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Firm accused of pushing client into ‘hopeless’ proceedings
A disgruntled client lashed out at his former firm of solicitors with accusations it allowed him to proceed with a defence despite knowing his matter was hopeless and “doomed to fail”.
Naomi Neilson
Anthony Malouf, a practitioner with extensive expertise in common law and civil litigation, and his firm, Malouf Solicitors, were accused of not informing a former client that his matter had no hopes of success prior to filing a defence in the NSW District Court.
The client, Victorian X-Ray Group and director Bevyn White, claimed that had he been informed by their solicitors, White would have chosen to settle the claims against the other party on the best possible terms.
The company and White have sought the recovery of all legal costs before the NSW Supreme Court but do not seek any additional sums for loss of profit or damages for an amount paid to the other party.
In submissions, Malouf denied any failure to take care, telling the court that while he may not have informed White before the filing of the defence that his matter was doomed to fail, he did advise him the case was “weak and/or risky or had difficulties”.
White accepted he was told the case may be “weak”, but he pressed that he was never informed the matter was doomed and was only presented with either dropping the case or defending the proceedings in the hope of success “despite the risks in doing so”.
In his reasons, Justice Richard Cavanagh said he had come to the “firm view” that White believed the litigation process could be used to “extract a better commercial result” from the other party and blamed the lawyers for being unable to convince them to reach this result.
It was also noted that any “pessimistic advice” from the firm was met with “criticism of those who provided it and disinclination to pay the legal fees”, as evidenced by the build-up of significant, unpaid fees.
These fees went unpaid, “almost as if [White’s] failure to pay money owing to others was not his problem but of those who allowed it to occur”, Justice Cavanagh added in the written reasons.
While there was a failure by Malouf to read the service agreements relevant to the District Court case, the conduct of the firm in the lead-up to filing the defences in question “would seem quite orthodox and not indicative of a failure to take care”, the court found.
Justice Cavanagh was satisfied that Malouf and the firm did not breach their duty of care and would not have known Victorian X-Ray Group’s and White’s case was doomed to fail prior to filing the defences.
In the second part of its defence, Malouf Lawyers said that even if a breach is established, the plaintiffs would have failed on causation.
However, just as Justice Cavanagh did not accept Malouf would have filed the defences “contrary to his ethical obligations”, he did not accept the plaintiffs “would have simply retained other solicitors” to pursue the matter instead “and incurred similar costs”.
“As such, even if White may have been disinclined to pay [the other party] any substantial sum, he would have been left to settle on the best possible terms or deal with the cases himself.
“On either scenario, he would not have incurred the legal costs.
“I am also satisfied that he would not have let the litigation proceed such that he would be subject to costs orders against him for substantial sums,” Justice Cavanagh said.
Causation would have been established if the first defence failed.
As for the legal fees, Justice Cavanagh said White could not recover the amounts in dispute because he did not pay them, has no ongoing obligation to do so, and has not established liability for a refund.
The only basis on which the plaintiffs could have recovered those amounts “is they have an obligation to reimburse someone else in respect of those amounts”.
“Neither Mr White, the corporate plaintiffs or the related entities entered into any agreements at the time when the payments were made,” Justice Cavanagh said.
“No documents were created evidencing any loans or any obligations to repay the amounts which were paid by the related entities as authorised by Mr White.”
Naomi Neilson
Naomi Neilson is a senior journalist with a focus on court reporting for Lawyers Weekly.
You can email Naomi at:
