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The Victorian Court of Appeal refused leave to a former client to appeal a decision which found his former solicitors not liable for breach of contract or in negligence in ceasing to act on his behalf while he was overseas.
Background facts
In 2016, Makin & Kinsey Solicitors Pty Ltd (Solicitors) had been acting for the applicant, Jack Falcon (the Client), in proceedings commenced by him against an architect he had engaged for a property development in Frankston (the Underlying Proceeding).
A costs dispute subsequently arose with counsel in the Underlying Proceeding resulting in counsel commencing proceedings against the Solicitors in the Magistrates Court of Victoria seeking payment of unpaid fees (Costs Proceeding). The Solicitors asserted that counsel was retained directly by the Client rather than by the Solicitors and, therefore, intended to join the Client to the Costs Proceedings, in the event that the dispute was unable to resolve.
In the circumstances, the Solicitors considered themselves to be in a conflict of interest which prohibited them from continuing to act for the Client in the Underlying Proceeding and, on 8 June 2018, the Solicitors emailed the Client (who was overseas at the time) and advised him that they had ceased acting for him.
Thereafter, the Client retained new solicitors (a former partner of the Solicitors who had familiarity with the matter but who had since started his own practice) (New Solicitor). The New Solicitor was retained by the Client on an interim basis and was not retained to prepare and run any trial.
The New Solicitor filed a notice of change of solicitor on 3 July 2018.
In accordance with the Client’s instructions to his New Solicitor, the Underlying Proceeding was settled on 19 July 2018, on the basis that the proceeding be dismissed with each side bearing their own costs.
Solicitor's negligence proceeding
The Client subsequently commenced proceedings against the Solicitors alleging that, as a result of their negligence and/or breaches of contract, he had lost the opportunity to recover damages in the Underlying Proceeding in the sum of $13,285,000. The Client’s primary assertion was that, because the Solicitors ceased acting for him while he was outside Australia, he was unable to obtain appropriate legal representation and was forced to settle the Underlying Proceeding with no payment to him.
Forbes J heard the Client’s claim against the Solicitors and dismissed it, primarily on the basis that the termination of the solicitor/client relationship did not cause the Client’s loss, as any loss suffered by the Client was directly caused by his instructions to his New Solicitor to settle the Underlying Proceeding.
Leave was sought by the Client to appeal the primary decision with the Client taking issue primarily with various factual matters her Honour took into consideration as well as how much weight her Honour placed on those facts. Further, the Client stressed his inability to properly communicate with his New Solicitor from a remote area overseas prohibited his ability to proceed with the Underlying Proceeding.
Court of Appeal decision
The Victorian Court of Appeal unanimously refused the Client leave to appeal the decision of Forbes J. In doing so, the Court of Appeal noted that, while it may have been less than desirable for the Solicitors to cease acting while the Client was overseas (as also indicated in the first instance decision) and not warn him while he was in Australia that they may do so, he plainly still could have instructed other solicitors to continue the Underling Proceeding (either with or without the help of the New Solicitors).
That is, even if the Client received notice of the Solicitors ceasing to act while he was in Australia and even if he would have arranged new representation before leaving Australia, that did not lead to the conclusion that there was any breach of contract or negligence on behalf of the Solicitors for advising the Client, after he left Australia, that they were ceasing to act for him.
Dismissal of the appeal
The majority of the matters the Client complained of were either of no consequence to her Honour in making her ultimate decision or were resolved by her Honour in the Client’s favour at trial.
Notably, the Client complained that her Honour did not accept that it was “impossible” for him to arrange new representation either because he lived “in a remote area where communications are non-existent”, or because he was (for at least part of the time) in an area where he “would be totally out of contact”. In response, the Court of Appeal noted that contrary to the Client’s statements on appeal, no such evidence was led at hearing and the Client’s communications with his New Solicitor in June and July 2018 belied any such assertion.
Key takeaways
While the Solicitors was were ultimately vindicated, this case serves as an important reminder to solicitors of their duties to both their clients and the Court. Importantly, in this instance, the Underlying Proceeding had not yet been listed for trial which was estimated to be at least 6 months away. If a trial date had been set, the result may have been different for the Solicitors.
Markedly, even without the trial being listed, the Court gave consideration to how the change in representation may adversely affect the Client’s interests in pursuing his claim. To that end, the Court noted the appropriateness of the Solicitors attending the first directions hearing after ceasing to act to ensure that the Court was aware that the New Solicitor would need to come on the record.
The intersection between managing the potential conflict (which necessitated withdrawal) and managing the withdrawal process itself is an interesting one for solicitors to note.
Insurance and reinsurance
Australia