Salvatore Blanda v Kemp Strang Lawyers Pty Ltd

Bechara v Atie [2005] NSWCA 268 Gamlen Chemical Co (U.K) Ltd v Rockem Ltd & Ors [1980] 1 All ER 1049 CASES CITED : Jankowski v Mastoris (1995) 7 BPR 14,589 Major Projects Pty Limited v Sibmark Pty Limited [1992] ANZ ConvR 349 Robins v Goldingham (1872) LR 13 Eq 440

PARTIES : Salvatore Blanda v Kemp Strang Lawyers Pty Ltd

COUNSEL : M Maxwell - Plaintiff S Docker - Defendant

SOLICITORS : McLachlan Chilton - Plaintiff Kemp Strang - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

15402/05 SALVATORE BLANDA v KEMP STRANG LAWYERS PTY LIMITED

JUDGMENT 1 HIS HONOUR: In these proceedings the plaintiff Salvatore Blanda ("the plaintiff" or "Mr Blanda") seeks an order pursuant to s 728 of the Legal Profession Act 2004 that his former lawyers deliver to him a file kept by the lawyers in acting as solicitors for him. The defendant or defendants are variously named in the Court papers but no issue has been taken about whether the proper defendant is a corporation Kemp Strang Lawyers Pty Limited or the partners of an unincorporated firm Kemp Strang Lawyers. In this judgment I will refer to the defendant or defendants simply as "the defendant" or "Kemp Strang". 2 Section 728 (1) of the Legal Profession Act 2004 is in the following terms:- "(1) On the application of a client of a law practice, the Supreme Court may order the law practice: (a) to give to the client a bill of costs in respect of any legal services provided by the law practice, and (b) to give to the client, on such conditions as the Supreme Court may determine, such of the client's documents as are held by the law practice in relation to those services." 3 Kemp Strang delivered bills of costs in respect of the legal services provided by Kemp Strang to the plaintiff. The plaintiff seeks an order pursuant to par (b) of subs (1) of s 728 that Kemp Strang give to the plaintiff documents of the plaintiff over which Kemp Strang claims a lien for unpaid costs. 4 The plaintiff's application is supported by an affidavit by John Gerard Amond, a solicitor employed by the plaintiff's present solicitors Messrs McLachlan Chilton. 5 Kemp Strang rely on an affidavit by Sarina Roppolo, a partner in the firm of Kemp Strang, who acted for the plaintiff. At the hearing before me Ms Roppolo was cross-examined, fairly briefly, on her affidavit. 6 There is little or no dispute about most of the primary facts and the following statement of facts is derived partly from Mr Amond's affidavit and partly from Ms Roppolo's affidavit. 7 On 1 September 2001 the plaintiff's younger brother Simon Blanda died as a result of injuries he had received in a motor vehicle accident on 22 August 2001. 8 In about April 2002 a woman named De-anne Forno brought proceedings in the Supreme Court seeking a declaration that she had been Simon Blanda's de facto wife and seeking a grant of letters of administration of Simon Blanda's estate. These proceedings can conveniently be referred to as "the Supreme Court proceedings". It would appear that Mr Blanda was a party to the Supreme Court proceedings and that Mr Domenic Carbone acted as his solicitor in the Supreme Court proceedings. 9 On 20 December 2002 the Supreme Court proceedings were settled. However, Mr Blanda was dissatisfied with the settlement of the Supreme Court proceedings and on or about 10 February 2003 Mr Blanda retained Kemp Strang to give advice about the settlement of the Supreme Court proceedings. 10 Kemp Strang forwarded to Mr Blanda a letter dated 6 May 2003 headed "Estate of your late brother", in which Kemp Strang noted that it had been instructed to act for Mr Blanda and in which it set out the terms of the engagement of Kemp Strang by Mr Blanda. In par 2 of the letter Kemp Strang set out the hourly rates which would be charged for work done by partners of Kemp Strang, by associates of the firm and by any other solicitors. It was noted that Kemp Strang could increase the hourly rates by giving fourteen days notice to Mr Blanda. 11 In par 3 of the letter of 6 May 2003 Kemp Strang estimated its costs for completing the work as about $5,000. In par 4 of the letter Kemp Strang estimated its expenses for completing the work as about $500. It was stated in the letter that Kemp Strang would advise Mr Blanda of any significant increase in Kemp Strang's charges and expenses beyond those estimated. Par 9 of the letter provided that Kemp Strang would send Mr Blanda a bill for its costs and expenses at the end of each month, while the work to be performed by Kemp Strang was in progress. 12 Paragraph 14 of the letter provided that Mr Blanda could at any time by notice in writing terminate his instructions to Kemp Strang to act for him. This paragraph also provided that, subject to any rules of Court, Kemp Strang could terminate its agreement to act for Mr Blanda by notice in writing, if, inter alia, Kemp Strang's charges and expenses were not paid when due. 13 The letter of 6 May 2003 concluded by asking Mr Blanda to confirm the engagement of Kemp Strang to act for him on the terms set out in the letter by signing an enclosed copy of the letter and returning the signed copy. There was not in the evidence before me at the hearing any copy of the letter signed by Mr Blanda. However, it can be inferred from Mr Blanda's conduct that he confirmed the engagement on the terms set out in the letter. 14 On 11 August 2003 Mr Carbone commenced proceedings in the District Court against Mr Blanda ("the District Court proceedings"), claiming the sum of $70,657.54 as unpaid costs of the Supreme Court proceedings. 15 Mr Blanda instructed Kemp Strang to act for him in the District Court proceedings and an associate partner of Kemp Strang Mr Ross Ward acted for Mr Blanda, under the supervision of Ms Roppolo. No new file was opened and the file already opened in connection with the Supreme Court proceedings was used. There was not in evidence before me any separate letter setting out the terms of the engagement of Kemp Strang to act for Mr Blanda in the District Court proceedings. Ms Roppolo believed that some such letter was sent to Mr Blanda but, for a reason which will emerge later in this judgment, was unable to confirm that such a letter had been sent. 16 A notice of grounds of defence raising various defences was filed in the District Court proceedings on behalf of Mr Blanda. A notice of cross-claim was also filed in which it was alleged inter alia that Mr Carbone had not carried out any work which he had done in a professional manner and had settled the Supreme Court proceedings otherwise than in accordance with the instructions of Mr Blanda. 17 Between 2003 and some time in 2005 Kemp Strang continued to act for Mr Blanda both in relation to the Supreme Court proceedings and in the District Court proceedings. 18 In October 2004 Mr Blanda instructed Kemp Strang to act for him in claiming specific performance of orders made in the Supreme Court proceedings. A new file was opened by Kemp Strang for these proceedings. However, as in the case of the District Court proceedings, there was no evidence before me of any separate letter setting out the terms of the engagement of Kemp Strang, although Ms Roppolo believed that such a letter might have been sent to Mr Blanda. Some work was done by Kemp Strang in the specific performance matter but then Mr Blanda abandoned the claim. Little attention was paid to the specific performance matter in the submissions which were made at the hearing before me. 19 Between 25 August 2003 and 28 July 2005 Kemp Strang sent Mr Blanda bills for its costs and expenses for acting in the various matters. A number of payments were made by Mr Blanda to Kemp Strang. Mr Blanda did not appropriate any of these payments to particular bills and Kemp Strang, in the absence of any appropriation by Mr Blanda, appropriated each payment to the oldest outstanding bill. The amounts paid by Mr Blanda did not fully discharge the amounts of the bills. 20 In about April and May 2005 there were meetings and telephone conversations between Mr Blanda and Ms Roppolo about the amount of the costs which had been charged and about the amount of those costs which had not been paid. An agreement which was reached between Mr Blanda and Ms Roppolo was set out in a letter from Kemp Strang to Mr Blanda of 3 May 2005, which was in the following terms:- "We refer to our meetings and telephone conversations with you and confirm that we have agreed to enter into the following arrangement with you with respect to the amount payable by you to us for our outstanding costs and disbursements: 1. As at today's date the amount payable by you to us is $67,815.23; 2. We will reduce the amount by $10,000 to $57,815.23 provided you comply with the payment arrangement in point 3. below; 3. You will pay the balance of $57,815.23 by instalments of $5,000.00 per week until that amount is repaid; and 4. You will pay all further accounts rendered by us in accordance with our payment terms being 14 days from the date of invoice; We look forward to receiving the first instalment of $5,000.00 by the end of this week". 21 Mr Blanda failed to make any payment in accordance with the agreement and on 6 June 2005 Kemp Strang sent a letter to Mr Blanda, which was in the following terms:- "We confirm in early May 2005 you advised that you would pay the outstanding amount due to us for our fees and disbursements by payments of $5,000.00 per week. You have failed to make any payment to us nor provide an explanation as to why you have not complied with this agreement. As you have failed to pay our accounts when due or comply with the agreement reached regarding payment over time we have no alternative but to advise you that we can no longer act for you and that we will shortly serve on you our Notice of Intention to Cease to Act in the District Court proceedings". 22 Notwithstanding the letter of 6 June 2005, Kemp Strang continued to do work for Mr Blanda. In the time ledger kept by Kemp Strang recording work done for Mr Blanda the following entries appear between 6 June 2005 and 19 July 2005. In these entries "RAW" refers to Mr Ward and "SR" refers to Ms Roppolo. AKK refers to a solicitor Andrea King. Date Sol Code Description

060605 RAW 28 Working on letters to you 010705 RAW 03 Telephone call you re mediation 010705 RAW 03 Telephone call Ben Bradley re mediation 010705 RAW 03 Telephone call you re mediation 010705 RAW 07 Court Appearance District Court re directions hearing 010705 RAW 03 Telephone call you re directions hearing 010705 RAW 08 Meeting Sarina Roppolo re directions hearing 010705 RAW 13 Drafting letter to you re directions hearing 010705 RAW 10 Perusing affidavit by Carbone 010705 RAW 08 Meeting Sarina Roppolo re directions hearing and mediation 010705 RAW 03 Telephone call you re directions hearing 070705 RAW 03 Telephone call you re evidence and offer 070705 RAW 10 Perusing affidavit by Carbone 070705 RAW 13 Drafting email to Jack Amond re CTP matters 080705 RAW 10 Perusing affidavit by Carbone 190705 AKK 14 Review affidavits and issues re evidence filed by Carbone 190705 SR 14 Review letter from Hunt & Hunt and response, fax to Mr Blanda 190705 SR 14 Review of material for replies

23 On or about 15 June 2005 Mr Blanda paid $20,000 to Kemp Strang on account of the outstanding costs. 24 On 19 July 2005 Kemp Strang sent a fax to Mr Blanda, which was in the following terms:- "We refer to our telephone conversation with you and confirm that our Ross Ward no longer works with us. Our Sarina Roppolo and Andrea King will take over the conduct of this matter on your behalf. Ms King's direct telephone number is 9225 2544. You will not be charged for the time taken by Ms King to familiarise herself with the matter. We confirm that you are reviewing the affidavits filed for and on behalf of Mr Corbone and that you will provide to us your instructions as to the replies to those affidavits. Please provide that material to us as a matter of urgency. We enclose letter received from Hunt and Hunt and our reply sent today. We will report to you the response received and at that time discuss the offer made with you." 25 On 20 July 2005 Mr Blanda telephoned Ms Roppolo. According to par 29 of Ms Roppolo's affidavit, which I accept, the conversation was to the following effect:- "Blanda: 'Please do not do any more work on my matter. McLachlan Chilton will be taking over. Can you please send them the files as soon as possible.' I said: 'You will need to pay your outstanding fees to our firm before I send any files to your new lawyers'. Blanda: 'Can you please send the files to my new lawyers. I will pay the money I owe. They need the documents as soon as possible to take over'. I said: 'I can't do that Sal. You will need to pay the outstanding amount before the files go to your new solicitor. You have already breached the agreement we reached about payment of fees'. Blanda: 'I haven't paid because I was overcharged by Ross Ward'. I said: 'We have already dealt with that and we gave you a discount for that which you accepted and promised to pay off the balance. You will need to pay the outstanding amount before the files go to your new solicitor. When you pay the outstanding amount I will make sure that they get the files as soon as possible'". 26 On 21 July 2005 Kemp Strang sent a letter to Mr Blanda, which was in the following terms:- "We refer to our telephone conversation with you yesterday and confirm that you advised us that you do not wish us to undertake any more work for you in this matter and that you have instructed another solicitor to take over conduct of it from us. We enclose for action by you or your new solicitor letter from Hunt and Hunt received today. We will advise Henry Davis York and Hunt and Hunt that we no longer act for you. Your proceedings against Mr Carbone will be before the Court on 29 July 2005. Your new solicitor must file with the Court a Notice of Change of Solicitor and appear for you on that day. Your affidavits in reply to those filed by Mr Carbone were required to have been filed by today. We also confirm our advice to you that we require our outstanding costs and disbursements be paid before we forward the files for the matter to another solicitor. You agreed to revert to the writer with your proposal as to payment of our costs. Mr Ron Labatte of our office will contact you regarding payment of our outstanding costs and disbursements. We wish you success in the proceedings". 27 On 1 August 2005 McLachlan Chilton wrote a letter to Kemp Strang, with which was enclosed an authority and direction in the following terms:- "I, Salvatore Blanda, … hereby: 1. Authorise and direct you to deliver your complete file herein to: McLaughlan Chilton Solicitors…

2. Irrevocably authorise and direct McLachlan Chilton to pay your reasonably incurred professional costs as agreed or assessed at the successful conclusion of the matter. 3. Irrevocably authorise and direct McLachlan Chilton to pay the fees and charges reasonably incurred by Counsel and other file creditors at the successful conclusion of the matter." 28 On 3 August 2005 Kemp Strang wrote to McLachlan Chilton saying that it required payment of its accounts in full, prior to any files being released to McLachlan Chilton. 29 On 31 October 2005, after having been informed by the solicitors for Mr Carbone in the District Court proceedings that McLachlan Chilton had not filed any notice in the District Court indicating that they were acting for Mr Blanda, Kemp Strang caused a notice of ceasing to act for Mr Blanda to be filed in the District Court proceedings. 30 On 3 November 2005 McLachlan Chilton wrote a letter to Kemp Strang. In this letter McLachlan Chilton stated that as at 25 October 2005 Mr Blanda had paid approximately $113,000 to Kemp Strang, leaving an outstanding amount of costs of about $46,000. In the letter McLachlan Chilton drew Kemp Strang's attention to rules 8 and 29 of the Professional Conduct and Practice Rules made pursuant to s 57B of the Legal Profession Act 1987, which remain in force pursuant to cl 24 of Sch 9 of the Legal Profession Act 2004. In the letter McLachlan Chilton said that the District Court proceedings had been fixed for hearing on 20 February 2006, with a ten day estimate. 31 With their letter of 3 November 2005 McLachlan Chilton enclosed a draft agreement which it asked Kemp Strang to enter into. McLachlan Chilton stated that, in the event of Kemp Strang not entering into the agreement, McLachlan Chilton would seek an order from this Court for the delivery of Kemp Strang's file to McLachlan Chilton. 32 The draft agreement enclosed with McLachlan Chilton's letter provided in cl 1 that "the client" (Mr Blanda) would pay the costs and disbursements of "the previous solicitor" (Kemp Strang) and, subject to any statutory right to an assessment of costs, would accept those amounts as properly due and payable. Clause 3 of the draft agreement included the following provisions:- "(a) The client has signed an irrevocable authority to the other party/parties to the transaction, litigation or dispute directing payment of all proceeds, damages, moneys, settlement moneys and costs to the present solicitor, and has authorised its despatch immediately after this deed is executed AND FURTHER will not during the term of this deed seek to revoke, alter or vary that authority" …… (d) The previous solicitor's lien over the files and property of the client or any proceeds of success or settlement is not discharged by the entry into this deed. ….. (e) The client and the present solicitor are obliged to do all things necessary to ensure that the previous solicitor's costs are paid or secured and protected to the satisfaction of the previous solicitor". 33 Clause 4 of the draft agreement provided for the payment of interest on outstanding costs. 34 Clause 5 of the draft agreement provided as follows:- "5. The parties all agree that the present solicitor shall pay, within 21 days of the receipt and availability of cleared funds, the costs and interest to the previous solicitor, and the moneys shall not be paid to the client until this has been done". 35 Kemp Strang replied to the letter of 3 November in a letter dated 8 November 2005, in the following terms:- "We refer to your letter dated 3 November 2005. As you know, we are no longer the solicitor on the record on this matter. On 21 July 2005 Mr Blanda telephoned the writer and terminated our retainer and advised us that another solicitor would take over the conduct of the matter from us. On 1 August 2005 you wrote to us enclosing an authority from Mr Blanda notifying us that the file in this matter was to be delivered to your firm. Your firm took over the conduct of the matter and you never filed a Notice of Change of Solicitor. When we became aware of this we filed a Notice of Ceasing to Act. We note that when you discuss the proceedings in paragraph 3 of your letter that you failed to mention the cross claim filed by Mr Blanda against Mr Carbone. We note your reference to rule 29 of the Professional Conduct and Practice Rules. Rule 29.3 provides that where the client terminates the retainer that the practitioner 'may retain possession of the documents until the practitioner's costs are paid or their payment to the practitioner is satisfactorily secured'. As you know our outstanding costs and disbursements have not been paid. The Deed of Transfer you submitted with your letter does not satisfactorily secure our costs and disbursements. A review of Supreme Court decisions on the application of section 209C of the Legal Profession Act support the position that where the client terminates the retainer he/she must pay the outstanding costs and disbursements or enter into an arrangement to the satisfaction of the practitioner. See Vella v Bechara [2004] NSWSC 408. We require our outstanding costs and disbursements to be paid before we transfer the file to you. Upon payment the files will be immediately transferred. Accordingly the proceedings that you foreshadow are inappropriate". 36 On 18 November 2005 the summons in the present proceedings was filed. No affidavit in support of the summons was then filed, for the reason that Mr Amond, who was the solicitor who had the conduct of the matter in the office of McLachlan Chilton, was temporarily overseas. By consent the summons was stood over to 20 December 2005 and the summons was then further adjourned. Mr Amond's affidavit was not sworn until 20 January 2006. 37 On 12 December 2005 McLachlan Chilton sent a letter to Kemp Strang, complaining that Kemp Strang had not given any reason for its assertion in its letter of 8 November 2005 that the draft deed enclosed with McLachlan Chilton's letter of 3 November 2005 would not provide Kemp Strang with sufficient security. 38 On or about 14 December 2005 a notice of motion was filed on behalf of Mr Blanda in the District Court proceedings, seeking an order that the hearing date of 20 February 2006 be vacated. 39 On 16 December 2005 Garling DCJ stood over the notice of motion to vacate the hearing date and abridged the time for service of a subpoena to Kemp Strang returnable on 21 December 2005 to produce its files in the District Court proceedings and the Supreme Court proceedings. 40 After having been served with the subpoena, Kemp Strang took out a notice of motion to set aside the subpoena. The notice of motion was supported by an affidavit by Ms Roppolo recording much of the history of the matter. 41 On 21 December 2005 Finnane DCJ made an order that Kemp Strang produce the files to the court on 22 December 2005. On 22 December 2005 Kemp Strang produced to the court fifteen volumes of documents. Kemp Strang had not made any copies of the documents which were produced. Although the documents were produced to the court, Kemp Strang resisted McLachlan Chilton's application that access to the documents be granted and Mr Blanda and McLachlan Chilton have not yet been granted access to any of the documents. 42 Further letters (McLachlan Chilton's letter of 23 December 2005 and Kemp Strang's letter of 9 January 2006) were exchanged between the two firms of solicitors, in which each firm again stated the position it had earlier adopted. 43 On 27 January 2006 McLachlan Chilton offered a further undertaking, which was in the following terms:- "1. McLachlan Chilton undertake to preserve your lien over your file in relation to proceedings brought against Mr Blanda by Domenic Carbone t/as Carbone & Associates which is subject to proceedings in the District Court of New South Wales, Number 3647 of 2003. 2. McLachlan Chilton undertakes to return the documents to your firm at the conclusion of the above proceedings. 3. McLachlan Chilton undertakes to retain in their trust account the balance of your outstanding costs out of any settlement or award arising from the above proceedings until the issue of those costs is resolved". 44 The application to vacate the hearing date for the District Court proceedings has been stood over from time to time in the District Court and my understanding is that the hearing date of 20 February 2006 has not, as yet, been vacated. 45 As stated earlier in this judgment, the plaintiff seeks an order pursuant to s 728 of the Legal Profession Act 2004 that the defendant deliver to the plaintiff its files in acting for the plaintiff in connection with the Supreme Court proceedings and the District Court proceedings. Two principal issues were argued at the hearing, namely:-

1. Whether Kemp Strang is entitled to a lien. This issue, although logically anterior to the second issue, first arose at a fairly late stage of the proceedings. If Kemp Strang is not entitled to any lien, it has no right to withhold from Mr Blanda documents which are Mr Blanda's.

2. If Kemp Strang is entitled to a lien, whether an order should be made pursuant to s 728 and, if so, on what conditions. In fact, counsel for Kemp Strang conceded that the documents over which Kemp Strang claims a lien or some of them are essential to Mr Blanda's defence and cross-claim in the District Court proceedings and some order under s 728 should be made. Consequently, the real dispute between the parties relates to the conditions subject to which an order under s 728 should be made. 46 I will deal with these two principal issues in turn.

1. Whether Kemp Strang is entitled to a lien . 47 It was not in dispute at the hearing that Mr Blanda had retained Kemp Strang to act for him as his solicitor in the matters I have described, that Kemp Strang had made charges for legal services rendered by it pursuant to the retainers and that Mr Blanda had not paid to Kemp Strang the full amount of the charges made by Kemp Strang. 48 The grounds on which it was submitted that Kemp Strang was not entitled to any lien were that Kemp Strang had not fully complied with Div 2 of Pt 11 of the Legal Profession Act 1987, and in particular s 175, of the Act, and that a consequence of the non-disclosure was that Kemp Strang was not entitled to a lien. 49 Section 175 of the Legal Profession Act 1987 was in the following terms:- "175 Obligation to disclose to clients basis of costs (1) A barrister or solicitor must disclose to a client in accordance with this Division the basis of the costs of legal services to be provided to the client by the barrister or solicitor. (2) The following matters are to be disclosed to the client: (a) the amount of the costs, if known, (b) if the amount of the costs is not known, the basis of calculating the costs, (c) the billing arrangements, (d) the client's rights under Division 6 in relation to a review of costs, (e) the client's rights under Division 4 to receive a bill of costs, (f) any other matter required to be disclosed by the regulations. (3) The disclosure to a client is not required to be made by a barrister or solicitor who is retained on behalf of the client by another barrister or solicitor. However, the disclosure to the client is to include the costs of the barrister or solicitor so retained". 50 It was submitted by counsel for Mr Blanda that, although the letter of 6 May 2003 from Kemp Strang might have been a sufficient disclosure of the basis of the costs of the legal services to be provided in connection with the Supreme Court proceedings (the letter of 6 May 2003 refers to "the estate of your late brother"), there should have been a separate disclosure of the basis of the costs of the legal services to be provided by Kemp Strang in acting for Mr Blanda in the District Court proceedings. 51 In response to this submission by counsel for Mr Blanda, it was submitted by counsel for Kemp Strang that s 175 dealt only with "non-specific matters", that is with matters which were not specific to the subject matter of the work the solicitor was to perform, and that the letter of 6 May 2003 sufficiently disclosed such matters as the basis of calculating costs, the billing arrangements and Mr Blanda's rights to a review of costs and to receive a bill of costs, not only in relation to Kemp Strang acting for Mr Blanda in connection with the Supreme Court proceedings but also in relation to their acting for Mr Blanda in the District Court proceedings. It was further submitted that, in any event, the matters in which Kemp Strang had acted for Mr Blanda should be regarded as inextricably linked and acting for Mr Blanda in the District Court proceedings should be regarded as having "spiralled out" of the original instructions. 52 In my opinion, the submission made by counsel for Kemp Strang that s 175 dealt only with matters which were not specific to the subject matter of the work the solicitor was to perform should be rejected. Section 175(2)(a) of the Legal Profession Act required a solicitor to disclose "the amount of the costs, if known" and s 177(1) provided that, if the amount of the costs was not disclosed under s 175, the solicitor was required to disclose an estimate of the likely amount of the costs of the legal services to be provided. In my opinion, these provisions indicate that a disclosure under s 175 was required to be made for each matter in respect of which a solicitor was retained to perform legal services. 53 I am further of the opinion that, although there was some connection between Kemp Strang acting for Mr Blanda in relation to the Supreme Court proceedings and Kemp Strang acting for Mr Blanda in defending the District Court proceedings brought by Mr Carbone, there was such a difference between the two matters that acting for Mr Blanda in defending the District Court proceedings did not fall within the scope of the original retainer and Kemp Strang was required to make a separate disclosure of the basis of the costs of the legal services to be provided in defending the District Court proceedings, including an estimate of the likely amount of the costs of performing those legal services. On the evidence before me no such separate disclosure was made and Kemp Strang should be regarded as having contravened s 175. 54 Certain consequences of a failure to make a disclosure of the matters required to be disclosed by s 175 were set out in s 182 of the Act, which provided:- "Effect of non-disclosure of matters related to basis of costs (1) If a barrister or solicitor fails to make a disclosure to a client in accordance with this Division of the matters required to be disclosed by section 175 in relation to costs, the client need not pay the costs of the legal services unless the costs have been assessed under Division 6. (2) A barrister or solicitor who fails to make a disclosure in accordance with this Division of the matters required to be disclosed by section 175 or 176 in relation to costs may not maintain proceedings for the recovery of the costs unless the costs have been assessed under Division 6. (3) The costs of any assessment referred to in this section (including the costs of the costs assessor) are payable by the barrister or solicitor seeking to recover costs. (4) Any failure referred to in this section does not of itself amount to a breach of this Act. However, the failure is capable of being unsatisfactory professional conduct or professional misconduct". 55 It seems to me that the consequences of a failure to comply with s 175 should be limited to the consequences expressly stated in s 182, that is that the client is not obliged to pay the solicitor's costs unless the costs had been assessed and the solicitor is not entitled to maintain proceedings for the recovery of the costs unless the costs had been assessed. On this view of the consequences of a failure to comply with s 175, any such failure would not affect any lien to which the solicitor might be entitled. 56 It is noteworthy that s 182 did not, according to its terms, destroy a solicitor's entitlement to costs or to any lien the solicitor might have over documents of the client in order to secure payment of costs. The section merely provided that, if there had been a non-compliance with s 175, a client did not have to pay the costs unless they had been assessed and a solicitor could not avail himself of the particular remedy of maintaining proceedings, that is court proceedings, for the recovery of the costs, unless the costs had been assessed. 57 Some further submissions were made by counsel for Mr Blanda, all of which I consider should be rejected. 58 It was submitted that there was no evidence that a copy of the letter of 6 May 2003 had been signed. However, s 175 did not require the disclosure made by the solicitor to be signed by the client. 59 It was submitted that Kemp Strang had failed to comply with s 177(3), in that it had failed to disclose significant increases in the estimate of its costs given in the letter of 6 May 2003. However, the consequences of a failure to comply with s 177(3) are limited to the consequences stated in s 183. 60 It was submitted that some charges made by Kemp Strang exceeded the rates of charging disclosed in the letter of 6 May 2003. It may be that letters were sent by Kemp Strang to Mr Blanda notifying him of increases in Kemp Strang's rates of charging. However, it was not established at the hearing that there were any such letters among the papers now held by the District Court following their production in response to Mr Blanda's subpoena and I should proceed on the basis that there is no evidence before me that any such letters were written. However, even if some charges made by Kemp Strang were made at rates of charging which exceeded the rates of charging which had been disclosed to Mr Blanda, that would not, in my opinion, amount to a failure to comply with s 175. The charges to which I was referred by counsel for Mr Blanda were few in number and were all made a substantial time after 6 May 2003. 61 I have decided that I should determine the first principal issue by holding that Kemp Strang is entitled to a lien.

2. On what conditions should an order under s 728 be made. 62 If a client retains a solicitor to perform legal services and before the solicitor has completed performing those legal services the retainer is terminated and after the termination of the retainer the solicitor claims a lien over papers of the client in the solicitor's possession to secure payment of outstanding costs by the client, there is an important distinction between cases in which it is the solicitor who terminates the retainer and cases in which it is the client who terminates the retainer. Certain principles were stated by Templeman LJ in his concurring judgment in Gamlen Chemical Co (U.K) Ltd v Rockem Ltd & Ors [1980] 1 All ER 1049 at 1058. These principles were stated by Templeman LJ in terms of a retainer of a solicitor to act for a client in an "action", that is in particular litigious proceedings, but the principles apply generally. Omitting some citation of authority, Templeman LJ said:- "A solicitor who accepts a retainer to act for a client in the prosecution or defence of an action engages that he will continue to act until the action is ended, subject however to his costs being paid.

If before the action is ended the client determines the retainer, the solicitor may, subject to certain exceptions not here material, exercise a possessory lien over the client's papers until payment of the solicitor's costs and disbursements. Thus in Hughes v Hughes ([1958] P 224 at 227-228) Hodson LJ said: '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 the costs have been paid ... This rule applies, as the authorities show, whether the client's papers are of any intrinsic value or not ... '

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, ie 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 clients' new solicitors, provided the new solicitors undertake to preserve the original solicitor's lien and to return the papers to the original solicitors, for what they are worth, after the end of the litigation". 63 A case cited in Gamlen was Robins v Goldingham (1872) LR 13 Eq 440 in which Sir R. Malins V.C. said at 442:- "Now it is well settled that where a solicitor is discharged by the client he has a lien for his costs upon the papers in his hands, and can retain them till he is satisfied; but it is different where the discharge is by the solicitor". 64 In Robins v Goldingham the Vice-Chancellor held that the discharge had been by the solicitor and ordered that the solicitor deliver up the client's papers to the new solicitors on an undertaking by the new solicitors to receive and hold them without prejudice to the previous solicitor's lien. 65 Gamlen and Robins v Goldingham were referred to with approval by Hodgson J (as his Honour then was) in Jankowski v Mastoris (1995) 7 BPR 14, 589. 66 In Bechara v Atie [2005] NSWCA 268 McColl JA, with whose judgment the other members of the Court agreed, said at par 50:- "In Bolster v McCallum (1966) 85 W.N (Pt1)(NSW) 281) Asprey JA observed (at 287) that "the solicitor's claim for a lien will be protected by the court until it is shown that the claim is unfounded". This proposition is true of the court's attitude to the possessory lien in circumstances where the client has, as in this case, terminated the solicitor's retainer. It should be recognised that where a solicitor discharges him or herself in the course of an action, the solicitor's possessory lien over documents becomes subject to the practice of the Court which would order the documents to be handed over to new solicitors subject to the lien, unless exceptional circumstances exist in which the Court might impose terms: Gamlen (at 624) per Templeman LJ. This distinction is also recognised in rr 29.3 and 29.4 of the Solicitors Rules". 67 In the part of McColl JA's judgment in Bechara which I have just quoted her Honour referred to rules 29.3 and 29.4 of the Solicitors Rules. These rules are included in the revised Professional Conduct and Practice Rules 1995 originally made pursuant to s 57B of the Legal Profession Act 1987. As I noted earlier in this judgment, the rules have remained in force by virtue of cl 24 of Sch 9 of the Legal Profession Act 2004. These Rules reflect the distinction drawn at common law between cases in which the client terminates the retainer and cases in which the solicitor terminates the retainer. The Rules include the following:- "8.3 Upon completion or termination of a practitioner's retainer, a practitioner must, when requested so to do by the practitioner's client, give to the client, or another person authorised by the client, any documents related to the retainer to which the client is entitled, unless -

8.3.1 the practitioner has completed the retainer; or 8.3.2 the client has terminated the practitioner's retainer; or 8.3.3 the practitioner has terminated the retainer for just cause and on reasonable notice; and the practitioner claims a lien over the documents for costs due to the practitioner by the client.

8.4 Despite Rule 8.3, a practitioner who claims to exercise a lien for unpaid costs over a client's documents, which are essential to the client's defence or prosecution of current proceedings, must: 8.4.1 deal with the documents as provided in Rule 29, if another lawyer is acting for the client; or 8.4.2 upon the practitioner's costs being satisfactorily secured, deliver the documents to the client. ….

29.3 If the client has terminated the first practitioner's retainer, the first practitioner may retain possession of the documents until the practitioner's costs are paid, or their payment to the practitioner is satisfactorily secured.

29.4 If the first practitioner has terminated the retainer and the client's documents are essential to the defence or prosecution of proceedings which are continuing before a Court, the practitioner must surrender possession of the documents to the client, upon the terms prescribed in Rule 8.4.2 or to the second practitioner, if so directed by the client, and, provided that the second practitioner - 29.4.1 holds the documents subject to the first practitioner's lien, if that is practicable, and ensures the first practitioner's costs are satisfactorily secured; or 29.4.2 enters into an agreement with the client and the first practitioner to procure payment of the first practitioner's costs upon completion of the relevant proceedings".

68 It is accordingly necessary in the present matter to determine whether it was the solicitor Kemp Strang who terminated the retainer or whether it was the client Mr Blanda who terminated the retainer. Counsel for Mr Blanda submitted that I should find that it was the solicitor who terminated the retainer and pointed to Kemp Strang's letter of 6 June 2005, in which Kemp Strang said that, as Mr Blanda had failed to pay Kemp Strang's account or to comply with the agreement set out in the letter of 3 May 2005, Kemp Strang had no alternative but to advise Mr Blanda that it could no longer act for Mr Blanda. 69 Counsel for Mr Blanda referred to Major Projects Pty Limited v Sibmark Pty Limited [1992] ANZ ConvR 349 in which McLelland J said at p 6:- "Where during the course of litigation, solicitors for a party terminate their retainer and the client retains new solicitors who for the purposes of the litigation require documents of the client in the possession of the former solicitors, who in turn claim a possessory lien over the documents to secure payment of outstanding costs, the normal practice of the Court is to order the new solicitors to preserve the former solicitors' lien and to return the documents to the original solicitors at the conclusion of the litigation. This practice is designed 'to save the client's litigation from catastrophe', and the principle is that the former solicitors' security should be interfered with only so far as necessary for the progress of the litigation. Where the former solicitors have declined to continue to act for the client unless outstanding costs are paid, and the client, being unable or unwilling to pay those costs retains the new solicitors, the former solicitors are treated as having terminated the retainer for the purposes of the application of this practice (see generally Gamlen Chemicals v Rochem (1980) 1 WLR 614, and cf. Ex Parte Clowes 87 WN (1) 364 and Bolger v Bolger 82 FLR 46)" 70 Counsel for Kemp Strang submitted that I should find that it was the client who had terminated the retainer and pointed to evidence of events occurring between 6 June 2005 and 20 July 2005, which, it was submitted, had superseded the letter of 6 June 2005. 71 In Jankowski Hodgson J said at p 8 that a court should not take an overly technical approach to the question of whether it was the client who had discharged the solicitor or whether it was the solicitor who had discharged himself but should look at the question "as a matter of real substance". 72 In the present case, if the relationship of solicitor-client had ended immediately or shortly after Kemp Strang sent its letter of 6 June 2005, I would have considered that it was Kemp Strang which had discharged itself. However, after the letter of 6 June 2005 was sent, no notice of ceasing to act was filed by Kemp Strang in the District Court proceedings, Kemp Strang did further work for Mr Blanda which was itemised in the timesheet, Mr Blanda, who had not previously made any payment after entering into the agreement evidenced by the letter of 3 May 2005, made a payment to Kemp Strang on 15 June 2005 of $20,000 and, importantly, Kemp Strang wrote the letter of 19 July 2005 in which Ms Roppolo said that, following upon Mr Ward ceasing to be employed by Kemp Strang, she and Ms King of Kemp Strang would take over the conduct of Mr Blanda's matter and in which she referred to steps currently being taken by Kemp Strang in the conduct of the matter. 73 In these circumstances, I consider that I should find that it was Mr Blanda who in the telephone conversation of 20 July 2005 with Ms Roppolo terminated the retainer. 74 As I have held that it was the client who terminated the retainer, it is necessary to determine whether Kemp Strang's costs, not having been paid by Mr Blanda, would have been satisfactorily secured under any of the offers made by McLachlan Chilton on behalf of Mr Blanda. 75 In Bechara McColl JA, on the question of whether an undertaking by the new solicitors satisfactorily secured the previous solicitors' costs, held at par 67 that it did not, because "it did not, on its face, provide an equivalent in monetary value to the solicitors' claim for costs and disbursements" . At par 64 of her judgment her Honour said:- "The expression "satisfactorily secured" should be understood, both by reference to the authorities dealing with possessory liens, and in its textual context, to refer to the provision, in lieu of payment, of something of monetary value which would ensure the satisfaction of the possessory lien. Like should be replaced with like….." 76 In the present case offers or undertakings were contained in the authority and direction enclosed with McLachlan Chiltons' letter of 1 August 2005, in the draft agreement enclosed with McLachlan Chiltons' letter of 3 November 2005 and in the further undertaking of 27 January 2006. I do not consider that Kemp Strang's costs would have been satisfactorily secured under any of these offers. None of the offers provided an equivalent in monetary value to Kemp Strang's claim for its costs. 77 The authority and direction enclosed with the letter of 1 August 2005 was an authority and direction from Mr Blanda to McLachlan Chilton to pay Kemp Strang's costs and counsel's fees but only "at the successful conclusion of the matter". The draft agreement enclosed with the letter of 3 November 2005 contained an unsecured promise by Mr Blanda to pay Kemp Strang's costs, an authority from Mr Blanda to the other party to the District Court proceedings in effect directing payment of any proceeds of the District Court proceedings to McLachlan Chilton and an agreement by all parties to the effect that McLachlan Chilton should pay Kemp Strang's costs to Kemp Strang "within 21 days of the receipt and availability of cleared funds". The undertaking forwarded with the letter of 27 January 2006 included an undertaking by McLachlan Chilton to retain the balance of Kemp Strang's outstanding costs out of any settlement or award arising out of the District Court proceedings. 78 None of these offers provided any security to Kemp Strang, except in the event of Mr Blanda succeeding in the District Court proceedings and there being "proceeds" of the District Court proceedings, that is there being a judgment or a settlement of the District Court proceedings in favour of Mr Blanda. 79 The retainers of Kemp Strang by Mr Blanda in the present case, unlike the retainer in Bechara, were not conditional costs agreements under which Kemp Strang would be entitled to costs only in the event of proceedings by Mr Blanda succeeding (compare Bechara at pars 14 and 42). Kemp Strang is entitled to its proper costs, whether or not Mr Blanda succeeds in obtaining any judgment or settlement in the District Court proceedings and no security has been offered for Kemp Strang's costs in the event of Mr Blanda not succeeding in obtaining a judgment or settlement in the District Court proceedings. 80 I conclude that an order should be made in favour of Mr Blanda under s 728 of the Legal Profession Act but only on condition that Kemp Strang's claim for its costs and disbursements is satisfactorily secured. **********

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