Allen & Overy (a firm) v Laramide Resources Ltd - [2017] WADC 128

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: ALLEN & OVERY (a firm) -v- LARAMIDE RESOURCES LTD [2017] WADC 128

CORAM: DEPUTY REGISTRAR HEWITT

HEARD: 21 SEPTEMBER 2017

DELIVERED : 3 OCTOBER 2017

FILE NO/S: CIV 1811 of 2017

BETWEEN: ALLEN & OVERY (a firm)
Plaintiff
AND
LARAMIDE RESOURCES LTD
Defendant

Catchwords:

Practice and procedure - Summary judgment application - Turns on its own facts

Legislation:

Legal Profession Act 2008 s 273, s 309

Result:

Plaintiff given partial judgment
Leave to defend on condition of a payment into court

Representation:

Counsel:

Plaintiff: Mr M J Feutrill
Defendant: Ms M L Coulson

Solicitors:

Plaintiff: Allen & Overy
Defendant: Coulson Legal

Case(s) referred to in judgment(s):

Nil

DEPUTY REGISTRAR HEWITT: This action was commenced by a writ filed on 26 May 2017 and the application with which I am concerned is the chamber summons for summary judgment filed on 14 July 2017. The plaintiff to the proceedings is a firm of legal practitioners who are suing the defendant for unpaid fees for work undertaken achieving the listing of the defendant on the Australian Securities Exchange. Affidavits have been filed by a number of deponents but the principal affidavits relevant to the application are those by Mr Jeffrey John Simpson, sworn 13 July 2017 and 28 August 2017. The principal affidavit in opposition is that filed by Mr D G Gibson sworn 18 September 2017. It may be thought that the affidavit of Mr Gibson was filed very late in the context of the summary judgment application but an earlier affidavit, effectively identical, was sworn on 30 August 2017 but attracted objections by the plaintiff such that it was obviously considered prudent to overcome those objections by filing a fresh affidavit.
I shall not repeat the well-known authorities concerning summary judgment applications. Suffice to say that a summary judgment should be only awarded in the clearest of cases where the court is of the view that there is no issue to be tried.
The present case is unusual in many ways. No challenge is made to any of the invoices which have been rendered by the plaintiff to the defendant in terms of work performed or the charges made for that work. The challenge which has been levelled by the defendant concerns events which occurred in October 2012. It is said by Mr Gibson, who is the chief financial officer of the defendant, that between 19 August 2011 and 15 August 2012, invoices totalling $428,558.59 were rendered to the defendant. The amount of those invoices was a cause of concern to Mr Gibson and as a consequence of that he had a telephone conversation with Mr Simpson who is the managing partner of the plaintiff. The proposition advanced by Mr Gibson is that in the course of the conversation which he had with Mr Simpson, an agreement was reached that the plaintiff's charges to the defendant for the further work required to achieve the listing would be pegged at a maximum of $40,000. Subsequent to this conversation emails were exchanged between the parties upon which the defendant relies as evidence supporting his contention that such an agreement was reached. The plaintiff has lodged a further affidavit dated 30 August 2017 challenging these matters. Although leave was given by the court to file an additional affidavit that leave was granted before the defendant had filed an affidavit in opposition and in circumstances which denied the defendant an opportunity to respond to any further affidavit which might be filed by the plaintiff. As a consequence I am of the view that the assertions which are made by Mr Simpson in his second affidavit have to be approached with some level of caution because the process by which that affidavit was placed before the court was firstly contrary to the usual practice of the court and secondly, as I have earlier mentioned, denied the defendant the right to comment upon the materials contained within that affidavit. Whilst I do not intend to ignore the affidavit my approach to the material which it contains will be tempered by these matters.
Heavy reliance is placed by the defendant on the contents of an email from Mr Simpson to Mr Gibson which was sent on 18 October 2012. The critical part of that email concerning the allegation by the defendant that ongoing costs were to be capped at $40,000 is as follows:
So for the purposes of going forward attached please find:
•details of our WIP (i.e. not billed) from 23 May to the present which shows time of approximately $57,860.05 has been incurred since that date. We propose to discount that amount to $41,428 in the interests of the continued broader relationship and as a good will gesture to reflect that the IPO process has cost more than originally contemplated; and
•draft estimate of our fees to listing from this point forward – we will fix that fee at a maximum of $40,000 but are hopeful it could be as a little as $28,000 based on the assumptions set out therein. You will of course pay only the lesser of the actual time costs and $40,000. Please note as set out in the assumptions it is important to minimize costs that our requests for information and instructions are dealt with in a timely and fulsome fashion. I am concerned our cap will be breached quickly if this does not happen.
In response to that argument the plaintiff has produced a document being the draft estimate of fees referred to in the email dated 18 October. The proposition advanced by the plaintiff is that the $40,000 cap was:
(a)only an estimate; and
(b)conditional upon the assumptions upon which the estimate was given being satisfied.
The plaintiff says that the assumptions were not satisfied and a great deal more work was required than had been anticipated. In fact, by my calculations the plaintiff seeks an amount in excess of a quarter of a million dollars for the work which it says was required to achieve the listing subsequent to the conversations and emails in October 2012. The plaintiff further relies upon the terms of the agreement between the parties which provides on the following which forms part of the agreement between the parties:
4.Any fee estimate given by us will be given in good faith but is not contractually binding. Fee estimates will be subject to the stated caveats and assumptions and to any factors outside our control. We will notify you if it becomes reasonably apparent that an estimate is likely to be materially exceeded.
It is immediately notable that the representation of the future costs was incredibly wide of the mark. The actual costs sought to be recovered by the plaintiff is something in the order of 10 times that which was estimated to have been payable. The plaintiff did email the defendant on 25 January 2013 indicating that the work to that date was proposed to be invoiced for $95,000. More than twice the upper limit which had been earlier indicated and three times the lower limit. The email to which I have referred contained an explanation as to why the account was considerably greater than had been earlier estimated.
In the summary of argument filed by the defendant a number of issues are identified as being potentially triable issues. The first such issue identified is the quantum of further costs payable by the defendant. There has been no affidavit evidence produced by the defendant to suggest any of the claims by the plaintiff are excessive and no challenge has been brought against any account rendered by the plaintiff. In my view the quantum of costs is not an issue in this case.
The next matter is the one with which I have just dealt and whether there was an agreement to cap the costs in the sum of $40,000. The next issue raised is whether the plaintiff performed any additional work outside the scope of the agreement for further fees and if so what was the extent and value of that work. Again, I turn to the evidence. There is no evidence to support the contention and as a consequence I do not consider it to be an issue. The next issue identified is whether the plaintiff breached its contract by failing to render monthly invoices to the defendant. The evidence which has been presented to me indicates that the plaintiff did not render accounts to the defendant because the defendant was in some financial difficulties and it was thought that by deferring accounts those difficulties could be eased. The submission seems to suggest that in failing to render accounts in terms required by the agreement there was misleading or deceptive conduct in breach of either the Australian Consumer Law or the Fair Trading Act 2010 (WA). I am completely unable to understand how that proposition could be sustained, I see no evidence to support such a proposition in the materials filed by the defendant in opposition to the application and in my view the argument advanced by the defendant in that aspect of its opposition does not disclose a triable issue.
Additional issues were raised by the defendant, in particular par 4.7 of the agreement, which is in the following terms:
4.7You are a sophisticated client under the Legal Profession Act (2004) NSW and equivalent Australian state and territory provisions (Legal Profession Requirement) and you agree that the costs assessment and costs mediation provisions of those Legal Profession Requirements do not apply to this letter.
It is said that the clause is somehow confusing and does not satisfy the requirement of s 309 of the Legal Profession Act 2008. On my reading of the clause it is perfectly clear the relevant legislation is identified, the proposition that the defendant is a sophisticated client is in my view beyond doubt, the plaintiff is a Canadian company seeking listing on the Australian stock exchange. It is obviously a sophisticated client. The agreement that the costs assessment and costs mediation provisions of the legal professional requirements do not apply is in my view stated with such clarity that it is not capable of sensible dispute, and in my view there is no issue which can properly be raised in that regard.
The next matter raised by the defendant concerns interest claimed by the plaintiff on the amounts said to be outstanding. Section 273 of the Legal Profession Act provides that a law practice may charge interest on unpaid legal costs but cannot do so unless the bill for those costs contains a statement of that intention. Furthermore, a law practice may not charge interest in excess of the prescribed rate. Both of those provisions have been breached in the present circumstances.
Notwithstanding that fact, the plaintiff seeks to recover interest on unpaid amounts on the basis of s 32 of the Supreme Court Act 1935.
The granting of interest under the section is discretionary. To grant interest in this case would be to nullify the requirements which have been set down by the Legal Profession Act. It would effectively undermine the Legal Profession Act. In the exercise of a discretion I would not be prepared to allow interest on the accounts for which the plaintiff sues.
On my analysis the only issue which has been raised by the defendant which is capable of constituting a defence to the claim is that which confirms the proposed capping of future costs and in particular the wording which is contained in the email from Mr Simpson to Mr Gibson dated 18 October 2012. In order to resist the summary judgment application rule all the defendant needs to do is raise an issue which is deserving of investigation by the court in a trial. What is of particular interest to me is the wording of the email to which I have referred. The plaintiff in materials which have been filed is relying on the proposition that what was said was merely an estimate. Certainly there is some support for that proposition within the costs agreement which was reached between these parties and some of the supplementary information which was provided to the defendant. On the other hand the wording is not entirely consistent with that proposition. The words which I regard as being of critical importance are these 'we propose to discount that amount to $41,428 in the interests of the continued broader relationship and as a good will gesture to reflect that the IPO process has cost more than originally contemplated and our draft estimate of our fees to listing from this point onwards – we will fix that fee at a maximum of $40,000 but are hopeful that it could be as little as $28,000 based on the assumptions set out therein'.
The words 'we will fix that fee at a maximum of $40,000' are arguably not consistent with the contention advanced by the plaintiff that what was being provided was merely an estimate contingent on the various tasks required being performed in the way which was anticipated. I do not regard the defendant's case on this point as being strong but I am not prepared to disregard it as without any substance at all. The wording in the memo is suggestive of a concluded agreement that the maximum which would be charged by the plaintiff to finish the job in hand would be $40,000. It is open to parties to vary existing contracts by further contracts. In order to do so consideration is required. In the present case the consideration would obviously be the continuation of instructions by the defendant to the plaintiff to continue with the work which had been commenced.
In my view that aspect of the matter is a triable issue and the plaintiff should not obtain summary judgment which it seeks, but that however does not mean that the plaintiff should not be entitled to any judgment at all. There was prior to the conversation and emails to which I have referred an outstanding balance owing by the defendant to the plaintiff for work carried out to that stage. By an email dated 14 May 2013 from the defendant to the plaintiff the defendant said:
Our records show that you have billed us for AUD $473,558 and we have paid AUD $337,120 including this recent payment leaving a balance outstanding of AUD $136,438. Please note that we are not disputing this amount and we have no intention of trying to renegotiate and will pay this in full as soon as we close up the upcoming financing.
On my understanding a sum somewhat over $30,000 relating to invoices rendered before the emails in October 2012 remains outstanding. I am not in a position to give an exact calculation of that amount but I am confident that it can be achieved and in my view there should be a judgment for the plaintiff in the sum outstanding and I shall invite the parties to make the necessary calculations.
It is also notable that even though the defendant contends that the monies payable for the work performed by the plaintiff subsequent to October 2012 were to be capped at $40,000 it has not paid that sum. I therefore think it appropriate that the defendant should be required to pay that sum into court as a condition of being granted leave to defend the claim. Whatever the outcome of the case, if the contentions of the defendant are accepted it will owe the plaintiff a further $40,000 and I think that is an appropriate amount for the payment in. As to the rest of the defence, although I think it weak I do not think it sufficiently weak to justify me placing any further conditions upon the leave to defend.