When Someone Else’s Mistake Becomes your Problem: Ethical Obligations when your Opponent Makes an Error

It may seem like a blessing when your opponent makes an error that advantages your client: perhaps an own goal or at least a free kick? But it could be a problem for you. The error may create a tension between your obligations to your client and broader obligations to the proper administration of justice and courtesy among practitioners. The error may also create practical problems. For example, (i) if the error is not dealt with correctly, it could amount to a breach of the Australian Solicitors Conduct Rules (ASCR)1 leading to disciplinary proceedings; (ii) if the error is taken advantage of, your opponent could embark on costly legal proceedings to unravel it; and (iii) if you refuse to take advantage of the error, your client may feel dissatisfied.

This article will examine the provisions of the ASCR that govern errors made by your opponent and provide some practical guidance on how to respond to such errors. This article is limited to errors made by your opponent that advantage your client; not errors that provide no advantage. The latter are unlikely to raise ethical or practical problems.

The Chamberlain case

Chamberlain v Law Society of the ACT (1993) 43 FCR 148 (Chamberlain) is without doubt the leading authority on taking advantage of an opponent’s error. For this reason alone, no article on this topic would be complete without referring to it. But more importantly, it exemplifies many of the difficulties that may arise if a lawyer takes advantage of an opponent’s error. It is for this reason that an understanding of Chamberlain is important.

Mr Chamberlain was an experienced solicitor who was in dispute with the tax office regarding his own taxes. In 1984, the Deputy Commissioner of Taxation was pursuing Mr Chamberlain for $255,579.20. The Deputy Commissioner filed and served a writ in the Supreme Court of the ACT. The particulars of the writ indicated that the Deputy Commissioner was seeking $255,579.20 but the line for the total amount claimed contained an error: the comma and decimal place were misplaced so the total amount claimed was only $25,557.92! This was the first mistake made by the Deputy Commissioner.

Mr Chamberlain seized on the mistake by preparing terms of settlement for $25,557.92 which attached a judgment by consent for the same amount. He then presented them to the Deputy Commissioner who signed them without noticing the error. This was the second mistake made by the Deputy Commissioner.

Judgment was entered for $25,557.92 which Mr Chamberlain then paid. When the Deputy Commissioner finally realized the error, he commenced court proceedings against Mr Chamberlian seeking the balance, which was approximately $230,000. The Deputy Commissioner did not seek to have the terms of settlement and ensuing judgment set aside in equity on the basis of a mistake. Instead, the Deputy Commissioner sued Mr Chamberlain for a debt of $230,000 despite judgment having been entered for $25,557.92. This proved to be the third mistake of the Deputy Commissioner.

After judgments in the Supreme Court of the ACT2 and the Full Court of the Federal Court,3 the High Court ultimately decided that the Deputy Commissioner could not pursue Mr Chamberlain for the $230,000 without first setting aside the judgment for $25,557.92.4 This was due to the principle of res iudicata. The Deputy Commissioner then commenced a new court proceeding seeking to have the judgment set aside. The Deputy Commissioner succeeded at first instance, but on appeal the Full Court of the Federal Court found that the Deputy Commissioner should have sought to set the judgment aside in the first proceeding that he commenced to recover the $230,000 and was now barred from doing so by an Anshun estoppel.5 The ultimate outcome: Mr Chamberlain only paid $25,557.92. But that was not the end of the matter.

The Law Society of the ACT commenced disciplinary proceedings against Mr Chamberlain in the Supreme Court of the ACT. By a 2-1 majority, a three-judge bench found Mr Chamberlain had committed professional misconduct by taking advantage of the Deputy Commissioner’s first mistake and fostering the second mistake.6 Mr Chamberlain appealed to the Full Court of the Federal Court which found by a 4-1 majority that he had committed professional misconduct.7 The reasoning of the Full Court does not need to be addressed at length since it did not apply the ASCR, which did not exist at that time. However, it is worth noting that the Full Court found Mr Chamberlain took “unfair advantage” of an “obvious error” made by the Deputy Commissioner;8 “fostered” the error;9 and improperly used the Court’s processes to obtain a judgment by consent for $25,557.92.10 Although Mr Chamberlain was representing himself and not a client, he “was using his knowledge and skills as a legal practitioner” and for that reason “his conduct should be looked at as professional conduct, despite the fact that he was acting with respect to his private affairs”.11

Chamberlain demonstrates three points. First, taking advantage of an error may result in costly disputes to try to unravel the error. In the Chamberlain proceedings, there were five separate decisions addressing whether the first and second errors of the Deputy Commissioner could be undone.12 Second, taking advantage of an error may result in a Pyrrhic victory or no victory at all. Mr Chamberlain avoided paying the additional $230,000 but only after years of litigation and was then found to have committed professional misconduct. Third, it may be difficult to determine whether taking advantage of an opponent’s error is ethically acceptable. Two of the eight judges who heard the disciplinary proceeding against Mr Chamberlain found that he had not committed professional misconduct. As Justice Lockhart of the Full Court remarked,

“The case demonstrates the difficulty of drawing the line between tough but legitimate tactics in an adversary system of litigation and an impermissible intrusion into the prohibited domain of professional misconduct”.13

Against the backdrop of Chamberlain, let us consider the relevant ASCRs concerning taking advantage of an opponent’s error.

Rule 30.1 of the ASCR

Rule 30.1 of the ASCR provides:
A solicitor must not take unfair advantage of the obvious error of another solicitor or other person, if to do so would obtain for a client a benefit which has no supportable foundation in law or fact.

There are three elements to r 30.1: an “obvious error”, an “unfair advantage” and “no supportable foundation in law or fact”. The three elements tend to merge into each other, in that if you fulfill one, you are likely to fulfil the next. If your opponent makes an “obvious error”, it is likely to be “unfair” to take advantage of that error particularly in a profession that mandates courtesy and honesty and where civil procedure legislation requires solicitors to co-operate in the conduct of litigation and only take steps to resolve the dispute.14 If you have taken “unfair” advantage of an “obvious error”, there is unlikely to be a “foundation in law or fact” for a benefit obtained by your client since a fairly obtained advantage is likely to have some foundation in law or fact. In light of this, it is submitted that a key requirement for r 30.1 is an “obvious error”.

But what distinguishes an “obvious error” from just an error? Unfortunately, there is no guidance on this point. The commentary for the ASCR published by the Law Council of Australia does not provide a general test for distinguishing and “obvious error” from an error nor is there any case law providing a general test.15 The phrase “obvious error” is taken from the judgement of Justice Lockhart in Chamberlain. His Honour said the first error made by the Deputy Commissioner of Taxation was “obvious” but did not provide a test or general guidance for distinguishing an “obvious error” from just an error. Perhaps it is unsurprising that there is no general guidance on this point: do we need to be told when an error is obvious? Shouldn’t the obvious be obvious? Unfortunately, it is not always clear when an error is an “obvious error” as opposed to just an error. In these circumstances, a conservative approach should be taken when confronted with an error made by your opponent. Also, it may be worth noting the following points.

First, an “obvious error” should be inherently unlikely since your opposing solicitor is under an ethical obligation to act competently and diligently.16

Second, one possible guide for determining whether an error is an “obvious error” (as opposed to just an error) is to ask whether it is immediately apparent. If it is immediately apparent, it is more likely to be an obvious error than if it only becomes apparent after careful analysis. However, this guide is not perfect. A typing error was found to be an obvious error in Chamberlain yet many typing errors are not immediately apparent and go undetected.

Third, another possible guide for determining whether an error is an “obvious error” (as opposed to just an error) is to ask whether there is a rational explanation for the possible error or whether it can only be explained by a slip or oversight. If the only explanation is a slip or oversight, it is more likely to be an obvious error. Chamberlain provides an example of the difference between an error (which had a rational explanation other than a slip or oversight) and an obvious error. The first two errors made by the Deputy Commissioner (filing a writ with the decimal place and comma in the wrong location and then consenting to a judgment with the same error) had no rational explanation other than a slip or oversight.

The third error (commencing court proceedings against Mr Chamberlain to recover the outstanding $230,000 without seeking to set aside the consent judgment) did have a rational explanation: the Deputy Commissioner may have wished to avoid the potential embarrassment of admitting the first and second errors. Also, the Deputy Commissioner may have considered the prospects of an equitable claim based on a mistake and decided that it did not have sufficient prospects to warrant the potential embarrassment it may cause. We do not know whether the Law Society of the ACT ever contemplated disciplinary proceedings against Mr Chamberlain in relation to the third error made by the Deputy Commissioner, but it is submitted that any such proceedings would have been unlikely to succeed.

One can think of other examples where a potential error has a rational explanation other than a slip or oversight, such as a defendant not pleading a statute of limitations point even though it is clearly available. In that case, the defendant may have rationally decided that it would prefer to fight the claim on its merits rather than a technicality.

Fourth, another possible guide for determining whether an error is an “obvious error” (as opposed to just an error) is to ask whether a lay-person (i.e. a non-lawyer) would have identified the error. If they would have, it is more likely to be an obvious error. Returning to Chamberlain, a layperson would have realized the error made by placing the comma and decimal place in the wrong location, but they would not have realized the error the Deputy Commissioner made when he pursued Mr Chamberlain for the outstanding debt without seeking to have the judgment set aside. A lay-person would certainly not have been aware of the principle of res iudicata!

Other Rules of the ASCR

Although r 30.1 of the ASCR is central when your opponent makes an error, there are other rules in the ASCR to be aware of. Without being exhaustive, these rules include the following.

Rule 31 of the ASCR prohibits a solicitor from retaining (among other things) any material disclosed to them if (i) the material is “reasonably suspected to be confidential”, (ii) the recipient solicitor “is aware that the disclosure was inadvertent” and (iii) the recipient solicitor is not otherwise “permitted or compelled by law” to retain it.

Rule 19.11 requires a solicitor to inform the court of “any misapprehension by the court as to the effect of an order which the court is making, as soon as the solicitor becomes aware of the misapprehension”. The court may be under a misapprehension due to an error made by your opponent.

Rule 19.12 requires a solicitor to alert their opponent, and if necessary, inform the court, if any express concession made in the course of a civil trial by their opponent about evidence, case-law or legislation is “to the knowledge of the solicitor contrary to the true position and is believed by the solicitor to have been made by mistake”.

Conclusion

Although the ASCR provide some assistance, it may be unclear what is the correct course of action when your opponent makes a mistake that advantages your client. There are resources available to assist you such as:17 (i) submitting a request for a ruling to the ethics committee of your local law society; (ii) reviewing the rulings of the ethics committee of your local law society to see whether there is a ruling on point; (iii) contacting an ethics support line offered by your local law society; (iv) reviewing the ethics guidelines provided by your local law society to see if they clarify the issue; and (v) reviewing the commentary on the ASCR published by the Law Council of Australia. Another option is consulting with an experienced colleague.

Peter Sise
Special Council
Clayton Utz

1. The ASCR have been adopted in every State and Territory apart from the Northern Territory. The numbering of rules within the ASCR vary from jurisdiction to jurisdiction. This article adopts the numbering found in the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW) which embodies the ASCR in NSW.
2. Deputy Commissioner of Taxation v Chamberlain (1986) 72 ACTR 1.
3. Chamberlain v Deputy Commissioner of Taxation (1987) 13 FCR 94.
4. Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502.
5. Chamberlain v Commissioner of Taxation (1991) 28 FCR 21 at 24.
6. Law Society of the ACT v Chamberlain (1993) 116 ACTR 1.
7. Chamberlain v Law Society of the ACT (1993) 43 FCR 148.
8. Ibid 155 (Black CJ).
9. Ibid 166 ( Lockhart J).
10. Ibid 156 (Black CJ).
11. Ibid 156 (Black CJ).
12. One from the Supreme Court of the ACT, one from a single judge of the Federal Court, two from the Full Court of the Federal Court and one from the High Court.
13. Ibid 163 ( Lockhart J).
14. For example, see ss 19 and 20 of the Civil Procedure Act 2010 (Vic).
15. For a recent application of r 30.1, see Victorian Legal Services Commissioner v Bell [2020] VCAT 438. This case does not provide a general test for distinguishing an “obvious error” from any other error.
16. Rule 4.1.3 of the ASCR.
17. Information about these options in Victoria is available at https://lsbc.vic.gov.au/further-information-and-advice.