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Stark v Dennett

 

[2008] QCA 50

Reported at [2008] 2 Qd R 72

 

SUPREME COURT OF QUEENSLAND

PARTIES:

DAVID PAUL STARK
(plaintiff/appellant)
v
JOHN CHARLES DENNETT
(defendant/respondent)

FILE NO/S:

SC No 5441 of 2007

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

DELIVERED ON:

7 March 2008

DELIVERED AT:

Brisbane 

HEARING DATE:

19 February 2008

JUDGES:

Keane and Muir JJA and Mullins J

Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDERS:

1.  Appeal allowed

2.  Orders 1 and 2 of the learned primary judge set aside

3.  All files, documents, correspondence or other material prepared by or on behalf of the appellant and copies of all documents, correspondence or other material disclosed by Burnett Valley Holdings Limited in the possession or control of John C Dennett, whether held by John C Dennett, John C Dennett & Associates and by John W Lee in relation to the Supreme Court proceeding No 3269 of 2007, be delivered up to the appellant

4.  All files, documents, correspondence or other material prepared by the appellant and copies of all documents, correspondence or other material disclosed by Indigenous Business Australia in the possession or control of John C Dennett, whether held by John C Dennett, John C Dennett and Associates and by John W Lee in relation to the Supreme Court proceeding No 9150 of 2003, be delivered up to the appellant

5. The respondent to pay the appellant's costs of and incidental to the appeal to be assessed on the standard basis  

CATCHWORDS:

PROFESSIONS AND TRADES – LAWYERS – SOLICITOR AND CLIENT – RETAINER – DURATION, TERMINATION AND CHANGE OF ATTORNEY – where the respondent denied the appellant access to his papers unless outstanding fees were paid and other conditions were met – where the appellant was at the relevant time under no obligation to pay any fees to the respondent – where the appellant required access to the papers to prepare for a mediation – whether the conduct of the respondent was inconsistent with the continuation of the retainer

PROFESSIONS AND TRADES – LAWYERS – LIENS – POSSESSORY LIEN – DETERMINATION – where appellant owes outstanding fees to the respondent – where the respondent refused to deliver up papers belonging to the appellant – where the respondent claimed a possessory lien over the papers – where the respondent is entitled to claim an equitable "fruits of the litigation" lien – whether the respondent can maintain a possessory lien over the papers

Baker v Legal Services Commissioner (No. 2) [2006] Qd R 249; [2006] QCA 145, distinguished

Court v Berlin & Ors [1897] 2 QB 396, applied

Ex parte Patience; Makinson v The Minister (1940) 40 SR (NSW) 96, applied

Gamlen Chemical Co (UK) Ltd v Rochem Ltd & Ors [1980] 1 All ER 1049, applied

Heslop v Metcalfe (1837) 3 My & Cr 183, applied

Patterson v Cohen & Ors [2005] NSWSC 635, applied

Re Weedman [1996] FCA 1112; No QG 88 of 1996, 17 December 1996, applied

Re Wingfield & Blew (Solicitors) [1904] 2 Ch 665, applied

Robins v Goldingham (1872) LR 13 Eq 440, applied

COUNSEL:

G R Coveney for the appellant

D J Morgan for the respondent

SOLICITORS:

Queensland Public Interest Law Clearing House for the appellant

Cleary Hoare for the respondent

[1]  KEANE JA:  The appellant is a chartered accountant.  He is the plaintiff in an action in the Supreme Court for damages relating to the termination of the appellant's employment against a party which may conveniently be referred to as "IBA".  The respondent is the solicitor who was formerly retained by him in relation to the conduct of that action and another action in the Supreme Court, the defendant in that action being a party which may be referred to as "BVH".  The action against BVH was settled at a mediation on 25 May 2006.  It is common ground that the respondent's retainer was terminated in April 2007, although which party was responsible for that termination is controversial. 

[2] Following the termination of the retainer, the appellant brought an originating application against the respondent seeking an order for the delivery up of the papers in the respondent's possession relating to the action against IBA (which included some papers generated in the course of the action against BVH).  The respondent declined to hand the appellant's papers over to him, insisting that he had a lien for costs incurred in respect of that action.  These costs and outlays were the subject of a tax invoice in the sum of $107,702.63.  The respondent also resisted the application on the basis that moneys were still owed to him for his costs and outlays in the BVH action.

[3] The learned primary judge held that the respondent was entitled to insist upon his lien on the basis that the appellant had terminated the retainer without good cause, and had not offered the respondent sufficient security for payment of his fees and outlays to warrant the making of an order inconsistent with the lien asserted by the respondent.  Accordingly, the learned primary judge dismissed the application and ordered the appellant to pay the respondent's costs of the application.

[4] For the sake of completeness, it may be noted that the appellant originally sought relief against his former barrister, Mr John Lee of Counsel, as well as against the respondent.  The appellant's claim against his former barrister has been resolved by consent before the hearing of this appeal.

[5] The appellant challenges the decision of the learned primary judge on the grounds that his Honour:

 

(a) erred in failing to find that it was the respondent, not the appellant, who terminated the retainer;

(b) alternatively, if it was the appellant who terminated the retainer, he had good cause to do so; and

(c) in any event, the undertaking offered by the appellant to pay into court, from the proceeds of any judgment or settlement in the proceeding against IBA, funds sufficient to secure the fees and outlays claimed by the respondent, should have been held to be sufficient to entitle the appellant to the order for delivery up of his papers.

[6] Before discussing the arguments which arise on the appeal, I propose to set out the terms of the retainer and to summarise the course of the proceedings against BVH and IBA.  I will then summarise the reasons of the learned primary judge for rejecting the appellant's application for delivery up of his papers. 

The retainer

[7] The appellant signed a client agreement with the respondent on 31 December 2002.  It is common ground that the client agreement related to both BVH and IBA actions.  The respondent agreed to perform:

 

"all such actions as required and advised from time to time with respect to any claim or claims I may have concerning unlawful dismissal or termination as an employee and with respect to any ancillary matters relating thereto."

[8] The client agreement provided for payment of monthly invoices within 14 days.  A notice attached to the client agreement advised the appellant that, if the appellant changed solicitors, the respondent would be entitled to charge and recover fees and costs for work done before notice of the change and that the respondent "may keep your file until you pay all fees and costs or reach an agreement about paying them".   

[9] On 21 January 2003 the appellant paid $3,000 into the respondent's trust account to cover anticipated costs and outlays.  On 5 May 2003 the respondent rendered an invoice for costs and outlays for $3,844.50.  On 6 May 2003 the respondent wrote to the appellant advising him of the shortfall of $844.50, and advising him as well that he was prepared to carry that shortfall "and additional costs in pursuing your claim on the basis that they are paid only in the event of a successful action." 

[10]  After May 2003 the respondent ceased to render invoices to the appellant in respect of work performed on his matters.

[11]  The appellant claimed that the arrangement between the parties was thus varied so that no fees would be payable by him unless there was a successful outcome of his action.  The respondent argues that no consideration was given for his agreement to act on the basis that he would be "paid only in the event of a successful action".  But whether or not the respondent was at liberty to resile from this position at any time, it is clear that he did not purport to do so prior to the events of April 2007.  At that time, the arrangement between the respondent and the appellant was as reflected in the respondent's letter of 6 May 2003.

The proceedings

[12]  The appellant's action against BVH was compromised on 25 May 2006.  The appellant has not received any funds from the payment made by BVH of $66,800 to the respondent on the appellant's behalf.  This sum was applied in partial satisfaction of the respondent's tax invoice of $82,500 dated 28 June 2006. 

[13]  To the extent that the appellant says that he needs the file from the BVH action to prosecute his action against IBA, the respondent asserts that there is still a sum of $15,700 due to him from the appellant in respect of the invoice of 28 June 2006.  The court was told that this sum formed no part of the claim for $107,702.63 made by the respondent against the appellant in relation to the action against IBA.

[14]  Although the appellant consented to the terms of the BVH compromise, he complained, before the learned primary judge, that he should have achieved a more advantageous settlement, and criticised the respondent for the lack of quality in his advice and the tardiness of his conduct of that litigation.  This was the principal basis on which he asserted that he was entitled to terminate the respondent's retainer.  It should be noted that the appellant represented himself at first instance.  On the appeal he had the benefit of legal representation; and these assertions were not pursued.  It should also be said, in fairness to the learned primary judge, that the arguments presented in this Court by Mr Coveney of Counsel on behalf of the appellant were distinctly more cogent than those presented to his Honour.

[15]  In the proceedings against IBA, a mediation was held on 23 June 2006.  It was unsuccessful, but a further mediation was to be held on 18 April 2007.  There were differences between the appellant and his former lawyers as to how his case could best be presented at the mediation.  It is convenient, at this point, to continue the narrative of events by reference to the reasons of the learned primary judge. 

The reasons of the learned primary judge

[16]  In this regard, the learned primary judge said:

 

"The matter was due to go to mediation again on 18 April 2007. Before then there was a flurry of communication between Mr Stark, his solicitor and Mr Lee about Mr Stark’s access to the files that he wished to examine for the purposes of the mediation. He telephoned Mr Lee on 10 April 2007 asking for part of his brief but was advised properly by Mr Lee that the brief was Mr Dennett’s and that he could not hand over anything without Mr Dennett’s consent. There was some discussion between Mr Stark and Mr Dennett about the possibility of engaging another barrister and on 12 April 2007 Mr Stark attended Mr Lee’s chambers and asked for the brief but again was declined on the basis of Mr Dennett’s lien.

Mr Stark, later, on 12 April 2007, was presented with the possibility of him presenting his own case at the mediation with his lawyers present. He said that he wanted access to certain documents but Mr Lee requested that he sign a retainer to be drawn up by Mr Lee overnight. Mr Stark was unwilling to sign the retainer when it was presented to him, apparently on the basis that Mr Lee included in it a provision that he would be entitled to require payment of his fees for all work done, whatever the outcome of the action, in the event an offer of settlement providing for the payment of a sum of money to the plaintiff was made by the defendant which he considered to be reasonable but which was rejected by the plaintiff. Mr Stark also objected to a proposed acknowledgement that he did not maintain that there had been any negligent act or omission by his lawyers.

Mr Dennett was agreeable to Mr Stark obtaining access to those documents provided he signed Mr Lee’s retainer. By 16 April 2007 Mr Lee had agreed to waive his requirement that Mr Stark sign his retainer to allow the mediation to go ahead but Mr Dennett says that Mr Stark told Mr Dennett that he and Mr Lee had had their chance. Mr Stark says that he only said that Mr Lee had had his chance but he then proceeded to act in the matter on his own behalf and, in my view, to terminate the retainer with Mr Dennett. He is now acting for himself here and in the case against IBA.

Mr Dennett sent him a tax invoice dated 3 May 2007 claiming $107,702.63 as professional fees and outlays. Mr Stark contends that no fees are payable unless there is a successful outcome from the trial and that his preparation for trial is prevented by Mr Dennett withholding his files."[1]

[17]  As to the appellant's contention that no fees were payable by him to the respondent as at 3 May 2007 because the retainer was on a "no win no fee basis", the learned primary judge concluded:

 

"Mr Lee was engaged by Mr Dennett verbally, initially in about March 2003. In May 2003 Mr Dennett told Mr Lee that Mr Stark was in financial difficulties and was not likely to be able to pay his fees before the conclusion of the matter. He says that Mr Lee continued to act on that basis. After an invoice of 5 May 2003, without waiving his right to payment, Mr Dennett ceased to render regular invoices to Mr Stark. On 6 May 2003, however, he said to Mr Stark in a letter of that date that he was prepared to carry an amount of $844.50 incurred to that time 'and additional costs in pursuing your claim on the basis that they are paid only in the event of a successful action'. He made it clear, however, that Mr Lee may be prepared to render a tax invoice at the end of the matter and did not commit Mr Lee to charging a fee only in the event of a successful action. There was no suggestion that any consideration was provided by Mr Stark in return for that waiver of Mr Dennett’s rights."[2]

[18]  The appellant contended that he was entitled to terminate the retainer by reason of misconduct on the part of the respondent.  As to this contention, the learned primary judge said:

 

"The solicitor’s retainer was terminated, in my view, for no good reason. The criticism for the delay and the result in the earlier proceedings against BVH, if it were valid, had been overtaken by its compromise and the disagreement between Mr Stark and Mr Lee over how best to plead Mr Stark’s claim for damages in the IBA matter can by no means be described as misconduct on the part of the solicitor or, for that matter, on the part of Mr Lee, should that be relevant. It is the sort of disagreement about the tactics of running a case that lawyers are familiar with in their attempts to balance the wishes of clients against their clients’ interests and the lawyers’ duties to the Court. There is nothing in the evidence I have seen to warrant setting aside the lien claimed on the ground of misconduct.

As McPherson J said in Elfis v Somers; ex parte Tydhof (Queensland Supreme Court No 270 of 1982, unreported):

 

'But it is not every breach of contract by a solicitor that results in his being deprived of his remuneration. Incidental or collateral negligence in the course of performing the contract, but which falls short of rendering the work wholly useless does not have such a consequence: see Isaacs v Cachia [1981] 2 NSWLR 92 at 99. No doubt this is because, on ordinary principle, such an incidental breach of duty does not justify the client in terminating the retainer: and unless the retainer is justifiably determined, the right of the solicitor to payment of his fees, and pro tanto to assert the lien, remains. In such a case the remedy of the client is to claim against the solicitor for damages in respect of the loss flowing from the breach of duty (see Isaacs v Cachia): but, subject to this, he remains liable for the fees, at least in so far as they were incurred in performing proper services: Hannaford v Hannaford (1871) 24 LT 86.' (See the extract from the decision in Quick on Costs at [7.1610].)"[3]

[19]  The learned primary judge concluded that the appellant was under a liability, actual or contingent, for costs and outlays due to the respondent in respect of which the respondent was entitled to assert a lien.  His Honour said:

 

"Even if Mr Dennett’s client agreement had been varied to turn it into a 'no win no fee' agreement by the letter of 6 May 2003, it does not seem to me that, for that reason, he should have no lien in respect of the files held by him. It seems more likely that there was a waiver of Mr Dennett’s rights under the agreement rather than a variation of the contract. The waiver might ground an estoppel against an earlier demand for the fees had the solicitor-client relationship persisted but the situation seems to me to be different where there has been a termination of the retainer by the client for no good reason.

Leaving that issue to one side for the moment, there may still be a liability to pay the balance of the fees in the BVH matter, at least if one assumes that was a successful action, an assumption that may be unlikely; cf. Baker v Legal Services Commissioner [2006] QCA 145 at [19]-[21], [65], [71]. There is arguably also, even on Mr Stark’s case, at least a contingent liability in Mr Stark to pay Mr Dennett’s fees for the IBA matter and probably a present obligation in Mr Dennett payable in the future in respect of Mr Lee’s fees.

Where, however, Mr Stark has terminated the retainer for no good reason, it seems to me that the liability is now actual rather than contingent. The views expressed by McPherson JA in Baker v Legal Services Commissioner at [28]-[32] about the difficulties a solicitor faces in recovering fees in a 'no win no fee' case where a retainer has been discharged by frustration or where the solicitor had terminated it do not apply, in my view, where, as here, it is the client who has terminated the retainer for no good reason.

Mr Stark has benefited from the work done for him by Mr Dennett and Mr Lee in the IBA matter which is now at the stage where pleadings have been delivered, disclosure has taken place and a mediation had been organised. Even if he disagrees with some of the pleadings delivered or the advice he was given it is clear that he has adopted the benefit of much of the work previously done for him; cf. Baker v Legal Services Commissioner at [32] and [80]-[82].

His liability to pay is also consistent with the provisions of the notice attached to Mr Stark’s client agreement. As I said earlier, it provided in cl. 6 that if the client changed solicitor or firm the original solicitor may charge and recover fees and costs from him for work done before notice was given by him of the change. Although no new solicitor or firm has been engaged by Mr Stark it would be anomalous to prevent the recovery of the solicitor’s fees or costs simply for that reason."[4]

[20]  It will be apparent that the focus of the learned primary judge's attention was upon the lien asserted by the respondent at the time the application came before his Honour.  I pause here to make this point because the way in which the application was argued before the learned primary judge did not focus on the refusal by the respondent (and Mr Lee) to allow the appellant access to his papers in mid-April 2007 and the reasons for that refusal.  His Honour considered the authorities, and went on to say:

 

"Again, Templeman LJ said in Gamlen Chemical Co (UK) Ltd v Rochem Ltd [1980] 1 All ER 1049, 1058:

 

'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. That principle was reaffirmed in Bluck v Lovering & Co.

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] 3 All ER 179 at 180, [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 … '

Mr Redmond, for the respondents, also drew my attention to a statement by Drummond J in Re Weedman (Federal Court of Australia, QG 88 of 1996; 17 December 1996, unreported; BC9606375) where his Honour said:

 

'Where it is the client who has terminated the retainer otherwise than for the solicitor's misconduct, I doubt whether there is any residual discretion in the court to order that the former client shall have access to the documents, in the face of the lien, even where the denial of access to the documents may leave the client facing what can truly be regarded as catastrophic disruption to his litigation. Such a discretion could, in my opinion, only be justified on the basis that the interests of justice may require such an order to be made in some cases. But it is difficult to see why the court should disregard the interests of its own officers and leave them without payment for what is justly due to them because insistence on the lien would deprive the former client of material essential to the conduct of his case, where that situation has been brought about by the client discharging the solicitor without any good reason. However, it is unnecessary for me to reach a concluded view on whether such a discretion exists since even if the court does have that power, I would not regard this as a proper case to exercise it in favour of the applicants, for reasons which later appear.'

In my view, therefore, the solicitor has an appropriate claim to exercise his lien. It would go against the policy identified by Hodgson LJ in Hughes v Hughes to prevent Mr Dennett from exercising his rights."[5]

[21]  The learned primary judge concluded that the retainer had been terminated by the appellant without good reason and that the respondent was entitled to insist upon his lien, and that the appellant was unable to offer sufficient alternative security to warrant the making of an order which would override the respondent's lien. 

[22]  His Honour considered an offer by the appellant to undertake to pay into court, from the proceeds of any judgment or settlement in the IBA action, sufficient moneys to secure the fees and outlays claimed by the respondent.  In this regard, his Honour concluded:

 

"Although Mr Stark was willing to offer such an undertaking, which he extended to any amount that he recovered, the respondents submitted that it did not provide any security to Mr Dennett, came from a person who was not an officer of the Court and so would not carry with it the sanctions that might be visited on the head of a substituted solicitor. They also submitted, with some justification, that there was an inference available on the evidence that Mr Stark had an inflated view of the prospects of his case such that reasonable offers by his opponent might remain unexploited and that he had pondered bankruptcy as an outcome should he be unsuccessful at a trial."[6]

The arguments on appeal

[23]  The principal argument on which the appellant relied on the appeal was that the respondent had terminated the retainer by denying the appellant access to his papers prior to the mediation set down for April 2007. 

[24]  Counsel for the respondent objected that this argument had not been agitated at first instance.  The correctness of his Honour's conclusion that it was the appellant who brought the agreement to an end depends upon an assessment of the effect of communications between the appellant and the respondent in April 2007.  These communications were the subject of comprehensive evidence by the respondent, and were either written or, where oral, were subsequently evidenced in writing.  Accordingly, this Court is in as good a position as the learned primary judge to determine the facts in relation to the terms of the parties' communications with each other and the legal consequences of those communications.[7]  Further, it is not the case that further evidence could have been adduced by the respondent to improve his position.  Accordingly, considerations of natural justice do not militate against a consideration by this Court of this argument.[8] 

[25]  It is convenient now to set out more fully the material terms of these communications before seeking to analyse their effect in legal terms.

The parties' communications

[26]  A difference of opinion had arisen between the appellant and the respondent in relation to the quantification of his claim against IBA.  The appellant was evidently of the view that his prospects of negotiating a settlement on the basis most advantageous to himself would be diminished by a formulation of his claim in the terms suggested by the second respondent.  In that regard, on 11 April 2007 the appellant sent an email to the respondent in the following terms:

 

"From: David Stark …

Sent: Wednesday, 11 April 2007 3:54 PM

To: john dennett

Cc: John Lee; Priscilla Wong

Subject: IBA

 

Dear John,

I confirm our discussion this afternoon.

Please ensure that you forthwith defer finalising the Statement of Claim, but instead send IBA and the Mediator my EXPLANATION OF CLAIM for $1,994,231, which omits the 'Alternative Claim' of what I may have earned from IBA.

 

To prepare myself for the mediation I require all my files from John Lee at 9.00am tomorrow (12 April 2007) - I will call at his office to collect them.

 

I will present my case at the mediation.

 

While I expect that you will attend the mediation, my instruction is that John Lee should not attend as I do not believe he represents my interests.

 

In the hope that a mediated settlement is achieved please send me by next Monday (16 April 2007) schedules of yours and John Lee's costs to-date to facilitate me negotiating payment of them by IBA. The schedules are to present columns headed;

Date   Hours   Who performed the work   Description of the work

Explanation of how the work advanced the preparation of the claim

$ charged

 

If mediation fails we will discuss who should represent me at trial, and how the Statement of Claim will be finalised. One such matter will be my oft requested details of the remuneration of the senior staff of IBA since October 2000, which will enable us to finalise the Alternative Claim.

 

Yours truly,

 

David Stark

…" (emphasis in original)

[27]  Discussions ensued as to the formulation and quantification of the appellant's claim against IBA.  The appellant had firm views in this regard.  On 12 April 2007 the appellant sent a further email to the respondent.  It was as follows:

 

"From: David Stark …

Sent: Thursday, 12 April 2007 12:50 PM

To: john dennett

Cc: John Lee; Priscilla Wong

Subject: IBA

 

Dear John,

 

Yesterday John Lee tried to justify his proposed Statement of Claim on the grounds that using his estimates for my past earnings was not a large departure from that which Bob Angel has provided evidence. He doesn't seem to understand that undermining Angel's evidence would be very damaging to my case. Instead of admitting his gross error he wanted to move on to explain how I have misunderstood the law in relation to the cases he said were relevant. I stopped him by pointing out that such discussion would be useful later, when we might have to finalise the Statement of Claim, but that the urgency now was to prepare for the mediation. I confirmed that as either you or he had failed to obtain the IBA senior staff remuneration data, the Alternative Claim could not be finalised, and that therefore the mediation should proceed on the basis of my EXPLANATION OF CLAIM.

 

Later you told me that JL proposed there were two additional cases that were relevant, and I undertook to consider them this morning.

 

Herbert V Horobin et al (1997) concerned the damages awarded to a young woman who when 17 years old became a tetraplegic as a result of an accident at the Surat Council swimming pool. Ambrose J determined Horngerg's damages by concluding what he thought she would likely earn for what was expected to be a shortened life. Despite the requirement in Queensland for future earnings to be adjusted by a 5% discount factor (while Todorovic V Waller requires 3% when there is no legislated requirement) Ambrose J chose to not discount future earnings – 'the plaintiff is being compensated for loss of earning capacity rather than loss of future earnings and adopting a broad brush approach, it is in my view that it would be inappropriate to further discount the assessment for loss of future earning capacity.' It seems Ambrose J did not understand Todorovic V Waller, and that an assessment of earning capacity is the present value of a steam [sic] of likely future earnings.

 

In relation to a claim for loss of superannuation, Ambrose J said 'it is quite inappropriate when assessing future loss to take into account any income component from funds invested in superannuation schemes.' Note that he was referring to a claim for earnings that might be made from superannuation - he did not deal with the likely capital appreciation of such superannuation funds. Note also that my EXPLANATION OF CLAIM also does not claim income of the superannuation investments, only the likely capital appreciation.

 

The 1998 appeal dealt only with the question of negligence, not with the method of assessing damages. Compare this decision by a single judge that chose to ignore the legislation and ignore the High Court, with that of a later decision of a single judge and consideration of his approach by the NSW Court of Appeal.

 

Cremona Roads & Traffic Authority (2000) NSW SC 556, Dowd J said; 'Superannuation is not a normal investment which attracts a return in the nature of interest. In addition to its tax benefits, superannuation comprises a capital growth fund in addition to any return on the funds already invested.' Dowd J thereby recognised the validity of superannuation tax and capital appreciation aspects as relevant in calculating damages. Dowd J also rejected the RTA's contention that 'the superannuation benefits should be based on present calculations', - the RTA submitted that Todorovic V Waller decided that no future allowance should be made for inflation, but Dowd J said 'Todorovic V Waller was a decision affecting the reduction of future losses using discount tables so as to calculate a figure for present day payment.' On appeal and cross-appeal by both parties, the Court of Appeal did not disturb Dowd J's findings in relation to superannuation.

 

As these additional cases also do not support John Lee's view I insist that you implement what I said in yesterday's email.

 

I am disappointed that yesterday you withdrew your previous day's advice that you would be prepared to go to the mediation without John Lee but that you would want a barrister if the matter went to trial. I hope after considering the above you agree to assist me with the mediation, if not in person then by finalising the arrangements. If you are not prepared to do even this then please supply me with the contact details of the various parties that I should contact to proceed to the mediation without you.

 

Yours truly,

 

David Stark

 

PS As you requested I rang to speak to you when I had read these two additional cases, but as you have not returned the call I made an hour ago I am sending this email now and ask you to phone me ASAP. I will now proceed to John Lee's office to collect my files and expect them to be given to me." (emphasis in original)

[28]  It will be readily apparent from the terms of this email that the appellant was prepared to represent himself at the mediation if necessary, but that his preference was for the respondent to assist him in that regard.  In relation to the issue as to the attendance of Mr Lee and the respondent at the mediation, the respondent's version of the telephone conversation referred to in this email was stated in his affidavit.  The respondent deposed as follows:

 

"At 6:00 p.m. on 12 April 2007 there was a telephone conference call lasting 45 minutes involving the applicant, Mr. Lee and myself. In the course of the conference Mr. Lee said that he was willing to represent the applicant at the mediation on the basis that the applicant should present his case as his own expert. The applicant said he would appreciate Mr. Lee and myself being at the mediation but that he did not want us arguing against his case. The applicant said 'I am delighted I can play a major role'. The applicant required access to certain documents to prepare for the mediation, principally the Hepplewhite report. That report was prepared by an independent inquiry into the administration of IBA. Mr. Lee requested that the applicant sign a retainer to be drawn up by Mr. Lee overnight. At the close of the meeting it was agreed that we should meet again at noon on 16 April 2007. I was agreeable to the applicant obtaining access to certain documents provided the applicant signed Mr. Lee’s retainer.

Following the conference call Mr. Lee telephoned me. We agreed that upon signing the retainer agreement the applicant could have access to certain documents he required, principally the Hepplewhite report. He said he would have the retainer ready for signature between 9:00 a.m. and 11:00 a.m. on 13 April 2007. At 6:50 p.m.
I telephoned the applicant to advise that Mr. Lee would have the retainer ready for signature between 9:00 a.m. and 11:00 a.m. on 13 April 2007. The applicant told me that that he would not sign anything. In response to the applicant’s query as to costs I said to him words to the effect 'I will give you a reasonably accurate estimate by the mediation'.

[29]  On 13 April 2007 the appellant sent a further email to the respondent.  It was as follows:

 

"David Stark …

Sent: Friday, 13 April 2007 7:38 AM

To: john dennett

Cc: John Lee; Priscilla Wong

Subject: IBA

Dear John,

­Last evening you, John Lee and I conferred during which I agreed that JL attend the mediation, and we agreed I would this morning collect my files from JL in order to prepare for the mediation. At the end of our conference JL imposed a condition on his releasing my files (files which I prepared) that I sign an acknowledgement that I was satisfied with the advice I have received and that I would pay yours and his fees. You refused to detail the fees as I have requested by email yesterday and the day before, and you refused to tell me even a 'ball-park' figure of what the fees would be if the matter ended at the mediation, saying that instead you would let me know the total amount at the mediation.

Please email to me the document that I am required to sign, and I will consider it.

Yours truly,

David Stark

…" (emphasis added)

[30]  On 13 April 2007 the respondent emailed the appellant in the following terms:

 

"From:  Priscilla Wong …

Sent: Friday 13 April 2007 9:26 AM

To:David Stark

Cc:[John Dennett]

Subject:IBA

Importance:High

 

Dear David

 

We refer to our telephone conference yesterday and your email this morning.

 

John Lee is in conference.  The only time he has to attend to this matter today is between 9.00 am 11.00 am as discussed yesterday.  The arrangement we made yesterday is that you would attend at his chambers between 9.00 am 11.00 am today to collect certain documents upon executing his fee agreement, which he will submit to you.

 

We also confirm that a conference will take place with John Lee and our town agent on Monday 12.00 pm.  It is expected that this conference will last until 2.30 pm.  We have made arrangements for our town agent to attend provided their costs of $600.00 including GST are paid into our trust account by 3.00 pm today.

 

We also confirm that we will confirm details of the mediation with the appropriate parties upon payment of the mediator's fee of $1,980.00 inclusive of GST into our trust account by 3.00 pm today.

 

Please telephone us once you have deposited funds into our trust account so that necessary arrangements can be made with our town agent.

 

We confirm we will provide you with a detailed assessment of our costs and disbursements to date at the mediation.  An estimate at this stage for acting from 2002 to date is approximately $70,000.00 inclusive of GST.  We confirm this is an estimate only.

 

Our trust account details are as follows:

 

...

 

Yours faithfully

 

Priscilla Wong

Solicitor

John C Dennett & Associates

Normanby Chambers

Level 2, 430 Little Collins Street

Melbourne  3000

…" (emphasis added)

[31]  At this point, it is convenient to note from this email that the respondent was not disputing the appellant's right to take delivery of documents but was seeking to make that delivery conditional upon the appellant's executing Mr Lee's fee agreement.  It is also apparent that the appellant, the respondent and Mr Lee were all in agreement that the appellant would be principally responsible for the presentation of his case at the mediation.  There was no suggestion that the appellant did not require his papers in order to prepare for the mediation, which was fast approaching.  It is also convenient to note here that, on the hearing of the appeal, it was not suggested that the respondent was entitled to withhold the appellant's papers or to cause Mr Lee to withhold them, unless the appellant executed Mr Lee's retainer and the deed acknowledging that he had no complaints about the conduct of his lawyers.

[32]  On 13 April 2007 the appellant replied to the respondent by email as follows:

 

"From: David Stark …

Sent: Friday, 13 April 2007 12:31 PM

To: Priscilla Wong

Subject: Re: IBA

 

Please note that this morning I requested the intended document I am to sign is to be emailed to me for my consideration. I understand that this document is for me to not only agree to pay whatever fees are requested, but also to express my satisfaction with the advise [sic] I have received from John Dennett and John Lee. I made clear to both of them last night that I would not agree to sign such a statement, as this would be untrue. Please phone me when the document has been emailed.

 

Please also understand that I require the detailed analysis of all the costs I am expected to agree to pay, and that this will be needed for the mediation as well as for me to agree to pay.

 

Please also recognise that continued withholding of my files will prejudice my presentation at the mediation." (emphasis added)

[33]  This email led to a telephone conversation between the appellant and Ms Priscilla Wong, an employee of the respondent.  That conversation was reflected in the following email from the first respondent to the second respondent:

 

"From: Priscilla Wong …

Sent: Friday, 13 April 2007 3:47 PM

To: [John Dennett]; 'John W Lee'

Subject: Stark v IBA

 

Dear John and John

 

David Stark has advised me as follows:

 

1.He will not be signing the two agreements prepared by John Lee this morning. He is in the process of drafting an email explaining why

2.He is not in a position to deposit funds into our trust account as requested this morning

3.He called the mediator Glenn Martin and advised Glenn Martin that he may be unrepresented at the mediation. David Stark advises that Glenn Martin advised him that he may make payment of his share of the mediation fees at the mediation on 18/4/07

4.He telephone [sic] Ian Johnson of Mallesons in Canberra. David Stark advised that Ian Johnson refused to speak to him on the matter as we are still acting for him, however, was able to confirm to David Stark that the mediation was still on.

5. He still wants John Dennett to act for him, however, notes that John Dennett may wish to withdraw from the matter as he will not sign John Lee's agreements.

 

Kind Regards

 

Priscilla Wong

Solicitor

John C. Dennett & Associates

Normanby Chambers

Level 2, 430 Little Collins Street

Melbourne 3000

 

…" (emphasis added)

[34]  It may be noted here that, while the appellant was making plain his willingness to deal with the mediation himself, it was abundantly clear that the appellant "still wants [the respondent] to act for him".  At this point, it may also be noted that it was not suggested to the appellant by the respondent in April 2007, and it was not suggested in argument in this Court, that the appellant's attitude to representing himself at the mediation was in any way inconsistent with the continuation of the retainer generally. 

[35]  On Monday 16 April 2007 the appellant sent the following email to the respondent:

 

"From:'David Stark' …

To:'john dennett' …

Cc:'Priscilla Wong' …; 'John Lee' …

Sent:Monday, 16 April 2007 8:02 AM

Subject:IBA

 

Dear John

 

My work at the weekend has confirmed that I should have had with me the files that I prepared in order to make my presentation at the mediation this Wednesday, 18 April 2007.  Please instruct John Lee to release them immediately.  Because the files have been withheld
I am not prepared for the proposed phone conference with you and John Lee today.

 

I confirm my instructions to you of last Wednesday that I require you and John Lee today to present me with schedules of the costs you are claiming, to enable me to review them, and if necessary to discuss them with you before Wednesday's mediation.  Without these details I will not be in a position to negotiate for their payment.

 

Last Thursday evening you confirmed your advice of the previous day that you would not attend the mediation without John Lee, and by his proposed Agreement John Lee has indicated that he will not act without you.  Your combined actions indicate that I must finalise arrangements for the mediation without you.  As advised on Friday
I have indicated to both the Mediator and to IBA's solicitor that
I wish the mediation to proceed as planned, even if I am not represented.  To ensure legal protocols do not hamper communications between me and IBA's solicitor, I will today advise the Court that I will be representing myself.

 

Please recall that I have pointed out a number of times that I am anxious to advance the case as I want to contribute $1 million into superannuation by 30 June 2007, when the favourable taxation arrangements cease, and that accordingly on Wednesday I will be prepared to be particularly receptive to even a low offer from IBA.  Should resolution not be possible because I have been unable to fully prepare for the mediation, due to not having had access to my files, conclusion of the mediation may have to be further delayed.  If such delay prevents access to the favourable taxation arrangements, I will hold you accountable for any financial loss caused.

 

As previously advised I do not maintain constant access to incoming emails, so please phone me to advise the sending of an email.

 

Yours truly

 

David Stark

…" (emphasis in original)

[36]  The appellant's rising level of anxiety was, to say the least, understandable.  The mediation was fast approaching, and his papers were being withheld from him on the basis of his failure to comply with conditions with which he was not obliged to comply.  It can also be seen that the appellant's intention to advise the court that he will be representing himself was specifically said to be "to ensure legal protocols do not hamper communications between me and IBA's solicitor" in relation to the mediation. 

[37]  Later on Monday 16 April 2007 the respondent spoke to the appellant by telephone.  He subsequently sent him the following email:

 

"From:john dennett …

Sent:Monday, 16 April 2007 1:25 PM

To:'David Stark'

Subject:IBA

 

Dear David.

We refer to our telephone conversation and your e mail this morning.

We confirm that we rang you to advise that John Lee was prepared to proceed with preparation of the mediation as we organizes [sic] on Thursday of last week without insisting that the agreements be signed.

You did not wish to discuss this option nor the mediation but chose to raise a number of irrelevant past matters. We are unsure as a result of your e mail and our telephone conversation whether you are terminating our agreement and would appreciate your advice in writing. Once we have your clear instructions we will then be in a position to contact the mediator and the solicitors for IBA, who have put in a number of calls to our office requesting whether we are still retained following your phone call to them last Friday. If you are terminating then we will send to you a Tax Invoice and will exercise a lien over your file until payment in full is received. That Tax Invoice will include John Lee's fees which he has advised are approximately $36,000 to date.

 

Yours Faithfully

John Dennett

John C Dennett & Associates

Barristers & Solicitors

Normanby Chambers

Suite 201, 430 Little Collins Street

Melbourne Vic 3000

…" (emphasis added)

[38]  At some time on the morning of Monday 16 April, the appellant sought to retrieve his papers from Mr Lee's Chambers.  They were not made available to him.  The appellant sent the following email to the respondent:

 

"From:David Stark …

Sent:Monday, 16 April 2007 2:45 PM

To:john dennett

Cc:Priscilla Wong; John Lee

Subject:IBA

Attachments:Form 92 NOTICE THAT PARTY ACTING IN PERSON.doc

 

Dear John,

 

Please note that the attached was signed and filed at the Court today.

 

This morning you rang to suggest that John Lee's proposed Agreement could be changed to not impose Clause 4 requirement that JL's fees would be payable if I refused an offer JL thought reasonable.  You ignored me when I read the full proposed clause to you, you insisting that the clause related only to cause JL's fees to become payable if I refused an offer JL thought reasonable.  Please re-read the proposed Clause 4.  It unashamedly says 'I (JL) will be entitled to vary the terms of this agreement and ....'  Such a clause could allow JL to vary the agreement to impose on me anything JL liked to impose, including for example a requirement that I accept his advise [sic] to accept any offer that was sufficient to cover just his and your fees.  You effectively did this to me with the BVH case – once bitten twice shy.

 

At midday I saw JL to recover my files but as you have not authorised him to release them, he declined.  I reminded him they are files I prepared and that accordingly they are my files and you and he are not entitled to retain them.  Your continued retention of them and the difficulty this will cause me is proof of why it was appropriate for me to terminate your services, as you seem more concerned with your interests than mine.

 

I await the detailed schedule of your costs to date, which may be able to paid for by IBA.

 

Yours truly

 

David Stark

…" (emphasis in original)

The respondent made a handwritten note on this email:  "No.  said JL OK to proceed without signing Deed and agreement."

[39]  This email of 2.45 pm on 16 April is important.  In it, the appellant asserts for the first time that he has, in fact, terminated the respondent's "services", and that he was entitled to do so because of the respondent's continued retention of the files needed by the appellant for the mediation.

The applicable legal principles

Discussion

[40]  It is important to state at the outset of a discussion of the applicable legal principles that the discourse concerning the termination of a retainer and the consequences of that termination upon the rights of the former client and solicitor to the client's papers reflects the equitable origins of the jurisdiction of the court to order the delivery up of the papers.  This discourse should not be confused with rules of the common law relating to the termination of contracts and the implication of termination for the right to remuneration of the solicitor who has provided services under the retainer.[9]  Issues as to the parties' respective claims to access to the papers are separate from issues relating to whether a solicitor whose retainer is an entire contract is entitled upon termination of the retainer to payment of his costs.  In this regard, Lord Cottenham LC said in Heslop v Metcalfe:[10]

 

"In Cresswell v Byron (a), [Lord Eldon] intimates, in the form of a doubt, his opinion that a solicitor discharging himself cannot claim a lien; an expression which must be understood as meaning, not that the solicitor loses the lien altogether, but that he cannot set it up so as to prevent the client from proceeding in the cause.  And his Lordship's language in Lord v Wormleighton (b) is to the same effect.

Undoubtedly, that doctrine may expose a solicitor to very great inconvenience and hardship, if, after embarking in a cause, he finds that he cannot get the necessary funds wherewith to carry it on. But, on the other hand, extreme hardship might arise to the client, if, – to take the case which is not uncommon in the smaller practice in the country, – a solicitor, who finds a poor man having a good claim, and having but a small sum of money at his command, may go on until that fund is exhausted, and then, refusing to proceed further, may hang up the cause by withholding the papers in his hands. That would be a great grievance and means of oppression to a poor client, who, with the clearest right in the world, might still be without the means of employing another solicitor. The rule of the Court must be adapted to every case that may occur, and be calculated to protect suitors against such conduct. Now, a solicitor, if he knows that he must trust to the result of the cause for his remuneration, will, of course, be disposed to proceed with it in such a way as, while it promotes the interest of his client, is most likely to render his lien available. I have no doubt, therefore, that the existence of the lien, while it is a great protection to the solicitor against his client, is also a great benefit to the client; but the benefit would be entirely lost, if the solicitor might stop short in the middle of the suit, and insist upon retaining the papers, because then no other solicitor could take up and carry on the cause."

[41]  In Re Weedman,[11] Drummond J set out an up to date summary of the effect of the authorities which bear on the issue of present concern:

 

"In the absence of a special agreement, the right of a solicitor to refuse to hand over his former client's papers in order to force the client to pay his costs has long been recognised under the general law. The principles relevant to the assertion of a solicitor's lien upon a change of solicitor are set out in the judgment of Templeton LJ [sic] in Gamlen Chemical at 624, and have been accepted by this Court in CCom Pty Ltd v Jiejing Pty Ltd and Ors (Cooper J, unreported, 24 June 1992) and Cross v National Australia Bank Ltd (Drummond J, unreported, 13 May 1993):

 

'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, 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 his 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 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.'

 

This passage cannot be read as limiting the cases in which delivery of the former client's papers will be ordered, the solicitor having terminated the retainer, to those in which the client will suffer a catastrophe, in the sense of irreparable harm in conducting his litigation if denied the papers: Templeton LJ [sic] added in Gamlen Chemical that: 'Where the solicitor has himself discharged his retainer, the Court then will normally make a mandatory order obliging the original solicitor to hand over the client's papers to the new solicitor against an undertaking by the new solicitor to preserve the lien of the original solicitor.' It has also been said that such an order is made 'as of course', where it is the solicitor who discharges the retainer: see Gamlen Chemical at 620. See also Cordery on Solicitors, 9th Ed, para735.

 

However, the modern rule is that, while it is the usual practice for such an order to be made where it is the solicitor who has terminated the retainer, 'the court does not do this automatically. Whether it grants the order is an equitable matter, and therefore one of discretion, with the result that it is to be exercised judicially on the facts of the case': A v B [1984] 1 All ER 265 at 274; Gamlen Chemical at 624-625; Ismail v Richards Butler (a firm) [1996] 3 WLR 129 at 139. In Gamlen Chemical, Templeton LJ [sic], at 624, refers to the Court's overriding discretion with respect to ordering delivery of the client's papers, notwithstanding the general rule referred to above. Whether such a discretion will be exercised in favour of the client depends, according to his Lordship, at 625, 'on the nature of the case, the stage which the litigation had reached, the conduct of the solicitor and the client respectively, and the balance of hardship which might result from the order the court is asked to make'; the existence of such a discretion is based on 'the inherent, albeit judicial, discretion of the court to grant or withhold a remedy which is equitable in character': Gamlen Chemical at 624. In A v B, Leggatt J said, at 274, that, in exercising this overriding discretion, the Court should make the order which would best serve the interests of justice and that, in determining where those interests lay, it is necessary to weigh up the principle that a litigant should not be deprived of material relevant to the conduct of his case and so driven from the judgment seat, if that would be the result of permitting the lien to be sustained, and the principle that litigation should be conducted with due regard to the interests of the court's own officers, who should not be left without payment for what is justly due to them.

 

Where it is the client who discharges the solicitor, other than for the latter's misconduct, a different position obtains: in such cases the general rule is that the solicitor is entitled to keep his lien and the court has no power to interfere with the exercise of it: Lord v Wormleighton (1822) Jac 580, 37 ER 969; Robins v Goldingham (1872) LR 13 Eq 440; Hughes v Hughes [1958] P 224 at 227-228; Gamlen Chemical at 624; A v B at 269. In Hughes v Hughes, Hodson LJ, delivering the judgment for the Court, explained the reason for this, at 228:

 

'The litigant need not change his solicitor without good cause. It would be odd if he were in effect able to get solicitors' work done for nothing by the simple expedient of changing his solicitor as often as he chose, leaving a trail of unpaid costs in his wake and demanding the papers without payment when he had no just cause to complain of the conduct of the solicitors instructed and discarded.'

 

In Ismail v Richards Butler, Moore-Bick J said, at 143, that the cases show that where the client has discharged the solicitor, the court has not been willing to interfere with the exercise of the lien, even where the papers concerned are required for pending litigation.

 

Where it is the client who has terminated the retainer otherwise than for the solicitor's misconduct, I doubt whether there is any residual discretion in the court to order that the former client shall have access to the documents, in the face of the lien, even where the denial of access to the documents may leave the client facing what can truly be regarded as catastrophic disruption to his litigation. Such a discretion could, in my opinion, only be justified on the basis that the interests of justice may require such an order to be made in some cases. But it is difficult to see why the court should disregard the interests of its own officers and leave them without payment for what is justly due to them because insistence on the lien would deprive the former client of material essential to the conduct of his case, where that situation has been brought about by the client discharging the solicitor without any good reason. However, it is unnecessary for me to reach a concluded view on whether such a discretion exists since even if the court does have that power, I would not regard this as a proper case to exercise it in favour of the applicants, for reasons which later appear."

[42]  In relation to the issue whether the client has terminated the retainer, Drummond J went on to explain the approach to be taken by the court in terms which eschew the kind of analysis which is appropriate where the issue is whether a commercial contract has been terminated by one party by reason of repudiatory conduct of the other: 

 

"The critical question whether it is the solicitor or the client who has terminated a retainer is not to be answered by a nice evaluation of who acted first or by an exact analysis of the language used by each party at various times, in isolation from the overall context of the dealings between the parties, especially when, as here, it appears both were aware of the consequences of being the party who determines the retainer and both were, at relevant times, choosing their words with care. It is the substance of the matter that is important. See CCom Pty Ltd v Jiejing Pty Ltd and Cross v National Australia Bank Ltd."

The termination of the retainer

[43]  In the present case, the respondent denied the appellant access to his papers unless certain conditions were met.  Under the terms of that retainer then current, the appellant was under no obligation to comply with those conditions; and insofar as it might be said that the respondent's refusal was justified by a lien for unpaid fees as at 13 – 16 April 2007, the appellant was, under the then current arrangements, under no liability to pay the respondent anything in order to have access to his papers. 

[44]  In my respectful opinion, having regard to the terms of the retainer between the appellant and the respondent between 10 April and 16 April 2007, and bearing in mind that the respondent and the appellant had agreed that the appellant would play the major role in the presentation of his position at the mediation set down for 18 April 2007 and required his papers to prepare for that as a matter of urgency, the respondent was duty bound to allow the appellant access to his papers for that purpose.  To refuse that access on the basis of the appellant's failure to accept unjustifiable conditions or on the basis of a claim to a lien for fees not yet payable under the terms of the retainer then in place, in a way plainly apt to prejudice the plaintiff's ability to prepare for the mediation, was to terminate the retainer or, at least, to give the appellant good cause to terminate it.

 

[45]  The crucial finding of the learned primary judge was that, after the communications of 16 April 2007, the appellant "then proceeded to act in the matter on his own behalf, and … to terminate the retainer with Mr Dennett."[12]  A close consideration of the communications set out above shows that they do not record the appellant expressly terminating the respondent's retainer before the appellant's 2.45 pm email on 16 April 2007.  Even in that email, the appellant speaks of having terminated the respondent's services; and there is no evidence of the actual communication whereby that event is said to have occurred.  It was conceded on the appellant's behalf, however, that this email of 16 April did indeed purport to terminate the retainer.  In my respectful opinion, the appellant's emails prior to this time, considered objectively as a whole, show that the appellant expressed an intention to act on his own behalf in the mediation, but he did not manifest an intention to terminate the respondent's retainer generally.  A solicitor who agrees to conduct an action is regarded as having entered into an entire contract to carry the litigation through to its end.[13]  If a client is to be regarded as having terminated such a retainer, a clear indication of his or her intention in that regard is required.  In Re Wingfield & Blew (Solicitors),[14] Cozens-Hardy LJ said:

 

"When once a good retainer has been given at the commencement of an action, something definite, clear, and precise is required to withdraw that retainer and to get rid of the indivisible effect of that retainer."

[46]  One can readily understand that the respondent may have regarded the appellant as a demanding and, even an ungrateful, client.  It may well be that the appellant's expressions of a want of confidence in the respondent's advice were such that the respondent would have been justified in calling upon the appellant at some earlier stage to state clearly, once and for all, whether the appellant wished to continue to retain the respondent in his action, making it clear in this regard that a continuation of the appellant's expressions of discontent would be treated as manifesting a breakdown of the trust and confidence essential to the continuation of the retainer.  But the respondent did not bring matters to a head in such a clear and unequivocal way before denying the appellant access to his own papers.   

[47]  In relation to the crucial question, namely whether the appellant terminated the retainer prior to 16 April 2007, in my respectful opinion, the communications from him set out above prior to that time are consistent with the continuation of the retainer generally, notwithstanding the appellant's willingness to deal with the mediation himself and his complaints about the quality of legal advice he was receiving from the respondent.  On the other hand, the respondent's conduct in preventing the appellant's access to his papers for the critical period prior to the mediation set down for 18 April was quite unjustified.  The respondent had accepted that the appellant could take the major role at the mediation.  There was no suggestion, then or now, that the appellant did not need access to his papers to prepare for that role.  The position taken by the respondent was unjustified, and not consistent with the continuation of the retainer.

Security for the respondent

[48]  The relief sought by the appellant is equitable in nature.  In my view, it would be inequitable to allow the respondent to prevent the appellant from proceeding with the litigation by insisting upon a lien over the appellant's papers in circumstances where the respondent terminated the retainer; and where both parties have always understood that the appellant does not have the financial means to meet the cost of obtaining his papers, especially where both parties have an interest in the resolution of the appellant's claim against IBA.[15] 

[49]  In these circumstances, it would not be inequitable to grant the relief sought by the appellant even though the respondent is entitled to "every security not inconsistent with the progress of the cause."[16]  Where a solicitor has terminated the retainer without good cause the court will not, in seeking to strike an equitable balance between the interests of the former solicitor and former client, be overly fastidious to ensure the adequacy of the former solicitor's security for his or her fees.  That is because it is the former solicitor's unwarranted act which has put the progress of the client's cause to finalisation out of his control in a case where both the client and solicitor have an interest in the finalisation of the action, and upholding the former solicitor's claim to a possessory lien will cause the action to be stalled indefinitely.

[50]  The respondent is entitled to claim an equitable lien over the fruits of the litigation even though these will not come into his actual possession.[17]  The nature of this equitable lien is such that, upon notice by the respondent to IBA, IBA will be under a liability to the respondent which it can discharge only by payment of the necessary amount to the respondent.  After the hearing of the appeal, the Court was informed that the respondent has given the appropriate notice to IBA. 

[51]  This security appears to me to be the best security available to the respondent which is consistent with the "progress of the cause" bearing in mind that it was the respondent who either terminated the retainer or gave the appellant good cause to do so, and that the proceeding against IBA was pursued by the respondent in the knowledge that he would only be paid if the action against IBA is successfully resolved.  To the extent that it is said on the respondent's behalf that the appellant may refuse a reasonable compromise because of his inflated view of the worth of his claim, that problem was always inherent in the respondent's decision to act for the appellant in the action.  It is not a consideration to which much weight can be given in striking an equitable balance between the interests of the parties when the respondent has terminated the retainer.

Conclusion and orders

[52]  The appeal must be allowed.  The judgment below should be set aside.  The respondent must deliver up the appellant's files to him.

[53]  So far as the question of costs is concerned, the costs of the appeal should follow the outcome of the appeal.  The basis on which the appeal succeeded was not argued below; but the respondent was not, objectively speaking, justified in opposing the appellant's application.  Accordingly, while the appellant should recover his costs of the appeal, the order for costs below in favour of the respondent should be set aside, but no order for costs of the proceeding below in favour of the appellant should be substituted in lieu of that order.

[54]  I propose the following orders:

 

(a) That the appeal be allowed;

(b) That orders 1 and 2 of the learned primary judge made on 16 July 2007 be set aside, and in lieu thereof:

(i) all the files, documents, correspondence or other material prepared by or on behalf of the plaintiff and copies of all documents, correspondence or other material disclosed by Burnett Valley Holdings Limited in the possession or control of John C Dennett, whether held by John C Dennett, John C Dennett & Associates and by John W Lee in relation to the proceeding in the Supreme Court at Brisbane, No 3269 of 2000, be delivered up to the appellant;

(ii) all the files, documents, correspondence or other material prepared by the plaintiff and copies of all documents, correspondence or other material disclosed by Indigenous Business Australia in the possession or control of John C Dennett, whether held by John C Dennett, John C Dennett and Associates and by John W Lee in relation to the proceeding in the Queensland Supreme Court at Brisbane, No 9150 of 2003, be delivered up to the appellant; and

(c) That the respondent pay the appellant's costs of and incidental to this appeal to be assessed on the standard basis.

[55]  MUIR JA:  I agree with the reasons of Keane JA and with the orders proposed by his Honour.

[56]  MULLINS J:  I agree with Keane JA.

Footnotes

[1] Stark v Dennett [2007] QSC 171 at [7] – [10].

[2] Stark v Dennett [2007] QSC 171 at [12].

[3] Stark v Dennett [2007] QSC 171 at [14] – [15].

[4] Stark v Dennett [2007] QSC 171 at [16] – [20].

[5] Stark v Dennett [2007] QSC 171 at [23] – [25].

[6] Stark v Dennett [2007] QSC 171 at [29].

[7] Warren v Coombes (1979) 142 CLR 531 at 551.

[8] Cf Coulton v Holcombe (1986) 162 CLR 1 at 8.

[9] Cf Baker v Legal Services Commissioner [2006] 2 Qd R 249 at 263 [30] – [31].

[10] (1837) 3 My & Cr 183 at 187 – 189.

[11] [1996] FCA 1112.

[12] Stark v Dennett [2007] QSC 171 at [9].

[13] Court v Berlin [1897] 2 QB 396.

[14] [1904] 2 Ch 665 at 684.

[15] See also Heslop v Metcalfe (1837) 3 My & Cr 183 at 188 – 190; Robins v Goldingham (1872) LR13Eq 440 at 442; Gamlen Chemical Co (UK) Ltd v Rochem Ltd & Ors [1980] 1 All ER 1049 at 1057.

[16] Heslop v Metcalfe (1837) 3 My & Cr 183 at 190.

[17] Ex parte Patience; Makinson v The Minister (1940) 40 SR (NSW) 96 at 100; Patterson v Cohen [2005] NSWSC 635.

Close

Editorial Notes

  • Published Case Name:

    Stark v Dennett

  • Shortened Case Name:

    Stark v Dennett

  • Reported Citation:

    [2008] 2 Qd R 72

  • MNC:

    [2008] QCA 50

  • Court:

    QCA

  • Judge(s):

    Keane JA, Muir JA, Mullins J

  • Date:

    07 Mar 2008

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2007] QSC 17116 Jul 2007Application for delivery of files from solicitor following termination of retainer; the respondent was entitled to insist upon his lien on the basis that the appellant had terminated the retainer without good cause, and had not offered the respondent sufficient security for payment of his fees and outlays to warrant the making of an order inconsistent with the lien asserted by the respondent; application dismissed: Douglas J.
Appeal Determined (QCA)[2008] QCA 50 [2008] 2 Qd R 7207 Mar 2008Appeal against dismissal of application against former solicitors to delivery papers relating to file; where a solicitor has terminated the retainer without good cause the court will not, in seeking to strike an equitable balance, be overly fastidious to ensure the adequacy of the former solicitor's security for his or her fees; appeal allowed: Keane and Muir JJA and Mullins J.

Appeal Status

Appeal Determined (QCA)
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