Plaintiff v First Defendant

Supreme Court of Victoria|2012-03-13|Before: Pagone J

PRACTICE AND PROCEDURE - Leave to file and serve a notice of solicitor ceasing to act - Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 20.03 - Party unable to provide funding to solicitor - Whether there are special circumstances which render it expedient to retain the solicitor on record - Solicitor's obligation to comply with Court orders.

1 The solicitors ("Madgwicks") on record for the defendants apply by summons for leave to file and serve a notice of solicitor ceasing to act for the defendants pursuant to r 20.03 of the (Vic). Leave is not usually required where a solicitor is substituted for a party in proceedings or where a solicitor ceases to act for a party. Leave is required, however, where a solicitor wishes to file a notice of ceasing to act "after a proceeding has been set down for trial." The proceeding was set down for trial on 9 December 2011 to commence on 13 March 2012. The application for ceasing to act was commenced by summons dated 2 March 2012 made returnable, and heard, on 7 March 2012. Leave is also required where the address of the party in the notice is outside Victoria. The address of one of the two defendants is outside Victoria.

2 As a matter of general principle a solicitor ought not to be required to act for a party where the party has ceased to provide funding. Rule 20.03 gives effect to that general principle by providing an unfettered ability for a solicitor to file a notice of ceasing to act except in the circumstances identified in r 20.03(3) when leave of the Court is required. The practice commentary to r 20.03 contains the general observation that a "solicitor who acts for a party and is unable to get instructions or funding is entitled to cease to act and to file a notice to that effect."[3] Authority for that proposition is said to be found in Blue Cross Properties (Toorak) Pty Ltd v Mackie & Staff Pty Ltd[4] but in that case his Honour was not dealing with an application for leave and, indeed, held that solicitors were required to comply with orders of the Court "even if they have no funding".[5] His Honour said (omitting footnotes):

Parties are required to comply with orders of the Court. It is not a matter of choice whether or not the steps set out in an interlocutory order are observed. If an order cannot be complied with for some good reason then application should be made to the Court for variation of the order. At the very least, the consent of the other parties to the variation, such as an extension of time, should first be sought. Here, Elite's solicitors did not advise the other parties that it would not be filing any expert report or that they would not be attending the mediation. If solicitors cannot obtain instructions or funding from the client then they are entitled to file a notice that they have ceased to act. But whilst they remain the solicitors on the record they are, in my opinion, required to comply with the orders of the Court even if they have no funding. Thus, Elite's solicitor should have attended the mediation, given that he had not applied for any exemption from attendance and had not even advised the other parties that he would not be attending. On the contrary, he had participated in making the arrangements for the mediation.[6]

His Honour's reasons make clear that a lack of funding does not absolve a solicitor from an obligation to comply with court orders made in respect of a proceeding in which the solicitor continued to be on record. Nor was his Honour dealing with one of the situations where leave might be needed.

3 The purpose of the rule requiring leave before a solicitor may file a notice of ceasing to act for a party was described in the context of the High Court Rules in Plenty v Gladwin[7] where the Court explained:

The purpose of the rule is quite different. Its concern is with the record of the Court and with the service of documents. It comes into play when, rightly or wrongly, a solicitor has ceased to act and the party has not given notice of change of solicitor or notice of intention to act in person. The solicitor may then take steps to have his name removed from the record. The first step is by applying to the Court or a Justice for an order declaring that the solicitor has ceased to be the solicitor acting for the party in the proceeding. As we have noted the Court has a discretion whether or not to make the order, but unless there are special circumstances which render it expedient to retain the solicitor on the record the order will generally be made as a matter of course upon proof that the solicitor has in fact ceased to act for the party and that no steps have been taken to take the solicitor's name off the record. Order 7, r 7(4) makes it plain that an order made under the rule does not affect the rights or liabilities of a solicitor and a party as between themselves.[8]

As the passage makes clear, the Court has a discretion in deciding whether to grant leave. Generally leave will be given upon proof that the solicitor "has in fact ceased to act for the party and that no steps have been taken to take the solicitor's name off the record" but leave may not be granted if there are special circumstances which render it expedient to retain the solicitor on the record.

4 Madgwicks rely upon two affidavits in support of their summons for leave in addition to an affidavit of service. The first is an affidavit of Mr Laurance Davis dated 2 March 2012 and the second is one by Mr John Caridakis dated 6 March 2012. The affidavit of service was also made by Mr Caridakis and dated 7 March 2012.

5 Madgwicks' application arose in the context of a trial pending for hearing within eleven days of the application being made. The basis of Madgwicks' application for leave to file a notice of ceasing to act for the defendants is, in short, that on 2 March 2012 Madgwicks requested funds from the defendants to conduct the trial but were told that neither of the two defendants were in a position to provide the funds requested. The affidavit of Mr Davis states that Madgwicks' billing records show that approximately $85,000 is currently outstanding plus an additional sum of approximately $50,000 for work in progress with unbilled disbursements yet to be paid. His affidavit goes on to recount having had a separate telephone conversation with each of the defendants regarding the trial. Each of the telephone conversations took place on 2 March 2012. Mr Davis deposed to the substance of the conversations including that he told each of the defendants that the trial was set down for a trial expected to last four days and that he anticipated that counsel would need at least four days to prepare for the trial and, therefore, that Madgwicks needed "at least $26,400 for Counsel (being $3,300 per day) plus [Madgwicks] also need funds for our costs". The affidavit by Mr Davis then recorded the substance of the conversations as follows:

(d) Each of the Defendants said to me that they are not in a position to provide the funds requested. I asked each of the Defendants whether they could raise the funds by loans or otherwise. Each of the Defendants said to me that they were unable to do so.

(e) I said to each of the Defendants that the firm is not prepared to fund the litigation. We require payment as does Counsel.

(f) Each of the Defendants said to me that if that was the case each of the Defendants can no longer engage Madgwicks to act on their behalf.

(g) I said to each of the Defendants that if they no longer wanted to engage Madgwicks the firm would need to file a notice of ceasing to act. Madgwicks would need to file an application for leave to file the notice given that Peter Mann lives outside Victoria and the matter has been set down for hearing. I also said that the Court has a discretion as to whether or not to grant leave for us to cease acting.

(h) Each of the Defendants said to me that the firm should do whatever it needed to do.

The affidavit of Mr Caridakis sworn 6 March 2012 was primarily directed to telephone conversations on 6 March 2012 following correspondence about the collection or delivery of documents. Mr Caridakis' conversation with the defendants confirmed that they were not going to oppose Madgwicks' application for leave to cease to act and that they both proposed to defend the proceeding set for trial on 13 March 2012, then being seven days from the date of Mr Caridakis' two separate conversations.

6 Counsel appeared on Madgwicks' application for leave and confirmed that the trigger for the application was his instructors' request for funds on 2 March 2012 and not a decision by the defendants otherwise to withdraw instructions or any dissatisfaction with Madgwicks or with counsel. No explanation was proffered, however, about why the request for funding had not been made until the date for trial was so imminent. Madgwicks have known of the trial date since 9 December 2011 and have given no explanation for why they only sought funding on 2 March 2012 in the context of a trial set to be heard within eleven days. Counsel accepted that the discretion to give leave might be exercised by the imposition of conditions but, after taking instructions, was in no position to offer conditions upon which leave should be granted.

7 Solicitors seeking the exercise of the Court's discretion to grant leave carry the burden of satisfying the Court that leave should be granted in all of the circumstances which are particular to the case in which they make the application. Solicitors making such applications must be particularly mindful of their duties to the Court, the administration of justice, to their client (or former client) and to opposing or other litigants and to their legal advisers. Usually the only possible controverter to such an application will be the solicitors' own (former) client, and often the application will be unopposed and untested although the inconvenience that may be caused in granting leave may be substantial. It has been held that such applications need not be served upon the other party to the proceedings but only upon the party for whom the solicitors act.[9] However, that the impact of granting leave upon the Court and upon other parties to a proceeding may be a relevant factor in whether to grant leave. That may be seen from the terms of r 20.03(3)(a) itself because of the requirement for leave where "the address of the party in the notice is outside Victoria". A consequence of giving leave in such cases will be to deny to an opposing party the convenience of service of documents upon the solicitor where the solicitor's (former) client is outside Victoria. In this case the address of one defendant is Kingscliff New South Wales. In this case the plaintiff was present at the hearing of Madgwicks' summons because of a concern that the hearing date might be vacated if leave was granted. In those circumstances I gave the plaintiff's counsel leave to appear to assist the Court.

8 This is a case where in my view there are "special circumstances which render it expedient to retain the solicitor on the record."[10] The application was made almost three months after the date was fixed for trial and only eleven days before the trial was due to commence. Madgwicks left their requirement that its clients put them in funds for the trial until 2 March 2012. No explanation was given for the delay (or timing) in imposing or insisting upon funds or for the delay (or timing) in making the application for leave. It is incumbent on solicitors making such applications for leave to satisfy the Court that it is proper and appropriate that leave should be granted. Applications of this kind are likely to be unopposed and that circumstance, coupled with the practitioner's duty to the Court and to uphold the law, makes it incumbent upon them to be full and frank with the Court asked to grant leave. The removal, or absence, of legal practitioners close to trial is sometimes used as a reason for an adjournment of the hearing with inconvenience to the Court, the other parties and to other litigants. Practitioners ought to guard against the possibility of the Court finding itself with unrepresented litigants close to the hearing date. No evidence was given by Madgwicks of having taken any steps to avoid the inexpedient consequences to the Court, to the plaintiff and to the plaintiff's solicitors which would arise if the leave Madgwicks seeks were to be granted. Nor, for that matter, have Madgwicks given evidence of any steps to prevent the situation of the defendants finding themselves close to the hearing date without legal representation or having to conduct the trial unrepresented after many months of all concerned knowing of the trial date. The inconvenience to the Court and the additional inconvenience and costs to the plaintiff and its solicitors, that would be occasioned by granting leave at so late a stage, could not be compensated by costs orders and outweigh any burden to Madgwicks of not granting them leave. The requirement in r 20.03(3) of seeking leave is imposed upon legal practitioners for the proper administration of justice. It enables the Court's work to be performed efficiently and with the confidence of the assistance of practitioners it provides a protection to former clients and serves to protect the position of adversaries.

9 The role Madgwicks may hereafter be required to perform upon my refusal to grant leave is another matter. Their continued role should, as far as possible, be limited to the purpose of the rule requiring leave as explained in Plenty v Gladwin[11] as concerned with the record of the Court and with service of documents. They may be required to continue to receive documents from the plaintiff's solicitors. It may require Madgwicks to continue to convey to the defendants any documents served for them at Madgwicks. Their status as officers of the Court may conceivably also require them to offer such assistance as the Court may require during the conduct of the trial. Madgwicks may not be required to conduct the trial on behalf of their former clients without funding but may need to give such other assistance as may be required by the Court to lessen or eliminate the adverse impact upon the Court's record or upon the orderly service of documents upon the defendants as the Court may direct. It is conceivable that greater duties may also arise but they should not be considered in the abstract and without hearing submissions from Madgwicks and others affected.

[3] Neil Williams, Civil Procedure Victoria, I 20.03.0 at Vol 1, 3253.

[8] Ibid 666 (Wilson, Brennan, Deane and Dawson JJ); Re Falgat Constructions Pty Ltd [1996] HCA 16; (1996) 70 ALJR 609, 610 (Kirby J).

[9] Re Creehouse Ltd [1982] All ER 659.

[10] Plenty v Gladwin [1986] HCA 55; (1986) 60 ALJR 665, 666 (Wilson, Brennan, Deane and Dawson JJ).

Court (General Civil Procedure) Rules 2005

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