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On 14 March 2012, Justice Bell of the Victorian Supreme Court
handed down his judgment in Goddard Elliott (a firm) v Paul Fritsch
[2012] VSC 87, a proceeding issued by a law firm, Goddard Elliott,
against its former client, Paul Fritsch.
His Honour's 321 page judgment examines a range of issues,
including:
whether Goddard Elliott was negligent in taking instructions
from Fritsch when he lacked capacity;
the immunity of advocates;
the rule in Jones v Dunkel; and
leading evidence from deceased witnesses.
Background
Goddard Elliott had acted for Fritsch in a property settlement
proceeding against his former wife in the Family Court of
Australia. The firm had not properly prepared the case such that at
commencement of the trial, a three day adjournment was required to
fill the preparatory gaps. As the case was about to resume, Fritsch
settled at the door of the court on terms that were overly generous
to his former wife. Fritsch was mentally ill, having been diagnosed
with major depression and chronic post traumatic stress disorder.
Both of these conditions were aggravated by stress, such that
shortly after the property settlement proceedings were resolved,
Fritsch was admitted to a psychiatric hospital.
The firm issued a straightforward claim for Fritsch's
outstanding legal fees of $103,931 plus costs.
Fritsch counterclaimed against the firm, his counsel Noel Ackman
QC and Clive Rose and his accountant Kevin Ferguson for loss of
opportunity arising out of negligence, breach of fiduciary duty,
misleading and deceptive conduct and various other causes of
action. Fritsch settled with his counsel and Ferguson, but not with
Goddard Elliott.
Capacity Negligence
Fritsch argued that Goddard Elliott coerced him into settling on
"grossly unfair and inappropriate" terms "in
circumstances where he had no or insufficient mental capacity to do
so" as his mental illness prevented him from properly
instructing his lawyers.
Goddard Elliott alleged that Fritsch had agreed to enter into
that settlement, against the recommendations of his barrister, and
only after he gave his written authority.
His Honour found that Goddard Elliott was negligent in taking
and acting on Fritsch's instructions to settle his case.
Goddard Elliott had failed to take into account the medical opinion
of Fritsch's treating psychiatrist, which advised that
Fritsch's mental illness had rapidly deteriorated, particularly
in the period leading to the adjournment and final hearing. His
Honour concluded that on the day his case settled, Mr Fritsch was
suicidal, very ill and was "not in a fit mental state to be
giving instructions, which his lawyers should have known".
Immunity of Advocates
Despite concluding that Goddard Elliott was aware that Fritsch
lacked capacity, His Honour found it "deeply troubling"
that he was "driven by the binding authorities" to apply
advocate's immunity and find that Goddard Elliott was supplied
with a complete defence.
Justice Bell found that Goddard Elliott's "capacity
negligence" was protected by the wide test of advocates'
immunity, "because it occurred in the course of work leading
to decisions about, or intimately connected with, the conduct of a
case in court".
The Rule in Jones v Dunkel
His Honour applied the rule in Jones v Dunkel (1959) 101 CLR 298
which enables a court to draw an adverse interference from a
party's failure to call witnesses which it "might
reasonably have been expected" to produce. By failing to call
counsel to provide evidence with respect to his conduct during the
plaintiff's family law proceedings, His Honour inferred that
counsel's evidence would not have assisted Goddard Elliot's
case.
Leading Evidence from Deceased Witnesses
Fritsch sought to rely on an affidavit from his father, which
was sworn four days prior to his death. Goddard Elliott submitted
that such evidence should be excluded as it was not able to be
tested by way of cross-examining the deceased witness.
His Honour was unwilling to exclude the affidavit, finding that
the probative value of its admissible parts significantly
outweighed any prejudice to Goddard Elliott in being unable to
cross-examine the deceased. His Honour noted however that the
affidavit should be given less weight in light of Goddard
Elliot's inability to test the evidence.
Decision
His Honour rejected Mr Fritsch's argument with respect to
breach of fiduciary duty, misleading and deceptive conduct and
coercion against Goddard Elliott.
Goddard Elliott was found to have been negligent and Justice
Bell awarded loss of opportunity damages against it of $675,000.
However, as Justice Bell found advocates' immunity provided a
complete defence for Goddard Elliott, it succeeded in its claim for
outstanding fees against the plaintiff.
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