New South Wales Supreme Court CITATION : King v Linney (No 3) [2010] NSWSC 902 HEARING DATE(S) : 9 July 2010 JUDGMENT DATE : 13 August 2010 JUDGMENT OF : Harrison J DECISION : Plaintiff's notice of motion filed 10 June 2010 dismissed with costs. CATCHWORDS : PRACTICE & PROCEDURE - application by plaintiffs to revisit costs order made following their unsuccessful challenge to retainer of defendants' solicitor – where plaintiffs contend costs order based on misapprehended facts – where original challenge to the retainer was made on assumption that defendants' solicitor had been given confidential information – where assumption false and challenge ill considered – costs order appropriate - application dismissed. CATEGORY : Procedural and other rulings Fletcher v Besser [2010] NSWCA 30 JBK Engineering Pty Ltd v Brick and Block Co Pty Ltd [2007] NSWSC 163 CASES CITED : King v Linney (No 2) [2010] NSWSC 342 Metropolitan Petar v Mitrevski [2008] NSWSC 243 Nominal Defendant v Manning [2000] NSWCA 139, (2000) 50 NSWLR 139 Sundarajah v Teachers Federation Health Ltd (No 3) [2010] NSWSC 471 Wendy Gay King (First Plaintiff) PARTIES : Brendan John Murphy (Second Plaintiff) Darren Linney (First Defendant) Tanya Morris (Second Defendant) FILE NUMBER(S) : SC 2008/289190 COUNSEL : P W Bates (Plaintiffs) SOLICITORS : Gerard Malouf & Partners (Plaintiffs) Goldsmiths Lawyers (Defendants) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION HARRISON J 13 August 2010 2008/289190 Wendy Gay King and Brendan John Murphy v Darren Linney and Tanya Morris (No 3) JUDGMENT 1 HIS HONOUR: On 29 April 2010 I made certain orders in relation to motions filed by both parties in this unfortunate and long-running dispute: see King v Linney (No 2) [2010] NSWSC 342. The plaintiffs now contend that in the course of my deliberations and judgment I misapprehended a particular factual matter and as a consequence, an order I made that the plaintiffs should pay the costs of their original challenge to the retainer of Mr Goldsmith as the solicitor for the defendants, miscarried and should be revisited. These reasons assume a familiarity with my original decision. Background 2 Paragraph [38] of my earlier judgment is at the heart of this issue and is as follows: "[38] It is apparent that the plaintiffs sought and received this advice from the solicitor. The communication was limited, preliminary and is arguably uncontroversial. It does not purport to deal with the provision or receipt of confidential advice. More importantly, the email and the response to it had been in the plaintiffs' possession for a considerable period of time before they commenced the proceedings and well before the defendants' current solicitor was retained . There is no confidential information given by the plaintiffs to that solicitor in the email in question, and certainly no information that the plaintiffs have not otherwise revealed as part of the case that they now wish to prosecute against the defendants. Whatever wisdom provoked the application to challenge the retainer of the defendants' solicitor, the plaintiffs ultimately recognised that it was ill founded and belatedly withdrew it. Nothing that the solicitor revealed in his correcting affidavit appears to me to be actually related to the decision to abandon the challenge, which was never likely to succeed and should not have been mounted." (emphasis added) 3 The main emphasised portion of that paragraph is said by the plaintiffs to be factually inaccurate. This contention derives from a comparison between what I said and what the first plaintiff said in an affidavit sworn by her on 26 August 2009 and relied upon in the original proceedings. For present purposes this was as follows: "4. On or around 17 June 2009 Ms Beshay called me back however left a voicemail message on my phone. On our [ sic ] about 23 June 2009 Christine Beshay called me to discuss my instructions and I said to her words to the following effect: 'Christine, I remember emailing Australian Defamation lawyers on 13 June 2007. I located them through the internet. I explained the dispute in the email as Brendan and I wanted legal advice about whether we should bring a claim against Darren Linney and Tanya Morris who had caused all sorts of problems for Brendan and me as our neighbours. I received an email in reply from Barrie Goldsmith saying he needed further information and asking me to give him a call.' Unfortunately, I did not keep a copy of the two emails." 4 Despite the fact that the first plaintiff did not have a copy of the email that she sent to Mr Goldsmith or his annotated reply providing a commentary on the matters that she raised, she was still able to depose in paragraph 9 of her same affidavit to the following facts: "9. I verily believe that the claim by me and Brendan against Darren Linney and Tanya Morris will be disadvantaged if Barrie Goldsmith and his firm continue acting for the defendants. My email to and my conversation with Mr Goldsmith were confidential, and when I spoke to him I received legal advice from him and he discussed the weakness as well as the strengths of my claim. I am concerned that the defendants will be able to make unfair use of the confidential knowledge that Mr Goldsmith has about our claim. I would never have provided information on behalf of myself and Brendan to Mr Goldsmith if I had known that he would be acting for our former neighbours in the current dispute. I feel there will be no justice if Barrie Goldsmith continues to act for Darren Linney and Tanya Morris." 5 The first plaintiff's affidavit was sworn at a time when the challenge to Mr Goldsmith's retainer was still current. The challenge was not withdrawn until a time when the email in question was produced as an annexure to the affidavit of Mr Goldsmith sworn on 2 September 2009. Curiously however, in the scheme of the then current challenge to Mr Goldsmith's retainer, the first plaintiff was nevertheless prepared to reveal the content of the conversation that she had originally had with Mr Goldsmith, to which paragraph 9 of her affidavit just quoted clearly makes reference. For completeness it is instructive to record the content of the conversation to which the first plaintiff deposed in paragraph 6 of her affidavit, which was as follows: "6. I recall that within a relatively short time after I received Mr Goldsmith's email asking me to call him, I called Goldsmiths Lawyers and spoke to a man who identified himself to me as Barrie Goldsmith. He said words to the effect: 'I am a solicitor, and have received your email asking for advice in relation to a defamation claim against your neighbours.' He asked me lots of questions which I answered to the best of my knowledge. I vividly remember him saying words to the following effect: 'You and Brendan Murphy seem to have a very strong claim against your neighbours. But no claim is guaranteed and there are some risks based on what you have told me. Your neighbours had no right to post those signs which pointed towards your house, where you and Brendan live, even though the signs did not say your name. Please send me $3,000 so I can start your claim. When I receive the money, you and Brendan will also need to fill out some additional paperwork.'" 6 What emerges from this material is first, that the plaintiffs were quite prepared to reveal what Mr Goldsmith said to the first plaintiff in his conversation with her. However secondly, and somewhat more significantly, they were prepared to challenge his retainer upon the basis of what the first plaintiff thought the original email said, even when she did not on her account either retain a copy of it or presumably clearly remember what it actually said. When she finally received a copy of it, the challenge to Mr Goldsmith's retainer was withdrawn. It seems clear that no steps to challenge Mr Goldsmith's retainer should ever have been commenced, or at least not before the offending email had been provided, by which time its actual relevance and significance would presumably have become apparent. The plaintiffs were prepared to rely upon the sworn evidence of the first plaintiff that her email and her conversation with Mr Goldsmith contained confidential information that would be harmful to their case if the defendants knew of it. That was an unfounded assertion when it was made as the events since then have demonstrated. 7 The plaintiffs submitted that prior to seeing Mr Goldsmith's final affidavit of 2 September 2009, which annexed the emails in question, they and their legal advisers "had acted reasonably in setting out the plaintiffs' recollections, on instructions". The plaintiffs submitted that upon receiving Mr Goldsmith's updated affidavit of that date at court on the same day, which included the emails, they gave "updated instructions to cease the challenge to Mr Goldsmith's retainer", which the plaintiffs submitted was a proper concession in light of the material produced that day. The plaintiffs submitted that the only issue then remaining was that of costs (which of course energises the current dispute) and "would have been avoided if the emails had been produced or supplied earlier by Mr Goldsmith to [the plaintiffs' solicitors] permitting updated instructions at that stage". 8 However, as the evidence that I considered in dealing with the challenge to the retainer issue in the first place reveals, the plaintiffs were asked for but never provided any reasonable or rational basis for contesting Mr Goldsmith's ability to continue to act for the defendants. The solicitors for the plaintiffs wrote on 29 June 2009 saying, for the first time, that they had been instructed on the morning of the day before "to challenge your firm's retainer for the defendants". The letter asserted that the plaintiffs had "previously sought, and obtained, confidential legal advice from Mr Goldsmith in the matter relating to the current dispute between the parties". There is no suggestion of any kind that Mr Goldsmith had been provided with confidential information by them, and none is particularised or documented in the letter describing what Mr Goldsmith told them about their chances of successfully suing the defendants. This is presumably because they told him nothing that was confidential that was not otherwise revealed in the statement of claim when it was filed, and because there was nothing confidential to reveal in any event. The whole of the relevant portion of that letter is set out at [36] of my earlier judgment. 9 When Mr Goldsmith responded by his letter on 2 July 2009, he referred to the alleged conflict of interest and set out the following request: "In order that we can consider your invitation that we cease acting for the defendants, and in order that we can obtain instructions from our clients, please let us have an affidavit in admissible form from the plaintiffs or either of them deposing as to any conversations alleged to have taken place with the writer. It appears from your letter that there were no written communications with the plaintiffs other than, as it is alleged, an initial email enquiry form. We are endeavouring to retrieve any notes or any email that we may have." 10 In the events that occurred, the plaintiffs did not provide an affidavit as requested. However, on this topic, by letter dated 8 July 2009, the plaintiffs' solicitors informed the solicitor for the defendants that "[w]e took careful instructions". That has been shown by the way in which the matter has proceeded not to be a correct statement, although the reason for its inaccuracy cannot be attributed with any certainty to the solicitors or to the plaintiffs. It is irrelevant for present purposes. In any event, the solicitor for the defendants replied the same day as follows: " Based upon the information that you have provided to date in support of your clients' requirement that this firm cease acting for the defendants, it is our view that it is not appropriate or necessary for us to do so. Your clients are of course at liberty to file such motion as they think fit. We note that, if such a motion is filed, your clients reserve their right to seek an order that this firm personally pay the costs of the motion, were it to succeed. In like manner, should such a motion be filed and should it be dismissed, our clients reserve their to seek an order that the principals of your firm personally pay the costs of the motion pursuant to section 99 Civil Procedure Act 2005." (emphasis added) 11 The solicitor for the plaintiffs in fact provided no information at all. Whatever view may be taken about what I said at [38] of my earlier decision, a review of this evidence, and in particular the affidavit material from the first plaintiff, makes it plain that no other or different decision on costs was appropriate or should have been made. The application to remove Mr Goldsmith was itself clearly unwarranted because the plaintiffs were apparently, if not certainly, prepared to make it on nothing more substantial or certain than an unfounded assumption, itself based at best upon an imperfect recollection, that the critical emails placed them at some perceived but unarticulated disadvantage. In the events that occurred, that turned out not to be true. The decision that I made on the challenge to the retainer issue would have been exactly the same if the emails in question had never materialised. They were confirmation that the plaintiffs' challenge was inappropriate and that Mr Goldsmith had not been provided with confidential information, but they did not amount to evidence supporting the suggestion that the fault somehow lay with Mr Goldsmith for not producing them earlier. No challenge to their late production, or Mr Goldsmith's explanation for it, was ever mounted. 12 In those circumstances, the plaintiffs must look to themselves for the cause of the costs that were incurred. They are no more entitled to a favourable, or different, costs order than would have been the case in the first place if the italicised portion of what I said at [38] of my earlier judgment had been wholly omitted or not relied upon. Moreover, the entire paragraph ought be considered. It is difficult to feel completely comfortable that the application to challenge Mr Goldsmith's retainer in the first place was caused merely by inadequate instructions, or an ill founded assumption, that confidential information had actually been communicated to him, rather than some kind of cynical adversarial or forensic opportunism. I see no reason either to revisit, or to amend, anything that I said in that paragraph, and I do not consider that any other costs order is now warranted or should be made. 13 It is therefore unnecessary to review the defendants' challenge to the plaintiffs' ability, as a practical or threshold matter, to raise the issue for reconsideration by me in the circumstances. In deference to the arguments that were mounted on both sides, however, I note that I was referred in this respect to JBK Engineering Pty Ltd v Brick and Block Co Pty Ltd [2007] NSWSC 163 at [4]–[7], Sundarajah v Teachers Federation Health Ltd (No 3) [2010] NSWSC 471 at [15], Metropolitan Petar v Mitrevski [2008] NSWSC 243 at [27], [30]–[31] and Nominal Defendant v Manning [2000] NSWCA 139, (2000) 50 NSWLR 139 at [70]–[73] and [122]–[124]. See also Fletcher v Besser [2010] NSWCA 30 at [17]. Orders 14 The plaintiffs' notice of motion filed 10 June 2010 is dismissed with costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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