under the law of New South Wales, the law of Pennsylvania or under the law of another jurisdiction (Carruthers defence and cross-claim); (f) failed to disclose that she was acting as a defendant and cross-claimant [i]n the proceedings as the nominee of GIO PARTICULARS ... ... 71. The entry of Carruthers into the GIO litigation funding agreement was made secretly, in that knowledge of it was withheld from the plaintiffs until discovery of documents was given to them in respect of the defendant's files and other records in 2006 in the Prescott proceedings pleaded in paragraph 82 below (Prescott's third GIO misconduct). PARTICULARS ... 71A. On 9 June 2005 Carruthers and GIO entered into a final litigation funding agreement (the GIO final litigation funding agreement) for the defence and prosecution of a cross-claim in the Carruthers proceeding in consequence of steps taken by Prescott to procure Carruthers and the GIO to enter it (Prescott's fourth GIO misconduct). PARTICULARS ..." (emphasis in original) 219The definition of "Prescott's third GIO misconduct" suffers from the vice I have identified at [197], namely that it does not identify any conduct on the part of Prescott other than perhaps implicitly alleging that it was Mr Prescott who withheld knowledge of the funding agreement(s) with the GIO from Mrs Marshall's solicitor. The definition of "Prescott fourth GIO misconduct" also suffers from the same problem. 220Leaving those matters aside, the factual contentions in these paragraphs have mainly been established, although it is doubtful that Mr Prescott's conduct could be described as it is in [66] of the FASOC as "procuring" Ms Carruthers to make a claim if that is meant to convey anything other than acting for her (until 10 June 2005) and then taking steps to obtain funding for her defence and pursuit of the cross claim, both of which were undertaken for Ms Carruthers' benefit and the GIO. Further, [71B] of the FASOC pleads that, but for Prescott's third and fourth GIO misconduct, Ms Carruthers would not have continued to defend the proceedings or pursued her cross claim and, instead, Mrs Marshall would have obtained summary judgment. In light of the statement in Mr Prescott's letter of 30 July 2004 (see [79]) and paragraph F of the recitals to the Final Funding Agreement noted above (at [81]), I accept that assertion. It seems that Ms Carruthers did not want to assume any further risks in conducting litigation after her loss in the Court of Appeal. 221However what legal duty was infringed by this conduct of Mr Prescott? Paragraph 77 of the FASOC alleges that the so called "Prescott's second Marshall misconduct" (which is defined as the "Prescott first, second and third GIO misconduct", and which I will treat as including the "Prescott fourth GIO misconduct") constituted (i) a breach of the "ongoing terms of [Mr Prescott's] former retainer from the plaintiffs [presumably Mrs Marshall] (express or implied)"; (ii) a breach of a duty of care said to be owed to the Marshalls by Mr Prescott; (iii) a breach of the fiduciary duty he is said to have owed the Marshalls; (iv) a breach of his obligation to keep confidential the information he had obtained during his retainer from them either under the terms of the retainer or as an obligation of conscience"; and (v) a conspiracy between the GIO and Carruthers either by unlawful acts or by lawful acts with the intention or "predominant purpose of harming the [Marshalls'] legitimate financial interests". These allegations are repeated and slightly expanded upon at [103] to [107] of the FASOC. 222None of these allegations has any substance. In relation to (iii), for the reasons already noted and as was eventually conceded on behalf of the Marshalls, Mr Prescott's fiduciary duty to them did not survive the termination of the retainer. In relation to (i), there was no attempt made to substantiate the existence of any express or implied term to the effect contended for that somehow survived the termination of Mr Prescott's retainer. As noted, in Kallinicos Brereton J found that the contractual duty of loyalty did not survive the termination of the retainer. 223Similarly, in relation to (ii) Mr Bevan's initial submissions of 15 August 2013 (at [123] to [125]) simply asserted the existence of a duty of care and did not attempt to differentiate between the period during and after the termination of the retainer. It articulated the duty in terms that reflect a fiduciary duty, namely to "promote and protect only the interests of the [Marshalls] in connection with the Pennsylvania proceedings". A duty of care expressed in those terms can never arise (Roads and Traffic Authority of NSW v Dederer [2007] HCA 42; 234 CLR 330 at [49] per Gummow J). Hence the original misconception about the effect of the decision in Beach Petroleum NL v Abbott Tout Russell Kennedy [1999] NSWCA 408; 48 NSWLR 1 informs this aspect of the Marshalls' claim. In any event, in respect of the period after the breach of the retainer and, in the absence of any properly developed argument, I do not accept that Mr Prescott owed Mrs Marshall a duty of care given that he was at that time retained to act on behalf of Ms Carruthers. To impose a duty of care on Mr Prescott in those circumstances would be inconsistent with his duty to Ms Carruthers. (It may be that Mr Prescott was in breach of the duty of care he owed Ms Carruthers if he was impeded in acting on her behalf for any reason of any obligation of confidence he owed Mrs Marshall: see Spector v Ageda [1973] Ch 30. However that is irrelevant for present purposes.) 224In relation to the claimed breach of an obligation of confidence, I have already addressed in detail the alleged confidential information that Mr Prescott is said to have misused in the period after the termination of his retainer. It has not been established that Mr Prescott misused any confidential information exclusive to the Marshalls in the period up to his ceasing to act on behalf of Ms Carruthers in the Marshall proceedings. 225The conspiracy allegation also fails. It follows from the above that the acts of Mr Prescott in procuring funding were not "unlawful". Most significantly there is not a scintilla of evidence that either the GIO or Ms Carruthers agreed with Mr Prescott or anyone else to commit any "unlawful acts". 226In relation to the allegation of a conspiracy by lawful means, as noted, it is necessary to establish a predominant purpose to harm the Marshalls' interests (Crofter). In the plaintiffs' written submissions in reply dated 19 August 2013 at [15], Mr Bevan sought to address this as follows: "In reply to [the defendant's written submissions dated 15 August 2013 at [47]], the evidence of the intention to harm the interests of the Marshalls is the conduct taken to secure an entitlement to the fund for Carruthers without any real insight whatsoever into the Pennsylvania law which was later relied on to support it. A reckless disregard for the rights of one client to disadvantage another client is evidence of intention to harm the second client because there is no bona fide belief held as to the prosecution of any legitimate rights of the first client which are said to compete with the latter client's rights." 227This submission was directed to a period after the termination of Mr Prescott's retainer with Mrs Marshall so that the suggestion he had two clients is ill founded. Otherwise I do not accept that Mr Prescott had anything other than a bona fide belief that Ms Carruthers had an arguable claim. Mr Prescott, Ms Carruthers and the GIO acted to further her and the GIO's legitimate interests which suffices to defeat the allegation of a conspiracy by lawful means (Crofter supra). Generally, the proposition that a solicitor who procures funding for their client thereby enters into a tortious conspiracy with their client and their funder to harm the other party to litigation is simply bizarre. 228I reject so much of Mrs Marshall's case that alleges that Mr Prescott is liable to her because he engaged in the Prescott's first, second, third and fourth GIO misconduct.

The (so called) Prescott's Third Marshall Misconduct 229This alleged misconduct was defined in [79] of the FASOC as follows: "Although he ceased to act for Carruthers in the Carruthers proceeding in the formal sense, Prescott continued to act for her informally by seeking information on Pennsylvania law to support her defence and cross-claim in the Carruthers proceeding and did so in breach of his obligation of confidence to the [Marshalls], in breach of his fiduciary duty to the [Marshalls], in breach of his contractual duties to the [Marshalls] and in breach of his tortious duties to the [Marshalls] under the terms of the Prescott retainer (Prescott's third Marshall misconduct)." (emboldened emphasis in original; italicised emphasis added) 230There is no doubt that from the period of the cessation of his retainer by Ms Carruthers in June 2005 until he was injuncted in November 2005 Mr Prescott continued to assist Ms Carruthers in her defence of Mrs Marshall's proceedings. However this allegation is more narrowly focused and only concerns his conduct in "informally ... seeking information on Pennsylvania law". 231Paragraphs 80 and 103 to 107 make the same allegations in respect of this so called misconduct as I have noted in [221] above in relation to the Prescotts second Marshall misconduct. 232The findings I have made in relation to the allegations of breach of fiduciary duty, negligence and breach of the retainer at [222] to [223] apply with equal force to Prescott's third Marshall misconduct. 233Sub-paragraph 80(d) of the FASOC alleges that the Prescott's third Marshall misconduct "constituted ... a breach of the fiduciary duty he owed to the plaintiffs and the obligation to keep confidential the information he had obtained during his retainer from them". Paragraph 106(a) is in similar terms. In the discussion at [163] to [192] I rejected the suggestion that Mr Prescott misused any information exclusively confidential to the Marshalls, save that I observed that prima facie he appears to have misused the information that was passed on to him by Mr Greenwell, as referred to in Mr Prescott's letter of 11 August 2005 ([179]). 234However, I decline to make any finding to that effect because no such allegation is raised by the pleaded case. The pleaded case in this respect is confined to an abuse of information acquired during the course of Mr Prescott's retainer with the Marshalls of which this is not. It also only alleges a breach of the obligation of confidence by Mr Prescott in "seeking information on Pennsylvania law". There is nothing to suggest that Mr Prescott used any of the information he obtained from Mr Greenwell for that purpose. 235This may appear to involve an overly strict approach to the pleaded case. However it is necessitated by the observations at [193] to [194] and the course of the submissions on this topic which I traced at [143] to [149]. The Marshalls only identified the confidential material with precision in their final written submissions in reply dated 9 October 2013 and in doing so implicitly suggested that its deployment involved a misuse. This course precluded Mr Prescott from having a proper opportunity to consider whether what was finally alleged against him was consistent with the FASOC. In those circumstances no departure from the pleaded case should be permitted. 236The conspiracy allegations in respect of Prescott's third Marshall misconduct fail for the same reasons they did in relation to Prescott's first, second, third and fourth GIO misconduct.

The (so called) Prescott's Fourth Marshall misconduct 237I have already addressed this at [197] above.

Mr Prescott's estoppel defences 238Only Mrs Marshall was a party to the Prescott proceedings and the Marshall proceedings. Thus, to the extent that recovery was sought in these proceedings of the solicitor/client component cost of those proceedings, then only Mrs Marshall can recover them. Kim Marshall's rights of recovery are limited to the claim for exemplary and punitive damages. 239Mr Kelly SC contended that, even if Mrs Marshall established a cause of action against Mr Prescott, she was not able to recover the solicitor/client component of her costs in the Prescott proceedings and the Marshall proceedings. He contended that the issue of the costs of those proceedings has already been determined by the costs orders that were made in each of those proceedings. For the reasons that follow I accept Mr Kelly SC's contention so far as it concerns the solicitor/client component of the Prescott proceedings, but reject it so far as it concerns the solicitor/client component of the Marshall proceedings. 240At the outset Mr Bevan contended that Mr Prescott "waived" his right to rely on these defences because it was said they had been withdrawn in January 2011 and only reinstated this year following an application by Mr Prescott to amend his defence (Marshall v Prescott (No 4) [2013] NSWSC 455) (plaintiffs' written submissions dated 15 August 2013 at [143]). He pointed to the cost and disbursements incurred in the meantime as well the "stress" of the litigation occasioned in the interim when there was no risk of these defences being upheld. Although the submission referred to the defences being "waived", the footnote to the submission referred to numerous passages from Commonwealth v Verwayen [1990] HCA 39; 170 CLR 394 which discuss both estoppel and waiver. Other than the incurring of costs which can be addressed if necessary, the balance of the claimed detrimental reliance was not the subject of any evidence so that no question of any estoppel sufficient to preclude these defences being relied on even arises. As for waiver, only Toohey and Gaudron JJ in Verwayen found that there was some form of "waiver" that precluded the Commonwealth's reliance on the limitation defence. Further, Gaudron J did so in the context of "deliberate action or inaction which has resulted in a changed relationship to which the parties will be held whether or not detriment is actually established" (Verwayen at 485). This has no relevance to this case and thus the particular form of waiver found in Verwayen by their Honours has no application here. 241In relation to the solicitor/client costs of the Prescott proceedings, Mr Kelly SC pointed to a stream of judicial statements that precludes one party from recovering further costs from another in a separate action where there was a judicial pronouncement of the parties' respective costs entitlements in a previous proceedings (defendant's written submissions dated 15 August 2013 at [144] to [150]). Thus in Anderson v Bowles [1951] HCA 61; 84 CLR 310, Dixon, Williams, Fullagar and Kitto JJ stated at 323: "It is a general rule that where it is sought to include costs incurred in other proceedings in the damages arising upon a cause of action, costs shall not be included, if as a matter of judicial determination or by a positive rule of law they are treated as costs which should be borne by the party suing. Accordingly it is not possible to recover as part of such damages the difference between party and party costs awarded to the plaintiff in the original litigation and the costs as between solicitor and client which he has incurred: Barnett v. Eccles Corporation (1900) 2 QB 423, at p 428. Further, if costs are expressly withheld by the court in the original proceeding none can be recovered in the action for damages brought by the plaintiff from whom they were so withheld." 242This passage does not specify the precise basis for this "general rule". At least in cases involving a previous "judicial determination" it seems that it is a form of res judicata in that the entitlements of the parties in respect of costs merge in the order that is made. In cases where the "rule of law" precluding recovery is a statute then presumably the general rule derives from an ascertainment of a statutory intention that the legislation deals exhaustively with the topic of costs, although it is not necessary to consider this further. 243Mr Kelly SC also referred to Avenhouse v Hornsby Shire Council (1998) 44 NSWLR 1. In Avenhouse one issue that arose on appeal was whether in proceedings in this Court against the Council for negligence the appellants could recover their costs of litigating against the Council in the Land and Environment Court at the conclusion of which there had been "no order as to costs". The Court of Appeal upheld the trial judge's refusal to allow recovery of those costs. Sheller JA, with whom Mason P and Priestley JA agreed, found (at 37) that: "[The appellants] having agreed that there should be no order for costs, they cannot, in my opinion, now seek to go behind that agreement by claiming the costs as damages in the present proceedings." Of precise relevance to this case, Sheller JA noted (at 36) that: "Had [the appellants] obtained an order for costs in the Land and Environment Court, principle would suggest that they could not recover in the present proceedings the difference between the costs assessed and the actual costs or expenses they incurred." 244Sheller JA did not refer to Anderson in his judgment. Presumably this is so because his Honour treated "no order as to costs" as only an agreement between the parties that precluded later recovery and not as a "judicial determination or ... positive rule of law" as referred to in Anderson. 245Mr Bevan contended that there is an exception to the "general rule" stated in Anderson as expressed in the following passages from McGregor on Damages, 17th Ed (2003) at 632: "More difficult are the cases where the now claimant claims that a separate tort was involved in instigating, assisting or causing the previous proceedings and sues for damages for that tort. Such torts could be malicious prosecution, false imprisonment or conspiracy. If the now claimant is thus capable of establishing a separate cause of action, it may be that he has found a sufficient peg upon which to claim as damages costs incurred by him in the earlier proceeding. Devlin L.J. in Berry v British Transport Commission [footnote: [1962] 1 Q.B. 306] certainly thought this should be so. He said: 'I find it difficult to see why the law should not now recognise one standard of costs as between litigants and another when those costs form a legitimate item of damage in a separate cause of action flowing from an additional wrong.' (emphasis added) ... (c) Conspiracy. Conspiracy is another tort which might be held to arise from instigating, assisting or causing the previous proceedings. This would be analogous to malicious prosecution but would also require an agreement between two parties to bring or defend the previous proceedings: it might however be wider in that, for instance, it could, unlike malicious prosecution under the present law, apply to all civil actions. On principle there is no reason why the now claimant should not recover as damages costs incurred by him in the previous proceedings. In Hathaway v Barrow [footnote: (1807) 1 Camp. 151] the now defendants had unsuccessfully brought a petition against the now claimant and costs had been awarded against them. The now claimant claimed to recover as damages the costs he had incurred above those awarded, but the court refused their recovery, Sir James Mansfield saying that those already awarded 'must be considered as satisfaction'. This, however, is the only case and it is a decision of 1807, which was long before the general principles were worked out by the courts; moreover, it is at odds with the general view of Devlin L.J. already referred to. [footnote: In Berry v British Transport Commission [1962] 1 Q.B. 306, CA at 322. See para. 17-005, above]" 246Mr Bevan contended that Mrs Marshall falls within this exception as she sues in conspiracy (plaintiffs' written submissions dated 15 August 2013 at [165]). I reject this contention for two separate reasons. 247First, at this point I am dealing with Mrs Marshall's claim for the solicitor/ client costs of the Prescott proceedings. Mrs Marshall does not allege that any "separate tort" on the part of Mr Prescott was "involved in the instigat[ion], assisting or causing" of those proceedings, as opposed to Ms Carruthers' defence of the Marshall proceedings. Thus, even if the first passage from McGregor on Damages was to be read as a definitive statement of an exception to the general rule stated in Anderson and the words "will be" were substituted for "may", it does not assist Mrs Marshall's claim to recover the solicitor/client costs component of the Prescott proceedings. 248Second, I do not accept that the exception alluded to in the passage from McGregor on Damages operates in circumstances where there has been a previous order addressing costs by a Court with full power to award them. In Avenhouse at 35 Sheller JA noted this possible exception as stated in earlier edition of McGregor on Damages, and then discussed various cases that bore upon the existence of the exception (namely Berry; Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674 and Jack L. Israel Ltd v Ocean Dynamic Lines SA & Ocean Victory Ltd [1982] 2 Lloyd's Rep 88). His Honour then referred to Hanrahan v Ainsworth (1985) 1 NSWLR 370 in which a plaintiff claimed damages for the defendant's alleged abuse of legal process by instituting defamation proceedings and sought to recover costs incurred as a result of those defamation proceedings. 249In Hanrahan at 375 Hunt J stated: "The first defendant objects that the actual temporal loss upon which the plaintiff relies in the present case (the expenses which he incurred in travelling to see his legal advisers) cannot be recovered in these proceedings. Those expenses, he says, are costs properly recoverable in the earlier defamation action, and only in that action. The expenses necessarily incurred in defending criminal proceedings are recoverable in a subsequent action for damages for malicious prosecution: Savile v Roberts (1698) 1 Ld Raym 374 at 378; 91 ER 1147 at 1150. But, where the action for malicious prosecution is based upon a civil action and not upon criminal proceedings, those costs are recoverable in the earlier action, and not in the action for malicious prosecution: Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674 at 690. This is because the successful party in civil proceedings (but not in criminal proceedings) is - so the theory goes - compensated in those proceedings by an order for costs, and the law does not permit that successful party's entitlement to costs in the earlier civil proceedings to be litigated a second time in the claim for damages for malicious prosecution: Berry v British Transport Commission [1962] 1 QB 306 at 320; Coleman v Buckingham's Ltd [1963] SR (NSW) 171 at 176, 177-178; 80 WN 593 at 596-597, 598. The first defendant's argument does not, however, take into account the fundamental differences between an action for damages for abuse of process and an action for damages for malicious prosecution. (Those differences are also recognized in Coleman v Buckingham's Ltd (at 179; 599).) The difference principally relevant here is the need in the action for malicious prosecution, but not in the action for abuse of process, for the plaintiff to plead and to prove that the earlier proceedings have terminated in his favour. Thus there is not in the action for abuse of process (as there is in the action for malicious prosecution) necessarily an adjudication in the earlier proceedings in relation to the present plaintiff's entitlement to costs. If the earlier proceedings had terminated in favour of the present plaintiff, then his expenses would have been recoverable in those proceedings and they would not support his subsequent action for abuse of process. But, where those earlier proceedings have not so terminated in favour of the present plaintiff, I see no reason why his expenses in relation to those proceedings should not validly support his present claim." (emphasis added) 250In Avenhouse at 36 Sheller JA specifically cited the latter part of this passage but I take his Honour as having endorsed the entirety of Hunt J's analysis. Hunt J's analysis was such that it precluded recovery in the latter proceedings of solicitor/client costs in earlier (civil) proceedings where there was an "adjudication in the earlier proceedings" as to costs. There was no such adjudication in Hanrahan but there was in this case. I take Sheller JA (with whom Mason P and Priestley JA agreed) in Avenhouse as having endorsed Hunt J's analysis in Hanrahan which confines the operation of any exception of the kind identified in McGregor on Damages in the manner I have stated at [248]. 251Otherwise it should be noted that this analysis is only apposite to the circumstance where the earlier proceedings were conducted in a court exercising a civil jurisdiction with full powers to award costs on a variety of bases and in respect of a range of circumstances. Since Hanrahan and even Avenhouse the powers of this Court hearing civil proceedings to award costs have only expanded so that the rationale for these decisions is even more appropriate now than it ever was. However the power to award costs in, say, criminal proceedings is more limited. Thus a different approach has been adopted where the earlier proceedings involve a criminal prosecution (see Berry at 317, 323 to 332 and 336 to 339). 252Mr Kelly SC sought to apply the same analysis to Mrs Marshall's claim to recover the solicitor/client costs component of the Marshall proceedings. Mr Bevan contended that the authorities relied upon by Mr Kelly SC and noted above have no application where the earlier proceedings were not between the same parties. He contended that, as a matter of principle, there was no difficulty with a party recovering from, say, their solicitor all the costs they incurred in other proceedings against a different party, provided that the usual preconditions for recovery such as causation and remoteness, etc, are satisfied. I agree (see Provident Capital Ltd v Papa (No 2) [2013] NSWCA 156 at [13] to [17], and cases cited at [14], per Macfarlan JA with whom Sackville AJA agreed). 253Mr Kelly SC sought to rely on an Anshun estoppel as precluding recovery by Mrs Marshall of the solicitor/client costs in the Marshall proceedings. As I understand this contention it concerns Mrs Marshall's alleged failure to either seek a solicitor/client costs order against Ms Carruthers in the Marshall proceedings or to make such an application against Mr Prescott in the Marshall proceedings, presumably under ss 98 and 99 of the Civil Procedure Act 2005. It is not necessary to address all the potential difficulties with this contention because it suffices to state that I am not satisfied that it was "unreasonable" for Mrs Marshall not to have made any such application (Anshun at 602 per Gibbs CJ, Mason and Aickin JJ). To have done so would have put at risk the favourable settlement she had negotiated with Ms Carruthers. Moreover I consider that a litigant in her position was entitled to take stock and consider the financial effect of all the costs orders and costs she had incurred before deciding to embark upon further litigation.

Proportionate liability 254Mr Prescott's defence pleaded that Mrs Marshall's and Kim Marshall's claim was an apportionable claim and that there were concurrent wrongdoers, namely Mr Greenwell and Kreindlers. No submissions were advanced in support of the defence. In view of my findings, it is neither necessary nor possible to address it.

Causation and quantum 255Various submissions were made by Mr Kelly SC concerning whether any conduct of Mr Prescott was causative of the solicitor/client costs claimed by Mrs Marshall. I have already addressed one matter relevant to causation in respect of the period prior to the termination of Mr Prescott's retainer to act on behalf of Mrs Marshall and Kim Marshall (at [210]). In view of my rejection of the entirety of the pleaded allegations against Mr Prescott it is not possible to address the balance of the points raised. 256In relation to quantum, I have already addressed Mr Kelly SC's submission concerning Mr Salier's assessment. Obviously, the claim for exemplary or punitive damages fails.

Orders 257I will order that the proceedings be dismissed and hear the parties as to costs. 258Accordingly the Court orders that: (1)The proceedings be dismissed.

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