Risk Watch: Lawyers’ paramount duty to the Court: Greater risks for probono/no-win-no-fee work? By Grant Feary

Lawyers’ Paramount Duty to the Court: Greater Risks for ProBono/No-Win-No-Fee Work?

GRANT FEARY, DEPUTY DIRECTOR, LAW CLAIMS

That a lawyer’s duty to the court and the administration of justice is paramount and prevails to the extent of inconsistency with any other duty — including that owed to the lawyer’s client — is well known (see Australian Solicitor’s Conduct Rules — Rule 3.1), but how does the apparent conflict in these duties really work in practice?

A particularly acute and instructive example of how the paramount duty applies and interacts with the duty owed to clients can be found in the recent decision of the Family Court in Pilkvist & Coburn (Deceased) [2020] Fam CA 92.

THE FACTS

The applicant Ms Pilkvist (Ms P) was engaged as the carer of Mr Coburn (Mr C) in 1993. Mr C was a quadriplegic. The terms of the engagement were that Ms P would live in Mr C’s house with him and would be provided with board and a weekly payment. Mr C died in mid2019 aged 85 years. Notwithstanding his disability, Mr C had operated a number of businesses and his estate was worth approximately $11m at his death.

In July, 2014, Mr C was removed from his home by others acting pursuant to a Power of Attorney and admitted to hospital. Shortly after that Mr C commenced to live in a nursing home. At around the same time, Mr C’s attorneys evicted Ms P from Mr C’s home. Ms P alleged that she was in a de facto relationship with Mr C and that this relationship continued until Mr C’s death in May, 2019. THE PROCEEDINGS

Ms P commenced proceedings in the Family Court in June 2016, seeking a declaration “that a de facto relationship exists between the parties” and that the Court “order an alteration of property interests pursuant to s. 79 of the Family Law Act 1975 (Cth) (FLA)”. There was evidence that Ms P was impecunious and “a person of low average intelligence with minimal education from Country who speaks and understands English but has no realunderstanding of the legalprocess.” The Application was drafted by Ms F, Ms P’s lawyer. Sharp-eyed readers will notice several problems with the orders sought — s.79 of the FLA only applies to married couples and, critically, the entitlement to apply for a property settlement as a de facto only arises after the breakdown of the relationship (s. 90 SM FLA).

The key fact is that, consistent with the orders sought in the Application, Ms P’s evidence was that she and Mr C remained in a relationship up to the date of Mr C’s death, despite their physical separation i.e. the relationship had not broken down — it only ended upon the death of Mr C. The Application remained basically the same throughout the interlocutory stages of the proceedings, despite being amended a number of times, including after Ms F briefed Ms B to appear as Counsel for Ms P.

THE DECISION

Carew J had little difficulty dismissing Ms P’s application (Pilkvist & Coburn (Deceased) [2019] Fam CA 635) because no jurisdictional basis for the orders sought was established. Indeed, no

jurisdictional basis was even possible on the Applicant’s own case. The Judgment we are currently considering concerned a subsequent application by Mr C’s legal personal representatives for costs of the proceedings against Ms P and her legal advisors on an indemnity basis.

No order for costs was made against Ms P on the basis that had Ms P been properly advised “the proceedings shouldnot have been commenced, let alone continued” [43]. Further, her Honour found that “if the applicant insisted on the proceedings continuing, despite advice, her legal representatives had the option to withdraw. A failure to do so

leaves them vulnerable to costs” [43]

(emphasis added).

In discussing the circumstances in which a court might order costs against a lawyer (see para [26]) Carew J quoted the relevant principles from Cassidy v Murray (1995) FLC 92-633, some of which are as follows:

“… b) There is a need to balance the competing public interests involved, namely, the concern that lawyers should not be deterred from pursuing their clients’ interests for fear of being made personally subject to orders for costs, and the principle that innocent parties should not be occasioned costs, for which they would not otherwise be liable, as a result of the inappropriate conduct of lawyers; …. d) The lawyers has a duty to the Court to promote the interests of justice whilst at the same time attending to the needs of the lawyer’s client; e) A mistake or error of judgement would not justify an order for costs against a lawyer. However, misconduct, default or negligence, any of which are found by a Court to be of a serious nature, may be sufficient to justify an order.” (emphasis added)

Ms F’s position was merely that she was not negligent. This was untenable given that Ms F had drafted the original Application and its subsequent versions. Ms B’s position was that she was of the understanding that the relationship ended when Mr C was removed from his home and that Ms P had given “completely different evidence at trial”. The problem with this submission was that it was inconsistent with the various iterations of the application as filed. Her Honour therefore found that it was not the case that Ms P had given completely different evidence at trial and ordered that Ms F and Ms B jointly and severally pay Mr C’s costs on an indemnity basis, fixed at $100,000.

GREATER RISKS IN PRO-BONO/NO-WINNO-FEE CASES

Law Claims has seen recently an increase in claims made against lawyers where the lawyer was acting pro-bono or on a no-win-no-fee basis. Whilst the basis on which Ms F and Ms B were acting is not clear from the Judgment, given Ms P’s acknowledged impecuniosity and her lack of understanding of the legal process, it would not be surprising if Ms F and Ms B were acting pro-bono or on a no-win-nofee basis.

We are all aware of the spiralling costs of litigation, and the preparedness of lawyers to act pro-bono or on a no-win-nofee basis is obviously a critically important factor for access to justice. It is important to remember that even where the retainer is of that nature, the normal duties of lawyers apply, both with respect to duties to the client and, more importantly, the paramount duty to the Court.

Often these sort of matters involve difficult questions of fact and/or law, as well as “interesting” personalities. The Pilkvist case clearly demonstrates (especially in the passage of the Judgment at [43] quoted above) that the paramount duty to the Court requires lawyers not to run “hopeless” cases, even where they might have every sympathy with their client.

If the position was — as it clearly was in Ms P’s case — that any de facto relationship was continuing, then she should have been advised that she had no claim. The paramount duty to the Court requires that lawyers have these difficult conversations with their client and if the client is not prepared to act on the lawyer’s advice, the lawyer should cease to act.

Of course, like everything in the law, there are always shades of gray and not every difficult case which is lost will or should result in a costs order against the lawyer. Indeed, many difficult cases are won “against the odds” as it were, and it would clearly be against the interests of justice for only cases which are certain winners to be run. What is clear, though, from a Risk Management point of view, is that lawyers should take the opportunity of protecting themselves by giving robust advice — in writing — about the risks of litigation and any offers of settlement which might be made along the way.

There is also an important, and potentially expensive, “sting in the tail”. The Professional Indemnity Insurance Scheme excludes indemnity in respect of orders for costs made against insured lawyers to the extent that the order is based on the Insured having engaged in conduct knowingly or recklessly in breach of that Insured’s duty to the Court or Tribunal, including having advanced a claim or defence found to have had no real prospects of success. Had the Pilkvist case occurred in SA therefore, it is likely that Ms F and Ms B would have had to bear the costs orders made against them personally. This is yet another reason to make sure that the paramount duty to the Court is taken very seriously.