Recovering costs from clients can sometimes be said to be a second job for many legal practitioners. Having taken on the responsibility of representing a client in what at times can mean brutal battles lasting months if not years, the recovery of well-deserved legal fees can become another battle entirely. The broader view of the community on the status of lawyers in society and whether legal fees have become a sort of wall or barrier to access to justice has been a contentious issue.

Whatever the case maybe in reality, equity has provided a useful and strong tool for the solicitor whose efforts have resulted in seeking the recovery of money from a non-paying client. This is in the form of the equitable lien. The case of Firth v Centrelink (formerly known as Department of Social Security) & Anor (2002) 55 NSWLR 451 is the decision guiding principle in this area of law.

The classical statement of Chief Justice Jordan in Ex Parte Patience; Makinson v Minister (1940) 40 SR (NSW) 96 set out the founding equitable principles further elucidated by Campbell J in Firth. In that case it was found, the solicitor having no common law right or title to receive monies, has an equitable right to have the costs paid from the proceeds of the judgement, award or compromise. If the judgement debtor refuses to pay the solicitor can then approach the court to obtain an order requiring the amount of the costs to be paid by the judgement debtor. One of the more illuminating aspects of the lien is that, as a matter of practice, the court’s assistance is invoked not to create the equitable right but to speedily enforce the right, and a solicitors claim is recognised independently of the right.

In the more modern case of Firth the following principles were enunciated by Campbell J in respect to equitable liens: –

1. The lien applies to the verdict and judgement or a compromise reached in the client’s favour;
2. It covers the judgement sum and any order for costs;
3. A lien will attach to monies in the solicitor’s possession, monies in court payable to a client and monies owed to a client but not paid into court;
4. Quantum extends to the amount properly owed to the solicitor with reference to a costs agreement, costs assessment or taxation of costs.
5. The lien exists immediately upon any of the following through the exertions of the solicitor:

a. Upon payment over of monies pursuant to judgement given in favour of a client;

b. At the point an order for costs is made in favour of a client; or

c. At the point of entry into a settlement agreement.

6. It will support an injunction preventing payment to a client without notice to a solicitor until the quantum of costs properly payable to the solicitor is ascertained.
7. The lien can be enforced against third parties in certain circumstances.
8. A lien can be applied for in numerous bankruptcy contexts.
9. Where a solicitor is holding trust monies, and the solicitor is served with a garnishee notice, the garnishee notice is not effective to attach the money in the trust account to the extent of the solicitors lien.

In giving notice of the claim for a lien it is important that the practitioner note several different points that can affect the claim. Notice should be given to all practitioners who are or who have acted for the client in the case and to the respondent practitioner who bears the liability to pay if the client succeeds. Notice should also be given if you have ceased to act because you came to a view that the case lacked reasonable prospects of success. And finally, notice should be given at the earliest practical time.

The recent High Court judgement of Trkulja v Google LLC [2018] HCA 25 provided further guidance on the law of defamation in the cyber-age. The facts surrounding the case involve a suit against Google by the applicant, Milorad ‘Michael’ Trkulja, who alleged that Google had defamed him by insinuating that he was a criminal through automated searches and results. Whilst the case is important as it revolves around the issue of the internet the High Court’s reasoning shows that old principles can be adapted to new situations and that reactionary calls for law reform in this area may have underestimated the adaptability of the common law.

The allegation stemmed from 2 separate Google searches and results. The first being an images search of ‘melbourne criminal underworld photos’, which showed the applicant to be intermingled with images of notorious criminals including Tony Mokbel and members of the Moran family. And the second was predictions by Google’s autocomplete function; after users began typing in Mr Trkulja’s name predications appeared on the search bar including ‘michael trkulja melbourne underworld crime’ and ‘milorad trkulja criminal’. The claim turned on the presentation of words and images generated in the search themselves.

At the heart of this important and contentious topic were 2 important legal issues:

1. Was Google a publisher for the purposes of defamation law?

1. Whether search results are capable of being defamatory.

 

At first instance McDonald J concluded that it was ‘strongly arguable’ that Google was a publisher and that it was easily arguable that the search results themselves conveyed defamatory imputations. The Court of Appeal allowed Google’s appeal on the ground that search results were not capable of conveying any defamatory imputation and that Google was indeed a publisher albeit a ‘secondary publisher’. What is curious to note was that the court held that the defence of innocent dissemination would almost always be available to a Defendant in cases like these.

The High Court unanimously allowed Mr. Trkulja’s appeal holding that search results were clearly capable of conveying defamatory imputations and, contrary to the Court of Appeal’s reasoning, a search engine user would assume that there was some connection between the terms of the search and the contents of the results displayed. The question of whether the court felt Google was a publisher was left open by the court but did make comments to the effect that there was a strong argument that this was indeed the actual case.

Since the appeal was from a summary dismissal there was no obligation on the High Court to come to any conclusion about whether Google necessarily is a publisher or whether search results could constitute defamation. Despite this the judgment in Trkulja still remains significant because it shows the Court’s reasoning in developing a jurisprudence for what could be a rather burgeoning area in the years to come. The High Court has taken cue from courts elsewhere where the trends have suggested that a court would rather look at technological change as a factual problem as opposed to one requiring the assistance of external legislation or activism from the bench.

Issue

In Clone Pty Ltd v Players Pty Ltd (in liq) (R & M Appted) [2018] HCA 12 (21 March 2018), the issue was whether the power of a court to set aside its perfected judgment extends to:

1. misconduct by the party who succeeded at trial which does not amount to fraud; and

2. where the unsuccessful party failed to exercise reasonable diligence to discover the fraud or misconduct during the earlier proceedings.

Facts

Players negotiated an agreement to lease premises that became known and the Planet Hotel from Clone. The agreement to lease provided that “[t]he Lessee will upon expiration or early determination of the Lease transfer to the Lessor any Liquor Licences or gaming machine Licences held in respect of the premises for NIL consideration”.

An issue arose in subsequent proceedings as to whether Players had struck through the word “NIL” when three of its directors executed the agreement to lease, with the result that consideration was payable to it by Clone under the agreement to lease.  It sought rectification of the memorandum of lease.  The original agreement to lease was not in evidence at the trial but Clone and Players each discovered and tendered a copy.  Each copy showed the word “NIL” with a faint line through the letters “NI” and over the top of the word “for”.  Clone argued that the line had been made accidentally or mechanically.  Clone called evidence that it could not locate any other copies.

During the trial, Clone’s instructing solicitor asked an employee of the Liquor and Gambling Commissioner to search the Commissioner’s files for any copies of the agreement to lease.  The employee advised that she had located a copy on a different file to the “Planet Hotel premises file”.  Upon inspection of that copy, Clone’s junior counsel noticed a line through the word “NIL”.  He did not photocopy it, to avoid it becoming discoverable, and asked the Commissioner’s employee to inform him of any inspection by Players’ solicitors.  The Commissioner’s employee complied with that request when Players’ solicitors subsequently inspected the Commissioner’s files but only requested, and were shown, the Planet Hotel premises file.  Clone’s principal solicitor then gave a notice to the Commissioner to produce all “Planet files” in the Commissioner’s possession, which the solicitor advised required production of the Planet Hotel premises file only.  Nonetheless, another file was also produced to the Court, which included a fourth copy of the agreement to lease.

Clone was successful at trial on almost all issues.  Relevantly, the trial judge held that Clone was not obliged to pay reasonable consideration for the licences, in part on the basis of her Honour’s conclusion that the word “NIL” had not been struck through in the agreement to lease.  Players appealed to the Full Court, which upheld this conclusion.

After the proceedings concluded, Players learned that Clone knew about the third copy and that the fourth copy had been contained in a file produced to the Court, but was not called upon by Clone.  In 2010, Players relevantly brought an application to set aside the judgment and to obtain an order for a new trial. Players argued that the judgment could be set aside on the basis of Clone’s malpractice. Both the primary judge and a majority of the Full Court held that Clone had engaged in malpractice and that its misconduct was a sufficient basis to enliven the Court’s discretionary power to set aside the judgment.  A new trial was ordered.

By grant of special leave, Clone appealed to the High Court on two grounds:

1. that the Supreme Court’s equitable power to set aside perfected orders is limited to fraud and does not extend to misconduct; and

2. that the Supreme Court’s power to set aside its perfected judgment on the ground of misconduct was conditional upon proof that, absent the misconduct, the judgment would probably have been different, and the party applying to set aside the judgment exercised reasonable diligence.

Held

The Court held the following:-

1. the general power of a court to set aside its perfected judgment requires actual fraud; and

2. it is not a precondition to the exercise of the power that the party seeking to set aside the judgment exercised reasonable diligence to attempt to discover the fraud during the earlier proceedings.

 

In the case of Australian Competition and Consumer Commission v JJ Richards & Sons Pty Ltd [2017] FCA 1224 (‘JJ Richards and Sons’) the Federal Court for the first time extended the unfair contract term regime to protect small businesses from unfair contract terms, allowing small businesses the opportunity to gain protection from unfair contract terms entered into with larger entities. The Court found that JJ Richards and Sons had 8 different unfair contract terms in its contracts with small businesses and found that these terms were void. Contracts for the supply of goods and/or services will amount to a ‘small business contract’ if the small business employs fewer than 20 people and the upfront price payable is no more than $300,000.00 or $1,000,000.00 for contracts that are longer than 12 months.

The unfair contracts regime was introduced in 2010 as part and parcel of the Australian Consumer Law (‘ACL’) in order to provide consumers with protection against unfair contract terms arising from the proliferation of Standard Form Contracts (‘SFC’) in the consumer era. This was deemed necessary as SFCs do not resemble traditional contracts which are individualised and allow both parties to negotiate terms. Instead SFCs are generally prepared unilaterally before any discussion relating to the transaction occurs between the parties, are almost inevitably long and complex and are usually presented to consumers on a take it or leave it basis.

Distinguishing features of unfair contract terms include that the term:

• Creates a significant imbalance between the parties’ rights and obligations;
• Is excessive or one sided;
• Is detrimental to one party; and
• Is not reasonably necessary to protect the legitimate interests of party who is advantaged by the term.

Examples of terms which might potentially be construed as unfair include terms that:

• Permits only one of the parties to avoid or limit performance of the contract;
• Permits only one of the parties to terminate the contract;
• Penalises only one of the parties for a breach or termination of the contract.
• Create an automatic rollover of the contract;
• Require one party to bear the risk of some event;
• Levy excessive fees or impose excessive interest rates; and
• Affect a party’s ability to redress or remedy a breach by the benefiting party.

The implications of the extension of the unfair contract terms regime to protect small businesses contracts is clearly beneficial to small businesses. It means that they can now rely on the ACL to ensure that they are protected from unfair contract terms. For the organisations who draw up the SFSs it is an opportunity to redraw the contracts with small businesses to ensure that they are in compliance with the ACL, to consider revising terms which might be deemed to be unfair, or even to find alternative means of ensuring that the terms are enforceable, for instance ensuring that the term in question has been adequately drawn to the other party’s attention.