Atanaskovic and his law shop take on their old client Bruce Gordon … Vlad collects most of his fees and in the process is impaled … The flames of Brodie Clarke’s villainy are still brightly burning … Massive judgment prepared, only for the dispute to settle days before it is due to be delivered … Money remained the live issue … Atanaskovic charged the client for investigating his employee’s fraud … Unflattering findings … Janek Drevikovsky reports
Though Vlad the Impailer was awarded fees of $928,982, he was on the receiving end of a serious hammering by Justice David Hammerschlag, who questioned his evidence and criticised his supervision of the fraudulent employed lawyer Brodie Clarke.
Clarke was a “young hotshot” at Atanaskovic Hartnell, where Gordon had been a client for three decades. While handling several of the media boss’s matters, Clarke filched funds to pay for his gambling addiction.
His normal pattern was to provide a spurious reason to convince Gordon’s people to make a bank transfer. He would give his own account details, rather than those of the putative recipient.
At one point, Clarke pressed for $2 million to be transferred into Antagonistic & Heartless’ trust account, although the firm did not run a general client trust account.
On another occasion, Clarke had Gordon transfer $500,000 to pay the stamp duty on an apartment purchase. But actually, the land office had waived duty on the sale, and the funds went straight into Clarke’s pocket.
To achieve all this, Clarke forged signatures, lied to the banks, even impersonated Gordon’s son. Deutsche Bank was duped and transferred about $7 million of Gordon’s money to Clarke.
The Hammer had few kind words about this “villainy”, as he called it. Clarke was “astute as a dishonest lawyer,” HH said.
The scandal broke in 2017, and Clarke is now doing three years porridge. But the wreckage is still ablaze.
Gordon and his holding company, Birketu, sued Atanaskovic Hartnell and Deutsche Bank for the money lost to Clarke’s failed punting. The plaintiffs’ argument was that Deutsche Bank had transferred funds without authority; and that AH was vicariously liable for Clarke’s behaviour. The law shop counter-sued, demanding over a million in unpaid legal fees.
In their excitement, the parties cobbled together a 10,000 page court book and 300 pages of submissions. After a 13-day trial, the Hammer bravely slogged out a 113-page judgment.
Then, days before his magnum opus was due to be delivered, the parties settled on the fraud question. That left unpaid fees as the only issue. There were new submissions, and a mighty headache for the South African on the bench.
As the Hammer himself complained, “The work needed to recast the judgment has been considerable”.
How much actually was recast is unclear. Large swathes of the judgment concerned issues that had settled. Clarke’s fraud was detailed, there was discussion of vicarious liability and Deutsche Bank’s involvement.
HH quickly decided that the bulk of AH’s fees were fair and reasonable – most of them related to Gordon’s ultimately unsuccessful joint bid with Lachlan Murdoch for Channel 10.
AH had followed the terms of engagement. Its lawyers gave satisfactory evidence about how they’d spent their time. And two expert cost assessors agreed that, while there were dodgy bits, they had no evidence of overcharging.
The fees regarded as reasonably charged totalled $928,982.
But in one area, things were not entirely above board. After Clarke’s embezzling came to light, AH offered to chase-up where the money had gone.
Atanaskovic met with Bruce Gordon and Andrew Lancaster, WIN’s chief financial officer, and the trio had a delightful lunch at Q Dining.
According to Lancaster, Atanaskovic promised Gordon’s business interests wouldn’t “be out of pocket” for Clarke’s fraud. He also said there would be no charge for the investigations.
Atanaskovic had a different version of events. He said he gave no general undertakings at all. Rather, by the time of the lunch, he thought incompetence by WIN/Birketu had caused much of the loss.
AH went on to charge $172,686.27 for the investigation.
HH rejected Atanaskovic’s story. In fact, he rejected most of Atanaskovic’s evidence:
“Atanaskovic was an unsatisfactory witness whose evidence I do not accept where it conflicted in a material way with that of Lancaster … and, in any event, where it is not is supported by objective contemporaneous material.”
It turned out Lancaster had sent an email soon after the lunch, as a record of the undertaking. The judge said he felt “actually persuaded” that the undertaking was given.
While the undertaking was not an enforceable contract, it may be relevant to whether the court would intervene to order payment of the charges. This was a matter for the court, and derived from its supervisory jurisdiction over legal fees.
The judge did not decide whether the investigation charges should be paid. Instead, he invited the parties back to argue about what order, if any, he should make.
The rest of the Herculean judgment concerned matters that already had been finalised through the settlement. HH seemed to conclude Deutsche Bank had no grounds for thinking Clarke was authorised to make the payment; and that AH was probably vicariously liable for the lawyer’s conduct.
Again, plenty of knuckle-rapping for Atanaskovic. In evidence, Vlad said he’d never thought much of Clarke and hadn’t entrusted him with authority.
At one point he said Clarke was no more than a “note taker”, or a human “post-box”.
Presumably, the point was to show Clarke had been acting well outside his scope of employment when he diddled Gordon’s money. Such unauthorised conduct cannot lead to vicarious liability.
Atanaskovic admitted Clarke had some skills. Along with preparing documents, he was said to be an expert in dealing with a certain type of government official. Or as Vlad put it:
“For example, [Clarke was good at] talking to – I’m wondering if I can use this expression – battle-axe female administrators at regulatory authorities.”
His Honour took a cool view of this.
“I reject Atanaskovic’s description of Clarke, and I do not accept that the view he now says he held was the view he held at the time.”
Clarke had had a high salary – $220,000 – and had been allowed to work unsupervised on many of Gordon’s and WIN’s matters. This showed the high level of trust and involvement Clarke enjoyed – something that made his offending possible.
If the question had not settled, it seems clear HH would have found AH vicariously liable.