DW Fox Tucker Pty Ltd v Morgan - [2023] SASCA 11

Supreme Court of South Australia
(Court of Appeal: Civil)
DW FOX TUCKER PTY LTD v MORGAN
[2023] SASCA 11
Judgment of the Court of Appeal
(The Honourable President Livesey, the Honourable Justice Doyle and the Honourable Justice Bleby)
16 February 2023
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS - CONTRACT IMPLIED FROM CONDUCT OF PARTIES
CORPORATIONS - RECEIVERS, CONTROLLERS AND MANAGERS - DUTIES AND LIABILITIES - LIABILITIES - PERSONAL LIABILITY
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS - GENERAL OFFERS AND THEIR ACCEPTANCE
The appellant law firm appeals against a decision of a Master in which he held that the respondent was not a client of the appellant, and was not bound by the terms of the appellant's retainer letter.
The respondent was the sole director and shareholder of a company who engaged the appellant in relation to a dispute concerning a joint venture for the purchase and redevelopment of land at Happy Valley. The appellant provided legal advice and services, including in relation to a caveat lodged by the company over the land.
The appellant sought to recover unpaid legal fees from the respondent in his personal capacity, and initially obtained a default judgment in the sum of $193,392.78 in the District Court. The default judgment was subsequently set aside. The appellant applied to tax its costs before a Master in the Supreme Court and, during this taxation, the respondent sought a declaration pursuant to clause 30(8) of Schedule 3 of the Legal Practitioners Act 1981 (SA) (the Act) that there was no costs agreement between him and the appellant.
The Master held that there was no costs agreement between the appellant and the respondent because, on the terms of the retainer letter issued to the respondent, he was not a client of the appellant in his personal capacity.
The appellant appeals against the decision of the Master on the basis that, objectively construed, the retainer letter made clear that both the company and the respondent in his personal capacity were liable for the appellant's fees. The appellant further contended that it was of no consequence that the respondent did not sign and return the retainer letter, as his conduct was sufficient evidence of his assent to its terms.
By a notice of alternative contention, the respondent submitted that, even if he was personally a party to the retainer letter, he was entitled to a declaration that the costs agreement must be set aside pursuant to clause 30(1) of Schedule 3 of the Act. The Master did not deal with this issue at first instance.
Held, by the Court, allowing the appeal and remitting the matter to the Master for further consideration of the matters raised in the respondent’s notice of alternative contention:
1.A reasonable person having regard to the terms of the retainer letter and the context of the relationship would have appreciated that the terms of the retainer letter were intended to bind both the company, and the respondent in his…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] SASCA 11
Decision Date: 16 February 2023

CaseChat Overview and Summary

DW Fox Tucker Pty Ltd appealed a decision of the Master of the Supreme Court of South Australia concerning the existence of a costs agreement between the law firm and Mr Morgan. The dispute arose from legal proceedings initiated by the law firm on behalf of a company, Morgan Residential Developments Pty Ltd, in which Mr Morgan was involved. The law firm sought to recover legal fees and disbursements from Mr Morgan personally, alleging a retainer agreement. Mr Morgan contended that he was not a client of the law firm and therefore not personally liable for the legal costs.

The primary legal issue before the Master was whether a costs agreement existed between DW Fox Tucker Pty Ltd and Mr Morgan. This involved determining whether Mr Morgan was a client of the law firm, given that the retainer letter was addressed to him but he claimed not to have read it and never signed it. The Master also considered whether the conduct of the parties, including the invoicing practices, indicated the formation of a contractual relationship.

The Master found that no costs agreement existed because the retainer letter, when interpreted in light of Mr Morgan's evidence and the subsequent conduct of the parties, indicated that only the company, not Mr Morgan personally, was the client. The Master accepted Mr Morgan's evidence that he understood he was not a client and noted that the retainer letter was not signed by him. Furthermore, invoices were consistently addressed to the company, supporting the conclusion that Mr Morgan was not personally retained. The Master applied the contra proferentem rule to resolve any ambiguity in the retainer letter against the law firm, as the drafter.

The Full Court allowed the appeal, remitting the matter to the Master for further consideration of issues raised in Mr Morgan's notice of alternative contention. The Court did not make final orders regarding the existence of the costs agreement but directed the Master to re-examine specific matters.

Orders

Orders of the court

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Background

Background to the litigation

After considering a significant volume of affidavit evidence, some cross-examination of Mr Morgan, and legal argument, the Master held[1] that there was no costs agreement between the law firm and Mr Morgan because, on the terms of the retainer letter issued by the law firm, Mr Morgan was not a client of the law firm. The law firm challenges the Master’s decision.[1] Morgan v DW Fox Tucker Pty Ltd [2022] SASC 3.Background The company fell into dispute with Morgan Residential Developments Pty Ltd (Morgan Residential). Mr Morgan’s father was the sole director of Morgan Residential. The dispute concerned a joint venture involving the purchase and development of land at Happy Valley. The matter initially came before the Supreme Court on short notice. The company had lodged a caveat over the land. Morgan Residential had warned that caveat, and the law firm, on the instructions of Mr Morgan, issued proceedings on behalf of the company seeking to extend the time for the removal of the caveat. An order was made extending time for the removal of the caveat and the matter then proceeded as an ordinary civil dispute. It is not necessary to address the course of the dispute in any further detail, save to note that the law firm continued to represent the company in the dispute, and rendered accounts for legal fees and disbursements.The Master’s reasons The Master noted that there was extensive affidavit evidence from Mr Morgan, but no evidence from the two solicitors who met with him on 5 January 2016 when instructions to act were initially taken. The effect of Mr Morgan’s evidence, which was accepted by the Master, was that he had always understood that it was only the company and not he who had a retainer with the law firm. Soon after the first meeting, a letter of retainer dated 6 January 2016 was emailed to Mr Morgan. Mr Morgan’s evidence was, according to the Master’s reasons, that he did not ever open the retainer letter and, despite provision for it to be signed by him, he did not ever sign and return the retainer letter. The Master analysed the terms of the retainer letter, ultimately concluding that its terms were consistent with the proposition that only the company, and not Mr Morgan, was a client of the law firm. It will be necessary to return to the terms of the retainer letter. The Master further held that there was “at least ambiguity about the position” and, in those circumstances, his Honour applied the contra proferentem rule so as to read the retainer letter against the interests of the law firm which had drafted the letter, and in the manner suggested by Mr Morgan. The Master went on to note that there was no evidence that Mr Morgan had ever been sent an invoice in his personal capacity. All of the invoices had been addressed to the company.[2] The Master found that this indicated that only the company was the client of the law firm.[2] Albeit to a Post Office Box that belonged to Mr Morgan. Finally, the Master observed that the District Court proceedings issued against Mr Morgan by the law firm appeared to have been issued in breach of clause 31 of Schedule 3 of the Act, because a law practice is prohibited from commencing legal proceedings to recover legal costs from a person until at least 30 days after the law practice has provided that person with a bill in accordance with clauses 32 and 33 of Schedule 3. The Master did not suggest that this finding was relevant to the issue he was required to decide. He regarded it as a matter for the District Court because sub-clause 31(3) required any court, before which any proceedings are brought in contravention of sub-clause 33(1), to stay those proceedings, whether on the application of a party, or on its own initiative. The contentions of the law firm and Mr Morgan

Evidence

Evidence Before The Court

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Decision

Reasons for decision

In these circumstances, the appropriate course is to remit the matter to the Master for further consideration of these issues.Conclusion For the reasons given, we allow the appeal and remit the matter to the Master for further consideration of the matters set out in the respondent’s notice of alternative contention.

Ratio Decidendi

Legal Principle Established

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