Pezzano v Hoffmans (A Firm) - [2001] WASCA 76

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE FULL COURT (WA)

CITATION: PEZZANO -v- HOFFMANS (A FIRM) [2001] WASCA 76

CORAM: KENNEDY J
IPP J
ANDERSON J

HEARD: 19 JULY 2000

DELIVERED : 15 MARCH 2001

FILE NO/S: FUL 43 of 1999

BETWEEN: ROCCO DOMENICO PEZZANO
Appellant
AND
HOFFMANS (A FIRM)
Respondent

Catchwords:

Contract - Whether concluded agreement - Alleged reaffirmation of agreement - Absence of consideration - No concluded agreement - Turns on own facts

Legislation:

Nil

Result:

Application for leave to amend statement of claim dismissed
Appeal dismissed

Representation:

Counsel:

Appellant: Dr J T Schoombee & Mr G D Crocket
Respondent: Mr M W Odes QC & Mr R G Walton

Solicitors:

Appellant: G D Crocket & Co
Respondent: Hoffmans

Case(s) referred to in judgment(s):

Nil

Case(s) also cited:

Australian Coal & Shale Employees' Federation v The Commonwealth (1956) 94 CLR 621
Cooke v Rickman [1911] 2 KB 1125
Coulton v Holcombe (1986) 162 CLR 1
D'Alessandro v Legal Practitioners Complaints Committee (1995) 15 WAR 198
Dalgety Australia Ltd v Rubin, unreported; FCt SCt of WA; Library No 5485; 24 August 1984
Garden City Wallpaper & Curtain Centre Pty Ltd v Barenfar Pty Ltd, unreported; FCt SCt of WA; Library No 980544; 18 September 1998
Household Financial Services Ltd v Braybrook [1991] 2 VR 577
Leotta v Public Transport Commission (NSW) (1976) 50 ALJR 666
Lewandowski v Lovell (1994) 11 WAR 124
Londish v Gulf Pacific Pty Ltd (1993) 45 FCR 128
Lovell v Lovell (1950) 81 CLR 513
Maloney v Commissioner for Railways (NSW) (1978) 52 ALJR 292
Metwally v University of Woollongong (1985) 60 ALR 68
Nescor Industries Group Pty Ltd v Miba Pty Ltd (1997) 150 ALR 633
Paramasivam v Flynn (1998) 90 FCR 489
Pask v Owen [1987] 2 Qd R 421
Renowdon v McMullin (1970) 123 CLR 584
Sangora Holdings Pty Ltd v Dunstan (1996) 16 WAR 552
Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146
University of Woollongong v Metwally (1984) 158 CLR 447
Water Board v Moustakas (1988) 180 CLR 491
Watts v Turpin (1999) 21 WAR 402
Western Australian Land Authority v Simto Pty Ltd, unreported; FCt SCt of WA; Library No 980560; 25 September 1998
Whim Creek Consolidated NL v Colgan (1991) 31 FCR 469
Williams v Spautz (1992) 174 CLR 509
Williams v Spautz [No 2] (1993) 67 ALJR 388
Woolf v Snipe (1933) 48 CLR 677

KENNEDY J: I have had the advantage of reading in draft the reasons to be published by Anderson J with which I am in agreement. I would therefore dismiss the appellant's application for leave to amend the statement of claim. I would dismiss the appeal.
IPP J: I have had the benefit of reading the reasons for judgment of the Hon Justice Anderson. I am in agreement with those reasons and have nothing further to add.
ANDERSON J: This is an appeal from a judgment delivered in this Court on 31 March 1999 dismissing the appellant's claim for a declaration that:
" … by an agreement between the [appellant] and the [respondent] made in about May 1993, the [respondent] agreed not to charge the [appellant] for all further work done by the [respondent] from that date in relation to the Ballato litigation, save as to reasonable disbursements."
The respondent is a firm of solicitors and the appellant was their client. The principal of the respondent firm was Mr David Hoffman and he had the conduct of the appellant's matters. These matters included what is referred to in the above form of declaration as "the Ballato litigation". The following is a brief account of that litigation.
In 1982, the appellant leased business premises to Mr Francesco Ballato and there were disputes over rent and arising from other business dealings between the two. The appellant originally instructed another firm of solicitors to act on his behalf in those disputes. He instructed them to sue Ballato for arrears of rent, possession of the premises and for the price of goods (apples) sold by the appellant to Ballato. Judgment was obtained, including for a sum of about $22,000. This judgment debt was not paid, and on the appellant's instructions a writ of fieri facias was issued and property at Ballato's premises was seized by the sheriff. In 1987, Mrs Concetta Ballato started an action against the appellant in conversion and detinue arising out of the sheriff's seizure. In 1988, the appellant changed solicitors and the respondent acted for the appellant thereafter. In 1990, Mrs Ballato started another action, this time against the sheriff. The sheriff joined the appellant as a third party. These two actions were later consolidated and are the essence of what is referred to in the form of declaration as "the Ballato litigation".

By 1993, the appellant had become very unhappy with the respondent. The dissatisfaction appears to have been general, but there were two particular matters of special concern to the appellant.
The first arose in late 1989. The appellant had instructed Mr Hoffman to commence bankruptcy proceedings against Mr Ballato in respect of the unpaid judgment debt. This was in about October 1988. A petition was issued. In late 1989, the appellant was shocked to receive a visit from a sheriff's officer seeking to recover more than $4,000 in legal fees and sheriff's charges said to be owing by the appellant to Mr Ballato in respect of the bankruptcy petition. It transpired that unknown to the appellant the petition had been dismissed with costs in December 1988 and the costs had been taxed and it was these costs which the sheriff was seeking to levy. The sheriff's officer seized the appellant's forklift truck and in order to prevent it being sold at a sheriff's auction, the appellant paid the amount due. He claims never to have had a satisfactory explanation from Mr Hoffman as to how the bankruptcy petition came to be dismissed without his knowledge and as to how a bill of costs came to be taxed against him. In his evidence at trial, he said that although he continued to retain the respondent firm, relations between himself and Mr Hoffman were very bad after that.
The second matter arose from the respondent's handling of the Ballato litigation itself. The consolidated actions by Mrs Ballato against the appellant and the sheriff were proceeding to trial in this Court. It was expected that they would be heard in early August 1993 before Walsh J and that they would take about five days of trial (in fact the trial lasted 32 days). The appellant had already paid some $43,000 in costs to the respondent for services rendered in the Ballato litigation. He did not think Mrs Ballato had any money. It was the appellant's evidence that he instructed Mr Hoffman on a number of occasions to obtain an order for security for costs against Mrs Ballato, but Mr Hoffman never did.
It was the appellant's case on the pleadings, and in evidence at trial, that his dissatisfaction with Mr Hoffman came to a head in a confrontation in May 1993 at the appellant's premises on an occasion when Mr Hoffman attended to have the appellant sign an affidavit in respect to the pending proceedings. This is the occasion on which the agreement of compromise referred to in the form of declaration is alleged to have been made. The appellant's evidence‑in‑chief was given by way of affidavit and his evidence with respect to the making of the agreement is as follows:
"22.Between December 1991 and early 1993 I had little contact with David Hoffman. In about May 1993 David Hoffman came to see me. He had an affidavit for me to swear. I told him that I was annoyed about the bailiff coming to seize my forklift and about not having security for costs. I was also annoyed because I had paid a lot of legal fees in the Ballato matters for nothing. He said something to the effect that he had done something wrong but did not explain. I said to David Hoffman that from now on I held him responsible and would sue him for negligence if I lost against Ballato or anything else happened. David Hoffman said to me that from that day on it would cost me nothing."
That is the whole of the evidence given by the appellant as to the making of the agreement of compromise. At trial he merely confirmed the truth of his affidavit. However, the appellant did give evidence of another meeting between himself and Mr Hoffman at which Mr Hoffman again said that he would not charge the appellant "any more fees in the Ballato matter". This second meeting was witnessed by two members of the appellant's extended family, a Mr Ferguson and a Mr Circosta. The appellant's evidence about it is contained in par 23 to par 25 of his affidavit as follows:
"23.One evening, late in July 1993, David Hoffman came to see me again at my business premises, 426‑428 Welshpool Road, East Cannington. Also present were my son‑in‑law, Agostino Circosta, and Brian Ferguson, the husband of my wife's sister.
24.During that meeting, I provided Mr Hoffman with some information that he had requested of me. I was quite angry with him because I believed that he was not well prepared for trial.
25.Again, during that meeting Mr Hoffman said to me that he would not charge me any more fees in the Ballato matter."
The appellant was cross‑examined at length, and it would be fair to say that serious inroads were made into his credibility. The learned trial Judge rejected him as a reliable witness and found that his evidence could not be accepted unless corroborated. In this appeal, there is no challenge to that finding.
Both Mr Ferguson and Mr Circosta, who are referred to in par 23 of the affidavit, were called to give evidence on behalf of the appellant. His Honour described them as "very impressive" witnesses. They gave evidence to the effect that they were indeed present at a meeting between the appellant and Mr Hoffman as deposed to by the appellant in par 23 of his affidavit. Mr Ferguson's evidence was that at this meeting the appellant threatened to sue Mr Hoffman for negligence if he lost the case. He gave evidence that Mr Hoffman responded to this by saying "that there was nothing to be concerned about, that everything was under control and that the case was not going to cost Mr Pezzano anything". Mr Circosta's evidence was broadly to the same effect.
It is important to appreciate that on the appellant's case, the meeting which was attended by Mr Ferguson and Mr Circosta was the second meeting. It was not the meeting at which the agreement itself is alleged to have been made. The relevant paragraphs of the statement of claim are as follows:
"11.From late 1987 onwards the plaintiff voiced concerns to Hoffman that both Mr and Mrs Ballato were persons of straw and that it was essential to obtain orders that security be provided for the plaintiff's costs in the Ballato litigation.
13.In or about May 1993, the plaintiff and Hoffman orally agreed that in consideration of the plaintiff releasing the defendant from any liability arising from the failure of the said petition for bankruptcy, the making of the said costs order and the failure to notify the plaintiff of the necessity to satisfy same, and the defendant's omission to seek orders for security for the plaintiff's costs, Hoffman and the defendant would conduct the remainder of the Ballato litigation without charge save that by implication the plaintiff would remain responsible for the defendant's reasonable disbursements.
14.Hoffman orally re‑affirmed to the plaintiff the arrangement set out in the previous paragraph in or about late July 1993 and in the evening of the 5th day of the trial of the Ballato litigation."
(The statement of claim does not contain a par 12.)
It can be seen that on the plaintiff's pleaded case the first meeting (in about May 1993) was the meeting at which the agreement was made; the second meeting in late July 1993 (witnessed by Mr Ferguson and Mr Circosta) merely "reaffirmed" that agreement, whatever that might mean. The significance of this is that there was no evidence except the appellant's evidence that there was a meeting in about May 1993 or that an agreement of compromise in the terms pleaded in par 13 of the statement of claim was ever made.
I would observe in passing that it is highly questionable whether, even if the appellant's evidence as to the May 1993 meeting had been accepted, that evidence was sufficient to prove an agreement. If all that you have is a complaint by a client about past failings and a threat to sue the solicitor if anything else goes wrong, and a reassurance by the solicitor that from now on the client will not have to pay, there is not a mutually binding contract. The client would be very surprised to be told that out of that exchange, he had bargained away all of his rights to sue his negligent solicitor.
The learned trial Judge reserved his decision and in a judgment handed down on 4 February 1998, his Honour held (AB 29):
"I am not satisfied that there was any meeting or agreement in or about May 1993 as alleged in paragraph 12 [sic 13] of the statement of claim."
It is apparent from his reasons that the learned trial Judge arrived at that conclusion because he rejected the appellant as a reliable witness and because there was no other evidence to support the appellant's story that such an agreement had been made in or about May 1993 or at any other time.
It is important to appreciate that this finding was not just a finding about dates. It was a rejection of the appellant's case as to its substance. It was a finding that an agreement in the terms pleaded was not proven.
The respondent might have been forgiven for thinking that the appellant's claim would be dismissed. That course was not taken or at any rate not immediately. Instead, his Honour announced in his reasons that because he accepted Mr Ferguson and Mr Circosta as reliable witnesses, especially Mr Ferguson, he would hear submissions as to whether the Court could grant relief to the appellant based on the events of the July meeting which had been witnessed by them. What he said was (AB 35 ‑ 36):
"In accord with Mr Ferguson's evidence, I find that at the meeting in or about late July 1993, the solicitor [Mr Hoffman] said to the plaintiff, amongst other things, that there was nothing to be concerned about; that everything was under control; they would not lose and that it would not cost Rocco anything.
In my view, those statements by the solicitor should prohibit him from rendering any professional fees for work done after that date. It would be unfair or unjust if he were left free to ignore them: see Dixon J in Grundt v Great Boulder Pty Ltd Goldmines Ltd (1947) 59 CLR 641 at 675, 676. See also the discussion of estoppel by Mason and Deane JJ in Legione v Hateley (1982) 152 CLR 406 at 430 ‑432. There was also a compromise of the claims which the plaintiff was making against him.
My tentative view, subject to hearing further submissions from counsel, is that there was an estoppel and an enforceable agreement that the solicitor would not charge further professional fees in the matter. For the solicitor to render fees for work done after that date would be completely inconsistent with what Mr Ferguson said happened. Subject to hearing counsel on this question, if an estoppel was claimed in the statement of claim it would be upheld."
The trouble with this is that his Honour was purporting to adjudicate (albeit, perhaps, provisionally) upon claims which had not been made. Firstly, as to his Honour's reference to estoppel, there simply was no case of estoppel sought to be made out by the appellant. Secondly, as to his Honour's finding that an enforceable agreement was made at the July 1993 meeting, it was not the appellant's case that any agreement was made at the meeting witnessed by Mr Ferguson and Mr Circosta. According to par 14 of the statement of claim, there was merely a "reaffirmation" of an existing contract, at this meeting. Incidentally, there appears to have been a good deal of controversy at trial about par 14 and a lot of time was spent in discussion and debate as to its real point. This is not surprising. What the word "reaffirmed" means is far from clear. About all that can safely be said is that par 14 is most certainly not a plea of contract. It seems to me to be no more than a plea that at the July meeting the respondent admitted or acknowledged the existence of the May agreement. To plead such an admission or acknowledgment is to plead mere evidence. If that is the point of par 14, its presence in the statement of claim contravenes the rule that evidence must not be pleaded: O 20 r 8(1). If that is not its point, it appears to have no point. It would have been better if it had been struck out. The case is a neat example of the trouble and distractions that invariably arise when the rules of pleading are not enforced.
In response to the learned trial Judge's invitation to counsel to make further submissions, it appears that there were several attempts to formulate an amended statement of claim and nearly a year after the learned trial Judge's first decision was handed down, he did hear further argument, including an application on behalf of the appellant to make substantial amendments to the statement of claim. These amendments were put up in the form of a minute of substituted statement of claim containing 12 new paragraphs.
There is no need to set them out. The effect of them can be summarised as follows.
Paragraph 13 was substantially in the same terms as it had been at trial, save that it was renumbered 12 and there were some insubstantial amendments to the last line or two. There was a new par 14 alleging in the alternative that the agreement, pleaded in par 13 (now 12) as having been made in about May 1993, had been made in "late July 1993". The old par 14 remained in, but was renumbered 13. There were new pars 16 to 26. These new paragraphs are lengthy and rather complex and I do not find them easy to understand. As best I understand them, they plead out causes of action in estoppel and waiver.
In the end, the learned trial Judge declined to allow the amendments. His Honour held that "it would be unjust to the defendant if I now allowed the plaintiff to amend the pleadings and the case to continue after the facts which I have found. The plaintiff chose to fight the case on the pleadings as they were at 21 November 1997. He has not succeeded with that claim and the action must therefore be dismissed".
In my respectful opinion, this was an inevitable result.
The notice of appeal, which I do not find easy to follow, appears to plead three substantive grounds. In the first place, it is contended that there should have been a finding that there was an agreement in the terms pleaded in the original par 13 except that it was made in July 1993. With respect, this contention is based on a misconception, namely, that it was only on the issue as to the date of the agreement that the appellant had failed to make good his case, so that the trial Judge should have allowed an amendment to correct that immaterial matter. This is not so. The finding, properly understood, was that an agreement in the terms pleaded in par 13 of the statement of claim, or substantially in those terms, was not proved. That was a finding well and truly open. Indeed, once the appellant's evidence was rejected, there was no evidence whatever of such an agreement. On the evidence of Mr Ferguson and Mr Circosta as to the exchanges that took place between the parties at the July 1993 meeting, no agreement was made at that meeting in the terms pleaded in par 13, nor was there any reference to any earlier agreement. The evidence of Mr Ferguson and Mr Circosta contains no reference to any discussion between the parties with respect to matters such as the dismissal of the bankruptcy petition, the respondent's failure to notify the appellant of the dismissal, the failure to obtain an order for security for costs and the other matters which are the basis of the compromise agreement pleaded in par 13.

Actually, I think it is impossible to spell out of their evidence the basic ingredient of a synallagmatic contract; namely, an exchange of promises. On their evidence, the appellant made no promises at all to Mr Hoffman. He delivered a blunt threat.
Secondly, it is pleaded that if there was no enforceable agreement in the terms pleaded in par 13 made either in May 1993 or in July 1993, his Honour should have held that the respondent was estopped from charging any professional fees after July 1993 in respect to the Ballato litigation in consequence of what Mr Hoffman said at the July 1993 meeting. This amounts to a contention that the appellant, having failed to establish the only cause of action on which he sued - a cause of action in contract - should have been permitted after trial and judgment to raise an entirely different cause of action based on promissory estoppel. In support of this contention, it was submitted, in effect, that all necessary findings of fact had been made on issues joined at the trial to sustain a claim for relief based on promissory estoppel. Therefore, it was merely a matter of bringing the pleadings into line with the case as it was actually fought. I do not accept this submission. It is plain from his Honour's second set of reasons that he was quite satisfied the trial was a trial of the question whether the agreement pleaded in par 13 had been made; and of that question alone.
To allege an agreement supported by a consideration is one thing. To allege a promise unsupported by consideration, but giving rise to an estoppel, is quite another. The two heads of claim involve different factual inquiries. In an action on a contract, there is no question of reliance or detriment or anything of that kind. These are, however, critical questions in an action based upon an estoppel. It cannot possibly be said that a case fought out on the first head of claim, that of contract, necessarily covers the ground of the second head of claim. No doubt, parties to litigation are free to put aside the pleaded issues and to conduct a case on issues not pleaded. But this is a practice which is not to be encouraged and I am not persuaded that this trial was conducted on that basis. There was no suggestion that an estoppel was being alleged by the appellant. In fact, it is quite obvious from the transcript of pre‑trial hearings to which we were referred that the appellant positively disavowed any case based upon an estoppel. In my opinion, his Honour was right to conclude that it would be unjust and unfair to the respondent to allow the appellant, after the trial had finished, to amend his pleadings to assert a case based upon estoppel.
Thirdly, it was argued that this Court should now allow amendments to the statement of claim (amendments which are different from those hitherto proposed) and should order the case to be remitted to the learned trial Judge "for the determination of the matters" arising from the amendments. Suffice to say I am not persuaded that we should do so.
When all is said and done, this was a straightforward case in which the appellant sued the respondent on a simple agreement of compromise said to have been made on a single occasion at a meeting between the parties in 1993. The appellant failed to prove the agreement. The action was rightly dismissed.
In my opinion, the appeal should be dismissed.