McNamara Business & Property Law v Kasmeridis - [2004] SASC 336

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal from a Master: Civil)
MCNAMARA BUSINESS & PROPERTY LAW v KASMERIDIS
Judgment of The Honourable Justice White
29 October 2004
PROCEDURE - COSTS - AGREEMENTS AS TO COSTS
Appellant firm of solicitors had acted for respondents - Appellant sent respondents documents containing Terms of Engagement and Schedule of Fees - Respondents agreed to Terms and Schedule orally by telephone - Appellant rendered account based on Schedule of Fees provided - Respondents applied to Master for taxation of costs - Master found no agreement in writing - Master ordered fresh bill of costs, based on usual scale, be served and filed - Question whether appellant "made an agreement in writing" with respondents - Terms of agreement were in writing but appellant and respondents did not "make" an agreement in writing - Appeal dismissed.
Legal Practitioners Act 1981, s 42; Supreme Court Rules SCR 106.05; Attorneys and Solicitors Act 1870 (UK), s 4; Statute of Frauds, 1677 (29 Car II, c 3) s 4; Acts Interpretation Act 1915, s 4; Law of Property Act 1936, s 26, referred to.
Re Lewis; Ex parte Munro (1876) 1 QBD 724; Re Raven; Ex parte Pitt (1881) 45 LT 742; Clare v Joseph [1907] 2 KB 369; Pontifex v Farnham (1892) 62 LJQB 344; Chamberlain v Boodle and King [1982] 3 All ER 188; Jovetic v Stoddart & Co (1992) 7 WAR 208; Re Walsh Halligan Douglas' Bill of Costs [1990] 1 Qd R 288; Heppingstone v Stewart (1910) 12 CLR 126; O'Young v Walter Reid & Co Ltd (1932) 47 CLR 497; Reuss v Picksley (1866) LR 1 Exch 342; Brooks, Jenkins & Co v Torquay Corporate [1902] 1 KB 601; Wrathall v Fleming [1945] Tas SR 61; Holmes v Deputy Federal Commissioner of Taxation (NSW) (No 2) (1988) 88 ATC 4328; NM Superannuation Pty Ltd v Hughes (1992) 27 NSWLR 26, considered.

WORDS AND PHRASES CONSIDERED/DEFINED
"make an agreement in writing"

MCNAMARA BUSINESS & PROPERTY LAW v KASMERIDIS
[2004] SASC 336
Magistrates Appeal
WHITE J:
Introduction

This appeal from a decision of a Master raises an issue of some importance in relation to the taxation of a solicitor’s costs. The question is whether a legal practitioner has, for the purposes of s 42(6) of the Legal Practitioners Act 1981, made an agreement in writing with a client where the practitioner has proposed in writing the terms upon which they will act, but where the client, while continuing to instruct the practitioner, has not indicated in writing his or her accession to the proposal.
The Legislation
Section 42(6) and (7) of the Legal Practitioner’s Act provide as follows:
“(6)   A legal practitioner may make an agreement in writing with a client for –
(a)    payment of a specified amount by way of legal costs (which may – but need not – consist of a daily, hourly or other time-related rate for professional work carried out by the legal practitioner on the client’s behalf); or
(b)payment of legal costs in accordance with a specified scale; or
(c)     subject to any limitations imposed by the Society’s professional conduct rules or the regulations – payment of a contingency fee to be calculated on a basis set out in the agreement on fulfilment of a condition stated in the agreement.
(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.”
Background Circumstances
The appellant is a firm of solicitors which formerly acted for the respondents in relation to an application to set aside a default judgment entered in proceedings in the Magistrates Court. Mr Viscariello was the practitioner within the appellant firm who had the conduct of the respondents’ matter.
The appellant rendered an account for $20,613.50 (inclusive of barrister’s fees and disbursements). The respondents applied, pursuant to s 42(1) of the Legal Practitioners Act, for a taxation of the appellant’s costs. In response to a direction from the Court, the appellant prepared a Bill of Costs in taxable form. That Bill was prepared using rates set out in a document entitled “Terms of Engagement” with an attached Schedule of Fees, both of which were sent with an accompanying letter by the appellant to the first respondent on 5 February 2004.
The respondents disputed the amounts claimed in the Bill of Costs. They submitted that the Master should refuse to tax the Bill of Costs which had been lodged, and should instead direct the filing of a Bill of Costs prepared in accordance with the appropriate scale pursuant to the Supreme Court Rules, on the basis that there was no written fee agreement between the parties. After hearing some brief argument, to which I will return shortly, the Master ordered:
“Fresh bill to be served and filed based on the usual scale of costs. I note that the present bill is a time cost one and as presently advised I am not satisfied that an agreement in writing has been achieved by the solicitors. It is for that reason that I am directing a fresh bill.”
The letter of 5 February 2004 from the appellant to the first respondent stated that its purpose was to set out the terms upon which the appellant would act for the respondents. It said:
“Enclosed are our Terms of Engagement and Schedule of Fees which together with this letter, set out the relevant terms and conditions on which we will act for you. Please note that our Terms of Engagement, Schedule of Fees and this letter constitute a solicitor and client agreement between you and this firm for the purposes of the Legal Practitioners Act 1981.”
Neither the letter itself, nor the Terms of Engagement, sought a signature from the respondents nor other means by which they might indicate their formal acceptance of the terms proposed.
Although it is apparent that both respondents were clients of the appellant, the letter of 5 February 2004 was addressed to the first respondent only. Furthermore, it was the first respondent only who was shown as the client on the Schedule of Fees.
The appellant acknowledges that the respondents did not sign a copy of the Terms of Engagement and Schedule of Fees and have not otherwise indicated, in writing, their acceptance of its terms. However, Mr Viscariello has deposed to a conversation with the first respondent as follows:
“On 9 February 2004 I had a telephone conversation with the first respondent Harry Kasmeridis, at which time [the] first respondent confirmed that he had received our letter dated 5 February 2004 and that he had read our firm’s Retainer Agreement and that he, acting for and on behalf of himself and for and on behalf the second respondent, accepted the Retainer Agreement and he then proceeded to give me further urgent instructions with respect to the future conduct of the matter including in relation to my previous recommendation to [the] first respondent, that I engage counsel, namely Robert W Sallis in this matter.”
From time to time the respondents made payments on account of costs to the appellant.
Extension of Time
SCR 106.05(3) requires an appeal against a decision of a Master to be instituted within seven days. The appeal in this case was filed and served 14 days after the Master’s decision. The appellant seeks an extension of time. In my opinion, a satisfactory explanation for the appeal not being instituted within the seven days has been provided. It resulted from a misunderstanding on the appellant’s part as to the appropriate time limit. The respondents have not claimed any relevant prejudice. I proposed to grant the extension of time which has been sought.
The Appeal to this Court
The Notice of Appeal as filed contains six grounds of appeal but in my opinion they reduce to three complaints. They are:
(a)the Master should have found that an agreement in writing had been made between the appellant and the respondents;
(b)the Master denied the appellant procedural fairness in allowing the argument as to the existence of an agreement in writing to take place, and requiring it to be completed, at a time when counsel appearing for the appellant was unprepared for that argument;
(c) the Master’s reasons were inadequate.
On the hearing of the appeal the appellant applied for leave to add a further ground alleging that the Master should have found that “even if there was no agreement in writing between the appellant and the respondent within the meaning of s 42(6) of the Act, this did not render the agreement unenforceable”. I refused leave for that amendment to be made. The Master has not considered, let alone determined, the subject of the proposed additional ground. It remains open to the appellant to argue before the Master that the costs should be taxed on the basis of the oral agreement. This is an appeal against an interlocutory order and it would be inappropriate to consider, on the appeal, a matter which has not yet been raised before the Master. It is undesirable for me to say anything about the prospects of success of such an argument.
An Agreement in Writing
The Master’s reasons for concluding that a written agreement between the parties had not been “achieved” are clear enough. They emerge from an affidavit sworn by Mr Viscariello. The Master noted the concession of Mr Viscariello that the Terms of Engagement had not been signed and that the only indication of acceptance by the respondents of the Terms was the discussion between the male respondent and Mr Viscariello on 9 February 2004. That was insufficient, in the Master’s view, to constitute an agreement for the purposes of s 42(6).
There is a long line of authority supporting the Master’s conclusion. That authority, in relation to the English and interstate counterparts of s 42(6), establishes that for a legal practitioner and a client to make an agreement in writing, the parties must show, by writing, their accession to the written terms. Usually accession to the agreement will be indicated by a signature, but that may not be the only means by which such accession can be indicated.
A number of the English decisions have considered s 4 of the Attorneys and Solicitors Act 1870 (UK) which provides that “an Attorney or Solicitor may make an agreement in writing with his client” respecting the remuneration of an attorney or a solicitor. In Re Lewis; Ex parte Munro (1876) 1 QBD 724 at 726-727 Lord Coleridge CJ said:
“… an ‘agreement in writing’ within s 4 must be an agreement by both parties, and both parties must sign their names upon the agreement. One reason for holding this to be the construction of the section is that otherwise it would always be possible for a solicitor to place a document signed by himself only and containing terms favourable to him before a client, and then to contend that the client was bound by it.”
In Re Raven; Ex parte Pitt (1881) 45 LT 742 at 743 Fry J said:
“The words of the Act are ‘an agreement in writing’. What is an agreement in writing? It must be a document which shall show all the terms of the bargain between the parties and show by writing the accession of both parties to those terms”.[1] (Emphasis added.)
[1] See also Pontifex v Farnham (1892) 62 LJQB 344 at 346.
A similar view was taken in Clare v Joseph [1907] 2 KB 369 by Lord Alverstone CJ who said, at 374:
“The scheme of the section is that it empowers a solicitor to enter into such an agreement with his client … when this agreement has received the client’s signature it comes within the machinery provided in the later part of the Act.”
Re Raven and Pontifex v Farnham were applied by Lord Denning MR, writing the judgment of the Court of Appeal, in Chamberlain v Boodle and King [1982] 3 All ER 188 at 191. Lord Denning went on to say:
“It seems to me that an agreement in writing can be contained in letters. But the letters ought at least to be signed by the client if he is to be deprived by the agreement of his right to tax.”
A similar view has been taken in Australia. In Jovetic v Stoddart & Co (1992) 7 WAR 208 at 218, Seaman J held that the solicitor and the client must both join by writing in some document or documents which constitute the agreement. In that case, as the solicitor had not signed or indicated by any other means in writing his accession to the agreement, it did not have effect under the Western Australian counterpart of s 42(6). In Re WalshHalligan Douglas’ Bill of Costs [1990] 1 Qd R 288, Dowsett J, in circumstances which are factually analogous to those of the present case, was not prepared to find that there was an agreement in writing since there was no document evidencing the acceptance by the client of the terms of the proposed agreement.
The traditional way by which an agreement in writing to be bound was indicated was the placing of a signature on the document containing the terms of the agreement. However, in my opinion, that need not be the only way. A signature is not critical. What is important is that the acceptance of the terms be in writing. In my opinion, that could be achieved by the sending of an email, or some other form of written communication which did not include a signature. However, a signature is, as I say, the conventional way by which a party indicates his or her accession in writing to an agreement.
The appellant sought to avoid the application of the line of authority referred to above in this case by a number of means. First, it referred to decisions of the High Court in which it has been held that for the purpose of the Statute of Frauds or its modern-day counterparts, a written proposal signed by the party to be charged is an agreement, or a memorandum or note of an agreement, sufficient to make the contract enforceable even though the offeree had accepted the proposal orally.[2] The Statute of Frauds[3] provides (relevantly):
“Section 4:
No action shall be brought whereby to charge any executor or administrator upon any special promise to answer damages out of his own estate; or whereby to charge the defendant upon any special promise to answer for the debt, default or miscarriage of another person; or to charge any person upon any agreement made upon consideration of marriage; or upon any contract or sale of lands, tenements or hereditaments, or any interest in or concerning them; or upon any agreement that is not to be performed within the space of one year from the making thereof; unless the agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing and signed by the party to be charged therewith or some other person thereunto by him lawfully authorized.” (Emphasis added)
[2]Heppingstone v Stewart (1910) 12 CLR 126; O’Young v Walter Reid & Co Ltd (1932) 47 CLR 497.
[3] 29 Car II, c3.
In Heppingstone v Stewart, Griffith CJ said:
“… it cannot be disputed that a written offer, containing all the terms of a proposed contract, may be accepted verbally, and if it is accepted verbally then there is a complete contract satisfying the Statute of Frauds.”
In the same case, Barton J said:
“It is plain that the document in question was not until acceptance a binding agreement. It was only an offer to make one. But the acceptance of the offer, even if merely verbal, converted it into a binding contract of which every term was in writing.”
In O’Young v Walter Reid & Co at 508, Dixon J said:
“… it could not be said that a contract existed but was unenforceable for want of sufficient writing. For the only contract offered by the intending guarantors would be in writing, and it would be immaterial that the creditors simple assent or acceptance was not also expressed in writing.”
In the same case, at 513 Evatt J said:
“A memorandum may be sufficient to satisfy sec 4 of the Statute of Frauds although it is signed by the party to be charged, before the agreement is concluded by verbal acceptance. When the signed offer is accepted by parol, such writing is not merely a memorandum or note of the agreement, it is ‘the agreement’ itself ‘in writing and signed by the party to be charged therewith.’”
In each of Heppingstone v Stewart and O’Young v Walter Reid & Co, the High Court applied a passage from the judgment of Willes J in Reuss v Picksley (1866) LR 1 Exch 342 at 351:
“The only question is, whether it is sufficient to satisfy the statute that the party charged should sign what he proposes as an agreement, and that the other party should afterwards assent without writing to the proposal? As to this it is clear, both on reasoning and authority, that the proposal so signed and assented to, does become a memorandum or note of an agreement within the 4^th section of the statute.”
As noted above, Evatt J went further and found that when there was oral acceptance of a written offer, the contract so made was a contract in writing and not just a memorandum or note thereof.
Thus it was submitted that there could be an agreement in writing even though parol evidence is required to prove the existence of that agreement.
In my opinion the approach of the High Court in the two cases concerning the counterparts of the Statute of Frauds is not determinative of the issue which arises in this case.
One starts with the language used in s 42(6). It provides that the practitioner “may make an agreement in writing with a client” with respect to costs. Section 42(6) is an empowering provision. It authorises the doing of something. It authorises an agreement of a particular kind to be made in a particular way. Section 42(6) does not merely authorise the practitioner to make an agreement with the client concerning costs. Nor does s 42(6) authorise the making of an agreement the terms of which are in writing. Section 42(6) speaks not only to what the practitioner may produce with the client (viz., an agreement) but also to the manner in which that agreement may be produced (viz., in writing). Thus s 42(6) is to be understood as though it read “the practitioner may make, in writing, an agreement with the client”. In this way effect is given to all words in s 42(6), and in particular to the requirements for the making of the agreement which it contains.
Where two parties agree orally that the terms of their agreement are those contained in a specified document, they do not, in my opinion, make an agreement in writing. Rather, they make an oral agreement with a term of that oral agreement being that the written terms contained in the specified document form part of their agreement. One can say, sensibly, that they have an agreement in writing but not that they have made an agreement in writing. The position is the same, in my opinion, when one party makes a proposal in writing which is accepted orally by the other.
The distinction is between the manner of the making of the agreement on the one hand, and the effect of that which has been made, on the other. In my opinion, the passages from Heppingstone v Stewart and O’Young v Walter Reid & Co, to which I have referred above, are directed to the latter circumstance only. One can say, as did Evatt J in O’Young v Walter Reid & Co that when a signed offer is accepted orally, the writing constitutes a written agreement, but that falls short of a conclusion that the parties have made an agreement in writing. That which the parties have agreed upon may be in writing without the parties having made an agreement in writing.
The appellant also relied on a number of authorities in which it had been held that the issue of an order or notice required by a statute to be in writing was not invalid because it had not been signed by the relevant issuing authority.[4] However, I do not regard these authorities as being of much assistance. They are decisions involving a different statutory context and further, in all but the first, involved the carrying out of a unilateral act the execution of which did not require any indication of acceptance or consent by the recipient.
[4]Brooks, Jenkins & Co v Torquay Corporate [1902] 1 KB 601 at 608; Wrathall v Fleming [1945] Tas SR 61; Holmes v Deputy Federal Commissioner of Taxation (NSW) (No 2) (1988) 88 ATC 4328; N M Superannuation Pty Ltd v Hughes (1992) 27 NSWLR 26.

Next the appellant referred to the definition of “writing” contained in s 4 of the Acts Interpretation Act 1915. It was noted that the word “writing” was there defined to include “any visible form in which words may be reproduced or represented”. Hence, it was argued that as there were forms of reproducing words in visible form in which signature would not be possible, it was inappropriate to construe the expression “an agreement in writing” as referring only to a document or documents which had been signed. I think there is some force in this submission. As noted above, in my opinion, the signing of a document is not the only way by which a party may, in modern times, indicate its accession to the terms of a document. But in this case the respondents had not indicated by any form of writing at all their acceptance of the terms proposed by the appellant.
Finally, the appellant contrasted s 42(6) of the Legal Practitioners Act with s 26 of the Law of Property Act 1936 which prevents an action being brought on a contract for a sale of land “unless an agreement upon which such action is brought or some memorandum or note thereof is in writing and signed by the party to be charged by some person thereunto by him lawfully authorised”. The submission was that where Parliament requires not only writing but signature it says so. In the case of s 42(6), Parliament has not specified that a signature is required. Hence it could be inferred, so it was submitted, that Parliament did not intend a signature to be a critical part of the making of an agreement in writing for the purposes of s 42(6). As noted above, I accept that a signature is not necessarily required in order for there to be an effective agreement for the purposes of s 42(6). But it does not follow that because a signature is not required, Parliament intended that an agreement in writing could be made without there being any written indication of acceptance of the terms of the agreement by the client. Furthermore, the technique of construing one statute by contrasting it with the language used in another is of doubtful validity. In each case, it is the words actually used which are to be construed. Counsel did not refer to any authority for the proposition that implications as to the meaning of one expression can be drawn from a contrast of the words with the language used in another Act. The existence of such a principle, in my opinion, is quite uncertain. In the present case, s 26 of the Law of Property Act and s 42(6) of the Legal Practitioners Act have quite different histories. Section 26 is a modern day equivalent of the Statute of Frauds. Section 42(6) appears to have its origins in the Attorneys and Solicitors Act 1870 (UK). Indeed, it might be thought that a clearer indication of Parliament’s intention is gained by the use in s 42(6) of a form of words which have a well understood and longstanding construction in relation to a solicitor’s entitlement to costs.
Accordingly, I consider that the Master was correct in concluding that whilst there had been an oral communication of acceptance of the Terms of Engagement only, the parties had not, for the purposes of s 42(6), made an agreement in writing.
Denial of Natural Justice
I consider that this ground can be dealt with quite shortly. Mr Viscariello has deposed to being taken by surprise by the objection to the Bill of Costs being taxed using the charges set out in the Schedule of Fees. When he became aware that that was the issue, Mr Viscariello applied for an adjournment in order that he could prepare an argument. The Master refused that adjournment.
It is plain enough that the respondents’ present solicitors had put the counsel who was to appear at the hearing on notice of the challenge to the use of the Terms of Engagement and Schedule of Fees in the taxation. This was a person other than Mr Viscariello. It was arranged, only shortly before the hearing, that Mr Viscariello would appear for the appellant instead. The foreshadowed challenge of the respondents was not brought to his attention. In those circumstances, it was unfortunate that the Master did not accede to the request for the adjournment. Although I have rejected the appellant’s submissions, it cannot be said that the point is straightforward. Given that he was taken by surprise, Mr Viscariello should have been given the opportunity to present a full argument. Had the adjournment been allowed, the respondents would not have suffered any prejudice which could not have been cured by an order for costs. However, the issue involves a question of law, and not of evidence. In the events that have happened the appellants have been able to agitate on the appeal a full argument. In those circumstances it is unnecessary to say anything further about this ground.
Absence of Full Reasons
The Master’s reasons were brief but in the context of the debate which had occurred before him, the Master’s reason for his decision were clear enough. The appellant understood why the Master had ordered a fresh Bill of Costs in taxable form to be filed and served. He took the view that an oral acceptance only of the Terms of Engagement and Schedule of Fees was insufficient to constitute that document an agreement in writing for the purposes of s 42(6). This ground of appeal is not made out.
Conclusion
For the reasons which I have given, I conclude that the Master was correct in deciding that the parties had not made an agreement in writing in respect of costs as contemplated by s 42(6). Accordingly the appeal should be dismissed.
The orders of the Court are:
1.An extension of time to 20 August 2004 for the institution of the appeal is granted.
2.The appeal is dismissed.
I will hear the parties as to costs.