Orio Holdings Pty Ltd v Costi & Co (No 3) - [2009] SASC 359

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal from a Master: Application)
ORIO HOLDINGS PTY LTD & ANOR v COSTI & CO (NO 3)
[2009] SASC 359
Judgment of The Honourable Justice Vanstone
25 November 2009
PROFESSIONS AND TRADES - LAWYERS - REMUNERATION - COSTS AGREEMENTS - OTHER MATTERS
Application for review of a provisional costs order made by a Master - written retainer agreement between solicitor and clients remained unsigned - whether Master erred in finding that there was no oral acceptance by clients of that written retainer agreement - whether Master erred in finding there was no acceptance by conduct of the written retainer agreement.
Held: open for Master to find that there was no oral acceptance of the terms of the written retainer agreement - conduct relied on by solicitor to show acceptance of terms of written retainer agreement ambivalent - application dismissed.
Orio Holdings Pty Ltd & Anor v Costi & Co (2008) 257 LSJS 185; Empirnall Holdings Pty Ltd v Machan Paull Partners Pty Ltd (1988) 14 NSWLR 523, considered.

ORIO HOLDINGS PTY LTD & ANOR v COSTI & CO (NO 3)
[2009] SASC 359
Civil

VANSTONE J: By order made 12 August 2008 I referred back to a Master a review of a costs order made by him so that he might make further findings on specific matters of evidence.
The history of the matter is set out in the accompanying reasons I then gave: Orio Holdings Pty Ltd & Anor v Costi & Co [2008] SASC 218; (2008) 257 LSJS 185. The Master has now made the further findings of fact requested of him. The matter has returned to me along with a new Notice of Appeal. I consider that the new notice is both otiose and incompetent, first, as no orders disposing of the original matter were ever made, and second, because an appeal lies against orders rather than findings, and the only order made by the Master in conjunction with the further findings was to refer the matter back to me. I propose to dispose of both originating processes.
A number of the original complaints of the appellant’s solicitor were dealt with by me in my earlier reasons. The delivery of those reasons, as well as the additional findings made recently by the Master, have narrowed and clarified the issues.
Mr Hoile, for the solicitor, now presses two grounds of review. First he argues that the Master’s conclusion that there was no express oral agreement to the terms of the written retainer agreement produced by the solicitor was against the weight of the evidence. Then he argues that, in any event, the Master applied an incorrect legal test in considering the question whether there was acceptance of the written retainer by conduct and that this led to error in rejecting the solicitor’s contention that there was acceptance by conduct.
The Master found that a draft written retainer agreement was generated by the solicitor on 22 April 2004. The solicitor’s evidence before the Master was that on 22 April the clients (Orio Holdings Pty Ltd and its director, Mr Psevdos) agreed with the terms of the document, although he was dismissive of it and not interested to discuss it. He was said to be more focussed on the subject matter of the prospective litigation. The solicitor said that on the basis of that agreement he advised the clients he would reprint the document in final form in a letter. He said his purpose in drawing the second version was so that the clients might sign it. The fact of the 22 April discussion is contemporaneously recorded in the second paragraph of a letter dated 23 April:
We confirm that on 22 April 2004 we discussed with you a draft of this letter (which did not contain the first two paragraphs hereof) and that you were happy to agree to the matters referred to therein, which we have set out below by way of confirmation thereof.
At the end of this seven-page letter provision is made for Mr Psevdos to confirm that he has read and agreed to all the terms and undertakings related to the retainer. Over his name is a dotted line and, under the name, the date, 23 April 2004. It is common ground that the clients did not ever sign the letter. The solicitor told the Master that he had invited Mr Psevdos to read the document, to think about it and to get independent legal advice on it if he wished. He said Mr Psevdos made it quite clear he was happy with the agreement and could not be bothered going through it. The solicitor said that at the end of the meeting on 23 April, while he had agreement to the terms of the letter, he left it with Mr Psevdos in case he had second thoughts about proceeding. The solicitor said he would not have held the clients to the agreement had Mr Psevdos changed his mind. I might interpolate that Mr Psevdos’s position was that no meeting whatsoever took place between himself and the solicitor on 23 April and that he never saw the letter. The Master found that the solicitor gave the unsigned retainer agreement in its final form to Mr Psevdos on 23 April 2004.
In his more recent reasons, the Master made the following finding on this issue:
The retainer document was left with the [clients] for them to consider and to sign it if they accepted all of its terms. The [solicitor] was embarking on the urgent work of instituting and prosecuting Supreme Court proceedings for the [clients].
In my view the statement in evidence by the solicitor to the effect that he anticipated that the clients would sign the document on 23 April and that was part of the reason for presenting it, coupled with the fact that the document clearly had provision for such a signature, rather undermines any weight that might otherwise be given to the assertion in the letter that Mr Psevdos had indicated on the previous day that he was happy to agree to the terms. Neither the assertion that he was dismissive about the document, nor the solicitor’s intimation that he would have been prepared to allow the clients to withdraw from the agreement after consideration, explains the failure to sign the document on that occasion, or even subsequently. In circumstances where the Master expressed a lack of confidence in the evidence of all the witnesses called before him and specifically rejected the evidence of the solicitor’s secretary as to statements made by the clients about the retainer agreement, I consider it was open to the Master to find that there was no acceptance of all the terms of the retainer agreement either on 22 or 23 April. That finding was not against the weight of the evidence.
Counsel’s second contention is that the judge erred in applying the legal principles relating to acceptance by conduct.
In my previous reasons given in this matter at [19] I set out a short quotation from Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 at 535, to this effect:
… where an offeree with a reasonable opportunity to reject the offer of goods or services takes the benefit of them under circumstances which indicate that they were to be paid for in accordance with the offer, it is open to the tribunal of fact to hold that the offer was accepted according to its terms.
Mr Hoile’s complaint is that, consistent with that principle, the Master should have found that, the solicitor having made the offer to act upon the basis of the terms contained in the 23 April letter, the fact that the clients gave further instructions to the solicitor must, objectively, indicate an acceptance of that offer. This echoes an argument put to me and dealt with on the first occasion the matter came before me. He also puts that payment by the clients of various invoices for fees which he argues were based on the retainer agreement was further evidence of acceptance.
In my mind, the true complaint made is not one going to the formulation of the legal principle, but rather to the application of that principle by the Master to the facts before him. In any event, I consider that the Master was correct, both in his formulation of the principle and in its application to the facts. The critical deficit in the solicitor’s argument on this point is that there was no finding by the Master that the solicitor made it clear that, absent any agreement to the written retainer, he would not further act. Certainly that was his evidence. However, the Master found, in his most recent reasons, that the solicitor’s continued preparedness to act was not conditional upon acceptance of the retainer agreement. He had acted for the clients previously upon terms orally agreed, the clients had raised this particular litigious issue with the solicitor on 1 April and the solicitor had agreed to act; the clients had instructed the solicitor on 22 April; further discussions on the topic of the litigation had taken place on 23 April; the continuation of instructions after that time was as much, if not more, referable to the pre-existing relationship between the men, including an oral retainer, as it was to any written retainer agreement. The same can be said of the payment of invoices. These do not elucidate the issue. The conduct upon which the solicitor relies for acceptance of the terms of the written retainer is colourless. The argument of acceptance by conduct fails.
Mr Hoile put a further argument to the effect that the clients were estopped from denying acceptance of the terms. However, he was unable to articulate in what circumstances that argument could avail him, where his principal arguments did not. In my mind the estoppel argument adds nothing. I do not propose to deal further with it.
Conclusion
Because of his reservations about the reliability of both clients and solicitor on the important factual issues in this matter, the Master found it difficult to make affirmative findings about what was done and said in respect of the retainer agreement. His rejection of the clients’ denial of being present on 23 April did not lead him to wholly accept the solicitor’s version of what occurred at that time. The onus of proof remained on the solicitor and the Master found that he was not persuaded that the terms of the written agreement were accepted. On the evidence that position was open.
Orders
I make orders as follows:
1.order number 1 made by me on 12 August 2008 is revoked;
2.pursuant to r 278(6) Supreme Court (Civil) Rules 2006 I confirm the costs order as entered in the Court’s record by the Master on 3 April 2008 as a judgment of the Court, and
3.the Notice of appeal (FDN 33) is struck out.