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  • Unreported Judgment

Ireland v Trilby Misso Lawyers

 

[2011] QSC 127

Reported at [2011] 2 Qd R 320

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

Ireland v Trilby Misso Lawyers  [2011] QSC 127

PARTIES:

COLIN LEO IRELAND

Applicant

V

TRILBY MISSO LAWYERS

Respondent

FILE NO/S:

SC 24 of 2011

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Mackay

DELIVERED ON:

24 May 2011

DELIVERED AT:

Rockhampton

HEARING DATE:

3 May 2011.

JUDGE:

McMeekin J

ORDER:

  1. Declare that the Retainer entered into between the Applicant and the Respondent for the Respondent to act on behalf of the Applicant to recover damages for personal injuries suffered in an accident which occurred on 10th April 2006 was terminated by the Respondent on the 2nd August 2010.
  2. Declare that the Respondent is not entitled to retain the Applicant’s file pursuant to the Retainer.
  3. Order that all files, documents, correspondence or other material prepared by or on behalf of the applicant and copies of all documents correspondence or other material in the possession or control of Trilby Misso Lawyers in relation to the file of Colin Leo Ireland, be delivered up to the Applicant.
  4. Refer the papers to the Legal Services Commissioner
  5. Order that the Respondent pay the Applicant’s costs of and incidental to the Application.

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 had entered into a ‘no win, no fee’ agreement with the respondent         

PROFESSIONS AND TRADES – LAWYERS – LIENS – POSSESSORY LIEN – DETERMINATION – whether appellant owes outstanding fees to the respondent – where the respondent refuses to deliver up papers on the appellant’s file – where the respondent claimed a possessory lien over the papers

Baker v. Legal Services Commissioner[2006] QCA 145

Baker Johnson v. Jorgensen[2002] QDC 205

Gamlen Chemical Co (UK) Ltd v Rochem Ltd & Ors [1980] 1 WLR 614

Spence v Gerard Malouf & Partners [2010] NSWSC 764

Stark v Dennett [2008] QCA 50

State Rail Authority of New South Wales v Codelfa Construction Pty Ltd(1982) 150 CLR 29

COUNSEL:

Mr GC Crow SC for the Applicant

Mr TA Arnold for the Respondent

SOLICITORS:

Macrossan & Amiet Solicitors for the Applicant

Trilby Misso Lawyers for the Respondent

  1. McMEEKIN J:  In this application Mr Ireland seeks certain declarations concerning the termination of the retainer under which his former solicitors Trilby Misso Lawyers (“Trilby Misso”) acted on his behalf and an order that the file held by those former solicitors be delivered up to his present solicitors, Macrossan & Amiet, and without payment of any fees or other provision to secure any costs or outlays. 
  1. Trilby Misso does not dispute that the file should be handed over – Mr Ireland’s claim cannot proceed without Macrossan & Amiet having the file - but claim that they have a lien over the file and it should be protected. 
  1. Mr Ireland resists offering any security as he says that no monies are owing to Trilby Misso.
  1. Resolution of the dispute requires an examination of what are generally known as “No Win No Fee” agreements. There are effectively two issues – are monies presently owing or likely to be one day owing to Trilby Misso? If so, should any, and if so what, security be put in place to secure those costs?

Background

  1. Mr Ireland alleges that he suffered personal injury on 10 April 2006 in an incident at a boat ramp.  He originally retained Dempsey Solicitors (“Dempseys”) to act for him in respect to a claim for damages arising out of the incident.  He did so under what was described as a “Speculative Agreement”.  Dempseys effectively terminated that retainer, presumably because the principal, Mr Dempsey, was struck off. Mr Ireland went to Trilby Misso on Dempsey’s recommendation. Dempseys apparently “sold” the file to Trilby Misso for the costs and disbursements that Dempseys claimed were then outstanding.  In about June 2009 Dempseys file was transferred to Trilby Misso. 
  1. At some point proceedings were commenced. The litigation has reached the stage where a defence has been filed and Mr Ireland must now deliver a list of documents and a statement of loss and damage.
  1. In or about August 2010 Trilby Misso decided that the claim was too risky to proceed with on a “no win, no fee” basis. They terminated the retainer. The client had done nothing to justify such termination. There is no evidence that Trilby Misso became aware of any new material that altered their opinion regarding the prospects of success of the claim. That their opinion altered is clear enough but that reassessment was done following a reappraisal of existing material, at least as far as the present evidence shows.
  1. Mr Ireland then consulted Macrossan & Amiet and sought the release of his file. Thus Mr Ireland is now with his third set of solicitors. Trilby Misso replied that they would release the file initially on terms that included execution of an “irrevocable authority that reflects our Bill of Costs”.  Upon enquiry as to the nature of the “irrevocable authority” Trilby Misso advised that they would require “immediate payment before we are prepared to release the file” of their Bill of Costs then under preparation.  Trilby Misso subsequently forwarded a Bill of Costs in the amount of $123,522.59, which sum included outlays of $48,626.06 and a “25% uplift pursuant to client agreement”. Subsequently an offer was made by Trilby Misso to accept $35,000 “in full and final settlement of our fees and disbursements only” – the solicitors did not wish to accept responsibility for the payment of a litigation loan previously obtained by Dempseys.

The Contract

  1. The determination of the first question, are monies presently owing or likely to be one day owing to Trilby Misso, requires an examination of the terms of the Client Agreement under which Trilby Misso agreed to act for Mr Ireland. Clauses 2, 3 and 16 of that Agreement provided:-

Clause 2

“We will charge you professional costs only if we are successful in obtaining damages or costs for you in connection with your claim.”

Clause 3

No Win, No Fee

A successful outcome is when you accept the amount of damages offered for your claim. 

If your claim is unsuccessful in obtaining any damages or costs, we will not send you an account for either professional fees or disbursements.” 

Clause 16

“We may terminate this agreement and cease to act for you if you:

  • breach this agreement
  • require us to act to unlawfully or unethically
  • fail to give us adequate instructions
  • fail to co operate with us, eg, repeated failure to attend medical examinations or provide information requested by us
  • indicate you have lost confidence in us or demonstrate a negative attitude to see your claim through
  • lose legal capacity
  • fail to keep us advised of any current address and telephone numbers
  • fail to accept our advice as to the conduct of the matter in some significant aspect

We may terminate this agreement and cease to act for you if we become aware of any material that alters our opinion regarding the prospects of success of your claim.  If you refuse to consent to make an offer of settlement or accept an offer of settlement made by or on behalf of the other party (defendant) which, in our written opinion, we consider is reasonable which should be made or accepted we shall be entitled to obtain at your expense the written opinion of Queen’s Counsel or Senior Counsel as to the reasonableness of the offer.  If the written opinion also recommends the making or acceptance of such an offer and you refuse to consent or to make or accept such offer, then we may terminate the agreement.  …

If the agreement is terminated by you or us in accordance with the provisions of this agreement we are entitled to all outstanding professional costs and disbursements calculated in accordance with this agreement.  We will also be entitled to retain your file until satisfactory arrangements are made for the payment of those professional costs and disbursements.” (underlining added)

The Right to Payment of Fees

  1. There is ample authority for the proposition that, subject to any particular terms of the retainer, in relatively uncomplicated litigation, as this is, the solicitor is “bound to do what is necessary to institute (or defend) the action and to bring it to a conclusion before becoming entitled to payment of any his professional fees”: see Legal Services Commissioner v Baker (No 2)[1]and the authorities there cited.  Further, as McPherson JA there pointed out, “the solicitor is not entitled to unilaterally terminate the retainer unless there is what is sometimes described as ‘reasonable cause’ or ‘just cause’, involving a breach or repudiation of the retainer by the client”.[2]
  1. Here the parties had agreed to terms that altered the situation at common law. The solicitors did have the right to terminate the retainer prematurely but only in certain circumstances. However it is clear that the solicitors here did not terminate the retainer in accordance with the provisions of the agreement. That is so because they did not become aware of any material that altered their opinion regarding the prospects of success of the claim as cl 16 required. Nor did Mr Ireland do anything that could be described as a breach or repudiation of the retainer.
  1. Mr Crow of Senior Counsel, who appeared for the applicant, submitted that in the circumstances the solicitors repudiated the agreement. That was not seriously contested. It follows, so the submission went, that Trilby Misso have no present right to the payment of any fees or disbursements.
  1. The applicant’s submission seems plainly right. Under cl 2 that right to payment arises only “if [Trilby Misso] are successful in obtaining damages or costs for you in connection with your claim”. That event certainly has not come to pass. Nor, as I have said, has the agreement been terminated in accordance with cl 16.
  1. Even if that were not so and the solicitors could show that they terminated the agreement in accordance with the termination provisions set out in cl 16 it would not assist them. If there is no right to payment of any fees or disbursements if the claim is unsuccessful – as cl 3 above plainly states – then the solicitors cannot gain a right to a payment because they change their view on the prospects of success. That would make a nonsense of the provisions in cl 3 which is the fundamental basis on which Mr Ireland agreed to retain the solicitors. This has been previously pointed out in relation to “no win, no fee” agreements: Baker Johnson v. Jorgensen[3]; Legal Services Commissioner v Baker (No 2)[4] (“Baker”).
  1. Further Mr Arnold, counsel for the respondent, conceded that he was not able to demonstrate that Dempseys had any entitlement to be paid any monies under its client agreement with Mr Ireland at the time that Trilby Misso paid Dempseys for their file.  Hence it cannot be said that in paying Dempseys Trilby Misso were meeting any presently existing obligation of Mr Ireland.
  1. Nor is it clear that they were incurring an obligation that must have inevitably fallen on to Mr Ireland.  At the very least it seems unlikely that Dempseys would gain a right to payment of fees under a “no win, no fee” arrangement by unilaterally terminating the retainer without “just cause” in the sense referred to by McPherson JA in Baker.  If the retainer came to an end through the striking off of the sole practitioner in the firm then there was a frustration of it.  There is authority to the effect that the performing party under such a contract has no right to payment of fees: Appleby v Myers (1867) LR 2 CP 651 referred to with approval by McPherson JA in Baker.[5]  
  1. The only remaining basis on which Dempseys may have a right to payment is under the principle of restitution for work done of which the client takes advantage: again see Baker at 263-264 [32] per McPherson JA citing State Rail Authority of NSW v Codelfa Construction Pty Ltd.[6]  Whether Mr Ireland will in fact receive some advantage from the work performed by Dempseys is not yet shown.  Statements in the correspondence exchanged suggest that there may have been very little advantage to Mr Ireland from that work.
  1. Whether Trilby Misso has a contingent right to payment upon a successful conclusion of the litigation was not the subject of argument. The retainer did not expressly deal with the situation where the solicitors determined the retainer without just cause. It is a nice point as to whether the solicitors can ever have such a right given that their right to any payment, whether of outlays or fees, was expressed to be contingent on Trilby Misso being “successful in obtaining damages or costs for you”. In the events that have now come to pass, if there is success, it will not be through the efforts of Trilby Misso. Again the solicitors may be able to demonstrate an entitlement under the restitutionary principles. Again whether the client can take advantage of any work performed is not presently known.
  1. Thus the solicitors seek the imposition of conditions on the handing over of their file in circumstances where they have terminated the retainer without good cause and where there is no present right to the payment of any fees, and at best, only a contingent right to such payment.

The Obligation to Hand Over the File

  1. Whilst Trilby Misso is prepared to hand over their file they say that they are entitled to have security put in place. Trilby Misso submit that they are entitled to payment, at least, of outgoings, and the best means of securing their position is to have Macrossan & Amiet and Mr Ireland enter into a Deed effectively securing to Trilby Misso their outlays incurred up to a nominated amount – effectively the amount that they paid Dempseys. So Trilby Misso seeks no professional costs for their own work.  The amount paid to Dempseys reflected both professional costs and outlays.
  1. The principles that apply to an application such as that made here were considered by the Court of Appeal in Stark v Dennett[7].  As the judgements there show Mr Ireland here seeks the exercise of an equitable discretion in his favour. While it is not in contest here that the former solicitor’s file should be handed over it is worth noting that the relevant factors are strongly in favour of that course - the relevant factors being “the nature of the case, the stage which the litigation has reached, the conduct of the solicitor and the client respectively and the balance of the hardship which might result from the order the Court is asked to make.”[8]
  1. In Stark, after pointing out that the relief being sought by the client was equitable in nature and the decision whether to grant it and on what terms a discretionary one, and in circumstances not dissimilar to those here where it was the solicitor who had determined the retainer, Keane JA said:

“In these circumstances, it would not be inequitable to grant the relief sought by the [client] even though the [solicitor] is entitled to "every security not inconsistent with the progress of the cause"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.”[9]

  1. Similar considerations apply here.
  1. Mr Arnold, who appeared for Trilby Misso, submitted that the following were the important factors that I was required to take into account in the exercise of this equitable discretion:
  1. As the plaintiff is seeking to secure damages for personal injury all the documentation exists for the purpose of that action. Hence, once the action has come to an end, the papers will be valueless;
  2. Because of the nature of the action the incoming solicitors’ undertaking as to the restoration of the lien upon completion of the matter is of no value;
  3. The outgoing solicitor has upon taking over the file from another practitioner expended considerable monies in satisfaction of outstanding outlays ($17,307.60) and payment of incurred professional fees ($19,276.50);
  4. The outgoing solicitor is seeking nothing for professional work undertaken since “taking over the file” and further seeks less than the amount that has come from its own pocket when the file was taken over;
  5. The termination of the retainer was in accordance with rights given to the outgoing solicitor in the written retainer;
  6. The order sought is consistent with the Solicitors Rules.
  1. The factors set out in (a), (b) and (d) are factually accurate. Monies were expended as claimed in (c) but, as I have said, not to satisfy any existing liability of Mr Ireland’s.  However each of those factors is only of limited significance. I do not accept that the solicitor terminated the retainer “in accordance with rights given to the outgoing solicitor in the written retainer” as asserted in (e). Nor is the reference to the Legal Profession (Solicitors) Rules 2007 in (f) of much relevance here. The reference is to rule 23, made under the authority of s.219 of the Legal Profession Act 2007, which provides as follows:

“23 Taking over a matter from another legal practitioner

23.1 Where a solicitor’s retainer is terminated before the completion of the matter, and the client instructs another legal practitioner to take over the conduct of the matter the following rules shall apply, subject to any orders which may be made by a court of competent jurisdiction in respect of the delivery of the client’s documents.

23.2The first solicitor must promptly, on receipt of a direction in writing from the client, deliver to the second legal practitioner all relevant documents to which the client is entitled and any information which is necessary for the proper conduct of the matter, unless the first solicitor claims a lien over the documents for unpaid costs.

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

23.4 If the first solicitor has terminated the retainer and the client’s documents are essential to the defence or prosecution of current proceedings which are continuing before a court, the solicitor must surrender possession of the documents to the client, upon receiving satisfactory security for the unpaid costs, or to the second legal practitioner, if so directed by the client, and, provided that the second legal practitioner:

23.4.1 holds the documents subject to the first solicitor’s lien, if that is practicable, and provides reasonable security for the payment of the first solicitor’s costs; or

23.4.2 enters into an agreement with the client and the first solicitor to procure payment of the first solicitor’s costs upon completion of the relevant proceedings.

23.5 A solicitor who receives a client’s documents from another legal practitioner pursuant to an agreement between the client and both legal practitioners, providing that the solicitor receiving the documents will pay the first solicitor’s costs from money recovered on the client’s behalf in respect of the matter to which the documents relate, must do all things which are reasonably practicable on the solicitor’s part to ensure compliance with the agreement.” (underlining added)

  1. Those rules assume an existing right to payment of fees which is not the case here. Nor do the rules deal with the situation of a solicitor terminating the retainer without just cause. Further, the rules leave open the question of what security is “satisfactory” in the circumstances – the very issue that I must determine.
  1. The two principal relevant circumstances are first, that it is the solicitors who have by their unwarranted act placed the client in the invidious position of having the progress of his action stalled and of forcing him to seek further representation in order to progress it. Secondly, those solicitors themselves have only a speculative right, at this stage, to the payment of professional fees and outlays. The deed that the solicitors seek be entered into would elevate their entitlement to something more than that.
  1. A solicitor has potentially a right to a lien of two different types – one over his or her file and the other over the fruits of litigation. This case is concerned with the former. In my view the solicitors are not entitled to maintain a possessory lien over the file. That is so because Mr Ireland does not presently owe them any money; see Spence v Gerard Malouf & Partners Pty Ltd [2010] NSWSC 764 at [108] per Bergin CJ in Eq. 
  1. As a result they are not entitled to be satisfactorily secured as provided for in the solicitor’s rules. In my view it would be quite inequitable to require either the applicant or the incoming solicitors to provide the degree of security sought. It is in the nature of the retainer that the solicitors took on that they might never be paid. They are the ones responsible for the drafting of their agreement in which they have severely circumscribed their right to be paid.
  1. In Stark the Court left the solicitors to their equitable lien over the fruits of the litigation.  Whether Trilby Misso in fact have a demonstrable right to the payment of any fees or outlays is yet to be determined. I do not decide that issue here.  But I cannot see that they should have any greater security than that allowed in Stark in the circumstances.  If the solicitors deliver a notice claiming such a lien then it will be for Mr Ireland to determine whether he wishes to contest the claim.
  1. I do not propose to order that any further security be put in place.
  1. There is a further matter that I should mention. The solicitors sought initially to impose a condition on the release of their file that was plainly not maintainable. To insist on immediate payment of monies in circumstances where none were chargeable is dishonest: Baker at 258 [16] per McPherson JA. Nor is it only the fact of the demand that is of concern.  The amount of the bill and certain items within it require some explanation. It may be the solicitors can demonstrate that they had some honest belief that they had the right to charge over $123,000.  Absent some explanation the impression is that an outrageous amount was demanded in an attempt to coerce the applicant into accepting an obligation to pay the lesser amount of costs when offered. I have received no argument on the point. I will refer the matter to the Legal Services Commissioner for further investigation.

Orders

  1. The orders will be:
  1. Declare that the retainer entered into between the applicant and the respondent for the respondent to act on behalf of the applicant to recover damages for personal injuries suffered in an accident which occurred on 10th April 2006 was terminated by the respondent on the 2nd August 2010;
  1. Declare that the respondent is not entitled to retain the applicant’s file pursuant to the retainer;
  1. Order that all files, documents, correspondence or other material prepared by or on behalf of the applicant and copies of all documents, correspondence or other material in the possession or control of Trilby Misso Lawyers, in relation to the file of Colin Leo Ireland, be delivered up to the applicant;
  1. Refer the papers to the Legal Services Commissioner;
  1. Order that the respondent pay the applicant’s costs of and incidental to the application.

Footnotes

[1] [2006] 2 Qd R 249, 254 [3] per McPherson JA

[2] Ibid

[3] [2002] QDC 205

[4] [2006] 2 Qd R 249

[5] [2006] 2 Qd R 249, 262 [28]-[29] – but see at 274 [80] per Douglas J

[6] (1982) 150 CLR 29

[7] [2008] 2 Qd R 72

[8] Gamlen Chemical Co (UK) Ltd v Rochem Ltd [1980] 1 WLR 614 per Templeton LJ at 625 quoted with approval by Drummond J in Re Weedman [1996] FCA 1112 which in turn was quoted with approval by Keane JA in Stark v Dennett at 89 [41]

[9] At 92-93 [49] – citations omitted

Close

Editorial Notes

  • Published Case Name:

    Ireland v Trilby Misso Lawyers

  • Shortened Case Name:

    Ireland v Trilby Misso Lawyers

  • Reported Citation:

    [2011] 2 Qd R 320

  • MNC:

    [2011] QSC 127

  • Court:

    QSC

  • Judge(s):

    McMeekin J

  • Date:

    24 May 2011

Litigation History

Event Citation or File Date Notes
Primary Judgment [2011] 2 Qd R 320 24 May 2011 -

Appeal Status

No Status