Indemnity costs order made against former Keddies' partners ... Negligence action brought against Stacks/Goudkamp had no reasonable prospects of success ... Judge Colefax's reasons referred to the Legal Services Commissioner
The former partners of the personal injury law shop Keddies have been ordered to pay Stacks/Goudkamp's costs for unsuccessfully running a professional negligence case against the rival firm.
Judge Andrew Colefax in the NSW District Court on Friday (Feb. 4) found that the negligence case against Stacks/Goudkamp on behalf of a former client was commenced without reasonable prospects of success.
He made the costs' order under s.348 of the Legal Profession Act.
The judge found there were many "serious departures from satisfactory professional conduct" on the part of Keddies and also ordered the former partners to pay two-thirds of the costs of the s.348 action.
Russell Keddie: off to the Legal Services Commissioner, againHe also referred his reasons to the Legal Services Commissioner to see whether "any legal practitioner" acting on behalf of the plaintiff had engaged in professional misconduct or unsatisfactory professional conduct.
Keddies was purchased late last year by Slater & Gordon for $35 million and partners Scott Roulston and Tony Barakat are now with S & G. Russell Keddie is not.
The case arose as a result of the death of Matthew Marshall, aged 17, in a car accident. His parents brought a third party claim against Allianz Insurance, the insurer of the driver who was liable for the accident. Stacks acted for the plaintiffs.
That claim was settled on November 11, 2002.
On December 20, 2007 Keddies, acting for Mr Marshall, brought a case in the District Court claiming that Stacks had been negligent in carrying out his instructions to settle the Allianz claim.
The proceedings were part-heard when Mr Marshall failed to attend court or give further evidence. Ultimately, the proceedings were dismissed with an order for Mr Marshall to pay Stack's costs.
A notice of motion was filed seeking an order that Keddies indemnify Stacks for its costs of defending the negligence action.
Mr Marshall's claim against Alliance was in nervous shock and initially included components of economic and non-economic loss.
His attitude to settlement or pressing on with the case fluctuated markedly, but in the end he insisted on settling, against the advice of Stacks.
The settlement did not include a component for non-economic loss because the plaintiff refused to have a medico-legal examination.
Maurie Stack: rare s.348 victoryMarshall then went to Keddies, which in September 2005 told him that barrister Kelvin Andrews had advised he had a "reasonable case" against Stacks.
However, by December 2007, after looking more fully at the file, Andrews was pessimistic about the case.
It boiled down to claims that Stacks ought to have insisted that Marshall saw a psychiatrist, insisted he get a second opinion about settlement and ceased to act if he did not do either of those things.
As Judge Colefax put it:
"In a case where a client was informed of all the relevant matters; where the solicitor had advised against settlement without further investigations; and where the client ultimately gave clear instructions to settle (all of which features are here present) any action in negligence or breach of retainer against the solicitors would, in general terms, face considerable difficulties."
Colefax also rejected an 11th hour submission from Keddies - that they could succeed if they proved that the client had not given "informed instructions".
However, Colefax said that was all far too late. It was not raised in the proceedings and it was correctly characterised by Stacks as a "new case".
In bringing the action against Stacks at no time did Keddies have available any evidence to prove damage and causation. There was no legal authority to support the claim.
Even with its "new case" Keddies would have had no reasonable prospects of success.
After Marshall gave evidence on July 2, 2009 Kelvin Andrews wrote a detailed letter of advice to Keddies saying the plaintiff will not succeed.
Marshall had told the court that he would not have attended a psychiatrist, even if the defendants had arranged it.
Andrews said that he would not then be entitled to any non-economic loss.
Further, other evidence showed that any medical condition would be resolved.
Consequently, the plaintiff's claim would be very small indeed and should be dropped.
Keddies withheld Andrew's advice from Marshall while unrealistic settlement offers were made. Colefax said:
"This conduct was an unacceptable departure from proper practice... No proper basis for withholding counsel's advice from the client was provided...
It is correct to say that there were many disturbing departures by Keddies during the course of their retainer from what I regard as acceptable and proper conduct as a solicitor."
Strangely, the Keddies' partners will be able to claim the indeminity costs awarded against them from LawCover.
Stacks' costs in the negligence proceedings run to $200,000.
Middlstons acted for Keddies, with Ivan Griscti doing the talking. Stacks Business acted for Stacks Goudkamp, instructing Tony McInerney.