Kasmeridis & Anor v McNamara Business & Property Law & Anor

[2006] HCATrans 52

[2006] HCATrans 052

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A41 of 2005

B e t w e e n -

HARRY KASMERIDIS AND VICKY KASMERIDIS

Applicants

and

McNAMARA BUSINESS & PROPERTY LAW

First Respondent

LAW SOCIETY OF SOUTH AUSTRALIA

Second Respondent

Application for special leave to appeal

GUMMOW J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

FROM ADELAIDE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 10 FEBRUARY 2006, AT 11.39 AM

Copyright in the High Court of Australia

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MR D.M. QUICK, QC:   May it please the Court, I appear with my learned friend, MR K. TREDREA, for the applicants.  (instructed by EZRA Legal)

MR R.W. SALLIS:   If the Court pleases, I appear for the respondents.  (instructed by McNamara Business & Property Law)

GUMMOW J:   Yes, Mr Quick.

MR QUICK:   May it please the Court, this application concerns statutory regulation of the means of entry into contract for the provision of legal services by solicitors.  The context in which such contracts are formed is an important aspect relevant to the construction of the contract.  I wish to make three brief observations about that context.  Many such contracts are formed between people on one side who have commercial experience and people on the other who have none.  Secondly, many such contracts are formed on the one side by a solicitor who is calm and objective but on the other side by a person who might be agitated or labile.

The third observation I make, therefore, follows from the first two.  The persons who are in such a situation of making a contract with a solicitor need protection not just from exploitation but also from their own conduct in entering into contracts which might be ill advised, having regard particularly to their own circumstances and to the nature and extent of the legal problem involved.  One means to protect persons from their own ill‑informed and ill‑judged conduct is to require not only that the terms of the contract ‑ ‑ ‑

GUMMOW J:   We have to get down to some question of statutory interpretation, do we not, Mr Quick?

MR QUICK:   I beg your pardon, your Honour?

GUMMOW J:   Do you not have to show that there was an error in the interpretation placed upon the statute by the Full Court?

MR QUICK:   Yes, I do, your Honour, and the context is important for that purpose.  I have finished with the preliminary observation.

GUMMOW J:   Yes.

MR QUICK:   I now turn directly to the statutory provision.  It is a provision that does not just deal with the terms of a contract, it deals with the process of making the contract and what it requires is that both parties to the contract put something in writing.  In this case, on the facts, only one party put something in writing and that was the solicitor.  We say that the reasons why both parties should put something in writing is something was intended by the statutory provision because the act of putting something in writing gives an additional occasion for reflection by the other person for the contract than the solicitor.

If I can draw attention to the terms of the statute. At section 42(6) of the Legal Practitioners Act 1981 (SA), the provision reads as follows:

A legal practitioner may make an agreement in writing with a client for –

Then there are certain provisions relating to the substance of the contract.  The other relevant provision on which the Full Court relied is subsection (7):

The Supreme Court may, in proceedings under this section, rescind or vary an agreement under subsection (6) if it considers that any term of the agreement is not fair and reasonable.

Two observations I make, the first in relation to subsection (6).  It regulates not merely the content of the contract; it regulates the making of the contract and the process of making the contract.  That appears in the first part of the provision:

A legal practitioner may make an agreement –

Two issues that arise here are what is required to make an agreement in writing and, secondly, what is an agreement in writing.  The reason why I draw attention to subsection (7) is that the Full Court of the Supreme Court said subsection (7) provides a very substantial remedy for unfairness or unreasonableness and that, therefore, is part of the context in which subsection (6) appears and mitigates against a requirement that something should be in writing for the purpose of producing fairness and reasonableness between the parties.

What subsection (7) is about is very limited.  It is limited to providing a provision where the terms of the agreement are unfair or unreasonable.  There will be many cases in which the issue is not about the unfairness or the unreasonableness of what is entered into, rather, whether it was ill advised, having regard to one party’s circumstances and to the nature and extent of the problem.  The Full Court of the Supreme Court, in our respectful submission, misapprehended what subsection (7) was about and when they permitted it to be a reason for reading down the clear words of subsection (6) they fell into error.

We submit that this case is important – it raises an important matter of principle for a number of reasons.  The first of these is that, as was observed by the Full Court, contracts of this nature are an important aspect of the administration of justice and public confidence in it.  These are contracts of which there are many and these are contracts which are an important part of the administration of justice.

Secondly, we submit that it is erroneous, that there is an error in the Full Court’s judgment in that it misapprehended what was meant, or what was intended and what remedy can be obtained from observation as to the contents of subsection (7).  I then draw attention to the fact that the Western Australian provision, like the South Australian provision goes to the making of the contract as well as to the substance of the contract.

In our respectful submission this is a case which is ideal for the consideration of the Court for a number of reasons.  First, the factual situation is uncomplicated; secondly, there are no factual disputes; thirdly, the case does not require consideration of long lines of authority because the authorities, in the main, are distinguishable.  Those dealing with the statute of frauds are clearly distinguishable and in our submission not analogous.

The Australian authority in relation to the matter is relatively limited but there is authority which would be of some assistance to the Court in deciding the issue.  If the Court is considering, as a matter of its deliberations, the caseload of a court, this is a case which will not present difficulties of a factual nature and where the issue involved is a matter of statutory construction of relatively short, albeit very important, exposure.

There are additional errors in the Full Court’s judgment. The Full Court held that section 42(6) had as its progenitor section 21 of the Legal Practitioners Act 1936. In that provision – that is in the provision of section 21 of the 1936 statute there was a requirement that a contract between a solicitor and client be signed by the client. That was then removed in the provisions of section 42(6) in the 1981 Act.

It is true, in one sense, in our submission, that the Act is a progenitor but it is only true insofar as it concerns the substance of the contract between a solicitor and a client.  It is not a progenitor in the sense that the 1936 Act does not deal with the making of a contract; rather, it deals with the substance of the contract and requires that once terms are agreed they must be put in writing in one place and then agreed, not necessarily in writing, subsequently they can be reduced to writing.

It is a different provision that the 1981 Act puts in place because it is directed to the process of the phenomenon of agreement, whereas the 1936 Act is directed not to that process of making agreement but to recording terms, albeit that an agreement may have been reached partly by oral acceptance.  The 1936 Act concerns a different mischief than the 1981 Act.

The only other submissions that I wish to make in relation to the matter concern the second point that we say is a point deserving of this Court’s consideration and that is the matter of what constitutes a written agreement.  The argument in relation to that is set out in the application book.  There is nothing further that I wish to say in relation to it.

Our submission, in summary, is that this is an important provision for South Australia, and for a large number of contracts.  They are important contracts because they indirectly concern the administration of justice.  There is a similar provision in Western Australia where similar problems are likely to arise.  It is an ideal case being decided by this Court because there are no factual issues either of complication or as between the parties.

The only other submission that I wish to make is a submission with respect to costs in the event that the Court decides that the application should be declined.  May it please the Court.

GUMMOW J:   What is the submission as to costs, Mr Quick?

MR QUICK:   There is outstanding in the Full Court of the Supreme Court an application under section 42(7).  That is a different type of proceeding than the present proceeding but should it turn out that on that application the Court decides that the provision is unreasonable or unfair then it may well be appropriate that the costs, including the costs of these proceedings, should be awarded to the client.

Having made that submission I do not want that to be in any way taken to detract from the submissions made as to the reason why this Court should decide this issue.  In those proceedings very different issues are to be decided.  The outcome of those proceedings could not have any impact at all on the resolution of the statutory construction point that we submit is

now to be determined and which, we submit, is a proper case for consideration by this Court.  May it please the Court.

GUMMOW J:   We do not need to call on you, Mr Sallis.

There are insufficient prospects of success in this matter to warrant a grant of special leave.  Accordingly, special leave is refused and the ordinary event should follow, that is to say, dismissed with costs.

We will now adjourn to reconstitute.

AT 11.52 AM THE MATTER WAS CONCLUDED