HMAS Melbourne: Courting a disaster decades in the making

by | Oct 24, 2015 | Business, Comment Analysis

The collision of HMAS Melbourne and the Voyager is one of the worst naval disasters in Australia’s history. Photo: Bob Rice

At nearly 9pm on February 10, 1964, the aircraft carrier HMAS Melbourne ploughed into the Voyager, cutting the destroyer in half and casting dozens of sailors into shark-infested waters off the coast of Jervis Bay.

Of the 314 aboard the Voyager, 82 sailors and one civilian were killed. A 1965 High Court ruling stopped armed forces personnel from suing the government but the compensation claims from survivors of the Voyager and their families kept pouring in.

Of the 214 cases, 86 were handled by David Forster of Hollows lawyers. Despite a bellicose legal defence by the Commonwealth – loath to see the floodgates open for lawsuits from members of the military – total settlements came to $23 million. Some 35 cases were still going in 2008, 44 years after the collision.

Illustration: Michael Mucci.

Last month, David Forster had a stroke. The Victorian Legal Services Board had appointed receivers to his law firm six years ago and he was struck off as a solicitor. Forster has been fighting the board and his receivers from Hall & Wilcox ever since.

His stroke came while he was working on his latest affidavit, a defence against the strike-off application in the Supreme Court of Victoria.

Forster’s wife wrote to the Victorian Civil and Administrative Tribunal on October 12 seeking an adjournment of a hearing slated for November on account of her husband being admitted to Frankston Hospital with “acute stroke”.

David Forster of Hollows lawyers. Photo: Jason South JPS

Unmoved, the judge ordered further evidence of his stroke and demanded that he continue working on his submissions for the case.

The hospital discharge report noted, “66-year-old male vomiting … blood pressure 200 over 110 … facial asymmetry … mouth not able to curve up”.

Forster told Fairfax Media this week he would keep fighting to restore his reputation and his licence to practise but he might not be around for long.

“The only beneficiaries of all this are lawyers and their fees,” he said.

“There is a reasonable chance that I’ll fall off the perch during the process.”

This “process” has been dragging on for five years, sucking in a battery of silks, junior barristers and solicitors for a cost which, according to observers, may have passed the $4 million mark. Four sets of proceedings remain afoot.

The public is funding all this.

Joe and Jane Citizen are picking up the tab via Victoria’s Public Purpose Fund, a statutory institution funded by the interest on the money in solicitors’ trust funds. It is held in trust for the clients of law firms.

So while we have state governments crying poor over their ability to fund hospitals and roads on account of “stretched” budgets, nary a syllable is uttered about the funding of the legal system – a system whose courts are drenched in tax-deductible actions by big corporations and insolvency types stretching out their litigation for as long as humanly possible.

David Forster’s estate meanwhile, Hollows law firm, is long gone. Any proceeds were exhausted in the first few months of a receivership that was meant to run for six months.

Receivers ‘in breach’

The news has not been all bleak for David Forster. Although he had a stroke working on his umpteenth set of pleadings, and he has no money left and no licence to practice, he did have an extraordinary win the other day.

In a judgment on costs for a case brought against him in the Supreme Court by receivers Noel Batrouney and Andrew Lyle of Hall & Wilcox, Justice Ross Robson ordered the receivers, ergo the public remember, pick up Forster’s costs.

In an earlier judgment by Robson in May in the determination of the same case brought by the receivers against Forster, the judge found Forster’s payments to clients had been “neither unlawful nor improper”.

The costs judgment though was particularly scathing of the receivership. The receivers were suing Forster for breach of fiduciary duty, essentially for over-charging his clients, the victims of the naval collision.

“In my opinion, the receivers’ double disbursements claim was misconceived and was pursued for an inappropriate purpose,” wrote Robson.

It was “an inappropriate proceeding brought by the receivers for an inappropriate purpose”.

Further, it was “unwarranted and unreasonable. The receivers had received advice from Deloitte that no monies were owed by Mr Forster to his clients. In fact, Mr Forster had written off some $5 million in outstanding fees.”

The receivers, who are officers of the court, owed Forster a fiduciary duty, said Robson.

“I find that the approach taken by the receivers was out of proportion to the problem that had arisen in the office accounts of Mr Forster.

“The receivers were in breach of their duties of good faith to Mr Forster and their duty to act fairly and impartially as between Mr Forster and his clients.”

In their initial statement of claim against Forster in February 2012, the receivers had alleged that 24 Melbourne Voyager clients were billed for legal work without them signing a costs agreement. Later that month, Forster found costs agreements for 21 of the 24 clients “in a file in the possession of the receivers”, said Robson.

By the time the trial kicked off, it was down to two clients and Robson noted he was “not satisfied” that these two “had not signed a fee agreement”.

“I find that the claim that Mr Forster charged excessive fees was speculative.”

He also found the receivers did not “put before the court all relevant information”, including part of the report they commissioned from Deloitte. This was “unacceptable”.

“In the trial judgment I listed in some detail the matters for which the receivers could have assisted the court but failed to do so,” he said.

Had the relevant information been put before the court, said Robson, “such conduct would have saved a great deal of time and effort for Mr Forster, the court and presumably the Public Purpose Fund”.

There were multiple breaches of the Civil Procedure Act, said the judge. “I have been particularly troubled by the speculative nature of some of the claims.”

Nonetheless, he found the “contravention” of the act had not been “contumelious” and that the receivers had not acted with “an ulterior motive”.

The receivers were not available for comment by the time this story went to print. They may appeal the decision.


Michael West

Michael West

Michael West established to focus on journalism of high public interest, particularly the rising power of corporations over democracy. Formerly a journalist and editor at Fairfax newspapers and a columnist at News Corp, West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences. You can follow Michael on Twitter @MichaelWestBiz.

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