Elmomax Pty Ltd v Russell Kennedy
[2009] VSC 615
•23 December 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 4362 of 2006
| ELMOMAX PTY LTD | Plaintiff |
| v | |
| RUSSELL KENNEDY (A FIRM) | Defendant |
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JUDGE: | HANSEN J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 5 and 6 May 2009 | |
DATE OF JUDGMENT: | 23 December 2009 | |
CASE MAY BE CITED AS: | Elmomax Pty Ltd v Russell Kennedy | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 615 | |
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CONTRACT – Solicitor retaining expert for litigation – Personal liability.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P H Solomon | Christopher Bunnett |
| For the Defendant | Mr J L Evans | Monahan + Rowell |
HIS HONOUR:
Introduction
The question in this case is whether the defendant firm of solicitors, or the client for whom they acted in litigation, is liable to pay the fees and disbursements of a person retained by the solicitors to provide services as an expert witness in that litigation. The solicitors deny liability on the basis that in dealing with the plaintiff they disclosed that they acted as agent for their client, and, in consequence, that the agreement for the provision of expert assistance was between the plaintiff and the client. The client is not a party to the proceeding.
The firm of solicitors is Russell Kennedy and it is the sole defendant.
The defendant acted for Newtronics Pty Ltd (“Newtronics”) in a proceeding brought against it by Seeley International Pty Ltd (“Seeley”) in the South Australian registry of the Federal Court of Australia in 1998. Robert Anthony Ewing, a partner in the defendant, had the principal conduct of the proceeding for Newtronics.
Newtronics was a subsidiary of Atco Controls Pty Ltd (“Atco”).
Seeley manufactured and supplied roof mounted domestic evaporative coolers. The coolers incorporated an electronic control designed and supplied by Newtronics. A function of the control was to control the operation of the electric motor fitted to the cooler. In early 1995 fire occurred in Seeley coolers installed in three houses, causing damage to the houses and leading Seeley to recall coolers which incorporated the Newtronics control.
In the proceeding Seeley claimed that the Newtronics control was defective and caused the fires, and sought damages. In its defence, Newtronics denied liability including that the control was the cause of the fires, and made various allegations concerning the design and manufacture of the Seeley cooler. The case was contested on liability and quantum, and there were issues of a technical nature which required the engagement of experts, in particular as to the cause of the fires. The defendant engaged Dr G Holmes who had expertise in the manufacture and operation of electric motors and remote control procedures which activate such motors. The defendant also engaged Mr D Lockwood as an expert witness on quantum. On further consideration the defendant determined, in consultation with Newtronics, upon the engagement of a further expert in relation to the occurrence of fires in electrical appliances including motors and the cause of such fires. In August 1999 Peter John Collins was engaged as such an expert.
Thereafter, in the course of the litigation, including at the trial at which he gave evidence, Collins’ advice and assistance was sought and given through his company, Elmomax Pty Ltd (“Elmomax”) (formerly, and throughout the time when Mr Collins provided such services, called Power-Lec Engineering Pty Ltd (“Power-Lec”)) which is the plaintiff in the present proceeding. The claim is for $203,583.70 as fees and expenses owing after allowing for payment of the plaintiff’s first invoice for $6,129.
Following a trial in 2000 and 2001, judgment in the proceeding was given for Seeley on 21 December 2001. Newtronics was ordered to pay Seeley $8,901,726.02 plus interest and costs. On 8 January 2001 Atco appointed receivers and managers to Newtronics. On 26 February 2002 Newtronics was ordered to be wound up in insolvency on Seeley’s application. Atco is now also in liquidation.
Pleadings and issues
Statement of claim
The statement of claim pleaded the case in the following way.
First, in or about the first week of August 1999 the plaintiff and the defendant entered into an agreement for the provision by the plaintiff to the defendant, in return for payment, of consulting services as requested from time to time, in relation to the litigation. This was called the “Overriding Retainer”. In particulars it was stated that the Overriding Retainer was partly oral and partly to be implied. Insofar as it was oral it was made in a discussion between Mr Collins and Mr Ewing in the first week of August 1999 and prior to 6 August. Insofar as it was implied it was to be implied by operation of law and to give business efficacy to the arrangement.
There were terms of the Overriding Retainer that:
(a)the plaintiff would calculate and charge its fees at its usual rates;
(b)the plaintiff would charge the defendant, and the defendant would pay, disbursements incurred by individuals who assisted the plaintiff to fulfil the terms of the Overriding Retainer;
(c)the defendant would pay the plaintiff’s invoices within a reasonable time.
In particulars it was stated that the terms were implied to give business efficacy to the agreement having regard to the ongoing nature of the consulting services to be provided, and the knowledge of the defendant, as a partnership including experienced litigators, that disbursements would be incurred. It was further stated that terms (a) and (c) were implied by operation of law.
It was alleged that pursuant to the Overriding Retainer, on fifty identified occasions between August 1999 and January 2001 the defendant requested the plaintiff, in connection with the Seeley litigation, to provide services, which the plaintiff duly did.
The fees and disbursements for the provision of the requested services totalled $209,712.70[1] of which the defendant had paid $6,129 leaving $203,583.70 outstanding. That amount was claimed as a debt payable by the defendant; in the alternative the plaintiff sought damages for breach of the Overriding Retainer constituted by the failure to pay the amount due.
[1]This was the total of 17 invoices; see below.
Secondly, and in the alternative, the plaintiff claimed the sum due on a quantum meruit as being a reasonable sum for the services provided.
Defence
The defence contained the following admissions and allegations.
Denying the alleged Overriding Retainer and terms, the defence alleged that:
(a)the defendant sent the plaintiff a letter dated 6 August 1999 seeking on behalf of its client, Newtronics, to retain the plaintiff’s services in relation to the conduct of the Seeley litigation, to which Newtronics was a party;
(b)after 6 August the plaintiff provided services for the benefit of Newtronics in relation to the litigation;
(c)at all times in its dealings with the plaintiff, the defendant disclosed it was acting as the agent of Newtronics, and not on its own behalf; and
(d)any agreement for the provision of the plaintiff’s services was between the plaintiff and Newtronics.
It admitted that the plaintiff provided services at the defendant’s request between August 1999 and January 2001, alleged that in requesting such services the defendant disclosed it was acting as agent for Newtronics, and not on its own behalf, and otherwise denied the plaintiff’s allegations as to the provision of services. This denial had the effect of forcing the plaintiff to much unnecessary expense in preparing its case.
It alleged that the payment of $6,129 was made on behalf of and at the instruction of Newtronics, admitted the plaintiff provided invoices for $203,583.70 which it had not paid, and alleged that the defendant did not owe any amount to the plaintiff.
Finally, in relation to the quantum meruit case, it alleged that any benefit from the plaintiff’s services was received by Newtronics and not itself.
Admissions during the trial
The defendant made the following admissions concerning quantum:
(a)In the course of the plaintiff’s opening, the disbursements charged in the plaintiff’s invoices were not in issue.
(b)When Russell Frederick Lee was about to give evidence, counsel for the defendant stated that the defendant sought the advantage of the invoicing errors referred to at [27(a)] below. Overall, the amount in the defendant’s favour would have been in the order of $1,000 to $2,000. However, Mr Collins, who had already given evidence, had not been cross-examined on these matters, and Mr Lee was not cross-examined at all. Then, when he gave evidence, Mr Ewing deleted from his witness statement the statement that the defendant did not dispute the number of hours Mr Collins worked. That deletion was for the purpose of taking advantage of the “errors” identified by Mr Lee. Otherwise, Mr Ewing said, the defendant did not dispute the hours worked. It is to be noted that the defence was not amended to allege the specific (or any) over-charging, counsel for the defendant never specified what the dollar amount of the deduction should be, and he did not thereafter mention the matter. That was not surprising. The point was trifling in the overall context.
(c)In his final address counsel for the defendant made no challenge to the quantum of the claim. The attack was confined to liability.
Evidence
Four witnesses gave evidence, Mr Collins and Mr Lee for the plaintiff, and Mr Ewing and Russell Alan Kenery for the defendant.
Messrs Collins, Ewing and Kenery each provided a witness statement which in the case of Ewing was supplemented by some additional evidence in chief. Each was cross-examined.
Lee provided an Order 44 statement of expert evidence to which was attached a report as to the reasonableness of Mr Collins’ hours and charges. He was not cross-examined. Again it is seen that the plaintiff was put to unnecessary expense in preparing and presenting its case.
There was a four volume court book in the order of 1860 pages, much of it concerned with establishing the work performed by Mr Collins, and unnecessary as it transpired.
In addition there was one documentary exhibit being an attendance schedule prepared by Mr Collins.
Mr Collins’ witness statement dealt with his discussions with the defendant in early August 1999, attached a 79 page schedule (cross-referenced to the court book) of the work performed by him at the defendant’s request, and referred to the payment of the invoice for $6,129 and the outstanding invoices. Mr Collins was an honest witness who gave evidence to his best recollection. I accept his evidence.
Mr Lee, who is an electrical and mechanical engineer, had prepared a report, at the request of the plaintiff’s solicitors in which he set out his expert opinion as to the reasonable value of the services rendered by the plaintiff. For this purpose he was provided with the pleadings, the court book and the schedule prepared by Mr Collins. A section of his report entitled “The Engagement of Mr Collins” was not admitted. In the balance of the report Lee expressed the following findings and opinions, in summary:
(a)Under the heading “Time Changes” he referred to two invoices where insufficient mileage had been claimed; one invoice where Mr Collins had rounded down his hours; one invoice where the hours were over-stated and the distance travelled under-stated; one invoice where the hours were over-stated; and one invoice where he could not see the listings for parking. Overall these errors were minor; see at [20(b)] above.
(b)The hours expended by Mr Collins appeared fair and reasonable.
(c)The hourly rate charged appeared low.
(d)There was no evidence of excessive work.
(e)The amount claimed was fair and reasonable and by industry standards less than could reasonably have been charged by an engineer of Mr Collins’ professional competence and standing.
In his witness statement Mr Ewing outlined the nature of the Seeley proceeding, and dealt with the retainer of the plaintiff and Mr Collins’ involvement in the case. Mr Ewing was an experienced litigation solicitor. He had been very much assisted by Mr Collins in the conduct of the Seeley litigation and save for observations as to his performance as a witness, in correspondence to his client and in evidence expressed appreciation of Mr Collins’ efforts and contribution. I found Mr Ewing an honest witness although at times defensive doubtless due to being placed in the position of giving evidence in defence of the claim when he, as I find, would have preferred it be paid, if only as a matter of honourable professional conduct. At times I considered that his demeanour and answers reflected discomfort. I considered also, observing him carefully, that he was embarrassed in the position in which he was placed. He had engaged Mr Collins without being specific as to whether his firm or the client would be paying his fees and disbursements, and in the light of the fact that with the single exception of the plaintiff, all persons engaged were paid by the defendant, from funds provided by Newtronics or Atco. I find that Mr Ewing never intended that the plaintiff, or any other person engaged by the defendant, be left high and dry in that way.
Mr Kenery became a director of Atco in or around 1998 and a director of Newtronics in or around 1999. He left the group in April 2003. In his evidence, which was relatively brief, he referred to Mr Collins’ engagement and also to matters concerning payment of the plaintiff’s invoices.
Facts
The story commences with the decision to engage a further expert and the selection of Mr Collins in August 1999.
Generally in relation to the engagement of expert witnesses, Mr Kenery deposed that the selection of experts was a collaborative process between Newtronics and the defendant. After receiving advice from Mr Ewing, Newtronics would provide instructions to retain the expert and Ewing would do so. I interpolate that the terms on which Ewing retained the plaintiff in this case is the question for me to determine on an objective consideration of the facts. Mr Kenery further deposed that the defendant would issue accounts to Newtronics which included the disbursements of third parties retained on Newtronics’ behalf and incurred in relation to the proceeding. On being apprised of the work done and that the charge was at the agreed rate, Newtronics paid the invoice.
Having identified the need for a further expert, Mr Ewing ascertained three possibilities, one being Mr Collins, and he passed the names to Mr Kenery, David Bruce and Peter Krincevski at Atco on 3 August 1999. They having no objections, Mr Kenery requested Mr Ewing to speak to those persons and consider their CVs.
On 4 August Mr Ewing telephoned Mr Collins to discuss the proceeding and his experience as an expert witness. I refer below to their respective accounts of the conversation. For the moment I note the following: later on 4 August Mr Ewing wrote to Mr Kenery recommending Mr Collins be retained, which recommendation was accepted. On 6 August Mr Collins provided his CV to Mr Ewing, and later that day Mr Ewing wrote to Mr Collins retaining him as an expert witness.
I now refer to the evidence concerning these matters.
In his witness statement Mr Collins deposed to the 4 August conversation in these terms:
“5. In or around the first week of August 1999 and before 6 August 1999 I received a telephone call from Robert Ewing in relation to Federal Court litigation involving Seeley International Pty Ltd and Newtronics Pty Ltd (the Seeley litigation). Mr Ewing introduced himself and said that he was involved in a matter regarding evaporative coolers catching fire. He also said that he was looking for somebody with experience in motors and fires. I said to Mr Ewing that I had been involved in similar matters previously. At one point during the conversation I remember saying to Mr Ewing that I had also previously prepared a report for Peter Krincevski of Newtronics, regarding electric bed fires. The substance of the next portion of the conversation related to the question of Mr Ewing’s need to retain my services in light of Dr Graham Holmes’ involvement in the Seeley matter. Mr Ewing said to me words to the effect that I appeared to be suitable to the task of providing the expert opinion required for the Seeley litigation. Before the termination of the conversation Mr Ewing asked that I forward to him my CV.”
He then deposed to sending his CV by facsimile and to receiving Mr Ewing’s 6 August letter.
In cross-examination Mr Collins was referred to paragraphs 12 and 13 of Mr Ewing’s witness statement (see below) and agreed that Mr Ewing advised that he was a solicitor and acted for Newtronics in the Seeley proceeding. Mr Collins could not recall if they discussed his rates. The substance of the conversation, as he recalled it, was contained in para 5 of his (Collins’) witness statement.
In his witness statement Mr Ewing gave the following account of the 4 August conversation:
“12. On 4 August 1999 I telephoned Peter Collins to discuss the Seeley proceedings and his experience as an expert witness. I recall explaining to Mr Collins that I was a solicitor and that Russell Kennedy acted on behalf of Newtronics in relation to the Seeley proceedings. I recall discussing generally with Collins his experience, his knowledge (which he offered to me) of other fires relating to Seeley made appliances and his availability to act as an expert in relation to the case. I made a handwritten note of our conversation which is dated 4 August (CB1848). That note reads:
Newtronics/Seeley
4/8
Perusing letter from Kenery
P/o Peter Collins – 9521 0848
25 mins – he will send CV
- knows of other
Seeley fires – e.g. Mildura
+with hardwired
controller
He suspects Seeley
didn’t manage the
project & ensure the
control & motor were
compatible.
Fax to client. He acting for N/tronicsre U.S. bed failures
13. The note indicates that Collins was to send his CV to me and that he told me he was acting for Newtronics in relation to another case which I noted as ‘U.S. bed failure’. I do not recall discussing the rate that Collins would charge Newtronics for his work. I do not believe he mentioned any rate. Based on my practice as a solicitor, I believe that if he had mentioned any rate, I would have both written it down, and included it in my subsequent letter to Newtronics regarding Mr Collins. Other than as set out above and contained in the note, I do not recall what was said in my conversation with Collins.”
Mr Ewing deposed further that:
“17. Mr Collins did not seek any assurance from me, that Russell Kennedy would be responsible for the payment of his fees for the work performed by him in relation to the Seeley proceedings, either in August 1999, or at any time before November 2002.”
In cross-examination Mr Ewing said that he could recall that the 4 August discussion happened, but not the language used or things said. He had to rely on his note for its contents. Later in cross-examination Mr Ewing agreed that he did not use the terminology of agency, that his best recollection was that he said the defendant was acting for or on behalf of Newtronics and that the question of payment was not raised.
In his 4 August letter sent to Mr Kenery following this conversation, Mr Ewing said that he had spoken to Mr Collins who seemed “well qualified to give advice”, and he would send his CV when received.
On 6 August Mr Collins provided his CV to Mr Ewing. Later that day Mr Ewing wrote to Mr Collins, care of the plaintiff, retaining him as an expert witness. The letter stated:
“We refer to your telephone conversation with the writer earlier this week in relation to our client, Newtronics Pty Ltd in relation to litigation where Seeley International Pty Ltd is pursuing our client for substantial damages.
We are instructed to retain you as an expert witness in this case and ask that you direct your invoices to this firm for payment in order to preserve legal professional privilege.
Our instructions to retain you as an expert witness have only recently been received and have arisen from certain comments made by Dr Grahame Holmes, a power engineering expert who we retained on behalf of our client to advise on certain technical aspects of the Applicant’s case, and of our client’s design and manufacturing work which Seeley criticises in its Statement of Claim.
We enclose:-
1 Applicant’s Substituted Statement of Claim.
2 Newtronics’ Defence.
3 Set of experts reports relied upon by Seeley on the technical side of its claim (ie. on matters relevant to liability rather than damages).
4 The report of Dr Grahame Holmes – together with copies of the documentation to which Dr Holmes refers in his report.
We wish to be in a position, if at all possible, to receive your report in a form in which it can be filed with the Federal Court, and served upon Seeley’s solicitors, on or very shortly after the 20th August.
The matters to which we ask you to address your comments are these:-
1 The relevance of AS 3115 to Seeley’s fan motor and the environs manufactured by Seeley in which the fan motor is installed.
2 Identification of any other Standards applicable to a motor such as that used by Seeley in the cooling system installation.
3 The adequacy of the thermal protectors to which Dr Holmes refers in his enclosed report.
4 The correct location of thermal protectors – and any criticism you might have of the placement of the thermal protectors as described by Dr Holmes, and by the experts upon which Seeley rely.
5 The flammability of materials used in Seeley’s motor.
6 The question of whether transients from the motor could cause our client’s electronics (ie. the RF remote controller and the receiver) to fail.
7 The general industry perception, as well as your own of course, of the design and construction standard of the motor used by Seeley in the subject fires.
8. Any material differences in quality or design between the motor used by Seeley on the one hand, and that used by Bonaire on the other.
9 Your awareness of any other house fires involving Seeley motor products (ie. whether involving Newtronics’ control devices of an RF type - or hard wired.
We look forward to hearing from you and thank you for your interest in this matter. If you would be assisted by speaking directly with our client, then we can of course arrange a conference or alternatively you may wish to telephone Peter Krincevski, the Research and Development Manager of Newtronics Pty Ltd – 9338 5088.
We look forward to hearing from you.”
In cross-examination Mr Collins deposed that he understood there was an ongoing retainer from this time. He further deposed that he never discussed this letter with the defendant. Nor did he discuss with the defendant whether Newtronics or the defendant was responsible for paying for his work.
In cross-examination Mr Ewing was questioned about the reference in the 6 August letter to preserving legal professional privilege, and to the like reference in correspondence to another expert witness. He believed that the privilege ensured that documents that passed through the lawyers were not discoverable whereas those that went directly to the client may be discoverable. He did not consider privilege was at risk if there was a contractual relationship between an expert witness and the client in the litigation. As to the request in his letter that invoices be directed to the defendant, Mr Ewing deposed that he wanted documentation relevant to billing to pass through his hands. He agreed that the letter was otherwise silent on how payment would occur.
On 9 August Mr Ewing wrote to Mr Kenery at Atco advising that he had briefed Mr Collins with documents (being those referred to in his 6 August letter) and asked for a report by 20 August. It may be noted that Mr Ewing enclosed an account for his fees, but “more particularly, for the out of pocket expenses which this firm has incurred in briefing barristers and retaining Grahame Holmes. In order to preserve legal professional privilege, it is necessary for Grahame’s invoices to be directed to me”. Mr Ewing deposed in cross-examination that his use of the expression “has incurred” was infelicitous. At another point in his evidence Mr Ewing stated as a reason for having the client pay cheques for disbursements to the defendant was so that he could keep track of costs. The costs were enormous, Newtronics’ costs alone for the case being some $6M.
On 12 August Mr Ewing wrote to counsel advising, among other things, that he had “retained” Mr Collins as the “motor expert”. Mr Ewing deposed in cross-examination that he meant retained “as agent” for Newtronics.
On 13 August Peter Krincevski of Newtronics wrote to Mr Ewing advising that he had “tried calling you without success regarding the retaining of Peter Collins from Power-Lec Engineering as our motor expert”, and requesting to know “the correct course of action … to initiate this”. It is apparent that this letter overlooked, or Krincevski was unaware of, Ewing’s letters to Kenery of 6 and 12 August. In any event, Newtronics did not separately engage the plaintiff.
Mr Collins duly commenced work as requested very soon after being engaged. Thereafter and throughout the interlocutory stages Mr Ewing requested him to perform a variety of tasks often in aid of interlocutory applications and otherwise for the purpose of the case. He also gave evidence at the trial. In view of the defendant’s admissions it is not necessary to set out the work that he did, but it was extensive, and many documents in the Court Book pertain to it, and the schedule attached to Mr Collins’ witness statement outlines it. His assistance was essential to Mr Ewing’s ability to conduct the case.
The plaintiff’s first invoice dated 4 October 1999 was for $6,129[2] for services rendered in August. On 20 October 1999 Mr Ewing wrote to Newtronics enclosing a “disbursement account” representing invoices of Lockwood and Collins and enclosing copies of their invoices[3]. The defendant’s “disbursement account”[4] was dated 15 October 1999, and stated:
[2]Court Book 1845.
[3]Court Book 1837.
[4]Court Book 1859.
“Seeley House Fires
Items
Facsimile charges
$712.00
Photocopying
$202.50
Taxi charges
$44.30
Right Connections Travel – Travel to Adelaide for Philip Marzella
$734.00
Power-Lec Engineering Pty Ltd Account (copy attached)
$6,129.00
Sims Lockwood Account (copy attached)
$19,273.41
$27,095.21
With compliments
RUSSELL KENNEDY
E & O E
Our terms are seven days from the date of our account. If our account remains outstanding after 30 days interest will be charged at the rate prescribed by the Supreme Court Act.
Unless the client requests retention, our file for each matter is normally destroyed after seven years.”
In cross-examination Mr Ewing deposed that the note as to payment of interest at the foot of the account was “a proforma endorsement and applies to profit costs”. He said that it was an error to appear on that account. I interpolate nevertheless that the like notation appeared on other disbursement accounts; if there was an error it was general, and Ewing said that the practice continues. I would add that the practice may be understandable as a safeguard lest the defendant determines in a particular case that interest ought be paid, as it might where it has paid the disbursement.
The plaintiff’s account not having been paid, on 16 December Mr 1999 Ewing wrote to Mr Kenery at Atco requesting payment (and also of Lockwood’s account) as soon as possible. In the letter Mr Ewing acknowledged the assistance provided by Mr Lockwood and Mr Collins.
On 22 December 1999, at the request of Atco, Mr Ewing sent Atco copies of the Collins and Lockwood invoices and the defendant’s disbursement account. The accounts still not being paid, on 6 January 2000 Mr Ewing wrote to Mr Kenery stressing the technical nature of the case, suggesting a conference with the experts but first requesting payment of the Collins and Lockwood accounts[5]. On 18 January 2000 the defendant received from Newtronics a cheque for $27,095.21 in payment of its disbursement account. From the proceeds the defendant drew and under cover of a letter dated 19 January 2000 forwarded to the plaintiff a cheque for $6,129 in payment of its outstanding account[6].
[5]Court Book 1852.
[6]Court Book 362.
Counsel for the plaintiff drew attention to a letter Mr Ewing sent to Mr Kenery, dated 20 April 2000, in which he referred to the defendant’s credit committee having raised the fact of several overdue invoices, including “fees which this firm is liable to pay and has paid to its Agents (Minter Ellison Adelaide), to its Counsel (Barristers) and to expert witnesses”. In relation to the reference to “expert witnesses” Mr Ewing was asked whether his position was that different experts were on different types of retainer. He said that he had a recollection that Dr Holmes may have had a requirement that the defendant accepted responsibility. That was “only a recollection”. The next step in the cross-examination was to call for production of Dr Holmes’ letter of engagement to compare his engagement to that of the plaintiff to establish that Mr Ewing’s engagement of experts followed a pattern that was identical or substantially similar and that Mr Ewing knew he was engaging as a principal. Counsel stated that he did not rely on the written letter of engagement (of 6 August) but on the oral discussion. Over, but subject to, objection I permitted the Holmes’ letter to be produced. It stated that in order to maintain legal professional privilege it was important “that your retainer as an expert witness, be effected via this office so that your reports are delivered directly to us in the first instance – we of course being responsible for payment of your fees”.
Mr Ewing was questioned as to whether the doctrine of legal professional privilege required that the defendant, not as an agent, enter into a contract with expert witnesses. He gave the following evidence:
“I put to you that the doctrine of legal professional privilege, as you understood it, required that Russell Kennedy enter into contractual arrangements with witnesses not simply as an agent? — — — Well it – it required it in order to safeguard the concept of legal professional privilege in the passage of documentation between the expert and me. And that if it passed via the client then that privilege would be lost.
Did you not see the issue of privilege as being connected with the manner in which the expert witness was engaged? — — — The – the question of privilege was best safeguarded by me dealing directly with the witness and retaining the witness on behalf of my client.”
Although Mr Collins provided on-going services, he did not send another invoice until December 2000 when he sent nine invoices dated 27 December 2000, one for each month from October 1999 to June 2000 inclusive. He then sent six invoices dated 2 January 2001, one for each month from July to December 2000 inclusive. Finally, he sent an invoice dated 30 April 2001 for services provided in January 2001.
Mr Collins deposed that he recalled no discussions with Mr Ewing in relation to these invoices or the outstanding amount during the course of the retainer.
As mentioned earlier, the trial commenced in 2000 and concluded at about the end of February 2001. In January 2001 Collins gave evidence as an expert, but he did not do well, as apparently was evident, and is indicated in the two extracts from the judgment to which Mr Ewing referred in his witness statement.
On 15 March 2001, while the parties were preparing final written submissions, Mr Ewing wrote to Atco and Newtronics enclosing the plaintiff’s December and January invoices and seeking payment. In the letter he commented on Mr Collins’ contribution generally and as a witness, in which latter respect some critical observations were made. It was said that he performed “very badly” as a witness. Nevertheless the letter concluded with an invitation to discuss the bill, and requested payment so that he (Mr Ewing) could on-forward it to Mr Collins. Mr Ewing said in evidence that there was consternation about the size of the bill and the other matters mentioned in the letter, but he had no particular recollection of Atco or Newtronics discussing the bill. The bill was not paid.
On 14 May 2001 Mr Ewing wrote to Atco and Newtronics, stating among other things, that he had received a further account from Mr Collins for work performed in 2001, that the work was performed and that he awaited instructions in relation to the account and its “more substantial predecessor”. In the meantime he was forwarding accounts for the defendant’s professional fees and disbursements including counsel and experts.
On 20 June 2001 the defendant sent a tax invoice to Newtronics for all of the plaintiff’s outstanding invoices (copies of which were enclosed), totalling $203,583.70. The invoice was endorsed with the same note concerning liability for interest referred to at [47] above.
Mr Ewing deposed that he did not chase Newtronics for payment of the plaintiff’s invoices. Indeed, on 4 July 2001 the defendant sent Newtronics an invoice for disbursements which, while including Mr Lockwood’s firm and counsel, did not include the plaintiff. Further, on 7 November 2001 Mr Ewing sent a facsimile to Atco enclosing a copy of the defendant’s 4 July 2001 invoice which was to be paid that day, referring to “a second outstanding invoice for the fees of an expert witness, Peter Collins” and stated that he would “send a copy of that invoice shortly”. In cross-examination Mr Ewing said that he could not remember why he did not also request payment of the Collins invoice at the same time.
On 20 December 2001 Atco paid to the defendant’s bank account the amount of the plaintiff’s unpaid invoices, $203,583.70, which was placed in, and has since remained in, the defendant’s trust account. Mr Ewing said that he was not involved in that “process”. He said that another partner, Ian Bult, was involved and that he (Mr Bult) advised him of the payment.
Mr Kenery, who at the time was managing director of Atco, deposed that he authorised the payment. He gave evidence after Mr Ewing, and in the course of cross-examination stated that he had discussed making the payment with Mr Ewing. There was concern about the amount, why invoices had not been raised during the proceeding, and there was disappointment about Mr Collins’ performance as a witness in the trial. He knew that most of Mr Collins’ work was performed prior to the trial. Mr Kenery deposed that he arranged with Mr Ewing to put him in funds and instructed Mr Ewing to negotiate a compromise with Mr Collins, subject to Atco’s approval or “veto”. He did not intend that Mr Collins simply not be paid. After paying the money to the defendant he did not check progress.
As mentioned earlier, judgment was given on 21 December 2001 and subsequently Newtronics and Atco went into liquidation.
On 1 July 2002 the defendant (by Mr Bult) wrote to Atco in relation to outstanding fees. In summary, the defendant had billed for their professional fees and disbursements and remaining counsel’s fees and had agreed to accept a reduced sum of $100,000 from Atco in full satisfaction (which included a reduction in senior counsel’s fees) on the basis of immediate payment. The letter went on in relation to the plaintiff’s account as follows:
“I also confirm we are continuing to hold the $203,583.70 which Atco paid to us in relation to the account for the same amount from Power-Lec Engineering Pty Ltd (Peter Collins). As you have previously mentioned, Atco paid this amount to us so that we could settle or compromise any liability Russell Kennedy may have in respect of the account. I confirm that we will continue to hold the moneys on that basis and will keep you fully informed if and when Collins, or his solicitors, make any approach to us.”
With the payment of $100,000 made pursuant to this agreement, all of the defendant’s fees and disbursements and all fees and expenses of third parties including experts were paid. That was with the one exception of the plaintiff’s invoices which remained unpaid. Mr Ewing deposed that he did not know why the plaintiff had not been paid. He said that Mr Bult had taken over handling the costs issues, and that he (Mr Ewing) was not involved in the “process” concerning payment of the plaintiff’s account. But later Mr Ewing deposed that he was advised by Mr Bult that “the client didn’t wish to pay him … and said that it wouldn’t”.
The plaintiff did not press for payment until 28 November 2002 when its solicitor wrote to the defendant demanding payment of the outstanding invoices in seven days, and advising that he was instructed to issue proceedings. The defendant responded by letter on 3 December stating that: “This firm has never, at any time, accepted any responsibility or liability for payment of your client’s fees”. It was stated that the plaintiff provided services to Newtronics. Although Mr Ewing’s name is on the letter as the contact reference, the letter was written by Mr Bult. Mr Ewing deposed that he would have given Mr Bult the letter of demand but he had no specific recollection of any communication with him. He could only say that he would have had a conversation.
There was no further correspondence prior to January 2006 when the plaintiff commenced the present proceeding.
As a matter of completeness it remains to mention that earlier this year Atco commenced a proceeding against the defendant to recover the amount of $203,583.70. In that proceeding the defendant has filed a defence which denies liability to repay the sum.
Final address
It is convenient to note how counsel put the case in final address.
Plaintiff
Counsel for the plaintiff submitted that there were three possible situations:
(a)First, that the plaintiff provided services pursuant to a contract between itself and the defendant under which the defendant was liable to pay for such services. On this basis, the plaintiff sought the sum claimed as a debt due and payable by the defendant.
(b)Secondly, that the plaintiff provided services pursuant to a contract between itself and Newtronics in relation to which the defendant was agent for a disclosed principal. In that case, Newtronics not being a defendant, the claim failed.
(c)Thirdly, in the alternative to (a) and on the assumption that there was not an Overriding Retainer with Newtronics, if it be concluded that the plaintiff’s initial engagement was narrow in scope in that either in the telephone call on 4 August or by the letter of 6 August the plaintiff was engaged “only for a narrow performance of a task, and that task was performed and paid for, and the remainder of the services accordingly were not performed pursuant to an Overriding Contract”, recovery was sought on the basis of restitution founded on principles of unjust enrichment. That is to say, restitution was sought in relation to the services provided subsequent to the services covered by the invoice for $6,129. In support, counsel referred to Pavey and Matthews Pty Ltd v Paul[7]; Brenner v First Artists’ Management Pty Ltd[8]; Angelopoulos v Sabatino[9]; Andrew Shelton & Co Pty Ltd v Alpha Healthcare Ltd[10]; Alma Hill Constructions Pty Ltd v Onal[11].
[7](1987) 162 CLR 221, 256 per Deane J.
[8][1993] 2 VR 221, 257-258 per Byrne J.
[9](1995) 65 SASR 1.
[10](2002) 5 VR 577.
[11](2007) 16 VR 190.
With this outline counsel developed his submissions as follows.
Dealing first with the issue of contract, he referred to Leo Dimos v Hanos[12] which concerned a question, raised as a question of law on appeal from the Magistrates’ Court, whether a solicitor who had retained a barrister to appear on behalf of three different persons on different occasions was contractually liable for the barrister’s fees. The solicitor’s case was that the firm had engaged the barrister as agent for and on behalf of the client, and that the contract was between the client and the barrister. Hence, the fundamental issue was, who were the contracting parties when the barrister was retained? In his judgment upholding the finding that the solicitor was so liable, Gillard J referred to authorities that indicated the correct approach to the determination of the issue.
[12][2001] VSC 173.
In dealing with the question Gillard J had to consider legislative and historical matters pertaining in Victoria to the liability of a solicitor and client for a barrister’s fees which are not relevant to the present case.
Counsel submitted, correctly, that it is not the law that prima facie solicitors contract as agent for their client[13]. As Gillard J observed, each case depends upon its own circumstances. Hence:
[13]At [78].
“[81]A legal practitioner who is a solicitor, who proposes to retain the services of a barrister, may negotiate what terms he thinks appropriate and may negotiate an agreement between the barrister and the client. He may even go further, by becoming a party to a tripartite agreement and exonerating himself from all liability for the barrister's fees.
[82]He is free to negotiate what he likes.
…
[88]But having said that, it is open to the solicitor to negotiate a contract which is solely between the barrister and the client. Also, the solicitor may be a party to an agreement and exonerate himself from any liability to pay the fees. In the end, it is a matter for negotiation.
[89]Whether a contract has come into being, whether the parties intend to make a concluded and binding contract, the terms and who the contracting parties are, are all questions of fact to be determined on an objective basis.”
While these passages dealt with, and refer to a case involving, a solicitor retaining a barrister, the propositions are applicable to the present case in describing the freedom of a solicitor, or any party, to contract as he or they may consider appropriate in the circumstances.
Gillard J then observed that where the retainer is in writing, the capacity in which a person entered into the contract is mainly a question of construction of the contract[14] and he referred to the well known case of Universal Steam Navigation Co Ltd v James McElvie & Co[15] where the House of Lords held that the defendant was not liable on a contract they had signed “For and on behalf of James McElvie and Co (as agents) – J A McElvie”, that manner of signing indicating they did not sign as principal. What, however, of the situation where a person signs a contract without such words of qualification? As to that, Gillard J referred to the statement of Lord Parmoor in Universal Steam (at 505) that:
“Different considerations arise when a person signs a contract without qualification, and the question is raised whether he is to be deemed as contracting personally, or as agent only. In such a case the intention of the parties is to be discovered from the contract itself, and the rule laid down in Smith's Leading Cases has been adopted as the rule to be followed. ‘That where a person signs a contract in his own name, without qualification, he is prima facie to be deemed to be a person contracting personally, and in order to prevent this liability from attaching, it must be apparent from the other portions of the document that he did not intend to bind himself as principal.”
At the same time, as Gillard J noted at [98], a person purporting to sign as agent may nevertheless agree expressly to undertake some form of personal liability.
[14]At [93].
[15][1923] AC 492.
I would at this point interpolate, because it is convenient to do so, a reference to the following passage in the judgment of Williams J in J S Robertson (Aust) Pty Ltd v Martin[16]:
“The proper way for a person who signs a contract for a principal and who wishes to exclude any personal liability is to sign as agent: Universal Steam Navigation Co. Ltd. v. James McKelvie & Co. [1923] AC 492. But a person who is really an agent may still save his personal liability although he signs the contract without qualification if it is clear from the body of the contract that he contracted only as agent, per Archibald J. in Gadd v. Houghton (1876) LR 1 Ex D 357. ‘Prima facie a party is personally liable on a contract if he puts his unqualified signature to it. In order, therefore, to exonerate the agent from liability the contract must show, when construed as a whole, that he contracted as agent only and did not undertake any personal liability’: Halsbury's Laws of England (3rd ed.), vol. I, p. 228 ; Bowstead on Agency (11th ed.) (1951), p. 246.”
[16](1956) 94 CLR 30, 56.
Continuing with his references to Gillard J’s judgment, counsel referred to the following passages:
“[101]The rules stated above are subject to exceptions, one of which is where the contracting party is acting as agent for a disclosed principal. The general rule is that the principal alone can sue, or be sued, on the contract. In certain cases, the agent can also be sued.
[102]However, whether he acts as agent and whether he contracts as such, are questions of fact. The starting point in those circumstances, is proof of the agency and authority to contract on behalf of the principal. The next issue to consider is, the capacity in which the agent purported to enter into the contract.”
Applying these principles Gillard J determined, on an examination of the facts in each case, that the contract was between the barrister and the solicitor.
As to the facts in the present case, counsel referred to Mr Collins’ evidence that he never discussed with the defendant who was responsible for his fees, Mr Ewing’s evidence that he could not recall what was discussed on 4 August and that his note was silent on the issue. He described as surprising Mr Ewing’s refusal to agree that legal professional privilege required the retainer to be with his firm.
Then, the 6 August letter did not refer to the engagement being between the plaintiff and Newtronics. And Collins was asked to forward invoices to the defendant which in turn invoiced the client on accounts that reserved the right to charge interest on those invoices. The reservation of that right was not made on behalf of the plaintiff, but by the defendant in right of itself.
Counsel submitted that it was important to focus on what was not said. In particular, Mr Ewing, who had control of the situation, did not discuss fees at all. Even giving him an urgent task, Mr Collins was not asked his rate or to estimate his fee. In essence, Mr Collins was told to invoice the defendant which had a client Newtronics involved in litigation in relation to which he was being engaged. In summary, no aspect of the discussion could lead to the conclusion that Mr Collins entered into a contract on the basis that Mr Ewing had no responsibility for payment of the fee.
Counsel submitted that if there was an overriding retainer it was between the plaintiff and the defendant and not between the plaintiff and the disclosed principal. It was apparent, counsel submitted, that when Mr Ewing said “on behalf of my client” all he meant was that he was conducting litigation on behalf of his client.
In concluding his submissions on the contract case, counsel referred to the differences in the evidence between Mr Ewing and Mr Kenery on the matter of Mr Kenery’s instructions concerning the funds held by the defendant and negotiating a settlement with the plaintiff. Counsel submitted that Mr Ewing’s evidence of communications in late 2001 was inaccurate and that by reason of the order of witnesses he did not have the opportunity to cross-examine Mr Ewing on the differences. He did not, however, submit that the inaccuracies were deliberate or conscious. But it was inaccurate and Mr Bult did not give evidence and explain the situation.
Furthermore, as Atco was not the client it was of no benefit to it to provide the funds to the defendant. The obvious inference, counsel submitted, was that Atco was assisting the defendant to discharge its liability to the plaintiff. Nor was it benefiting Newtronics in view of its financial position. In short, counsel submitted, accurate evidence would have strengthened the inference that Atco was discharging the defendant’s liability.
Counsel then addressed submissions on the alternative claim in restitution. He referred to the authorities mentioned earlier for the purpose of identifying the relevant principles and demonstrating their application. I have regard to all that counsel said but do not set it out. It is not necessary to do so. I do note that central to his submission was the proposition that the plaintiff’s services provided a benefit to the defendant in discharging its obligations to its client, benefit for this purpose being a broad concept[17].
[17]Brenner v First Artists’ Management Pty Ltd (1993) 2 VR 221, 257-258 per Byrne J.
Defendant
Counsel for the defendant commenced his submissions by noting that the plaintiff primarily based its claim on a retainer constituted by the discussion that occurred between Mr Collins and Mr Ewing on 4 August 1999. In the alternative, counsel noted, the plaintiff contended that it provided services pursuant to a series of requests made to the plaintiff between August 1999 and January 2001 for which the defendant is liable to pay reasonable compensation; that is the claim based in restitution.
Counsel dealt first with the claim in contract. As to this, counsel submitted that the retainer was partly oral constituted by the conversation on 4 August, partly in writing constituted by the letter of 6 August, and partly to be implied by reason of the need to give business efficacy to the retainer. Counsel submitted that the defendant entered into the retainer with the plaintiff as agent for a disclosed principal and thus was not liable under the retainer.
On the matter of construction of the agreement, counsel submitted as follows. It was accepted that evidence of the factual matrix within which the retainer was entered into was relevant to the identification of who were the parties to the retainer, who had the liability to pay the plaintiff for services provided under the retainer, and the terms of the retainer generally. However, evidence of the conduct of the parties subsequent to the first week of August 1999 was not admissible for the purpose of ascertaining or construing the terms of the retainer; see FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd[18]. The terms of the retainer were to be objectively ascertained from the course of conduct between the parties prior to the formation of the contract and from the actual words used by them. See Codelfa Construction Pty Ltd v State Rail Authority of N.S.W.[19]. A further principle relevant to the identification of the parties and the terms of the retainer was that the parties to a commercial contract are considered to have contracted against the legal background of decisions on similar agreements so that existing case law is to be taken into account in the identification and construction process; see Toomey v Eagle Star Insurance Co Ltd[20].
[18][1993] 2 VR 343, 351.
[19](1982) 149 CLR 337, 352-353.
[20][1994] 1 Lloyd’s Rep 516, 520.
Then, counsel referred to the principle that where an agent contracts on behalf of a disclosed principal the principal and not the agent is liable upon the contract. He submitted that in the case of solicitors entering into contracts with third parties, where the identity of the client for whom services are to be provided is disclosed by the solicitor to the third party, there is a line of authority which states that the solicitor would not ordinarily be liable for the fees of the third party. He referred to Hartop v Juckes[21]; Robins v Bridge[22]; Lee v Everest[23]; and Wakefield v Duckworth & Co[24].
[21](1814) 2 M & S 438; 150 ER 443.
[22](1837) 3 M & W 114.
[23](1857) 2 H & N 285; 157 ER 118.
[24][1915] 1 KB 218.
Hartop concerned a claim by a messenger against a solicitor acting in a bankruptcy. The messenger being aware that the solicitor was not a principal and being able to ascertain who was the petitioning creditor, and notwithstanding that the solicitor was the medium through which it was convenient to the messenger to receive the messenger’s bill, the solicitor was not thus made a principal.
The question in Robins was whether an attorney who had caused a witness to be subpoenaed, without any express contract, and without any circumstances from which a special contract could be inferred, was liable to be sued by the witness for his expenses at trial. It was held that there was no implied contract by the attorney to pay the witness. The attorney was merely the agent of the principal and as such did not bind himself, unless he offered to do so by express words[25].
[25](1837) 3 M & W 114, 119.
In Lee an attorney had engaged a surveyor to value property. The plaintiff duly performed the work and at the request of the attorney sent his account for his charges. The plaintiff entered his account in his ledger against the attorney’s client and sent his bill to that client and sued it for the amount but afterwards abandoned that action and commenced an action against the attorney. The plaintiff stated that he had no communication with the defendant except as attorney for the client. It was submitted that the facts showed that the attorney acted only as attorney for his client. It was held that the attorney was not liable. In his judgment Bramwell B said[26]:
“It is a clear rule that where a person is professedly acting as agent for another the principal is bound and not the agent. Now an attorney is in that position. He is the agent of his client, and is acting for him. The authorities are to that effect: Robins v. Bridge ( 3 M. & W. 114), Hartop v. Juckes (2 M. & Sel. 438), per Maule, J. (3 C. B. 96). It is clear that, according to those cases the defendant would not have been liable had he merely subpoenaed the plaintiff: can it make any difference that the plaintiff attends without subpoena, or that to make his attendance useful he previously surveys the premises? Is the defendant thereby liable, not only for the previous labour of surveying but also for the attendance to give evidence, or is he liable for the former part and the parish officers for the latter? We think not. It is undoubtedly more convenient that the engagement of the witness should be supposed to be with the party rather than with the attorney. The attorney may die, or be changed, before the witness has finished the entire duty of qualifying himself to give evidence and giving it. Then suppose he gives unfair evidence, dishonestly suppressing something for the benefit of the party, or does not properly qualify himself by the previous survey which he has undertaken, and thereby the party sustains a loss, who is to sue him for breach of duty, the party or the attorney, for the engagement must be taken to be with him if he is to pay for its performance.
We are of the opinion therefore that primâ facie the party, and not the attorney, is liable for such a claim as the present. No doubt it is competent to the parties to arrange otherwise and it was said that they had done so, and that the defendant’s letters shewed that he was to be personally liable. But we are of opinion that is not so, and that the letters are entirely consistent with the general presumption that he was acting merely as attorney or agent: and indeed, in this case, the plaintiff had put his own interpretation on these letters, and we think correctly, that the parish officers were his debtors.”
[26]At 121.
In Wakefield it was held that solicitors who ordered photographs from the plaintiff, a photographer, for the purpose of litigation in which the solicitors were acting for a client, and the photographer knowing that the solicitors were so acting, were not liable to the photographer for the price of the photographs as they were prima facie agents acting on behalf of a principal. In his judgment, upon which counsel relied, Lord Coleridge J stated that:
“There is no question that the plaintiff knew that the defendants were solicitors acting on behalf of a client, and that being so, apart from any other considerations, they were agents acting on behalf of a principal. Prime facie in such a contract the plaintiff would have to have recourse to the principal and not the agent. It is said, however, that in the present case the mere fact that the solicitors by their partner gave the order made them personally responsible. That is not so.
There are certain exceptional cases in which, although one party to a contract knows that the other is a solicitor acting for a client, yet the solicitor is personally responsible, for instance, in cash transactions, where it is to be assumed that the solicitor has no authority to pledge the credit to his client. The present transaction was not a cash transaction in that sense, although no doubt an action would lie for the price of the photographs as soon as they were delivered. The bill was an ordinary one for photographs sent in by the plaintiff to the partner who ordered them. Another case in which the solicitor might be personally responsible is where a custom can be proved that he should be so. It is for the judge to say in any particular case whether such a custom has been proved, and if it were proved it would override the ordinary incidents of law so far as that case is concerned. In the present case no such custom has been proved. The photographer knew that he was dealing with the solicitor as an agent, and the mere fact that he chose to debit the solicitor in his books does not throw upon him any liability to pay.”
Counsel submitted that in circumstances where the plaintiff knew that the defendant was acting for Newtronics and was to be retained to provide expert evidence and assistance in Newtronics’ defence of the Seeley litigation, the defendant was not liable to the plaintiff in the absence of evidence of intention that the defendant be so liable, or of some usage that could have that consequence.
Although the plaintiff did not refer to any “usage” which could found liability in the defendant, counsel for the defendant addressed a submission on the matter. He submitted that there was no evidence of any such usage. As to this, counsel noted that at the relevant time the Solicitors’ (Professional Conduct and Practice) Rules 1984 (Vic) were in force which were replaced on 1 January 2000 by the Professional Conduct and Practice Rules 2000, neither of which referred to any professional conduct obligation towards third parties. In January 2003 rules were introduced which for the first time referred to conduct obligations in dealing with third parties and specifically questions of assumption of liability for the fees to be charged by third parties for services provided on behalf of a client. Counsel submitted that there was no evidence of a general usage of that nature at the relevant time.
For these reasons, counsel submitted, the plaintiff’s claim against the defendant must fail.
Counsel then turned to the claim in restitution. Counsel pointed out that there was no basis for the application of principles of restitution where there was a valid and enforceable contract for the provision of the subject services by the plaintiff, as had been pointed out in Pavey & Matthews Pty Ltd v Paul[27]. See also Lumbers v W Cook Builders Pty Ltd (in liq)[28].
[27](1987) 162 CLR 221, 256 per Deane J.
[28](2008) 232 CLR 635, 674.
Apart from that, counsel submitted that restitution was not available because in making any request that the plaintiff provide services in relation to the Seeley litigation, the defendant acted as agent for Newtronics to the plaintiff’s knowledge. The principles of agency apply in cases of restitution, as to which see Angelopoulos v Sabatino[29]; Alma Hill Constructions Pty Ltd v Onal[30]. In those circumstances the defendant was not liable to the plaintiff in restitution because there was no “unjust” enrichment of the defendant where the primary, if not whole, benefit of the services was taken by Newtronics which was liable to make restitution, and because an agent will not be liable in restitution for the benefits derived by the principal from the provision of services requested by the agent on behalf of the principal.
[29](1995) 65 SASR 1, 10-11, 15.
[30](2007) 16 VR 190 at [54]-[59].
Finally it remains to note that counsel provided a supplementary written submission a few days after the trial concluded. The submission dealt with the plaintiff’s counsel’s submission concerning the differences in the evidence of Mr Ewing and Mr Kenery in relation to the conversations in late 2001. Counsel noted that the evidence was inconsistent. On the one hand, Mr Ewing gave evidence that he was not involved at all in the payment to Russell Kennedy in December 2001, and that Mr Bult was the person involved. On the other hand, Mr Kenery gave evidence that he gave instructions to Mr Ewing regarding the sum of $203,583.70 paid into the defendant’s trust account and the use to which it might be put. It was noted that Mr Kenery’s evidence was not put to Mr Ewing so as to give him a chance to deal with it, but it was acknowledged that this was because Mr Kenery’s own evidence first emerged in cross-examination subsequent to Mr Ewing giving evidence. It is further to be noted that both witnesses were called by the defendant and that the subject evidence was not stated in their witness statements. It was further noted that Mr Ewing’s evidence was not put to Mr Kenery which meant that he was unable to deal with it. Further the witnesses were giving evidence of something that occurred in excess of seven years before they gave evidence and it was not clear what consideration they had given to the matter before giving evidence. Counsel submitted that in the circumstances, regardless of which evidence the court preferred (assuming it made a finding on the issue), the court should be slow to criticise either witness in relation to their evidence on the issue.
Decision
In referring to the facts I have covered the range of matters dealt with in the evidence. Not all of them are properly to be considered in deciding the pleaded case on liability. Nevertheless, it has seemed appropriate to do so in view of the way the case was conducted, and to indicate these matters lest the case go further.
One matter of evidence about which I should say something was the evidence of Mr Ewing and Mr Kenery relating to the discussions concerning Atco’s provision of funds with which to comprise the plaintiff’s claim. Clearly, their evidence was inconsistent. In the light of all of the circumstances however I am unable to conclude where the truth lay, and thus to find that the credit of either witness was affected. And, of course, whichever account was correct would not affect the determination of the principal questions on liability.
The plaintiff’s principal case is that of the Overriding Retainer. The pleaded case is that the retainer was agreed in the discussion on 4 August and by way of implication by operation of law and to give business efficacy to the arrangement. It is apparent that the area of implication was the three implied terms as to the plaintiff charging at its usual rates, and that the defendant would pay the plaintiff’s disbursements and invoices within a reasonable time. Counsel suggested no other implication. It is evident, in view of the fact that in their 4 August discussion Mr Collins and Mr Ewing did not discuss the plaintiff’s rates and who would be responsible for payment, that these matters had to be covered by implication.
In my view, in their discussion on 4 August, Mr Collins and Mr Ewing did not reach a concluded agreement. The better view, I conclude, is that the discussion was more of an exploratory nature in which Mr Ewing sought to ascertain Mr Collins’ suitability for the task relevant to the consideration of which was the provision of a CV which Mr Ewing did not receive until 6 August. Having received the CV Mr Ewing was in a position to determine upon retaining Mr Collins. I find that that was his position and that he then determined to, and did, by his letter of 6 August retain the plaintiff as an expert witness in the case.
The 6 August letter was provided, and is to be regarded, in the context of the 4 August discussion and the provision of the CV. Also, in view of the omission to discuss or agree on the plaintiff’s rates it is to be implied that the plaintiff would be entitled to charge at a reasonable rate, including expenses reasonably incurred, for time reasonably spent in the provision of requested services.
The fact is however that neither in their 4 August discussion or the 6 August letter was it expressly stated who was to be liable for payment of the plaintiff’s charges. In the 4 August discussion the matter was not mentioned. In the 6 August letter it was requested that invoices be sent to the defendant “for payment in order to preserve legal professional privilege”. It may be said that the expression “for payment” carried an implicit acknowledgment that the defendant undertook liability to pay, but I consider any such indication to be ambivalent at best.
The fact is that at all times Mr Collins knew that the defendant was acting for a client, Newtronics, in litigation in aid of the representation of whom his services were retained. That is, in retaining the plaintiff the defendant was acting as agent for a disclosed principal to the knowledge of Mr Collins. Without more that would ordinarily produce the consequence that the retainer thus produced was between the plaintiff and Newtronics.
But I do not determine the issue on a mere prima facie basis but regarding the letter on its terms and in the context indicated. As I have said, the request to send invoices to the firm for payment is ambivalent in terms of indicating an assumption of liability by the defendant. In truth, I consider, it is to be understood as a matter of convenience but also on the basis of preserving legal professional privilege. It is not to the point whether Mr Ewing’s understanding that that was required in order to preserve such privilege was soundly based or not. Overall, in my view, the letter, whether regarded alone or in the context of the 4 August discussion, does not carry the implication that the defendant undertook personal liability to pay the plaintiff’s charges.
For these reasons, in my view the party liable to pay the plaintiff’s charges was Newtronics. It follows that the claim in contract fails for the plaintiff has sued the wrong party.
I am also of the view that the alternative claim in restitution fails. That is because in my view there was an “Overriding Retainer” with Newtronics. That removes the factual premise of the restitution claim. No further discussion of this aspect of the case is necessary.
The proceeding will be dismissed.
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