Pirone v Craig J Roberts (Solicitor) Pty Ltd Trading as Paul Kirk, Roberts & Co - [2006] SASC 134

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
PIRONE v CRAIG J ROBERTS (SOLICITOR) PTY LTD TRADING AS PAUL KIRK, ROBERTS & CO
[2006] SASC 134
Judgment of The Honourable Justice Layton
11 May 2006
APPEAL AND NEW TRIAL - APPEAL GENERAL PRINCIPLES
PROFESSIONS AND TRADES - LAWYERS - REMUNERATION - TAXATION OF COSTS AND FEES - GENERAL PRINCIPLES
PROFESSIONS AND TRADES - LAWYERS - SOLICITOR AND CLIENT - RETAINER
Appeal from the decision of a magistrate - appellant ordered to pay legal costs pursuant to an agreement with the respondent solicitors for legal services - whether respondent entitled to legal fees set out in a bill of costs - whether the appellant received and accepted a no win-no fee retainer agreement including terms that client liable to pay for legal fees if she failed to follow legal advice - discussion of general principles regarding retainer agreements between solicitor and client - consideration of requirements of s 42(6) of the Legal Practitioners Act 1981 - consideration of fiduciary obligations of solicitors to clients - Held: magistrate erred in finding retainer agreement entered into - appeal allowed
Supreme Court Rules 1987 s 97.04; Legal Practitioners Act 1981 s 41(1); s 42(1); s 42(6); Magistrates Court Act 1991 s 40(3), referred to.
McNamara Business & Property Law v Kasmeridis (2005) 92 SASR 382, discussed.
Aubigny Pty Ltd v Kowshu Enterprises Pty Ltd (1997) 191 LSJS 202; Caruso v Iarossi [2003] SASC 117; O'Reilly v Law Society of New South Wales (1988) 24 NSWLR 204; Summersides & Summersides v Rasch Pty Ltd (Unreported, Supreme Court of South Australia, King CJ, Judgment No S4209, 17 September 1993); Wong v Kelly (1999) 154 FLR 200, considered.

PIRONE v CRAIG J ROBERTS (SOLICITOR) PTY LTD TRADING AS PAUL KIRK, ROBERTS & CO
[2006] SASC 134

LAYTON J: This is an appeal from a decision of a Magistrate who upheld the respondent’s claim in contract against the appellant for payment of legal costs and interest totalling $7,772.59. For convenience I will refer to the appellant as the defendant and the respondent as the plaintiff.
The Magistrate’s judgment was delivered on 23 December 2005 and the appeal to this Court was instituted on 25 January 2006. That is outside the 14 day period specified in rule 97.04 of the Supreme Court Rules 1987 and the defendant therefore also seeks an extension of time.
At the hearing before me the defendant indicated that the delay occurred because she was awaiting the outcome of an application for the waiver of filing fees which she said took about a fortnight. I also note that some time would have been lost because this was over the Christmas holiday period. No point was taken by the plaintiff on this issue and I granted an extension of time in which to institute the appeal.
The plaintiff is a firm of solicitors. The defendant retained the plaintiff to act for her in relation to a claim for worker’s compensation pursuant to the Worker’s Rehabilitation & Compensation Act 1986.
The plaintiff acted for the defendant between November 2001 and March 2003. Mr Roberts, who argued the case in the Magistrates Court and on appeal, was the member of the firm responsible for the conduct of the defendant’s claim.
In about November 2003, the plaintiff delivered to the defendant a Bill of Costs of the kind required by s 41(1) of the Legal Practitioners Act 1981 (“the Act”). The defendant declined to pay that bill. Thereupon the plaintiff sued the defendant in contract seeking payment of the amount specified in the Bill of Costs. The main issue, both before the Magistrate and in this Court, was the plaintiff’s entitlement to those legal fees as set out in the Bill of Costs. This issue was complicated by the dispute between the parties as to the existence of a retainer agreement, and the relevant terms of any agreement.
Findings of the Magistrate
The Magistrate found that the terms upon which the plaintiff acted for the defendant were set out in a document entitled “NO WIN – NO FEE RETAINER AGREEMENT” which was attached to a letter dated 20 December 2001. Both before the Magistrate and in this Court the defendant acknowledged that she had received the letter of 20 December 2001, but her evidence before the Magistrate and her submission before me was that the no win – no fee retainer agreement had not been enclosed with the letter. The Magistrate preferred the evidence of the plaintiff’s witness Mr Roberts and found that the no win – no fee retainer agreement had been enclosed with the plaintiff’s letter dated 20 December 2001.
The terms of that agreement included that the plaintiff would act on a no win – no fee basis. However, pursuant to Clause 3 of the no win – no fee agreement if the defendant refused to follow legal advice, the plaintiff was entitled to terminate the provision of legal services, and to charge the defendant on the Supreme Court scale. The Magistrate found that that the requirements of that clause were satisfied, and that the plaintiff was therefore entitled to the amounts claimed in the Bill of Costs. The Magistrate allowed the plaintiff’s claim, which with interest, court filing fees and solicitors’ fees made a total judgment sum in favour of the plaintiff of $7,772.59. The plaintiff withdrew its claim in respect of two of the three items claimed as disbursements, and the Magistrate refused the plaintiff’s claim to the third disbursement, on the basis that the plaintiff was not able to establish that that amount had been paid by the firm.
The Appeal
The grounds of the appeal lodged by the defendant, who represented herself, were sparse. They simply indicated that she disagreed with the decision of the Magistrate because she considered that the plaintiff had the opportunity to finalise her matter and decided not to and that she had not been adequately represented in her compensation claim.
Pursuant to s 40(3) of the Magistrates Court Act 1991 an appeal from the civil division of the Magistrates Court is by way of re-hearing and upon hearing the appeal, the court can receive and act on further evidence which was not before the Magistrates Court.[1] On a hearing of an appeal, the court must reach its own view of the case by making an independent assessment of the evidence after giving due weight to the advantage of the Magistrate in having heard the witnesses.[2] The appellate court must also decide the facts, as well as the law, for itself.[3]
[1] Summersides & Summersides v Rasch Pty Ltd (Unreported, Supreme Court of South Australia, King CJ, Jud No S4209, 17 September 1993).
[2] Aubigny Pty Ltd v Kowshu Enterprises Pty Ltd (1997) 191 LSJS 202.
[3] Caruso v Iarossi [2003] SASC 117.
In this case the main issues before me are whether there was a retainer agreement entered into between the plaintiff and the defendant; if so what are the terms of that retainer; and, in particular, whether Clause 3 of the no win – no fee retainer agreement applies.
The defendant contended in her outline of argument on appeal that she did not receive a copy of the no win - no fee retainer agreement as found by the Magistrate and as alleged by the plaintiff. She also contended that, if she were bound by that agreement, she had not failed or refused to follow legal advice or failed or refused to co-operate. In the further alternative, the defendant argued that the plaintiff had terminated instructions and pursuant to Clause 1 of the no win – no fee retainer agreement, she was not liable to pay the solicitor’s costs.
Factual background
It is necessary at this point to set out briefly a history of the relationship between the plaintiff and defendant. On 28 November 2001 the defendant saw the plaintiff at his office. This much is at least confirmed by a letter dated 20 December 2001 from the plaintiff to the defendant the receipt of which is not contentious. The relevant passages are:
As discussed with you on 28th November 2001 when you first consulted the writer and again more recently when the hearing took place at the Workers Compensation Tribunal on 19th December 2001, the writer is prepared to act on your behalf with respect to your work injury claims upon the basis that the solicitor costs will be charged in accordance with the Supreme Court Scale of fees and upon the basis that solicitor costs and disbursements will be paid when your claims are finalized with solicitor/client costs and disbursements to be a first charge on compensation monies to be paid to our Trust Account when your claims are finalized.
…The writer confirms that he is prepared to act on your behalf essentially on “no win – no fee” basis and that if your claims cannot be satisfactorily settled or ultimately fail at a hearing of the Workers Compensation Tribunal that the writer will accept whatever costs and disbursements can be recovered under the provisions of the Workers Rehabilitation & Compensation Act and Regulations
In acting on your behalf on a “no win – no fee” basis, we reserve the right to cease acting on your behalf if at any time you refuse to take the writer’s properly considered legal advice for settlement of your case…
Please find enclosed herewith a copy of the medical report of Dr. Alan Cotton dated 20th September 2001 which was recently sent to the writer by Mr. Shopov solicitor acting for Catholic Church Insurances and we advise that the writer will endeavour to speak to you again before going away on leave at the end of the month.
Yours faithfully,
PAUL KIRK, ROBERTS & CO.
per:
CRAIG ROBERTS
Enclosure
A copy of this letter was Exhibit P1 before the Magistrate and stapled to that exhibited letter was a copy of the firm’s standard form no win – no fee retainer agreement.
The terms of that document are as follows:
“NO WIN – NO FEE” RETAINER
The basis of our retainer as discussed with you is as follows:
1. It will always be at the discretion of the solicitor handling your file as to whether Paul Kirk, Roberts & Co. continue or not continue with each stage of your claim for compensation and if it is perceived at any stage that there may be problems or difficulties with your case then Paul Kirk, Roberts & Co. reserve the right to indicate to you that there will be no continuation of legal services in relation to your case and in those circumstances you will only be liable for disbursements incurred on your behalf up until that time.
2. Should you at any stage change your mind about proceeding with your claim or for whatever reason require Paul Kirk, Roberts & Co. to cease acting or terminate the services of Paul Kirk, Roberts & Co. then and in such circumstances all solicitor costs and disbursements must be paid in full for all work undertaken on your behalf up until that time with solicitor costs to be charged in accordance with the Supreme Court Scale of costs.
3. If at any time you fail or refuse to follow the legal advice of Paul Kirk, Roberts & Co. for the settlement of your case or should you fail or refuse to co-operate with the solicitor handling your case then and in such circumstances Paul Kirk, Roberts & Co. will be entitled to give notification that legal services for your case will not continue and you will be liable for payment in full for solicitor costs and disbursements up until that time in accordance with the Supreme Court Scale of costs with such solicitor costs and disbursements to be paid as a first charge from any settlement monies ultimately recovered by you in relation to your claim or alternatively from your own financial resources.
4. In the event that Paul Kirk, Roberts & Co. continue to conduct your case to its conclusion and you are unsuccessful in recovering compensation or damages for your claim then no solicitor costs will be payable and Paul Kirk, Roberts & Co. will not render an account for legal services provided during the conduct of your case and you will only be required to pay disbursements incurred on your behalf during the conduct of your case.
5. On the basis that your claim is successfully finalized by Paul Kirk, Roberts & Co. or by any other solicitor instructed by you or by you personally after Paul Kirk, Roberts & Co. ceased acting on your behalf then and in such circumstances all solicitor costs of Paul Kirk, Roberts & Co. for legal services provided to you shall be payable in full in accordance with the Supreme Court Scale of costs together with all disbursements incurred on your behalf until your claim is finalized or until the time that Paul Kirk, Roberts & Co. ceased acting for you.
Should you have any queries regarding the terms herein you should immediately contact the solicitor handling your case to further discuss matters in that regard.
It is to be noted at this point that the letter Exhibit P1 does not state that a copy of any retainer agreement is enclosed. There is no reference to such a document at all but instead the letter refers to “the basis of our retainer as discussed with you”, and there are three paragraphs in the letter which refer to conditions of retainer, as set out above. There is nothing in the letter which suggests that there is a separate retainer agreement over and above the conditions which are set out in that letter.
The retainer agreement that is part of Exhibit P1 is not the solicitor’s file copy, but merely a standard form agreement. Further, Exhibit P1 did not contain a copy of the medical report of Dr Cotton being the only document referred to in the letter of 20 December 2001 which was stated as being enclosed. An explanation of the absence of the report of Dr Cotton in the exhibit was given by Mr Roberts at the hearing before me, being that the practice of the plaintiff firm is not to keep file copies of letters with the actual medical report attached. I accept this explanation.
At the hearing before the Magistrate, Mr Roberts was asked if the retainer agreement, which he claimed was attached to the letter, needed to be signed and sent back by the defendant. Mr Roberts said:
No, it wasn’t your Honour. That document was sent to Ms Pirone at her address and I believe she received that document. There’s certainly been reference to that letter and that document on a number of occasions.[4]
[4] Transcript of Proceedings, 8 December 2005, 5-6, line 34.
The Magistrate also asked further questions related to that document and information was given in the following terms:[5]
[5] Transcript of Proceedings, 8 December 2005, 22-24.
HER HONOUR:         What are you saying that you didn’t read either documents?
DEFENDANT:            No, I did read the documents. The letter was forwarded on to me but there was no retainer at the back. It’s got like a separate retainer thing at the back.
HER HONOUR:         Was this actually enclosed with this letter Mr Roberts.
MR ROBERTS:           Yes, your Honour. I’m not sure of that, your Honour. The letter refers to the “no win/no fee” retainer.
HER HONOUR:         That’s right. Is it your understanding that it was?
MR ROBERTS:           Yes, your Honour.
DEFENDANT:            No, I never received that, the retainer, until a later date through Stephen Lieschke. I received the letter but I didn’t receive the actual retainer.
HER HONOUR:         Can you recall it being enclosed Mr Roberts or is it just your practice.
MR ROBERTS:           Well it is the practice to enclose the retainer agreement, which is a standard agreement, when the letter is sent out in relation to the client’s case being taken on a “no win/no fee” basis, so that retainer agreement is sent with the letter confirming instructions that the firm will act for a client on that basis. The agreement is received with the letter.
HER HONOUR:         There’s no actual reference to it being enclosed though, is there?
MR ROBERTS:           The letter doesn’t actually say the “no win/no fee” document being enclosed specifically but it refers to the “no win/no fee” retainer.
HER HONOUR:         If you look at the first paragraph on p.2 it states ‘We reserve the right to cease acting on your behalf if you refuse to take the properly considered legal advice for settlement’. It doesn’t go on to say that in that event costs would be charged in accordance with the Supreme Court scale, does it?
MR ROBERTS:           But as I say your Honour the agreement was enclosed with this letter.
HER HONOUR:         You’re saying on the basis it being the usual practice rather than you recalling when you signed the retainer. I’m just trying to find out the extent of knowledge on it. It was your usual practice to do it. Can you say it was done in this case? But on the basis of it being usual practice.
MR ROBERTS:           It’s always sent out. I believe it was done in this case, your Honour.
HER HONOUR:         When you had the initial discussion with Mrs Pirone did you go through it with her. What was mentioned in relation to the “no win/no fee” retainer.
MR ROBERTS:           I indicated to her that I was prepared to act on that basis but there were conditions to that. It wasn’t an unconditional arrangement that there were conditions and that I would send her a letter shortly in that regard with the “no win/no fee” retainer standard agreement. We didn’t go into that issue in detail when I first saw her. It was certainly just mentioned but the specifics were not discussed in detail. But I did make it clear to her that there were conditions to that, that it wasn’t just an open ended arrangement. No solicitor is prepared really to do that. It has to be some conditional arrangement.
HER HONOUR:         Mrs Pirone so it’s your position that you received a retainer at a later date.
DEFENDANT:            Yes.
The information set out above, was the only evidence before the Magistrate as to whether a retainer agreement was entered into between the parties.
Retainer Agreements
The legislative requirements for entering into an agreement for the purposes of a contractual arrangement between lawyer and client are contained in s 42 of the Act. Section 42(6) provides:
(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.
The requirements of this section and the intention of Parliament in enacting such provisions have recently been considered by the Full Court in McNamara Business Law v Kasmeridis.[6]
[6] (2005) 92 SASR 382.
In McNamara the Court said that:
Section 42(6) is to be interpreted against the background that its terms were designed to promote sound and reasonable regulation of a profession that owes fiduciary duties to clients. The subsection, by its very terms, acknowledges that it is addressing an aspect of the relationship of solicitor and client. That relationship carries accepted obligations of confidence, trust and dependence. The section is not to be construed as taking away the protection provided to a client by the common law.[7]
[7] McNamara Business Law v Kasmeridis (2005) 92 SASR 382 [47].
The Court also considered the fiduciary duties which form part of the relationship between a solicitor and a client, and in particular the duty of disclosure.[8]
[8] McNamara Business Law v Kasmeridis (2005) 92 SASR 382 [48] – [51].

The Court observed that a retainer is a term used to “describe a contract between a solicitor and a client for the provision of legal services”.[9] There can be no retainer unless the elements of a contract are present. Like other contracts, the terms of the retainer, whether they be expressed or implied terms, determine the nature and scope of the contractual rights and obligations that apply to the relationship.[10]
[9] Wong v Kelly (1999) 154 FLR 200.
[10] McNamara Business Law v Kasmeridis (2005) 92 SASR 382 [31].
The issue before the Court in McNamara was whether or not the agreement in question was an “agreement in writing” where the client’s acceptance of the written agreement was not in writing. In McNamara the client had indicated their acceptance of the written retainer agreement during a telephone conversation with the solicitor and the solicitor had made a written file note of this conversation. The Court considered that there was evidence of the oral acceptance which satisfied the requirements of s 42(6) of the Act and that the latter written record of the oral acceptance was not essential in order to satisfy s 42(6). Therefore it was decided that s 42(6) of the Act should not be construed to require a client’s acceptance of a costs agreement to be in a written form.
The Court in McNamara also considered where the onus lies in proving the existence of a binding agreement between solicitor and client. At [64] the Court stated that:
[i]t is to be borne in mind that the onus of establishing that an agreement was made rests on the solicitors. This onus is to be discharged having regard to the nature of the fiduciary relationship and the circumstances of dependence and vulnerability that may exist.
Further submissions
Following the hearing before me on the 22 March 2006, by letter I referred both parties to the McNamara case and invited them to make further written submissions in the light of the principles in that case.
The plaintiff filed further written submissions on 29 March 2006 in response and argued that McNamara was not directly on point with the appeal before this Court. In summary, the plaintiff argued that as the defendant had not made an application under s 42(1) of the Act to tax and settle the legal costs claimed by the plaintiff, it was therefore not the same as the situation in McNamara. The plaintiff further submitted that insofar as the case might be relevant to this appeal, the defendant received the standard form no win – no fee agreement shortly after the first meeting, and that through the defendant’s subsequent conduct, actions and discussions with the plaintiff, she had expressly or impliedly accepted the terms of that written agreement.
The plaintiff therefore submitted that it is immaterial that the defendant did not evidence her acceptance of the terms of that agreement in writing. Further that the defendant is bound by the terms of the agreement through her conduct over a period of some 13 months after she received the standard form no win - no fee agreement and the letter which, it was alleged, enclosed that agreement.
The defendant also provided some further written submissions although they did not refer to the McNamara case itself. The defendant in essence repeated many of the same issues raised previously before the Magistrate and in this Court.
Findings on appeal
Applying the principles of the case of McNamara to the case at hand, I am not satisfied that the plaintiff has met the onus of establishing that there was a retainer agreement in the terms set out in the standard form no win – no fee retainer agreement agreed to between the parties. In my opinion the Magistrate fell into error as the evidence before her, which was also before me, was insufficient to support a finding that the defendant had been provided with the document at the relevant time, or that the defendant had indicated her acceptance of the terms of the document.
In so concluding , I have regard to the following matters:
·None of the correspondence between the parties adverts to the existence of the particular no win – no fee document. The letter of 20 December 2001 refers to a “discussion” of the retainer with the defendant and then sets out conditions purportedly discussed, but does not alert the defendant to any other document or to any conditions of retainer other than those set out in the letter.
·The evidence given by Mr Roberts as to what was discussed with the defendant was very limited and referred simply to the fact that the retainer was not unlimited in that there were conditions, and that he had indicated a letter would be sent to her with the standard form no win – no fee retainer agreement.
·The letter refers to the singular “enclosure” and not “enclosures”. (This is to be contrasted with a later letter written by the plaintiff to the defendant on 27 November 2002 which does differentiate between the singular and plural). Only one document being the report of Dr Cotton, is referred to in the letter as being enclosed. There is no reference to a retainer agreement being enclosed.
·The letter of 20 December 2001 (Exhibit P1) is clearly not complete on its face in any event. Exhibit P1 was not an original file copy, it was a photocopy of what purported to be a file copy. It did not contain a copy of the medical report of Dr Alan Cotton, and what was said to be the attached no win – no fee retainer agreement was actually a pro forma document.
·The letter of 20 December 2001 refers to the preparedness of the plaintiff to act for the defendant on a “no win – no fee” retainer, which on its ordinary meaning, indicates that no fees would be charged by the solicitors in relation to any work unless the work done by the solicitors resulted in a “win” for the defendant.
·Whilst the letter referred to the right of the plaintiff to cease acting if the defendant “refused to take the writer’s properly considered legal advice” importantly it did not refer to any consequence. There was no reference at all to the consequences such as expressed in Clause 3 of the standard form no win – no fee retainer agreement.
Mr Roberts, for the plaintiff, relied heavily on the usual practice of his office in enclosing retainer agreements, but this does not sit well with the above contra-indications of that practice having been implemented on this occasion and which are also reflected in Mr Robert’s own documentation.
There is no direct evidence that the defendant accepted the no win – no fee agreement, either orally or in writing. There is no evidence which contradicts her statement that the first time she became aware of the terms of the no win – no fee retainer agreement was when Mr Lieschke from Lieschke Weatherill handed her a copy when she went to see him to obtain advice in March 2003.
The plaintiff’s case is that it seeks to enforce a retainer which includes a condition in Clause 3 that, notwithstanding the assertion of “no fee”, there are certain circumstances in which the client would be obliged to pay. Bearing in mind the description of “no win – no fee”, it would be incumbent on the plaintiff, as a firm of solicitors who owe fiduciary obligations of disclosure, to ensure that the client was made aware of the specific terms of that condition, particularly when fees would be payable by the client.
In summary, having regard to the above circumstances and the absence of any evidence that Ms Pirone received the standard form no win – no fee retainer agreement or any evidence adduced by the plaintiff that the defendant indicated her acceptance either in writing or verbally, I am not satisfied that any such retainer agreement was entered into between the parties.
In relation to the plaintiff’s submission that the defendant’s conduct indicated that she had impliedly accepted the terms of the no win – no fee retainer agreement, there is no conduct which would permit me to draw such a conclusion. Given my finding that the firm’s standard form no win – no fee agreement was not attached to the letter of 20 December 2001, and that the conditions of Clause 3 were not reflected in the letter itself, it necessarily follows that the defendant’s conduct could not amount to an assent to terms she had no knowledge of. It also follows that Clause 3 cannot therefore provide a basis upon which the plaintiff can assert an entitlement to the legal fees claimed in the Bill of Costs.
Although Mr Roberts did not put forward an alternative basis upon which the plaintiff might be entitled to charge the defendant for legal services, I have considered whether the letter of 20 December 2001 itself represents an agreement in writing for the purposes of s 42(6) of the Act. While it is not disputed that the defendant received that letter, the conditions described in the letter are not sufficiently particular to constitute a written retainer agreement between the parties. The absence of any term relating to the basis on which the plaintiff would charge the defendant for legal services, such as the conditions upon which the plaintiff could charge costs and the amount of any such costs or scale for their calculation, is an impediment to such an argument.
Accordingly, it seems to me that the requirements of s 42(6) have not been complied with. The fact that the defendant did not make an application to the Supreme Court for a taxation of the bill of costs under s 42(1) does not distinguish this case from the principles discussed in McNamara. The relationship between the plaintiff and defendant was still a contractual and a fiduciary relationship, and the Bill of Costs which was delivered to the defendant was of a kind required by s 41(1) of the Act.
Retainer Agreement: Clause 3
In the event that I am wrong with regard to the no win – no fee retainer agreement not having been entered into, I still have some concerns as to whether, on the evidence presented, the condition in Clause 3 of that agreement had been complied with so as to make the defendant liable for solicitor costs.
Bearing in mind that the solicitor/client relationship is a fiduciary relationship and that there is a requirement for disclosure, it was incumbent on the solicitor to ensure that the client was made aware that her conduct was regarded as falling within Clause 3 such that she was liable to pay costs. None of the letters in which the plaintiff adverts to the poor behaviour of the defendant, refer to the fact that Clause 3 of the no win – no fee retainer agreement may have been triggered. Most importantly the letters do not indicate that if the defendant failed to comply with Clause 3, and if she continued to refuse to accept his advice, she could be liable to pay costs pursuant to the agreement.
In my view, at the very least, the defendant should have been alerted to that clause to give her the opportunity of understanding her situation. Further, to ensure she understood her obligation to pay solicitor costs in full in the event that she failed or refused to follow legal advice or co-operate with the solicitor and the solicitor/client relationship subsequently came to an end.
The defendant has submitted that it was not unreasonableness on her part that caused the break down in the solicitor/client relationship but in fact a termination of the relationship by the plaintiff. Having regard to the affidavit of Stephen Lieschke of 4 November 2004 together with the correspondence from his firm Lieschke and Weatherill to the plaintiff, there is some doubt as to whether or not the defendant, did in fact terminate the solicitor/client relationship as alleged by the plaintiff. In a letter from Mr Lieschke to Mr Roberts’ firm dated 8 April 2003, (which forms part of Exhibit D1 before the Magistrate) the writer refers to a telephone conversation with Mr Roberts in the presence of the defendant where Mr Roberts indicated that he had “terminated his instructions”. The letter states:
We refer to our conversation of the 28 March 2003 in which we indicated that we have now been instructed by Ms Pirone to act on her behalf. You confirmed on that occasion, that you were not acting for her as you have in fact terminated your instructions.
Further, a letter dated 27 November 2003 from Mr Lieschke to Ms Pirone (also part of Exhibit D1 before the Magistrate) stated:
In the meantime we enclose* for your information a copy of the writer’s notes of our discussion with Craig Roberts on 21 March 2003 during your first consultation with the writer. Whilst we did not record in that note his comment that he had terminated you, we do have a note where he confirms that he went overseas for six weeks, and that you were supposed to prepare and file a detailed statement of your evidence. He indicated that you had not done that, and that he was not prepared to do that for you. That is certainly not a comment consistent with a retainer for the provision of legal services, in our view.
He indicated that in his view you had a ‘severe personality disorder’, which was why in part he no longer wished to act for you.
That same letter also enclosed for Ms Pirone a copy of the 8 April 2003 letter sent by Mr Lieschke to Mr Roberts’ firm confirming Mr Roberts statement that he had terminated the instructions.
These letters were before the Magistrate. Notwithstanding the absence of any evidence that Mr Roberts had told the defendant that through her conduct the relationship was terminated and that she was therefore liable for costs and disbursements pursuant to Clause 3, her Honour at [22] of the reasons for decision said:
The failure of the defendant to accept the advice of the plaintiff was evident from the fact that the defendant had engaged another firm of solicitors to represent her.
In my opinion the Magistrate’s finding that the defendant had engaged another firm of solicitors to represent her in lieu of the plaintiff thereby failing to accept the legal advice of the plaintiff is incorrect. The correspondence from Mr Lieschke indicates that he (Lieschke) was being retained by the defendant to provide advice only, or a second opinion to the advice given to her by the plaintiff. Mr Lieschke was not being retained to represent the defendant in relation to the WorkCover matter on which the plaintiff was instructed. This is also made apparent by the annexure SAP 6 to the affidavit of Ms Pirone of 4 February 2005, which was Exhibit D1 before the Magistrate and which indicated that the defendant had spoken to a person at the Tribunal who suggested that she get a second opinion from a solicitor. The obtaining of a second opinion from a solicitor does not mean that that particular solicitor is engaged in lieu of another solicitor who is already acting with regard to the matter.[11] In my opinion the Magistrate fell into error in finding that the failure of the defendant to accept the advice of the plaintiff was evident from her engagement of Mr Lieschke. In order to satisfy the condition in Clause 3 that a person was failing to accept legal advice, something more would be required than just seeking the opinion of another solicitor.
[11] See e.g O’Reilly v Law Society of New South Wales (1988) 24 NSWLR 204 at 209-10, 215, 219, 221 where the Court held one of the duties of a solicitor is to generally advise the client to obtain independent legal advice and, if appropriate, to facilitate the obtaining of such advice where a conflict of interest arises.
Conclusion
In summary, I am not satisfied that there is sufficient evidence upon which either I, as a judge hearing the appeal, or indeed the Magistrate could have been satisfied that the no win – no fee agreement had been entered into between the plaintiff and defendant. The consequence is that neither Clause 1 nor Clause 3 of that agreement apply and the plaintiff is not entitled to the costs claimed.
Further, even if it could be inferred in some way that the no win – no fee retainer agreement had been entered into between the plaintiff and defendant, I am not satisfied on the material before me that the defendant had terminated her instructions to the plaintiff. Further, if an issue in relation to the application of Clause 3 had arisen, in my view the plaintiff ought to have given the defendant some indication as to the consequences of the defendant’s actions. Further, if there was a termination by the plaintiff, then pursuant to Clause 1, the plaintiff would be entitled to disbursements only.
In so concluding, I am aware that the plaintiff has performed certain legal work and has clearly experienced difficulties in the process of acting for the defendant. Having said that, it is nonetheless incumbent upon legal practitioners to ensure that they comply with the terms of any retainer in order to recover costs from the client.
I therefore allow the appeal, set aside the judgment of the Magistrate and in lieu thereof order that there be judgment in favour of the defendant