Ethics and - Gordon & Jackson

THE COST OF FAILING TO ACT ETHICALLY OR
PROFESSIONALLY
RECENT CASES IN THE COURTS:
ENSURE YOU HAVE INSTRUCTIONS
In the aftermath of Black Saturday 2009, a number of class actions were
spawned, including one against a power company with a claim that the
proximity of power lines to vegetation had caused a fire.
In Matthews v SPI Pty Ltd 8 the group proceedings were prepared by an
articled clerk who was obviously under pressure and lacking in
supervision. Mr Keane had merely registered his interest on the firm’s
website. No proper instructions were taken or advice given regarding
likely costs consequences against Mr Keane as a representative plaintiff if
he was unsuccessful The fact that writ incorrectly named defendants and
included an allegation of damage from a fire some 200 kms north of Mr
Keane’s property also demonstrated the lack of preparation.
After the matter had been issued and underway for some months, the firm
discovered their representative plaintiff had not given instructions to make
a claim or be a representative plaintiff. Even after realising this, it was
some months before the firm took corrective action and informed the court
and the defendant.
The castigation of the law firm by the judge, not to mention the costs
consequences both for the firm’s loss of revenue and having to pay the
defendant’s costs was considerable. No quarter was given. The judge
commented that group proceedings are now called “lawyer driven
litigation” 9 .
The defendant argued that allowing the proceeding to remain on foot,
notwithstanding a replacement representative plaintiff had been found and
her substitution ratified, that the court should exercise its authority to strike
out the claim as an abuse of process. The court determined that
practitioners must be made aware that issuing proceedings without the
authority of a client is misconduct. The court decided not to exercise its
authority to deal with the behaviour as contempt of court, but decided to
refer the lawyer’s conduct in issuing and maintaining the proceeding to the
Legal Services Commissioner.
One of the reasons the court took this action was it considered striking out
the application would be more punitive against the replacement
representative plaintiff, and the group she represented rather than the
8 Matthews v SPI Electricity Pty Ltd; SPI Electricity P/L v Utility Services Corporation Limited & Ors
(Ruling No 1) [2011] VSC 1676 10 May 2011, Forrest J at 120.
9 Kirby v Centro Properties Ltd [2008] FCA 1505, Finkelstein J.
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