Darkinjung Local Aboriginal Land Council v Darkinjung Pty Ltd (in liq)

[2010] NSWCA 351

New South Wales

Court of Appeal

CITATION:	Darkinjung Local Aboriginal Land Council v Darkinjung Pty Ltd (In Liq) & Anor [2010] NSWCA 351
HEARING DATE(S):	23 November 2010
JUDGMENT DATE:	15 December 2010
JUDGMENT OF:	Hodgson JA at 1; Tobias JA at 9; Macfarlan JA at 82
DECISION:	(1) Leave to appeal granted; (2) Appeal allowed. (3) Vary the answer given by Austin J to Question 1.6(a) on 1 March 2010 by deleting the words “but the firm acquired” and substituting therefor the words “but the termination does not by itself prevent the firm from establishing that it acquired”. [The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] (4) The second respondent to pay the costs of the appellant and the first respondent with respect to the appeal and the summons for leave to appeal but to have a certificate under the Suitors’ Fund Act 1951, if otherwise qualified. [The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
CATCHWORDS:	RESTITUTION – quantum meruit – effect of termination of costs agreements on ability of solicitor to proceed to recover, tax or assess any of costs claimed – whether solicitor acquired entitlement to recover reasonable remuneration on quantum meruit basis in respect of legal services – whether claim for quantum meruit properly before primary judge – whether valid request by company for solicitor to provide it with legal services – directors of company not authorised to make request
LEGISLATION CITED:	Aboriginal Land Rights Act 1983 Civil Procedure Act 2005 Crimes Act 1900 Suitors’ Fund Act 1951 Supreme Court Act 1970 Uniform Civil Procedure Rules 2005
CASES CITED:	Commissioner for Railways (NSW) v Cavanough [1935] HCA 45; (1935) 53 CLR 220 Darkinjung Local Aboriginal Land Council v Minister for Aboriginal Affairs [2006] NSWLEC 291; (2006) 147 LGERA 348 Darkinjung Pty Ltd v Darkinjung Local Aboriginal Land Council & Ors; Hillig v Darkinjung Pty Ltd & Ors; Darkinjung Local Aboriginal Land Council v Warner & Ors [2006] NSWSC 1008; (2006) 203 FLR 394 Dr Drury’s Case (1610) 8 Co. Rep.; 77 E.R. 688 Hadkinson v Hadkinson [1952] P 285 Hillig v Darkinjung Pty Ltd [2006] NSWSC 594; (2006) 57 ACSR 733; (2006) 201 FLR 148 Hillig v Darkinjung Pty Ltd & Ors [2008] NSWCA 75 Hillig v Darkinjung Pty Ltd & Ors (No.2) [2008] NSWCA 147 Hudgson v Endrust (Australia) Pty Ltd (1986) FCR 152 Isaacs v Robertson [1985] AC 97 Lumbers v W Cook Builders Pty Ltd (In Liq) [2008] HCA 27; (2008) 232 CLR 635 R v Drury (1849) 3 Car. & K.; 175 E.R. Zimmerman Holdings Pty Ltd v Wales [2002] NSWSC 447
PARTIES:	Darkinjung Local Aboriginal Land Council Darkinjung Pty Ltd (In Liq) Ian George Cunliffe
FILE NUMBER(S):	CA 2006/256718
COUNSEL:	A: D A Smallbone R: R D Shepherd / L E P Magowan
SOLICITORS:	A: Patrick Woods & Co, Parramatta R: Tress Cox Lawyers, Melbourne
LOWER COURT JURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	SC 2006/256718
LOWER COURT JUDICIAL OFFICER:	Austin J
LOWER COURT DATE OF DECISION:	12 and 13 November 2009
LOWER COURT MEDIUM NEUTRAL CITATION:	Darkinjung Local Aboriginal Land Council v Darkinjung Pty Ltd & ors [2010] NSWSC 132

CA 2006/256718

HODGSON JA
TOBIAS JA
MACFARLAN JA

Wednesday 15 December 2010

DARKINJUNG LOCAL ABORIGINAL LAND COUNCIL v DARKINJUNG PTY LIMITED (IN LIQUIDATION) & ANOR

Judgment

1 HODGSON JA: I agree with the orders proposed by Tobias JA and, subject to what I say below, I agree with his reasons. I will use abbreviations adopted by Tobias JA.

2 The appeal must succeed because the question of whether Mr Cunliffe was entitled to costs on a quantum meruit basis was not properly raised before the primary judge.

3 However, it is also appropriate for this Court on this appeal to determine, as a further independent basis for allowing the appeal, that there was not a valid request by DPL for Mr Cunliffe to provide it with legal services for the purposes of the Proceedings. The primary judge gave substantial reasons for his decision on this question, and it was the subject of extensive argument on appeal; and there was no suggestion from Mr Cunliffe that his arguments were in any way curtailed by reason of the matter not having been properly raised at first instance.

4 As pointed out by Tobias JA at [76], a quantum meruit depends on there being that kind of request, subject to some possible exceptions. Although I agree with Tobias JA that it is appropriate not to shut Mr Cunliffe out from pursuing his amended cross-claim, I think it should be made clear that this must not be taken as a suggestion from this Court that the amended cross-claim has any prospect of success.

5 Quite apart from the problem created by the absence of a request from DPL, there is also a real question whether it can possibly be for the benefit of DPL to incur costs in a contest between claimants for the control of DPL. And although this is not a question that would arise on the amended cross-claim itself, there would be a further question whether DPL, as trustee, could be entitled to an indemnity from trust funds for legal costs which had been incurred in order to promote an improper purpose of removing those funds from decision-making within the statutory confines of DLALC.

6 I do not overlook the circumstance that on 23 August 2006, Windeyer J gave judicial advice to DPL concerning the application of trust property for legal costs. However, the efficacy of that advice depends on the assumed facts on which it was given; and I do not know whether or not they included all the facts which grounded Barrett J’s decision that an improper purpose was being pursued by DPL and by those in control of DPL.

7 In all those circumstances, in my opinion it would be appropriate for Mr Cunliffe and his legal advisers to consider very carefully whether the amended cross-claim has reasonable prospects of success, which would justify them causing the incurring of substantial further legal costs.

8 Finally, I note that Mr Cunliffe, in submissions on appeal, placed reliance on ss 128 and 129 of the Corporations Act 2001 (Cth). Those sections, if of any assistance to Mr Cunliffe, would have been relevant to his claim to contractual entitlement against DPL, which was squarely in issue before the primary judge; and it is plainly too late to rely on them now for that purpose. There is a question whether there would now be an estoppel preventing them being relied on for a quantum meruit; but in any event, there is no evidence that Mr Cunliffe made any assumption based on information available to the public from ASIC within s 129(2) (see s 130(1)), and even if he did, it seems clear he must have suspected it was incorrect, within s 128(4).

9 TOBIAS JA: The present appeal arises out of a claim by the second respondent, a solicitor (Mr Cunliffe), in respect of legal costs and disbursements expended by him in providing legal services to the first respondent, Darkinjung Pty Limited (In Liquidation) (DPL), with particular reference to DPL’s involvement in proceedings in the Equity Division of this Court being, relevantly, proceedings numbers 2005/5634 and 2006/2842 (the Proceedings).

10 On 23 September 2008 Mr Cunliffe filed a cross-claim (the first cross-claim) in which he sought a declaration that he was entitled to be paid costs fairly to be allowed to DPL for its expenses in respect of, amongst other matters, prosecuting and defending the Proceedings, such costs to be paid from the property of what was referred to in the evidence as the Darkinjung Local Aboriginal Land Council Trust (the Trust) held by the appellant, the Darkinjung Local Aboriginal Land Council (the Land Council), including from a fund in the sum of $430,000 paid into Court pursuant to an order of Barrett J in the Proceedings (the Fund).

11 On 11 November 2008 the Land Council filed a cross-claim (the third cross-claim) joining DPL, Mr Cunliffe and others as cross-defendants in which it sought, relevantly, orders in favour of DPL for the recovery of money paid to the cross-defendants after 22 May 2006 without authority as money received for the use of DPL as well as a declaration that DPL incurred no legal costs and expenses between 22 May 2006 and 13 December 2006 (when it was wound up by order of Barrett J). Other consequential relief was also claimed.

12 On 12 August 2009 Barrett J made orders for the separate trial and determination of six questions relating to the position of Mr Cunliffe and Norton White Melbourne (a firm of which he was a partner at all material times) (Norton White) with respect to the costs now claimed by Mr Cunliffe and the competing claims by Mr Cunliffe and the Land Council against the Fund. Those questions focussed on the circumstances relating to the entry into of certain costs agreements, the contents of those agreements, the identity of the solicitors who made them, any limitations on the ability of the solicitors to recover costs, and the effective termination of those agreements.

13 One of those questions was Question 1.6 which was in the following terms:

“What was the effect, if any, of the termination of the costs agreements or either of them on:
(a) the ability of the solicitor or solicitors (if otherwise entitled) to proceed to recover, tax or assess any of the costs claimed in the first cross-claim; or
(b) the liability of the solicitor or solicitors (if otherwise liable) to be proceeded against for assessment or taxation of any of the costs which are the subject of the first cross-claim or the third cross-claim?”

The solicitor or solicitors the subject of this question was Mr Cunliffe and Norton White. I refer to each of them interchangeably.

14 On 1 March 2010 the primary judge, Austin J, answered Questions 1.6(a) and (b) as follows:

Question 1.6(a)
“The termination of the costs agreement of 12 May 2006 by Mr Hillig on 22 May 2006 had the effect of bringing to an end the contractual entitlement of Norton White Melbourne to recover, tax or assess any of the costs claimed in the first cross-claim, but the firm acquired an entitlement to recover reasonable remuneration on a quantum meruit basis in respect of legal services provided in the period from 22 May 2006 to 13 December 2006 at the request of the persons purporting to act as directors of the first defendant.”
Question 1.6(b)
“The termination of the costs agreement of 12 May 2006 by Mr Hillig on 22 May 2006 had no effect on the liability of Norton White Melbourne to be proceeded against for assessment of the costs that are the subject of the first cross-claim and the third cross-claim, given that the relevant statutory provisions confer a right to apply for assessment in terms sufficiently wide to encompass legal costs not contractually authorised but claimed on a quantum meruit basis.”

15 On 28 May 2010 the Land Council filed a summons seeking leave to appeal against that part of the primary judge’s answer to Question 1.6(a) comprising the statement that Norton White had

“acquired an entitlement to recover reasonable remuneration on a quantum meruit basis in respect of legal services provided in the period from 22 May 2006 to 13 December 2006 at the request of the persons purporting to act as directors of”

DPL. The Land Council further sought consequential relief with respect to the answer to Question 1.6(b).

16 Mr Cunliffe did not oppose the grant of leave and, in my view, leave should be granted. Further, in my opinion the appeal should be allowed.

A BRIEF HISTORY OF THE DISPUTE

17 The various disputes between the parties involve the governance of the Land Council, DPL, and the Trust. The Land Council owned waterfront land on the Central Coast. In 2002 it contracted to sell that land to Mirvac Projects Pty Ltd for an overall consideration of $42 million, which was to be paid in stages.

18 The Land Council decided to set up a trust into which the proceeds of sale would be placed. By Trust Deed dated 9 March 2004 DPL was appointed to act as trustee for the Trust, an entity described by the primary judge as being

“purportedly a charitable trust established on very broadly expressed terms essentially mirroring the structure and powers of the Land Council”.

See Hillig v Darkinjung Pty Ltd [2006] NSWSC 594; (2006) 57 ACSR 733; (2006) 201 FLR 148 at [47]. The Land Council was the sole shareholder of DPL.

19 Thus substantial funds were transferred by the Land Council to DPL as trustee of the Trust and some of these funds were used to finance certain “enterprise companies” that had been established by the Land Council as well as a cattle joint venture in which the Trust had invested (CattleCo).

20 On 16 August 2005 an investigator appointed under the Aboriginal Land Rights Act 1983 (the ALR Act) reported to the Minister in a manner which was highly critical of certain officers of the Land Council and their management of its property.

21 On 28 October 2005 DPL instituted proceedings number 2005/5634 against the Land Council, the enterprise companies, CattleCo and the New South Wales Aboriginal Land Council seeking declaratory relief as to the validity of the payments made by the Land Council to DPL. The Land Council also took proceedings in the Land and Environment Court seeking an injunction preventing the Minister from appointing an administrator to the Land Council. These last mentioned proceedings were unsuccessful: Darkinjung Local Aboriginal Land Council v Minister for Aboriginal Affairs [2006] NSWLEC 291; (2006) 147 LGERA 348. Accordingly, on 2 May 2006 the Minister appointed Mr Peter Hillig (Mr Hillig) as administrator of the Land Council with all of its functions.

22 Mr Hillig developed concern that the assets of the Land Council were being rapidly dispersed as a consequence whereof he instituted proceedings number 2006/2842 on 19 May 2006 and made an immediate application for interim injunctive relief. However, on 22 May 2006, before that application was determined, Mr Hillig purported to cause the Land Council, as sole shareholder of DPL, to take steps to remove the directors of DPL, to appoint himself as DPL’s sole director, to repeal or amend DPL’s constitution and to terminate the retainer of DPL’s solicitor, Mr Cunliffe. DPL and its directors, who were the second to sixth respondents in the Proceedings, challenged Mr Hillig’s actions (the Hillig litigation).

23 On 15 June 2006 the primary judge determined the Hillig litigation by holding that Mr Hillig’s actions were invalid on grounds not presently relevant: Hillig v Darkinjung Pty Ltd [2006] NSWSC 594; (2006) 57 ACSR 733; (2006) 201 FLR 148. On 19 June 2006 his Honour made declarations to the effect that Mr Hillig’s actions of 22 May 2006 were inoperative and ineffective, the directors (the second to sixth respondents) remained in office and Mr Cunliffe remained DPL’s solicitor. He also ordered that Mr Hillig be restrained from holding himself out or purporting to act as a director of DPL.

24 On 23 June 2006 Mr Hillig instituted an appeal against the primary judge’s decision which was heard by this Court on 9 May 2007 and judgment delivered on 29 April 2008: Hillig v Darkinjung Pty Ltd & Ors [2008] NSWCA 75 (Hillig (No.1)). The Court, McColl JA, with the agreement of Beazley and Giles JJA, allowed the appeal and set aside the primary judge’s orders and declarations made on 19 June 2006. It reserved the question of the costs of the proceedings both before the primary judge and of the appeal.

25 The issue of costs was dealt with by this Court on the papers, judgment being delivered on 23 June 2008: Hillig v Darkinjung Pty Ltd & Ors (No.2) [2008] NSWCA 147 (Hillig (No.2)). The actual orders that were then made are not presently relevant although both the primary judge and Mr Cunliffe relied on certain statements made by McColl JA, with whom Beazley and Giles JJA agreed, in that judgment.

THE PROCEEDINGS BEFORE BARRETT J

26 Notwithstanding that on 23 June 2006 Mr Hillig had filed an appeal against the orders of the primary judge made on 19 June 2006, the Proceedings before Barrett J ran for some 13 days between 25 July 2006 and 7 September 2006. Written submissions were then filed with his Honour on various dates in September 2006 and judgment was delivered on 3 October 2006: Darkinjung Pty Ltd v Darkinjung Local Aboriginal Land Council & Ors; Hillig v Darkinjung Pty Ltd & Ors; Darkinjung Local Aboriginal Land Council v Warner & Ors [2006] NSWSC 1008; (2006) 203 FLR 394.

27 Relevantly, at [11], Barrett J explained that the Proceedings were:

“(a) 5634/05 (commenced by summons filed on 28 October 2005) in which DPL, as plaintiff, seeks against DLALC [the Land Council], the Enterprise Companies, CattleCo and the New South Wales Aboriginal Land Council (“NSWALC”) declaratory relief as to the validity of payments made by DLALC to DPL …;

(b) 2842/06 (commenced on 19 May 2006) in which Mr Hillig, as administrator of DLALC, the sole member of DPL, seeks, by reference to Corporations Act provisions concerning oppression, unfair prejudice and the like, winding up of DPL and either repeal of DPL’s constitution or its modification ’by removal of provisions entrenching control of the incumbent directors’, together with declaratory relief to the effect that the trust of which DPL is supposedly the trustee is wholly or partially void and that the payments made by DLALC to DPL were void; and

(c) ...”

28 In Hillig (No.1) McColl JA at [71] summarised Barrett J’s conclusions in the following terms:

“(a) that as the appellant and NSWALC contended, the transfers of funds from DLALC to DPL ‘were actuated by the improper purpose of removing the moneys in question from the ambit of decision-making within the statutory confines of DLALC and to place them instead within the decision-making structure based on DPL and the Trust, being a decision-making structure not presided over by members of DLALC’;

(b) that, even though the transfers of funds were duly sanctioned by resolutions passed at meetings of DLALC, it was beyond the statutory authority and capacity of DLALC for it to make the four transfers to DPL and that the decisions to transfer were made for an improper and extraneous purpose’;

(c) that the Trust was a charitable trust (in the sense that at least part of the “Sole Purpose” is charitable) but that, to the extent that trust moneys were lent by DPL, as trustee, to CattleCo and the Enterprise Companies (and, in the case of CattleCo, outlaid as subscription moneys for shares), the expenditure was neither made in furtherance of any aspect of the charitable purpose nor made in a form that the Trust Deed permitted the trustee to make.”

29 On 13 December 2006 Barrett J made formal declarations and orders. Relevantly he declared that the purposes of the Trust were neither charitable nor purposes for which the trustee of the Trust (DPL) was able to receive, hold and apply capital or income of the Trust property. He further declared that the whole of the funds and assets of DPL were held by it upon (resulting) trust for the Land Council and he ordered that DPL forthwith transfer to the Land Council the whole of its funds and assets except for the Fund ($430,000) which DPL was ordered to pay into Court. His Honour ordered that that amount remain in Court to

“abide the determination of the amount, if any, which is fairly to be allowed to [DPL] for its expenses of acting as trustee of the [Trust] (being the resulting trust), in respect of the prosecution of proceedings number 5634 of 2005 and in respect of its conduct of the defence of [proceedings number 2842 of 2006].”

30 His Honour also ordered that DPL be wound up and a liquidator appointed. In the first cross-claim Mr Cunliffe seeks access to the Fund in respect of the costs of the legal services provided by himself through Norton White in respect of the prosecution and defence of the Proceedings on behalf of DPL.

THE FIRST CROSS-CLAIM

31 The relevant allegations in the first cross-claim were pleaded in the following terms:

“1. At all material times from time to time solicitors then trading under the name or style Norton White Melbourne were retained by the First Defendant in proceedings in this Honourable Court (‘the Retainer’) being proceeding number 5634 of 2005 and this proceeding (‘the Proceedings’) .
PARTICULARS

The Retainer was partly oral, partly in writing and partly implied.
To the extent that it was in writing, it was contained in costs agreements provided to the First Defendant on 24 October 2005 and 12 May 2006. …

To the extent that it was implied it was implied by law.
2. On 13 December 2006 the First Defendant was placed into liquidation.
3. The Retainer was entered into by the First Defendant through the Second to Sixth defendants then acting within their authority as directors.
4. This Honourable Court on 15 June 2006 confirmed the authority of the Second to Sixth Defendants to bind the First Defendant and the validity of the Retainer.
PARTICULARS
The Seventh Defendant refers to the decision of Austin J in Hillig v Darkinjung [2006] NSWSC 594 (15 June 2006).
5. Pursuant to the Retainer and at all times material:
(a) the solicitors then trading under the name or style of Norton White Melbourne provided legal services to the First Defendant; and
(b) …
6. The First Defendant has not paid all of the amounts owed by it to the solicitors trading under the name or style Norton White Melbourne for the legal services alleged in paragraph 5 and is indebted to the Seventh Defendant in the premises set out herein in the amount of $342,003.55 (‘the Debt’) in respect of the provision of those legal services. …
7. …
8. …
9. …
10. In prosecuting and defending the Proceedings the First Defendant was at all material times:
(a) acting as a trustee for the ‘Darkinjung Trust’ (‘the Trust’) , being a trust created by instrument dated 9 March 2004 and amended on 29 November 2005 and previously referred to in judgments in this proceeding;
(b) acting reasonably; and
(c) not acting for its own benefit and only for the benefit of the Trust.”

32 It will be noted that nowhere in the pleading of the first cross-claim is it asserted that Norton White provided legal services to DPL otherwise than pursuant to the retainer referred to in paragraph 1. In other words, the firm’s entitlement to the payment of the costs of their legal services to DPL was based purely on contract. No alternative claim was made based on a quantum meruit which, it is common ground, was only sustainable in the absence of a contract between the parties in respect of the relevant services: Lumbers v W Cook Builders Pty Ltd (In Liq) [2008] HCA 27; (2008) 232 CLR 635 at [79]. In other words, if the relevant services were provided pursuant to a contract, there could be no entitlement to the cost of those services based on a quantum meruit.

33 In his reasons (at [18]) the primary judge noted that in the first cross-claim Mr Cunliffe sought, amongst other things, to establish the entitlement of DPL as trustee of the Trust to an indemnity out of the Trust property including the Fund for its legal costs in acting as trustee in the Proceedings and to have the Court determine the amount to be allowed for those expenses. Thus the first cross-claim asserts the right of a trustee to be exonerated for legal expenses out of trust property. Relevantly, Mr Cunliffe’s claim for recovery of legal costs asserts that he, as a creditor of the trustee DPL, is entitled to access to the Trust property including the Fund. The claim was based on the proposition that as a creditor of DPL as trustee, Mr Cunliffe is subrogated to DPL’s right of exoneration out of the Trust assets including the Fund.

34 His Honour recognised (at [22]) that there would be no purpose in Mr Cunliffe merely claiming for legal expenses as an unsecured creditor of DPL as the latter had no assets other than such rights of indemnity as it may have against Trust assets (including the Fund) and the Land Council personally. Accordingly, his claim for recovery of legal expenses out of the Fund and other Trust assets must be characterised as the assertion of rights of subrogation to DPL’s indemnity rights. However, that was an issue that his Honour was not required in the present proceedings to determine.

35 At [35] the primary judge noted that the amount of the payments made to Norton White after 22 May 2006 was not in dispute and totalled $816,948.09. On the other hand, in the first cross-claim Mr Cunliffe asserted that DPL owed him $342,003.55 for the provision of legal services by Norton White in respect of the conduct of the Proceedings on behalf of DPL. As a consequence of the evidence given before the primary judge including concessions made by Mr Cunliffe in cross-examination, that amount was reduced to $314,783.01 which was in turn to be further reduced although the details of that further reduction are not presently relevant.

SOME FINDINGS BY THE PRIMARY JUDGE

36 At [49] his Honour found that Mr Bradford (the former Chairman and a director of DPL and of the Land Council) first instructed Mr Cunliffe on behalf of those parties in October 2005. On 12 May 2006 Mr Cunliffe on behalf of Norton White offered to provide legal services to DPL which offer was accepted by Mr Flanders, then a director of DPL and the Land Council, on 15 May 2006. It would appear that this retainer also involved the entering into of a costs agreement between DPL and Norton White.

37 However, as I have already noted, on 22 May 2006 Mr Hillig, having been appointed administrator of the Land Council by the Minister on 2 May 2006, purported to exercise the powers of the Land Council as the sole shareholder of DPL by removing its then directors and appointing himself as sole director and, at the same time, terminating Mr Cunliffe’s retainer on behalf of DPL. The evidence appears to establish that at the same time Mr Hillig advised Mr Cunliffe that neither he nor his firm were to provide any further legal services to DPL.

38 Nevertheless, it would appear that some legal work was carried out by Mr Cunliffe on behalf of DPL between 22 May 2006 and 15 June 2006 when the primary judge declared that Mr Hillig’s removal of the then directors of DPL as well as his purported termination of Mr Cunliffe’s retainer, were invalid and ineffective. Thereafter, and in apparent reliance upon his Honour’s declarations, Mr Cunliffe at the request of those directors, continued to provide legal services to DPL in relation to the Proceedings. The provision of those services ceased on 13 December 2006 when Barrett J ordered that DPL be wound up.

THE REASONING OF THE PRIMARY JUDGE WITH RESPECT TO HIS ANSWER TO QUESTION 1.6(a)

39 At [112] of his reasons, the primary judge noted the submission on behalf of the Land Council that since Mr Hillig validly terminated all retainers of Norton White on 22 May 2006, Mr Cunliffe had no entitlement to costs in respect of any legal services provided after that date. He noted Mr Cunliffe’s concession that Norton White’s retainer came to an end on 13 December 2006 when an order was made for the winding up of DPL and a liquidator was appointed to that company but that he claimed that there was a valid retainer giving rise to an entitlement to costs for work done up to that date.

40 His Honour then made reference at [114] to the declarations made by him on 19 June 2006 to the effect that Mr Hillig’s actions of 22 May 2006 were inoperative and ineffective with the result that the directors of DPL remained in office and Mr Cunliffe remained DPL’s solicitor. Those orders remained in force until well after 13 December 2006 as the Court of Appeal did not reverse his Honour’s decision until 29 April 2008.

41 Thus, in the period from 22 May 2006 to 13 December 2006

“the position was that although the Norton White Melbourne retainer had been validly terminated, the validity of the termination had not been confirmed by the Court; rather, there were binding declarations and orders in force to contrary effect.”

42 At [115] his Honour referred to [32] and [33] of the reasons of McColl JA, with whom Beazley and Giles JJA agreed, in Hillig (No.1). However, it is appropriate to refer also to [30] and [31]:

“30 It appears that by the time the appeal was heard DPL had transferred substantially all its assets to DLALC except for an amount of $430,000 set aside in Barrett J’s December 2006 orders. The outstanding costs issue which Barrett J has yet to resolve turned, Mr Murr informed the Court, on the validity of the appellant’s [Mr Hillig’s] steps of 22 May 2006. Notwithstanding this statement, at the end of the oral argument, Mr Murr submitted that if the Court upheld the appeal it should order the respondents to pay the appellant’s costs both of the proceedings before Austin J and of the appeal.

31 The Court determined that if leave to appeal were required, it would grant that leave. It also determined that it should deliver reasons on the issues raised by the appeal, save those as to costs. The issue of costs is to be determined once the substantive appeal is resolved.

32 Mr Murr submitted, in support of the utility of the appeal, that if successful the appellant would argue as relevant to the question of costs (whether in this Court or before Barrett J was not made clear) that the proceedings before Barrett J were conducted by people who had been removed from office and who had no proper authority to conduct them.

33 This submission appeared to me to be based on a misconception. Acts done according to the exigency of a judicial order afterwards reversed are protected as being ‘acts done in the execution of justice, which are compulsive’: Commissioner for Railways (NSW) v Cavanough [1935] HCA 45; (1935) 53 CLR 220 (at 225) per Rich, Dixon, Evatt and McTiernan JJ. This principle is a corollary of the proposition that an order made by a court of competent jurisdiction must be obeyed unless and until that order is discharged: Hadkinson v Hadkinson [1952] P 285 (at 288) per Romer LJ, cited with approval by Lord Diplock in delivering the judgment of the Privy Council in Isaacs v Robertson [1985] AC 97 (at 101-102).”

43 At [116] the primary judge noted that McColl JA returned to what he referred to as “this general territory” in Hillig (No.2). He placed particular reliance upon what her Honour said at [55] and [56] of her reasons. Before reciting those paragraphs it is important to read all the paragraphs from the reasons of McColl JA upon which the primary judge relied in context. Hillig (No.2) concerned the question of who should pay the costs of the original hearing before the primary judge as well as of the appeal. In this respect it may be noted that in Hillig (No.1), following the appointment of a liquidator to DPL, a Notice of Change of Solicitor was filed on behalf of DPL as well as a submitting appearance except as to costs. Further, on 13 March 2007 the second to seventh respondents (the second to sixth respondents being the former directors of the Land Council and DPL and the seventh respondent being Mr Cunliffe) also filed submitting appearances except as to costs. Essentially, therefore, the appeal in Hillig (No.1) proceeded without a contradictor.

44 The issue of costs foreshadowed by her Honour in the paragraphs in Hillig (No.1) which I have recorded at [42] above, morphed into an application that Mr Cunliffe should be visited with the costs orders that Mr Hillig and DPL sought to the extent that he had conducted the proceedings before the primary judge (but not the appeal) on DPL’s behalf. That application was made in the context, referred to by her Honour at [47] and [48] of Hillig (No.2), that it was common to order a solicitor personally to pay the costs he has thereby caused parties to incur when he has taken unauthorised steps in litigation. Where a solicitor has acted without authority for one of several parties to proceedings then, subject to discretionary considerations, the solicitor will be ordered to pay so much of the other party’s costs as were attributable to the parties for which the solicitor purported to act being joined as parties.

45 As her Honour noted at [49], according to English authority, the Court’s jurisdiction to make such an order was founded on the premise that

“a solicitor who does not in fact have authority to represent a plaintiff is liable to other parties on an implied contract that he had authority.”

46 At [50] McColl JA referred to the judgment of Bryson J (as his Honour then was) in Zimmerman Holdings Pty Ltd v Wales [2002] NSWSC 447 at [5]-[6] to the effect that the common law approach should no longer be applied given the discretionary powers as to costs in s 76(1) of the Supreme Court Act 1970 (the predecessor of s 98(1) of the Civil Procedure Act 2005). Her Honour also referred to the provisions of UCPR 42.3 which provided that the court may not, in the exercise of its powers and discretions under s 98, make any order for costs against a person who is not a party to the proceedings with an exception with respect to an order for costs against a person who purports, without authority, to conduct proceedings in the name of another person.

47 The question that therefore arose in Hillig (No.2) was whether, on the basis that Mr Cunliffe or Norton White did not have authority to conduct proceedings on behalf of DPL as a consequence of this Court’s decision in Hillig (No.1), he (Mr Cunliffe) should be required to pay the costs of Mr Hillig and DPL in respect of the proceedings both at first instance and on appeal in the Hillig litigation.

48 At [58] McColl JA rejected the submission that Mr Cunliffe pay Mr Hillig and DPL’s costs of the trial before Austin J. In coming to that conclusion, and after referring to the appropriate approach to the issue of a solicitor non-party purporting to act without authority, her Honour said (omitting citations):

“53 The first question is whether Mr Cunliffe should be visited with the costs orders the appellant and the first respondent seek to the extent he conducted the proceedings on Darkinjung’s behalf. In determining this question it should be taken into account that all three applications before the primary judge turned on the one issue: the efficacy of the Resolutions. ... Mr Cunliffe could not determine by reference to objective facts whether or not the Resolutions were effective and, therefore, whether or not Darkinjung, and ergo its directors, had authority to retain him. Rather, as the outcome of the primary proceedings demonstrated, there was at least an arguable case that the Resolutions were ineffective.

54 Darkinjung was always a necessary party to the primary proceedings, as too, were the second to sixth respondents. The issues on the three applications were so intertwined that it was appropriate for the primary judge not to resolve the 24 May Interlocutory Process challenging Mr Cunliffe’s retainer until he had heard all of the argument ...

55 It was the appellant who commenced the proceedings and joined the first to sixth respondents as defendants. The principles concerning a solicitor acting without authority apply whether the party represented is a plaintiff or a defendant. However where the party represented is a defendant, and the question whether the defendant can retain a solicitor lies at the heart of the proceedings, a court would not readily order the solicitor to pay the costs of the proceedings even when the effect of its conclusion is that those the solicitor represented were not authorised to retain him or her.

56 A solicitor placed on notice of a challenge to retainer would do well to determine, as Zimmerman demonstrates, whether the client’s authority to retain him or her can be objectively determined. Where that cannot be done, the court must be anxious to ensure that an order that the solicitor bear the costs is appropriate in all the circumstances. Those circumstances include, in my view, the public interest that citizens have legal representation for the purposes of the conduct of litigation.

57 In my view, Mr Cunliffe was entitled to proceed on the basis that the efficacy of the Resolutions and the question whether Darkinjung could retain him, was an issue of law which should properly be determined by the Court and that the defendants should have legal representation for the purposes of that contest. Accordingly I would not exercise the UCPR 42.3(d) power against him in relation to the trial.”

49 It will thus be appreciated that her Honour’s remarks in both Hillig (No.1) and Hillig (No.2) which I have recorded at [42] and [48] above were made in the context of a submission on behalf of the Land Council and DPL that Mr Cunliffe should personally pay the costs of the Hillig litigation both at first instance as well as the appeal.

50 At [117] of his reasons the primary judge recognised that when McColl JA said that Mr Cunliffe was entitled to proceed to act, she was conveying the idea that in the exercise of its discretion as to costs orders, the Court would regard that conduct as fair and reasonable, and not a course of unauthorised conduct that was, in the circumstances, in any way culpable. His Honour continued:

“She was not intending to lay down a legal right for Mr Cunliffe to continue to act. My task is to determine a legal question. Therefore her observations in the costs judgment do not directly assist me. But it is helpful for my purposes that her Honour regarded it as reasonable for Mr Cunliffe to proceed on the basis that the efficacy of Mr Hillig’s actions was an issue of law that should properly be determined by the Court and that DPL should have legal representation for that purpose.”

51 The primary judge then reasoned as follows:

“118 It seems to me that the quoted observations in the Court of Appeal's principal judgment provide the key to a solution of the matter argued before me. It is established, as McColl JA said at [33], that an order made by a court of competent jurisdiction must be obeyed unless and until that order is discharged. My orders of 19 June 2006 included declarations of right binding on the parties and having the effect, inter alia , of asserting the invalidity of Mr Hillig's actions and consequently the invalidity of the purported termination of retainer. Therefore after my declarations and orders were made and before they were set aside, it was not open to the parties, including DPL, to proceed as if Norton White's retainer had been terminated by Mr Hillig. To put the matter positively, DPL was entitled by my declarations and orders to regard Norton White as continuing to be retained under the contractual arrangements that were in place before Mr Hillig purported to act. As was later established by the Court of Appeal, the retainer had in fact been terminated, but DPL and the other parties to the litigation were bound to act as if the retainer remained in place until my declarations and orders were set aside.

119 Mr Cunliffe was not himself a party at that stage, as McColl JA found in the costs judgment (at [42]). But DPL was entitled to the benefit of my declarations and orders and if Norton White Melbourne had declined to act for DPL, they would have deprived DPL of the benefit of my decision in its favour.

120 In the period from 22 May to 13 December 2006 Norton White's retainer by DPL had been terminated and so had all previous costs agreements, and Norton White was no longer contractually authorised to undertake any work for DPL. But after 22 May it continued to receive requests for legal services from individuals who were entitled by my orders to regard themselves as the directors of DPL. The solicitors carried out work as requested, in circumstances where it was reasonable for them to act for the reasons explained by McColl JA. It seems to me that these matters have given Norton White Melbourne an entitlement as against DPL to claim remuneration for their services on a quantum meruit basis.”

52 At [122] the primary judge noted that counsel for the Land Council had submitted that strictly speaking it was unnecessary to consider any question of quantum meruit as no such claim had been pleaded or made in the first cross-claim. However, as he

“read the question for separate determination, the answer would be incomplete if quantum meruit entitlement were overlooked. I take the reference, in the stated question, to the ability of the solicitors to recover, tax or assess the costs claimed in the first cross-claim to be a reference to their ability to recover, tax or assess costs in the amount stated in the first cross-claim, rather than simply the costs claimed in the first cross-claim as arising under specified costs agreements. If the termination on 22 May 2006 of the costs agreement of 12 May 2006 brought Norton White’s contractual entitlement to recover costs to an end, but left it with a quantum meruit claim for an amount of remuneration not necessarily the same as would be recovered under a valid costs agreement, it seems to me appropriate to say so in answer to the question.”

THE SUBMISSIONS ON THE APPEAL

53 The Land Council’s and DPL’s submissions on the appeal can be summarised thus:

(a) It was not open to the primary judge to answer Question 1.6(a) by reference to a quantum meruit claim as no such claim was made in the first cross-claim and, further, no such claim was the subject of submissions at trial;

(b) In any event, an essential element of a quantum meruit claim is that the relevant work is done not only for, but at the request of, the party or recipient of the relevant work or services;

(c) Any such request must be that of the recipient of the services and, if the recipient is a company, the services must be requested by an officer of the company who is authorised to do so;

(d) Given the decision of this Court in Hillig (No.1) , on and after 22 May 2006 only Mr Hillig could make such a request and he did not do so: on the contrary, he terminated the solicitor’s retainer and directed that they cease to provide legal services to DPL;

(e) Accordingly, any claim for a quantum meruit failed at that threshold;

(f) Even if there was an authorised request by DPL to Mr Cunliffe to provide legal services after 22 May 2006, nevertheless no relevant benefit was received by DPL: rather, the services were really for the benefit of the five directors of DPL whose services had been terminated by Mr Hillig. The real contest was for control of DPL and the Land Council – the former was merely part of the spoils.

54 Mr Cunliffe’s submissions may be summarised as follows:

(a) Although the legal firm Norton White was no longer contractually authorised to undertake any work for DPL after 22 May 2006, nevertheless as a result of the request for legal services by the directors of DPL reinstated to their office by the order of the primary judge on 19 June 2006, legal work was carried out as requested in circumstances where it was reasonable for Norton White to act for DPL in the Proceedings;

(b) The principle articulated by McColl JA in Hillig (No.1) at [33] based upon the High Court’s decision in Commissioner for Railways (NSW) v Cavanough [1935] HCA 45; (1935) 53 CLR 220 at 225, implied that the effect of the primary judge’s declarations of 19 June 2006 was that the reinstated directors of DPL were compulsorily required to act as such: in other words, his Honour’s declarations were required to be obeyed unless and until they were reversed;

(c) The Land Council and DPL’s argument incorrectly focuses on requests for legal services irrespective of Mr Hillig when considering two of the requisite elements of a claim for a quantum meruit namely, whether requests were made by DPL and whether it had received an incontrovertible benefit. DPL could not act other than through its directors and the primary judge correctly directed his enquiry as to whether the requisite elements of a quantum meruit existed from DPL’s perspective as controlled by those directors who, as a result of the declarations of the primary judge of 19 June 2006, remained in office until 13 December 2006 when DPL was wound up. Furthermore, the judicially recognised principle or public policy that citizens should have legal representation for the purposes of the conduct of litigation referred to by McColl JA in Hillig (No.2) particularly at [57], was a further reason why it was at least reasonable that DPL should have legal representation in the Proceedings;

(d) Accordingly, the compulsion principle as articulated in Cavanough to the effect that it is in the public interest for citizens to have legal representation for the purpose of the conduct of litigation resulted in Mr Cunliffe being entitled to claim his legal fees based on a quantum meruit ;

(e) In essence, and notwithstanding the effect of this Court’s decision in Hillig (No.1) , his Honour was correct when at [120] he found that after 22 May 2006 Norton White continued to receive requests for legal services from individuals who were entitled as a consequence of his Honour’s orders and declarations of 19 June 2006 to regard themselves as directors of DPL.

WAS THE CLAIM FOR A QUANTUM MERUIT PROPERLY BEFORE THE PRIMARY JUDGE?

55 As noted at [32] above, the first cross-claim confines Mr Cunliffe’s claim to legal costs upon the retainer pleaded in paragraph 1. It was a contractual claim and cannot, in my view, be construed as containing an alternative claim based on a quantum meruit.

56 Both parties were required to provide his Honour with opening submissions in writing. Those of the Land Council and DPL relevantly referred to the termination of Mr Cunliffe’s costs agreement and retainer on 22 May 2006 and a direction from Mr Hillig that he cease to act for DPL. It was submitted that it followed that Norton White after 22 May 2006 had no contract with DPL for the provision of legal services and therefore could not claim any contractual entitlement to the costs of those services.

57 Paragraph 30 of those submissions was in the following terms:

“It follows also that Norton White Melbourne cannot assert any quantum meruit basis for remuneration, as no such action lies for the performance of unrequested work and a fortiori , work that the claimant was directed not to do and which in fact exposed DPL to large disadvantages, including depletion of the trust funds and liability to its beneficiaries (under the orders of 8 December 2006).”

There was a footnote reference to the words “ quantum meruit ” in the first line of [30] which stated as follows:

“Strictly speaking it is unnecessary to consider any question of quantum meruit as no such claim has been pleaded or made in the first cross claim.”

This was recognised by the primary judge at [122] of his reasons, which I have recorded at [52] above.

58 There was nothing in Mr Cunliffe’s opening written submissions that bore upon this question. However, paragraph 7 of his final written submissions was as follows:

“Mr Cunliffe contends that DPL would be unjustly enriched if [it] did not pay for the legal services taking into consideration the recognition by the authorities that a solicitor who acts on instructions from a party on the record is entitled to look to that party for costs: see Hudgson v Endrust (Australia) Pty Ltd (1986) FCR 152 at [154]. This is all the more so when Mr. Cunliffe was entitled to rely upon the decision of this Honourable Court in Hillig v Darkinjung Pty Ltd [2006] NSWSC 594 until it was overturned.”

59 At paragraph 44 of those written submissions, reference was made to the fact that the Land Council and DPL relied upon this Court’s judgment in Hillig (No.1) to the effect that the costs agreements and retainer between Norton White and DPL were terminated as at 22 May 2006. The submission continued:

“… This misinterprets and misapplies the judgment. The fact that ‘the Resolutions’ were effective does not mean that the proceedings were conducted by people who had been removed from office and who had no proper authority to conduct them (which is the basis of [the Land Council’s] submission). …”

Reference was then made to the statements of McColl JA in Hillig (No.1) at [32]-[34] and Hillig (No.2) at [57].

60 At paragraph 46 Mr Cunliffe sought to make specific responses to matters raised in the opening written submissions of the Land Council. In response to paragraph 29 of those submissions (in which it had been asserted that after 22 May 2006 Norton White “had no contract with DPL for the provision of legal services”), Mr Cunliffe contended:

“No. One may ask rhetorically, if not under a retainer, upon what other basis was Mr. Cunliffe acting (as he was entitled so to do)?”

In response to paragraph 30, which I have recorded at [57] above, the response was “ Not relevant to the preliminary questions …”.

61 In both his written and oral submissions on the appeal, Mr Cunliffe submitted that the first cross-claim had been pleaded widely and alleged material facts necessary and sufficient to support a claim based on a quantum meruit without pleading the actual words “on a quantum meruit”. The case was not conducted, so it was contended, on the pleadings but on the evidence and the issues for determination were those that were to be determined by answers to the separate questions.

62 Mr Cunliffe further submitted that the Land Council and DPL had, at paragraph 30 of their opening written submissions, referred to the question of a quantum meruit which was, therefore, “in the ring”. In any event, the Land Council and DPL were not in any way prejudiced by the failure to plead the words “quantum meruit”. The work performed and the request for the work to be performed were in evidence as the primary judge found. There was no evidence that the Land Council or DPL would have adopted a different course at trial had the cross-claim specifically pleaded a claim based on quantum meruit.

63 In my opinion Mr Cunliffe’s submissions should be rejected. It was not suggested that in the course of the hearing any reference was made to a claim based on quantum meruit and there is no reference to any submission on the part of Mr Cunliffe in the short oral submissions that were made which advanced any such claim. Furthermore, the responses in Mr Cunliffe’s final written submissions to paragraphs 29 and 30 of the Land Council and DPL’s opening written submissions makes it clear, first, that Mr Cunliffe was relying upon a contractual right for payment of his legal fees and, second, any claim based on a quantum meruit was irrelevant.

64 In the foregoing circumstances, in my respectful opinion it was inappropriate for the primary judge to determine Question 1.6(a) upon the basis of a claim for a quantum meruit when such a claim had never been in issue beforehand and he had received no relevant submissions relating to it. That is not to say that Question 1.6(a) could not have been answered in a manner that in effect reserved the question as to whether such a claim could be established. But it was not open to his Honour to determine an issue for the purpose of answering a question that had not been the subject of proper argument before him.

65 It may well be, as his Honour contemplated at [122] of his reasons, that to not deal with any issue of quantum meruit would leave the answer to Question 1.6(a) “incomplete”. But of itself that did not provide a basis to deal with an issue that had been neither pleaded, argued nor the subject of submissions. In this respect I do not suggest that the parties were necessarily confined to the pleadings had the question of a claim based on a quantum meruit been directly raised for consideration and submissions directed to it. But that was not the case. The parties did not conduct the proceedings before his Honour on that basis.

WAS THERE A VALID REQUEST BY DPL FOR MR CUNLIFFE TO PROVIDE IT WITH LEGAL SERVICES FOR THE PURPOSE OF THE PROCEEDINGS?

66 I have already indicated that in my view Mr Cunliffe obtains no comfort from the remarks of McColl JA in either Hillig (No.1) or Hillig (No.2) which was directed to a different issue. It is noteworthy that in Hillig (No.2) at [46] her Honour observed that the effect of the Court’s decision in Hillig (No.1) was that:

“on and from the date they [the resolutions of Mr Hillig] were passed (22 May 2006) the retainer of Messrs Norton White was withdrawn and he had no authority to continue to act for [DPL].”

67 As I have indicated, Mr Cunliffe relied heavily upon the decision of the High Court in Cavanough. The respondent in that case was an officer of the Commissioner for Railways and, as such, received a certain salary. He was summarily convicted of larceny under the relevant section of the Crimes Act 1900. He appealed from that conviction to Quarter Sessions, which upheld his appeal and set aside the conviction. During the period that elapsed from his conviction until its reversal, he received no salary and the performance of his duties was suspended. The question for the High Court’s decision was whether the respondent was entitled to recover his unpaid salary.

68 Rich, Dixon, Evatt and McTiernan JJ in a joint judgment held that he was so entitled because, his conviction having been quashed, he could not be considered ever to have been convicted and could not be deemed to have ever vacated his office. His conviction was avoided ab initio. Their Honours adopted the observation of Coleridge J in R v Drury (1849) 3 Car. & K., at 199; 175 E.R., at 520 where his Lordship said:

“The judgment reversed is the same as no judgment”.

69 After noting that the conviction was “utterly defeated and annulled”, their Honours continued in the following terms (omitting citations):

“… Acts done according to the exigency of a judicial order afterwards reversed are protected: they are ‘acts done in the execution of justice, which are compulsive’. And proceedings which, although based upon a judgment, are brought to completion before its reversal are not avoided. For ‘collateral acts executory are barred, but not collateral acts executed’. But ‘upon the reversal of a judgment against any person convicted of any offence, the judgment, execution and all former proceedings become thereby absolutely null and void. If living, he (or if dead, his heir or personal representative, as the case may be) will be entitled to be restored to all things which he may have lost by such erroneous judgment and proceedings, and shall stand in every respect as if he had never been charged with the offence in respect of which judgment was pronounced against him’.
As the respondent in contemplation of law was never out of office, he is entitled to the salary attached to it. …”

70 At [118] of his reasons, which I have recorded at [51] above, the primary judge stated in the last sentence that notwithstanding the decision of this Court in Hillig (No.1), DPL and the other parties to the litigation (being the existing five directors of DPL as well as Mr Cunliffe) were bound to act as if Norton White’s retainer remained in place until such time as his Honour’s declarations were set aside. If his Honour intended by this statement to assert that as the retainer remained in place, the parties to it were contractually bound, then he was in error for the effect of this Court’s decision in Hillig (No.1) was to terminate that retainer as and from 22 May 2006.

71 In any event, the declarations did not compel the then directors of DPL to request or otherwise require Mr Cunliffe to provide legal services to DPL for the purpose of the Proceedings. They permitted the directors to do so but did not mandate such a course.

72 This distinction was adverted to by the Court in Dr Drury’s Case (1610) 8 Co. Rep.; 77 E.R. 688 at 691 where their Lordships said:

“There is a difference between mean acts done in the execution of justice, which are compulsive, and acts which are voluntary: and, therefore, if an erroneous judgment is given in debt, and the Sheriff, by force of a fieri facias sells a term of the defendant, and afterwards the judgment is reversed by a write of error, yet the term shall not be restored, but only the sum because the sheriff was commanded and compelled by the King’s writ to sell it. But if a capias ullagatum is awarded, whereby the sheriff is commanded to take the body … and by force of that writ, the sheriff, by inquisition, takes the goods and chattels of the man outlawed and sells them, and afterwards the outlawry is reversed, the party shall be restored to his goods and chattels, because the sheriff was not commanded nor compelled by the King’s writ to sell them.”

73 In the present case the acts of the defendant directors in requesting Mr Cunliffe to continue to provide legal services after 22 May 2006 were, relevantly, voluntary and not compulsive. In these circumstances, it is not open to Mr Cunliffe to rely on the primary judge’s declarations as providing authority for the directors to make that request. On the contrary, the effect of the decision of this Court in Hillig (No.1) in reversing the primary judge’s findings and setting aside his declarations was that as and from 22 May 2006, the defendant directors were no longer authorised to give instructions to Mr Cunliffe on behalf of DPL.

74 Furthermore, the giving of those instructions was not in accordance with the exigency of a judicial order afterwards reversed. During the course of argument the example was given of such an order, namely, where a sequestration order is made under the bankruptcy legislation against a person’s estate then any act of the Official Trustee in obtaining the bankrupt’s property would be protected in the event that the sequestration order was later annulled. In other words, the Official Trustee could not be held liable for trespass to goods. No such “exigency” arose in the present case.

75 Accordingly, in my opinion the defendant directors of DPL were not authorised to make the requests referred to by the primary judge at [120] of his reasons. An unauthorised request to perform services on behalf of another is no request at all with the consequence that it cannot be relied upon for the purpose of establishing a claim based on a quantum meruit. The compulsion principle has no application to the present case.

CONCLUSION

76 Subject to some possible exceptions such as the doctrine of necessitous intervention, a quantum meruit in the case of an ineffective contract depends upon a request which, in the case of the company requesting the provision of services, in turn depends upon the authority of the relevant officers of the company to make that request. In the present case, the contract of retainer between DPL and Norton White was validly terminated as and from 22 May 2006. Furthermore as and from that date the defendant directors ceased to have authority to act as directors of DPL. It follows that the decision of this Court in Hillig (No.1) had retrospective effect and operated as if the primary judge’s declarations had never been made.

77 Insofar as Mr Cunliffe’s claim for a quantum meruit rested upon the defendant directors of DPL having authority to request him to provide legal services to DPL after 22 May 2006, that authority did not exist. It follows that his Honour was in error in finding that it did and that the requirement that there had been a valid request for the provision of legal services notwithstanding the decision of this Court in Hillig (No.1) had been established.

78 I note that after the primary judge delivered his decision in the matter under appeal on 1 March 2010, Palmer J on 25 May 2010 gave leave to Mr Cunliffe to amend the first cross-claim. Those amendments specifically plead a claim based on a quantum meruit. The fate of that amended cross-claim remains to be determined. It is inappropriate for this Court to make any comment with respect to it. However, for the reasons to which I have already referred, and given that the issue of a quantum meruit formed part of his Honour’s answer to Question 1.6(a), the answer his Honour gave to Question 1.6 should be varied so as not to shut Mr Cunliffe out of pursuing his amended cross-claim if he wishes to do so.

79 So far as the answer to Question 1.6(b) is concerned, the Land Council and DPL submitted that if the appeal was allowed the words “but claimed on a quantum meruit basis” should be deleted from that answer. However, in my view it is neither necessary nor appropriate for those words to be deleted given the subject matter of the question. There is a significant difference between Question 1.6(a) and Question 1.6(b). His Honour’s answer to the former stated that Norton White acquired an entitlement to recover reasonable remuneration on a quantum meruit basis. It established an entitlement that in my view the solicitors do not necessarily have. Question 1.6(b) involves a different issue and the words “but claimed on a quantum meruit basis” which the Land Council and DPL seek to have omitted, do not establish any entitlement to any such claim.

80 In the event that ultimately Mr Cunliffe establishes such an entitlement, it is appropriate that that part of the answer to Question 1.6(b) should remain. The retention of those words in no way prejudices the stance of the Land Council and DPL that Mr Cunliffe has no entitlement to a claim on a quantum meruit basis. It follows that it is unnecessary to vary the terms of his Honour’s answer to Question 1.6(b).

81 I would therefore propose the following orders:

(1) Leave to appeal granted;

(2) Appeal allowed.

(3) Vary the answer given by Austin J to Question 1.6(a) on 1 March 2010 by deleting the words “ but the firm acquired ” and substituting therefor the words “ but the termination does not by itself prevent the firm from establishing that it acquired ”.

(4) The second respondent to pay the costs of the appellant and the first respondent with respect to the appeal and the summons for leave to appeal but to have a certificate under the Suitors’ Fund Act 1951, if otherwise qualified.

82 MACFARLAN JA: I agree with Tobias JA, subject to the comments of Hodgson JA with which I also agree.

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