Plaintiff v Defendant

The fact that there is a change of solicitors in the course of a proceeding does not take away the former solicitor's right, but his right to maintain the lien may be affected depending upon whether he discharged himself as the solicitor or was discharged by the client. The general rule is that if he is discharged by the client otherwise than for some breach of contract, he is not obliged to produce or hand over the documents until his costs are in fact paid.[2]

In order to understand the submissions made on behalf of Bodycorp, it is necessary to refer to the emphasised words, "otherwise than for some breach of contract".

3 In Gamlen Chemical Co (UK) v Rochem Ltd & Ors,[3] the Court of Appeal in England stated the general rule. Templeman LJ approved a statement by Hodson LJ in Hughes v Hughes[4] in the following terms:

There is no doubt that a solicitor who is discharged by his client during an action, otherwise than for misconduct, can retain any papers in the cause in his possession until his costs have been paid... The rule applies, as the authorities show, whether the client's papers are of any intrinsic value or not.[5]

In order to understand the submissions made by Bodycorp, it is necessary to refer to the emphasised words "otherwise than for misconduct".

4 Where the solicitor determines that the retainer, including for good cause such as non-payment of fees after a reasonable time has elapsed after demand for payment, the solicitor's lien is, in cases where the retainer relates to litigation, subject to another qualification. This qualification was stated by Templeman LJ in Gamlen Chemical in the following terms:

The solicitor himself may determine his retainer during an action for reasonable cause, such as the failure of the client to keep the solicitor in funds to meet his costs and disbursements; but in that case the solicitor's possessory lien, i.e. his right to retain the client's papers of any intrinsic value or not, is subject to the practice of the court which, in order to save the client's litigation from catastrophe, orders the solicitor to hand over the client's papers to the client's new solicitors, provided the new solicitors undertake to preserve the original solicitor's lien and to return the papers to the original solicitor, for what they are worth, after the end of the litigation.[6]

This principle was accepted by Gillard J in McKenzie.[7]

5 In summary, where a solicitor's retainer relates to current litigation, as here, the principles may be distilled as follows. First, where a client discharges the solicitor, the solicitor's lien continues in force unless the client was entitled to terminate the retainer for breach of contract or misconduct by the solicitor. Second, where the solicitor discharges the client without good cause, the solicitor's lien comes to an end. Third, where the solicitor discharges the client for good cause, the solicitor's lien continues, but is subject to the qualification stated by Templeman LJ in Gamlen Chemical that the file must be handed over to the new solicitors, provided that they undertake to return it at the end of the litigation, to save the client's litigation from catastrophe.

6 With these principles in mind, I turn to the relevant facts in this case. Before doing so, I note that the matter was heard in the Practice Court and that the hearing concluded well after court hours yesterday evening. Many affidavits were filed. There were some instances of oath against oath on material questions. Although an application by Mr Edwards for non-party discovery was foreshadowed, it was not proceeded with. There was no cross-examination. However, having regard to the relatively small amount of legal costs in dispute and Bodycorp's urgent need for the file so as to save its interests in the principal proceeding from being lost, the parties agreed that I should determine the proceeding on the basis of the evidentiary material as I have described it.

7 The relevant chronology is as follows.

(1) Bodycorp retained Mr Edwards in about late July 2006. At that time, the principal proceeding had been on foot for over four years and there was still no settled statement of claim approved by the court. The matter obviously required urgent attention and was subject to the hazard of being dismissed for want of prosecution if a viable statement of claim could not be formulated promptly.

(2) There was an early flurry of activity by Mr Edwards and counsel briefed by him. In late August, after reading the papers, junior counsel advised Mr Edwards that the documents provided were incomplete in material respects. In his affidavit, junior counsel swore:

"By that time I had concluded that the papers delivered to me did not contain all of the court documents and that there was a substantial number of missing documents, particularly some affidavits and some of the pleadings. I rang Mr Edwards and told him that there was documentation missing from the papers delivered to me and that it was crucial to obtain all of the paperwork, in particular the court documents, before Mr Hayes QC and I could either understand the matters fully or provide advice."

(3) There is no direct evidence that Mr Edwards took urgent steps to obtain these documents or, if he did, that he then pursued those requests with the necessary vigour, given the urgency of the situation.

(4) In September, Mr Edwards was distracted by extraneous events. For reasons not relevant, the Law Institute of Victoria appointed a manager to his practice between 11 and 25 September. Mr Edwards' bill, which was delivered subsequently, reveals that no charges had been made for any work performed on the file after 4 September, except for the drawing of a notice of ceasing to act on 17 October. There is no other evidence of any work being performed by Mr Edwards to progress the matter after 4 September.

(5) On 31 July, a summons had been issued by Mr Edwards on behalf of Bodycorp for leave to deliver a further amended statement of claim. That summons was returnable on 21 August. Mr Edwards arranged for it to be adjourned on the papers until 4 September. On that day, Mr Edwards performed his last service. He arranged for the matter to be adjourned on the papers until 24 October 2006. At this time, the documents requested by junior counsel had still not been provided or, if they had, there is no evidence to this effect, nor is there any further evidence of attempts by Mr Edwards to obtain these documents to enable a statement of claim to be drawn and propounded at the adjourned hearing on 24 October.

(6) Next, Bodycorp became dissatisfied with Mr Edwards' performance of the retainer. Bodycorp consulted another solicitor, Mr Issac Brott. Mr Brott telephoned Mr Edwards in mid-October 2006. Mr Edwards has sworn that Mr Brott told him that he had been instructed by Bodycorp to conduct the principal proceeding on its behalf. This is disputed by Bodycorp. However, although Mr Brott was obviously assisting Bodycorp in this application, for example by providing documents to be exhibited to affidavit material, no affidavit was sworn by Mr Brott to dispute the version of the conversation sworn to by Mr Edwards and no explanation was put forward as to why Mr Brott had not sworn an affidavit. I infer that the evidence of Mr Brott would not have assisted Bodycorp's case on this issue. I accept that Mr Brott informed Mr Edwards, in about mid-October 2006, that he had been instructed to act for Bodycorp in the principal proceeding. This also accords with the probabilities. Something must have happened to make Mr Edwards prepare the notice of ceasing to act on 17 October 2006. At that time there was as yet no invoice for fees which had been unpaid. The notice of ceasing to act cannot have been justified, in Mr Edwards' mind, on the basis of fees being unpaid after reasonable request having been made. Further, the evidence shows that Mr Brott requested Mr Edwards to send the case file to him by letter dated 19 October, which letter enclosed an authority signed by Mr Murdaca on behalf of Bodycorp for the case file to be delivered to Mr Brott. Although this letter and enclosure has been lost, other correspondence refers to it, and I find that such correspondence and authority was in fact forwarded by Mr Brott to Mr Edwards on 19 October. Once again, there is no contrary evidence from Mr Brott to dispute this or other evidence on behalf of Bodycorp.

(7) Although Mr Edwards filed a notice of ceasing to act on or about 19 October, there is no evidence that he served it on his ex-client or upon the new solicitor, Mr Brott. Receipt of the notice of ceasing to act is denied by Bodycorp. For reasons which will become apparent, it is unnecessary to make a finding on this dispute.

(8) On 23 October, Mr Edwards delivered an invoice for his fees to Bodycorp. As I have said, there was no prior invoice.

(9) The next relevant event was the hearing on 24 October before a master. Mr Edwards says that he had informed Bodycorp of this date. This is disputed by Bodycorp. Whatever version is true, there is no evidence as to the content of the conversations alleged by Mr Edwards, other than the general statement that Bodycorp representatives were informed of the date orally.

(10) There was no appearance on behalf of Bodycorp at the adjourned hearing of its summons on 24 October 2006. Master Lansdowne made a number of orders on that date. In summary, the Master ordered that the summons issued by Bodycorp be dismissed without adjudication and that Bodycorp serve a summons for directions within 30 days, in default of which the proceedings would stand dismissed. Detailed orders as to the manner of service of the authenticated order were made by the Master, with the obvious intention of ensuring that the order came to the attention of Bodycorp and those in control of it. I infer that this order was served. However, notwithstanding its draconian effect, it was not complied with and the proceeding stood dismissed.

(11) On 31 October, Mr Brott signed a letter requesting a bill from Mr Edwards in taxable form. This is one of the documents which Mr Brott has provided to Bodycorp to assist it in the conduct of this application. No bill in taxable form was provided.

(12) There has since been an application to reinstate the proceeding. This was initially refused by a Master. On appeal, Mandie J ordered, subject to certain conditions as to the payment of money by 20 April, that the time for the plaintiff, that is, Bodycorp, to file a summons for directions be extended until 24 April this year. Counsel for Bodycorp informed me that Bodycorp intends to make the required payments and to issue a summons for directions once it has done so. However, Bodycorp is not prepared to pay the costs claimed by Mr Edwards. First, due to lack of capacity. Second, because the affidavit material shows, it was submitted, a bona fide dispute as to the quantum of the costs claimed and evidences a possible claim for a set-off or counter claim for breach of retainer by Mr Edwards, giving rise, for example, to costs orders against Bodycorp at a hearing at which it was not represented.

8 Against this factual background, I make the following findings. First, I find that Bodycorp discharged Mr Edwards by instructing Mr Brott to act on its behalf in the principal proceeding, to inform Mr Edwards of this and to seek the case file from Mr Edwards.

9 Second, I find that Mr Edwards was in material breach of his retainer at the time of discharge. The matter was urgent. The lack of any action to progress it by actively seeking the documents requested by junior counsel in late August was conduct well below the standard to be expected of a solicitor in all of the circumstances. The appointment of a manager by the Law Institute provides no excuse for the lack of attention by Mr Edwards in the period after 4 September 2006. Section 5.4.3(1) of the Legal Profession Practice Act 2004 does not absolutely prohibit a legal practitioner of a practice which is the subject of appointment of a manager from engaging in the affairs of the practice. It only prohibits the practitioner from participating in the affairs of the practice except under the direct supervision of the manager. Section 5.4.4 of the Act provides that the manager may transact urgent business of the practice with the approval of existing clients of the practice. At the very least, Mr Edwards should have informed the manager that there was urgent business and sought to have it attended to by the manager, after having sought consent of Bodycorp. There is no evidence that this was done. Nor is there any evidence that Mr Edwards took any steps to progress the interests of Bodycorp after the manager withdrew on 25 September. These issues were clearly raised in Bodycorp's affidavit material and have not been adequately responded to by Mr Edwards in the evidence filed on his behalf.

10 Third, even if there was no breach of retainer by Mr Edwards as I have found, I am satisfied that, in this case, it is necessary, in order to save Bodycorp's principal proceeding from catastrophe, that the case file be delivered to Bodycorp's new solicitors in accordance with the practice described in Gamlen Chemical.

11 It follows that Bodycorp is entitled to the relief which it seeks. Having regard to my principal finding that the lien did not survive a material breach of retainer by Mr Edwards, I do not require the undertaking by Bodycorp's new solicitors to preserve the original solicitor's lien, as discussed in the Gamlen Chemical case. In any event, as noted in that case, such an undertaking would be of little real worth.

12 For these reasons, I propose to order that the defendant forthwith deliver up to the plaintiff the defendant's case file for proceeding 9071 of 2005 in this Court. I will hear the parties as to costs.

[1] [2001] VSC 220, [32]-[42].

[2] Ibid [40], (emphasis added).

[3] [1980] 1 WLR 614.

[4] [1958] P 224, 227-8.

[5] [1980] 1 WLR 614, 624 (emphasis added).

[6] Ibid.

[7] [2001] VSC 220, [71].