Litigation travesty

Lawyers fail to comply with requirements for speedy, efficient proceedings ... Possible costs penalties ... Reference to Queensland Law Society and Bar 'n' Grill ... Reeves J unloads both barrels in Federal Court ... Sir Terence O'Rort reports 

In the Brisvegas legal scene Justice Martin Daubney of the Queensland Supremes (the Daubstar) is generally regarded as one of the wittiest beaks around. 

Witness the opening lines of his judgment in Creswick v Creswick [2010] QSC 339 - Brisbane's version of Jarndyce v Jarndyce. 

"Felix Creswick and his son John Creswick are used car salesmen."

Very droll.

Unfortunately, the Court of Appeal did not appreciate his sense of humour and reversed many of the Daubstar's findings in Tabtill Pty Ltd v Creswick [2011] QCA 381.

But that's a story for another day.

A new, and somewhat unlikely, challenger has now emerged from the shadows seeking to wrestle Daubney for the title of Wry Japester.

Step forward Justice John Reeves of the Federal Court in Brisbane. 

Reeves used to sit in Darwin, but later transferred to our glorious flood plain.

Regarded as conservative in nature and a quiet achiever on the bench, Reeves now has the good burghers of Brisvegas slapping their thighs with his judgment in Superior IP International Pty Ltd v Ahearn Fox Patent and Trade Mark Attorneys [2012] FCA 282. 

Simply everyone is talking about it. 

The proceedings concerned an application by Superior IP to set aside a statutory demand made by Ahearn Fox for the sum of $10,706.33.

It is unclear from the judgment whether Superior IP retained a firm of solicitors. All that we know is that it was represented by Brisbane barrister Jim Webb (admitted 1966).

Ahearn Fox was represented by blueFOX Legal the principal of which is one Luke Fox and according to itsminimalist website is a "boutique legal firm specializing in brand protection and commercial litigation". 

Luke was "general counsel for ghd hair, the brand name for the world's premier hairstyling products".

He claims experience in "all aspects of brand protection from global trade mark registration strategies and product development through to distribution methods and enforcement". 

Importantly, blueFOX promises that with its associates (who are unnamed) ...

"enforcement of intellectual property rights through civil, criminal and regulatory avenues can be achieved quickly and without excessive cost." 

Back to the case.

Things started poorly when Superior IP relied upon the wrong section of the Corporations Act in its application to set aside the statutory demand. Reeves saw this as, "a harbinger for what was to unfold in the proceedings". 

Superior IP filed 300 pages of affidavit material and Ahearn Fox almost 150 pages.

According to Reeves J the material was "replete with allegations of falsity and untruthfulness on the part of the deponents of the opposite party's affidavits".

Neither the credit of witnesses nor the merits of a party's case are relevant to the determination of an application to set aside a statutory demand, so most of the content of the affidavits was worthless. 

According to Reeves this reflected "a complete lack of appreciation by the two lawyers concerned as to what it was they had to direct their minds to at the hearing of the application". 

The judge pointed out that the dispute was over nine tax invoices, most of which were below $1,000 and only one of which was greater than the $2,000 minimum debt able to support a statutory demand.

Why is the Federal Court's time being wasted with something that should have been dealt with in the magistrate's court?

Both sides to the dispute also failed to comply with the provisions of the Civil Dispute Resolution Act 2011 (Cth), which commenced earlier in 2011 and requires parties to attempt to resolve the issues prior to commencing proceedings in the Federal and other designated Commonwealth courts.

Reeves adjourned the matter for a short while so that the parties could attempt to work it out themselves - but that didn't happen.

Desperate for another angle to avoid wasting court time on this shambolic litigation, Reeves ordered the lawyers to disclose to their clients how much they each intended to charge in legal fees.

Superior IP's lawyer thought the figure would be $10,050, while blueFOX was going to charge $8,000 - and this did not include the filing fee of $2,145.00.

The total was almost double the amount of the disputed debt.

According to the judge, "this did still not deter the clients from their headlong pursuit of this dispute".

Growing increasingly desperate to attract the attention of the parties and their lawyers to his red light warning, Reeves pointed to the provisions of the Federal Court of Australia Act and the duty it imposes to conduct litigation so that matters can be dealt with as quickly, inexpensively and efficiently as possible. 

An exasperated Reeves said:

"Bereft of any other means to force the lawyers and their clients to see some sense, I considered I had no option but to proceed to hear the matter." 

The hearing lasted almost a day, with a large part of it taken up with objections to affidavit material in circumstances where there had been no discussion between the lawyers to attempt to resolve any of the objections. 

Things hit rock bottom when the judge discovered that "neither lawyers appeared to have a copy of the Federal Court Rules 2011 or the Evidence Act 1995 (Cth) with him in court".

It was hardly surprising for the judge that neither lawyer "could tell me which section or rule he was relying on the make particular objections".

In what the judge described as "the final travesty" Webb, for Superior IP, sought leave to rely on a large amount of additional material that had not been put forward earlier.

Reeves adds:

"When I say 'final travesty', I should add that there are a number of other less significant defaults on both sides that I have failed to mention in the interests of brevity." 

In relation to the conduct of the lawyers Reeves found it was ...

"the sort of conduct that brings the legal profession into disrepute, that significantly undermines the efficient disposal of civil litigation and that has the potential to erode public confidence in the administration of justice in this country." 

The court set aside the statutory demand, but that was not the end of the matter.

Justice Reeves ordered that the lawyers provide a copy of the judgment to their clients and advise them to seek independent legal advice on the question of the costs of the proceedings.

The two lawyers are to be joined as parties to the proceeding for the limited purpose of determining costs. 

In a final flourish for having to endure this type of sloppiness, Reeves directed the registrar to provide a copy of his judgment to the Queensland Law Society, the Bar Association of Queensland and the Legal Services Commission ... 

"so that those bodies may take such action as they consider appropriate in relation to the conduct of the two lawyers concerned." 

Ouch.

Sir Terence O'Rort reporting