In The Trust Company (PTAL) Pty Ltd v Romeo (No. 4),1 Schmidt J considered a solicitor’s application for leave to file a notice of ceasing to act and to withdraw from the proceedings.
The cost agreement entitled the solicitor to file a notice of ceasing to act if the client either:
- unreasonably refused to act in accordance with the solicitor’s advice; or
- an amount in excess of $1000 in respect of any account is outstanding for more than 30 days; or
- the client didn’t within 7 days, comply with a request to pay a disbursement or a prepayment.
The solicitor at the time of making the application was owed in excess of $100,000 in legal costs and disbursements in the proceedings. In accordance with the cost agreement, the solicitor filed and served a notice of intention to file a notice of ceasing to act on number of occasions.
After these notices were served the solicitor and client agreed that he would continue to act for the client provided that the sum of $105,000 ($80,000 for counsel and $25,000 for the firm to conduct the hearing of the proceedings) be deposited into the firm’s trust account by a specified date. These funds were not received. Despite further negotiations for provision of funds for the conduct of the proceedings, the client failed to pay and this led to the services of the various notices.
The solicitor finally, on a specified date, gave certain advice to the client which the client refused to act on; at the same time the client had still not honoured prior representations that the solicitor would be put in funds. The solicitor served a final notice of ceasing to act and sent both a letter and email to the client to explain why he proposed to cease to act.
The client opposed the application. He contended that he should not be left unrepresented when he had been paying the solicitor $3000 a week, money which ought not to have been taken if the solicitor intended to withdraw. The solicitor’s position is that these amounts were paid to pay off what was owing in respect of other matters in which he acted for the client.
Justice Schmidt noted ‘that a client’s failure to provide money for costs and disbursements can be an appropriate basis upon which the leave which is sought may be granted.’2
Schmidt J held that the solicitor was justified in ceasing to act. The evidence established ongoing attempts to secure necessary funds and that he was not dilatory.
Matters to consider:
- Review cost agreements to expressly provide for a right to terminate where:
- The client hasn’t, within a specified time, failed to comply with a request to pay a disbursement or provide adequate advances for disbursements and out of pocket expenses;
- Where a client insists on some step being taken which in the solicitor’s opinion is dishonourable; and
- Where the client hinders and prevents the solicitor from continuing to act as he or she should act or unreasonably refuses to act in accordance with your advice. - Do not be dilatory in your pursuit of the client putting you in funds to cover future costs and disbursements;
- Act promptly on breaches and give clear notice (remember, a reasonable time is required to be given);3
- Do not delay in seeking to extract the necessary funds as dilatory behaviour may lead the court to conclude that reasonable notice has not been given.
1 [2013] NSWSC 1447.
2 Ibid [8]. See Super 1000 Pty Ltd v Pacific General Services Ltd [2007] NSWSC 171; Wadsworth v Marshall (1832) 149 ER 279.
3 Australian Solicitors Conduct Rules 2012 (Qld) r 13.1.3.