Hall v Williams
[2008] TASSC 37
•1 August 2008
[2008] TASSC 37
CITATION: Hall v Williams [2008] TASSC 37
PARTIES: HALL, Ian Terry
v
WILLIAMS, Gilbert Edward
HALLWILL PTY LTD
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 653/2008
DELIVERED ON: 1 August 2008
DELIVERED AT: Hobart
HEARING DATE: 29 July 2008
JUDGMENT OF: Blow J
CATCHWORDS:
Contracts – General contractual principles – Construction and interpretation of contracts – Implied terms – Other cases – Deed of settlement after deadlock between company directors – Term requiring irrevocable appointment of solicitor to act in litigation – Authority of one director to retain solicitor on behalf of company and other director.
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, applied.
Aust Dig Contracts [109]
Contracts – General contractual principles – Construction and interpretation of contracts – Other matters – Agreement partly superseding terms of deed.
Supreme Court Civil Procedure Act 1932 (Tas), s11(10).
Berry v Berry [1929] 2 KB 316; McDermott v Black (1940) 63 CLR 161; Pappas v Rimar Pty Ltd (1984) 55 ALR 327, referred to.
Aust Dig Contracts [120]
REPRESENTATION:
Counsel:
Applicant: P W Tree SC and A Wood
First Respondent: G Abel
Solicitors:
Applicant: Simmons Wolfhagen
First Respondent: Hunt & Hunt
Judgment Number: [2008] TASSC 37
Number of paragraphs: 29
Serial No 37/2008
File No 653/2008
IAN TERRY HALL v GILBERT EDWARD WILLIAMS
and HALLWILL PTY LTD
REASONS FOR JUDGMENT BLOW J
1 August 2008
These are my reasons for granting an application for declaratory relief on 30 July 2008. On that day I made a declaration that, subject to his accepting or having accepted such appointment, Daniel Zeeman of Butler McIntyre & Butler had been validly appointed as the solicitor for Hallwill Pty Ltd and Gilbert Edward Williams in accordance with the terms of a deed of settlement entered into between Gilbert Edward Williams, Ian Terry Hall, and Hallwill Pty Ltd executed and dated 18 June 2008.
The second respondent ("Hallwill") is a company whose only directors and shareholders are the applicant ("Hall") and the first respondent ("Williams"). The company and Williams are parties to a number of pieces of litigation pending in this Court. The company needs to be represented in that litigation, but Hall and Williams became deadlocked as to who was to represent it. On 18 June 2008 they executed a deed of settlement, both in their personal capacities and as officers of Hallwill. That deed was intended to bring their deadlock to an end. However differences arose between Hall and Williams in relation to events occurring after the execution of that deed. Hall contended that a solicitor — Daniel Zeeman, a partner in the firm Butler McIntyre & Butler — had been appointed to act for Hallwill and Williams in accordance with the terms of the deed. Williams contended that that was not so. With a view to resolving that dispute, Hall applied for declaratory relief. The application proceeded to a hearing, with counsel for Williams neither making any concessions nor making any submissions. I gave him leave to withdraw.
The deed of settlement
Clause 1 of the deed of settlement is central to this case. Its provisions begin as follows:
"1)Hallwill and Hall and Williams in their personal capacities and as directors and shareholders in Hallwill:
a)irrevocably appoint a solicitor to be agreed upon by them in writing within seven days and in default of agreement to be nominated by the President for the time being of the Law Society of Tasmania ('the Solicitor') to act as solicitor for Hallwill and Williams in prosecuting and defending (as the case may be) the claims set out in the Litigation for the purpose of obtaining specific performance, damages, or any other relief deemed appropriate in respect of the purchase of the CP Land;
b)irrevocably authorise the Solicitor to take such procedural steps in the Litigation as the Solicitor determines to be appropriate after receiving advice from Senior and Junior Counsel engaged by the Solicitor to act on behalf of Hallwill and Williams in the Litigation;
c)agree that the steps taken pursuant to (b) shall be binding upon them;
d)…".
The words "irrevocably appoint" in cl 1(a) are in the present tense, not the future tense. The clause is not worded as a contractual promise to appoint a solicitor after he or she has been chosen in accordance with its terms. The wording is that of an instrument of appointment. That tends to suggest that, once a solicitor had been chosen in accordance with the mechanism set out in the clause, the parties intended that that solicitor would thenceforth hold his or her appointment by virtue of the terms of the deed. The deed is a very thorough and carefully worded document, and plainly the product of the application of a high degree of professional skill.
There is evidence that a solicitor was agreed upon by Hall and Williams, but that that solicitor quickly formed the view that he had a conflict of interests, and became unable or unwilling to act. Clause 8 of the deed contemplated that the parties might get into such a situation, and need a replacement solicitor. That clause provides as follows:
"8)In the event the Solicitor is unable or unwilling to act and Hall and Williams cannot, within seven days, agree on a substituted solicitor, the substituted solicitor shall be appointed by the President of the Law Society of Tasmania and the substituted solicitor shall be the Solicitor for the purposes of this Deed."
Like cl 1(a), cl 8 is not worded as if the parties intended to impose a contractual obligation on Williams or anyone else to engage the individual after his or her selection as the substituted solicitor. It is worded as if, from the time of selection, the substituted solicitor was intended to hold his or appointment by virtue of the operation of the deed.
Events since 18 June 2008
I have no evidence that either Hall or Williams did anything about agreeing upon a solicitor, as contemplated by cl 1(a) of the deed, until 24 June. On that day Williams sent Hall an email at 3.16pm suggesting the names of a number of solicitors. However it appears that he sent that email to a stale email address.
Clause 1(a) provided for Hall and Williams to agree upon a solicitor within seven days of the execution of the deed. That deadline expired on 25 June, apparently without any further step having been taken.
On 27 June at 6.19pm, Williams sent Hall another email to the same email address, lamenting the delay.
On 29 June at 6.13pm, Hall sent Williams an email suggesting that they get together.
On 30 June at 4.23pm, Williams sent Hall an email proposing that they engage Andrew Walker of Dobson Mitchell & Allport. That was acceptable to Hall. On 7 July Hall and his solicitor, Mr Cameron, spent two hours with Mr Walker. In the end he apparently told them that he or his firm had acted for a director of one of the companies engaged in the litigation, that a conflict would arise, and that he therefore declined to act.
On 8 July Mr Cameron wrote to Williams on behalf of Hall, apparently sending his letter by both facsimile and post, advising of that development.
On 10 July Mr Cameron wrote to Williams, again by both facsimile and post, proposing that Butler McIntyre & Butler be engaged. I have no evidence as to what time the facsimile was sent. On the same day, at 3.44pm, there was an email from Williams to Hall saying the following:
"Anthony Spence at Page Seger [sic] or Daniel Zeeman at Butler McIntyre Butler according to some are both capable lawyers and I am happy with both, you choose."
Hall chose Mr Zeeman. On 11 July Hall and Mr Cameron went to see Mr Zeeman and spent two hours with him.
A firm named Hunt & Hunt had been acting for Williams. He made arrangements for that firm's file to be sent to Mr Zeeman. On 14 July at 5.08pm, making a mistake as to the name of the firm that had been acting for him, he sent Hall an email in which he said, "The file at Hall and Hall [sic] is to be organised to go across to Daniel Zeeman".
On 16 July Mr Zeeman wrote to Hallwill, Hall and Williams setting out the proposed terms of his firm's retainer. In his letter he asked both Hall and Williams to sign and return copies of the letter, both in their personal capacities and as directors, to acknowledge acceptance of the terms of the proposed retainer. Hall signed in both capacities, but Williams apparently did not. He was unhappy with the financial arrangements proposed by Mr Zeeman. He sent an email to Hall at 1.46pm on 16 July proposing that Mr Zeeman be asked to change his terms, and that another firm be approached for the purpose of a comparison.
On 21 July at 5.12pm, Williams sent another email to Hall criticising the terms of Mr Zeeman's proposed retainer and suggesting that a different solicitor be engaged.
On 23 July at 4.34pm, Williams sent another email, which began as follows:
"We agreed on a name not knowing their terms. I do not believe Daniel Zeeman's terms are reasonable therefore we do not agree."
There were subsequent emails between the parties, but I see no need to say anything about them. There is nothing in them that could have made a difference to the outcome of this application.
Analysis of the events
I am satisfied that, in all of their negotiations after the execution of the deed, Hall and Williams were acting both in their personal capacities and in their capacities as directors of Hallwill. Each of them negotiated the terms of the deed and executed it on that basis. There is nothing in the evidence to suggest that either of them subsequently acted in only one capacity at any time during their negotiations.
Clause 1(a) of the deed required Hall and Williams to agree upon a solicitor within seven days, ie no later than 25 June. They agreed upon the appointment first of Mr Walker, and later of Mr Zeeman, but not until after that date. Clause 13 of the deed provided as follows:
"Hall and Williams may vary this Deed by Deed in writing and the provisions of this Deed as varied by them shall be binding on the parties hereto."
Hall and Williams did not execute any deed after 18 June. However I do not think cl 13 precluded them from making a subsequent agreement, in writing or orally, varying or partly superseding the terms of the deed of 18 June. A court with equitable jurisdiction must give effect to any such subsequent agreement: Berry v Berry [1929] 2 KB 316; McDermott v Black (1940) 63 CLR 161 at 187; Pappas v Rimar Pty Ltd (1984) 55 ALR 327. This Court must therefore give effect to any such subsequent agreement in accordance with the Supreme Court Civil Procedure Act 1932, s11(10), which provides that the rules of equity are to prevail over the rules of the common law.
The deed of settlement contains very detailed provisions as to the arrangements between Hall and Williams concerning their relationship with the solicitor selected to act in the litigation. The communications passing between Hall and Williams, including the communications from Mr Cameron to Williams, show no indication that either of them intended to depart from the negotiated arrangements relating to the chosen solicitor. I am satisfied that, by 7 July at the latest, they had agreed that Mr Walker was to be the chosen solicitor, rather than a solicitor chosen by the President of the Law Society of Tasmania pursuant to cl 1(a). Of course it eventuated that Mr Walker was unable or unwilling to act. I am satisfied that, by 14 July at the latest, Hall and Williams had agreed that Mr Zeeman was to be the chosen solicitor, rather than a solicitor chosen by the President of the Law Society of Tasmania pursuant to cl 1(a) or cl 8, and that they agreed to supersede or vary the terms of the deed of settlement, but only to that extent.
The question whether Mr Zeeman has been appointed to act for Hallwill is more straightforward than the question whether he has been appointed to act for Williams. Without holding a formal meeting, the two directors of Hallwill agreed that Mr Zeeman was to be engaged to act for that company. Once that had been agreed upon, it follows that either director had the power to engage Mr Zeeman on behalf of the company. The directors have not since resolved, formally or informally, that Mr Zeeman not be engaged or that his instructions to act for the company be terminated. It follows that, regardless of the extent of any powers conferred on Hall by the deed to act as the agent of Hallwill, Hall was authorised by the company, from the time that he and Williams agreed upon Mr Zeeman, to engage him as the company's solicitor.
Williams has not personally engaged Mr Zeeman to act for him. A question therefore arises as to whether the terms of the deed of settlement can operate in such a way that Mr Zeeman can become his solicitor against his wishes. Counsel for Hall submitted on a number of bases that Mr Zeeman could be engaged to act for Hallwill and Williams without any further step being taken personally by Williams. His arguments can be summarised as follows:
· On a proper construction of the deed, cl 1(a) did not create an obligation on Williams to appoint the solicitor chosen in accordance with that clause. The solicitor, once chosen, became appointed to act for both Hallwill and Williams, simply by virtue of having been chosen, and by virtue of the operation of the deed.
· Hall and Williams made a subsequent agreement, superseding the selection provisions of the deed, but only the selection provisions of the deed, that Mr Zeeman was to be the appointed solicitor.
· It was an implied term of the deed of settlement that either Hall or Williams could engage the appointed solicitor on behalf of both Hallwill and Williams.
Solicitors do not get appointed unilaterally. Retaining a solicitor involves a process of offer and acceptance. The execution of the deed and the making of the subsequent agreement that Mr Zeeman was to be the appointed solicitor did not, without more, result in the commencement of a relationship of solicitor and clients. That relationship could only be brought into existence through a process of offer and acceptance in which Hallwill, by an agent, and Williams, personally or by an agent, dealt with Mr Zeeman or his firm. The question therefore arises whether, on a proper construction of the deed, or as the result of an implied term, Hall was authorised to engage the chosen solicitor to act for Williams, even if Williams wished Mr Zeeman not to act for him.
It is apparent from the terms of the deed that Hall and Williams placed little or no trust in one another. The deed contains many provisions by which they each sought to protect themselves from the other director breaching its terms, changing his mind, or not co-operating. When they said in cl 1(a) that they irrevocably appointed a solicitor to be agreed upon by them in writing, I think they must have intended that, if either of them sought to change his mind about the appointment of the solicitor agreed upon in writing, the other would nevertheless have the authority to engage the chosen solicitor to act for both Hallwill and Williams in accordance with the terms of the deed.
In my view it was an implied term of the deed of settlement that, upon a solicitor being chosen pursuant to cl 1(a) or cl 8, either Hall or Williams was authorised to retain that solicitor on behalf of Hallwill and Williams. That term was reasonable and equitable. In the prevailing atmosphere of distrust, such a term was necessary to give business efficacy to the contract, and so obvious that it went without saying. It was capable of clear expression. It did not contradict any express term of the deed. It thus satisfied all the conditions required for a term to be implied as formulated in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283.
When Hall and Williams subsequently agreed that Mr Zeeman was to be the chosen solicitor, since it was their intention that the terms of the deed other than those relating to the choosing of the appointed solicitor were to continue to apply, that implied term continued to apply.
It follows that, at least from 14 July onwards, Hall has had the authority of both Hallwill and Williams to engage Mr Zeeman. There is no evidence that the terms of a retainer have been agreed upon between Hall and Mr Zeeman. The declaration sought by Hall was one that Mr Zeeman had been validly appointed as the solicitor for Hallwill and Williams pursuant to the deed. Because the terms of a retainer might not yet have been agreed upon, and because the deed was partly superseded by the agreement that Mr Zeeman was to be the chosen solicitor, I made a declaration in slightly different terms.
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