PM Sulcs & Associates Pty Ltd v Oliveri - [2009] NSWSC 456

No judgment structure available for this case.

CITATION: PM Sulcs & Associates Pty Ltd v Oliveri [2009] NSWSC 456

HEARING DATE(S): 27, 28, 29 & 30 April 2009; 1, 5 & 11 May 2009

JUDGMENT DATE :
28 May 2009

JURISDICTION: Equity

JUDGMENT OF: Debelle AJ

CATCHWORDS: PROCEDURE – Costs – Taxation – plaintiff had succeeded in litigation – defendant submitted bill of costs based on alleged costs agreement – whether costs agreement had existed – whether defendant retained on void contingency basis – Held no costs agreement existed and costs payable on quantum meruit basis as assessed under Division 6 of Part 11 of the Legal Profession Act 1987 - TORTS - Trover and detinue – Remedies – Action of detinue – Files and documents in relation to earlier litigation held pending payment of costs and disbursements – Held defendant entitled to lien – Order that defendant deliver up files and documents on provision by plaintiff of security for the costs payable to defendant

LEGISLATION CITED: Evidence Act 1995
Legal Profession Act 1987

CATEGORY: Principal judgment

CASES CITED: A v B [1894] 1 All ER 265
Briginshaw v Briginshaw (1938) 60 CLR 336
Bechara v Atie [2005] NSWCA 268
Boland v Yates (1999) 167 ALR 575
Boyles v McCallum (1966) 85 WN (Pt 1) 281
D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1
Doyles Construction Lawyers v Harsands Pty Ltd (NSWSC, McClelland CJ in Eq, 24 December 1996, unreported)
Empirnall Holdings v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523
Felthouse v Bindley (1862) 11 CB(NS) 869; 142 ER 1037
Giannarelli v Wraith (1988) 165 CLR 543
Ismail v Richard Butler (a firm) [1996] 2 All ER 506
Jankowski v Mastoris (1995) 7 BPR 14589
Pavey v Matthews Pty Ltd v Paul (1987) 162 CLR 221
PM Sulcs & Associates Pty Ltd v Daihatsu Australia Pty Ltd - Costs and Interest [2001] NSWSC 798
Rust v Abbey Life Assurance Co Ltd [1979] 2 Lloyd's Rep 334
Watson v Foxman (1995) 49 NSWLR 315

TEXTS CITED: Lawyers' Professional Responsibility 3rd ed (2005) Lawbook Co

PARTIES: PM Sulcs & Associates Pty Limited ( Plaintiff)
Dominic Oliveri (Defendant)

FILE NUMBER(S): SC 3548/2004

COUNSEL: R Aldridge SC/BJ Skinner (Plaintiff)
GC Lindsay SC/GPF Rundle (Defendant)

SOLICITORS: Connah, Steed & Co (Plaintiff)
Penelope Purcell Solicitors (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ACTING JUSTICE DEBELLE

THURSDAY, 28 MAY 2009

DOMINIC OLIVERI

JUDGMENT

1 HIS HONOUR: The central issues in these proceedings are what, if any, costs agreement was made between the plaintiff and the defendant solicitor for payment of legal fees and, if a costs agreement was made, was that agreement lawful. The plaintiff had retained the defendant to act on its behalf in a substantial action for damages. Its case is that the defendant orally agreed that his fees would be 10 per cent of the damages recovered after disbursements had been paid. The defendant denies such an arrangement. His case is that the plaintiff is bound by a written costs agreement dated 5 July 1998. It is common ground that the legislation that governed the arrangements as to the legal costs payable to the defendant was the Legal Profession Act 1987.

The parties

2 The plaintiff is an exempt proprietary company incorporated in 1984. From June 1991 until 1 December 2006 its directors were John Wadley Hooper and his wife Lianne Sarah Hooper. Mrs Hooper ceased to be a director of the company on 1 December 2006. Mr Hooper remains a director. There is no other director other than Mr Hooper. Mr Hooper is also the secretary of the company. He acted for and on behalf of the plaintiff in the events the subject of these proceedings.

3 The defendant is a solicitor. He was admitted to practise as a solicitor in 1982. From 1989 to 1993 he was the principal of the firm D L Oliveri & Associates. The offices of that firm were at 161 Palmer Street, East Sydney. By a sequestration order made on 23 December 1993 the defendant was declared bankrupt. In January 1994, the defendant’s trustee in bankruptcy sold the defendant’s practice to Messrs Di Lizio & Associates (“Di Lizio & Associates”). The defendant was employed by that firm from January 1994 until June 1996. The principal place of business of Di Lizio & Associates was at Hurstville. The defendant continued to work from the premises of his former firm at 161 Palmer Street, East Sydney.

4 In about June 1996, the defendant ceased his employment at Di Lizio & Associates. He then studied for the Bar examinations and completed those examinations and the practical course by December 1996. He was not admitted as a barrister. The defendant renewed his practising certificate in April 1997. He then resumed legal practice as a solicitor from the premises at 161 Palmer Street, East Sydney. On 29 October 1999 the defendant was discharged from bankruptcy.

5 The defendant’s brother Emanueli Oliveri also practised from premises at 161 Palmer Street as did the firm of Messrs Hillman Mura & Associates (“Hillman Mura”). On occasions, the defendant was engaged by Hillman Mura to do work on behalf of the clients of Hillman Mura.

An action against Daihatsu

6 In April 1993 the plaintiff commenced an action in the Common Law Division of this Court against Daihatsu Australia Pty Limited (“Daihatsu”). In that action the plaintiff claimed damages for breach of contract in relation to the provision of computer services. In the alternative, there was a quantum meruit claim for work and labour done.

Changes of solicitors

7 Initially, the solicitors for the plaintiff were Messrs Watson Stafford Wilmot Klimt. In 1993 and 1994, the plaintiff paid bills as rendered by that firm. At some time in 1994 the firm Watson Stafford Wilmot Klimt dissolved. Mr Klimt continued to act for the plaintiff in the action against Daihatsu. By letter dated 20 January 1995 and sent by facsimile transmission on 1 February 1995, the plaintiff terminated its instructions to Mr Klimt and asked him to deliver the papers to the firm of Di Lizio & Associates. Di Lizio & Associates acted as the plaintiff’s solicitors until August 1995. The defendant, who was then employed by Di Lizio & Associates, conducted the Daihatsu litigation on behalf of the plaintiff. On 3 July Mr Hooper on behalf of the plaintiff wrote to Mr Mario Di Lizio, the principal of Di Lizio & Associates, complaining of the defendant’s conduct of the proceedings against Daihatsu. Mr Di Lizio replied to the allegations by letter dated 4 August 1995 and terminated the retainer.

8 The plaintiff then instructed Mr Miller, a member of the firm of Messrs Garland Hawthorn Brahe, to act for it. In June 1998, Garland Hawthorn Brahe terminated the retainer. The plaintiff then instructed the defendant to act as its solicitors.

Judgment against Daihatsu

9 The defendant thereafter acted for the plaintiff until February 2003. The trial was heard by the Honourable Justice David Kirby. It occupied some 51 days. On 1 August 2001, Kirby J gave judgment for the plaintiff and made certain orders. On 21 September 2001, Kirby J amended the terms of the orders made on 1 August. The terms of the orders as amended were as follows:

“1. Order of 1 August 2001 be amended and there be verdict for the plaintiff in the sum of $1,390,900 plus costs and interest.

2. The defendant pay 80% of the plaintiff’s costs, other than the Notices of Motion for Security for Costs dated 14 December 1999 and 15 June 2000 and noting that the plaintiff will not seek to recover any costs in respect to Dr Bradley or Professor Deegan.

3. The defendant pay the plaintiff’s costs in respect of the Notices of Motion for Security for Costs dated 14 December 1999 and 15 June 2000.

4. The defendant pay the plaintiff interest at the rate specified in Schedule J on the amounts Awarded as follows:

(a) on $97, 500 from 19 April 1989 to date;

(b) on $81,500 from 18 July 1989 to date;

(c) on $1,211,900 from 4 July 1990 to date;

which as a 13 September 2001 amounts to $1,879,103.86 and $419.18 for each day thereafter.

5. There be judgment for the plaintiff in the sum of $3,273,357 inclusive of interest.

6. The plaintiff has leave to apply for additional damages in respect of its possible tax liability for the amount awarded for loss of a chance ($1,211,900) and interest thereon in the event the plaintiff is assessed as liable to pay tax on either or both of these amounts.

7. The time within which to appeal against any judgment or order is extended until 28 days from today.”

10 The facts as so far found are not in dispute. The dispute between the parties concerns the terms on which the defendant was retained in 1998 to conduct the action against Daihatsu and, as well, a number of events that followed the orders made by Kirby J on 21 September 2001.

Plaintiff pays money on account of costs

11 On 31 October 2001, Daihatsu delivered to the defendant a cheque for $3,273,357. The defendant handed the cheque to Mr Hooper on behalf of the plaintiff. Mr Hooper arranged for a special clearance of the cheque. Mr Hooper then calculated the disbursements. His calculations were set out on a four page schedule of disbursements dated 31 October 2001 (“the disbursements schedule”). The disbursements schedule began with a summary in these terms:

Daihatsu Payment 30-October-2001	$3,273,357.00
Less Estimate of Disbursements	-$1,163,757.00
*Disputed Accounts Due	$90,850.00
Total	$ 2,200,450.00
10% of above total to Oliveri Attorneys on account of their fees:-	$ 220,045.00

12 On 2 November 2001 Mr Hooper handed the defendant a cheque for $220,045 together with the disbursements schedule. The plaintiff’s case is that before Mr Hooper handed the defendant the cheque for $220,045, there had been an exchange of emails concerning the arrangement as to fees payable by the plaintiff the defendant. The defendant strongly denies that the exchange of emails occurred. I will return to the facts concerning this disputed exchange of emails.

Claim that costs agreement is void

13 The plaintiff’s case is that the defendant agreed to act on a contingency basis. It says that an oral costs agreement was made between the parties in May 1998 pursuant to which the plaintiff would pay the defendant an amount equal to 10 per cent of the amount recovered by the plaintiff in the action after disbursements had been paid. In these proceedings, the plaintiff claims, amongst other things, that the agreement as to costs is contrary to s 184 and s 188 of the Legal Profession Act and is void. It seeks recovery of the sum of $220,045. The defendant denies that he entered into an agreement to accept 10 per cent of the amount recovered after disbursements. He admits that he agreed to act on a contingency basis but says the parties had entered into a written costs agreement dated 5 July 1998 to the effect that, if the plaintiff was successful, he was to be paid at an hourly rate of $500 per hour.

14 After that brief introduction I shall now examine the facts in greater detail. Before doing so, I comment on the reliability of the various witnesses who were called.

The witnesses

15 A number of the events that are critical in this action occurred some 10 years ago. Others occurred at least five to seven years ago. Some of the witnesses and in particular Mr and Mrs Hooper and the defendant purported to give detailed accounts of certain conversations, even long conversations, that were said to have occurred as long as 10 years ago. In his reasons in the Daihatsu litigation, Kirby J referred to the remarks of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319:

“… Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.”

16 The plaintiff called seven witnesses, Mr and Mrs Hooper, Mr Smallbone, Mr Tatar, Mr Santa Maria, Mr Black and Ms Evers.

17 Mr Hooper was a most unsatisfactory witness. Quite often his answers were either evasive or not responsive. At one stage he gave evidence implying that he did not know the difference between solicitor and client costs and party and party costs. Later questioning disclosed that he clearly knew the difference. On some occasions he purported to give a verbatim account of conversations that had occurred seven or more years ago. In my view such detailed recall is highly unlikely particularly as he made no notes or other record of those conversations. On occasions, his evidence did not ring true. On several occasions he sought to argue his case from the witness box and on others he took the opportunity to make gratuitous and insulting remarks about the defendant or his legal advisors. I allow for the fact that Mr Hooper might have been anxious in the witness box but that fact did not in any respect excuse his behaviour. In every respect his evidence must be subjected to close scrutiny. I am not prepared to accept his evidence unless it is substantiated by other evidence or is otherwise consistent with objective facts. I find that I cannot believe much of his evidence.

18 Mrs Hooper too was not a convincing witness. She has a financial interest in the outcome of the proceedings. She too purported to be able to recall details of conversations that had occurred some years before. She had no notes or other record of those conversations. She was in my view willing to say whatever was thought necessary to support the plaintiff’s case. As with her husband, I am not prepared to accept her evidence unless it is substantiated by other evidence or is otherwise consistent with objective facts.

19 Mr Tatar was a most unsatisfactory witness. He gave his evidence in a supercilious manner. He has convictions for dishonesty. He has no financial interest in the outcome of these proceedings. Nevertheless, I am unable to rely on his evidence at all.

20 Mr Smallbone, a barrister, gave his evidence carefully. It was not challenged. I have no hesitation in accepting his evidence.

21 Mr Santa Maria gave evidence on one small aspect of the manner. I accept his evidence. Mr Black is employed by Deloitte Touche Tohmatsu of the Sydney office of that firm. His duties include forensic examination of computer hardware. He gave evidence of his examination of the hard drive disc belonging to the defendant. His evidence was thorough and I accept it. Ms Evers gave evidence as to solicitors’ costs. She has experience as a costs assessor and I accept her evidence.

22 The plaintiff’s solicitor Mr Brown swore two affidavits. He was not cross-examined on either. I accept his evidence.

23 The defendant, Mr Oliveri, gave evidence and called three witnesses, Mr Di Lizio, Dr Bradley and Mr Gaweda.

24 The evidence of the defendant was not entirely satisfactory. The manner in which he conducted aspects of his legal practice at material times was not at all satisfactory. He did not always prepare costs agreements with his clients. In the plaintiff’s action he failed to keep timesheets or other records of the time spent on the matter and did not regularly keep any other form of costs entry. He prepared a party and party bill of costs in the Daihatsu action without the benefit of costs entries or a costs sheet, relying on documents such as emails and other correspondence, diary records of conferences with counsel and with witnesses and of days spent in court. He swore an affidavit stating that he was charging at the rate of $400 per hour plus GST. The costs agreement dated 5 July 1998 on which he seeks to rely is inconsistent with that, in that it provides that his charges are $500 per hour. While any shortcomings in the conduct of his legal practice do not necessarily reflect upon his credit, those shortcomings when coupled with the inconsistency between his affidavit and the alleged bill of costs give rise to real concerns about the reliability of his evidence. For these reasons, his evidence must be subjected to close scrutiny and should not be accepted unless it is consistent with objective facts or is otherwise consistent with other evidence. His demeanour in the witness box was, however, more impressive than that of Mr Hooper. Notwithstanding that I do not always accept Mr Oliveri’s evidence, his evidence is more consistent with the objective facts than that of Mr Hooper.

25 Mr Di Lizio gave his evidence forthrightly. On a number of occasions he was asked about events said to have occurred in 1995 but he did not have any recollection of them. That is not surprising given that he is a solicitor in active practice and that 14 years have elapsed since those events and conversations were alleged to have occurred. I accept his evidence.

26 I accept the evidence of Dr Bradley. He too was forthright in the manner in which he gave his evidence. It was suggested that he had an interest in this litigation. I entirely reject that evidence for reasons to be given.

27 Like Mr Black, Mr Gaweda is a person whose occupation is the forensic examination of computers. His evidence was persuasive and I have no hesitation in accepting it.

28 Evidence for the defendant was also given in affidavit form by Ms Anne Lampe, Ms Louise Butler and Ms Penelope Purcell. Their evidence was not disputed and I accept it. The defendant also relied on a report from Ms Michelle Novotny dated 27 May 2008 whose evidence I also accept.

29 In these reasons, I do not deal with every item of evidence. I have read and re-read the affidavits of all witnesses in conjunction with the transcript of proceedings. Counsel had agreed that all of the evidence in the affidavits should go in saving all just exceptions. The fact that I have not mentioned every assertion of fact does not mean that I have overlooked it. Some of the assertions are irrelevant. Others are inadmissible or do not materially assist in the determination of the issues in these proceedings. In reaching my conclusions, I have had regard to all of the evidence.

Oliveri acts for plaintiff

30 I now turn to examine the facts in greater detail. The narrative represents the facts as I find them. Where there is a dispute as to certain facts, I will mention that the fact is disputed. In this narrative I refer to Mr Hooper, the defendant and other witnesses by their respective surnames without meaning any disrespect to any of them.

31 Oliveri had acted for Hooper or for companies controlled by Hooper since the time when Oliveri had been employed by Di Lizio & Associates. At different times between 1994 and 1997 Oliveri acted for companies controlled by Hooper.

32 On 14 January 1994, Hooper instructed Oliveri to conduct proceedings in this Court on behalf of Bedor Ltd, a private company incorporated in Hong Kong. Hooper’s evidence was that Oliveri told Hooper that his fees would be $80 per hour but that he was prepared to run the proceedings for a fixed price and he charged a fixed price. Oliveri denied that he charged Hooper at the rate of $80 per hour. It is extremely unlikely that an employed solicitor would then charge at such a low rate. Furthermore, Oliveri was then employed by Di Lizio & Associates. It is unlikely that his principal would have permitted him to charge at such a low rate. I reject Hooper’s evidence that Oliveri charged for his services at the rate of $80 per hour.

33 It was Hooper’s evidence that Oliveri did not render any account for legal services performed by him before 2003. That is denied by Oliveri. I do not accept Hooper’s evidence. On occasions Oliveri prepared costs agreements with his respective clients but did not always do so.

Plaintiff instructs Di Lizio & Associates

34 In 1994 Hooper began to speak to Oliveri about the plaintiff’s action against Daihatsu. He told him Mr Klimt was acting for the plaintiff. At some stage in 1994 he handed to Oliveri some bundles of documents concerning the action. Oliveri read them and told Hooper, among other things, that he thought that the plaintiff had

quantum meruit

35 Early in January 1995 Hooper delivered to Oliveri four bundles of documents relating to the action against Daihatsu. On 10 January 1995, Hooper wrote to Oliveri at Di Lizio & Associates confirming that he delivered four bundles of documents to him. In that letter he asked if Di Lizio & Associates would take over the conduct of the matter on a “no-charge-unless-successful basis”. Oliveri informed Hooper that Mario Di Lizio had no objection to Oliveri acting for the plaintiff on the basis that no fee would be charged if the plaintiff failed in the action. Oliveri and Hooper then discussed the fees to be paid. Hooper and Oliveri gave differing evidence as to the effect of their conversations on the topic of fees. It is apparent from the correspondence exchanged between Hooper on behalf of the plaintiff and Di Lizio & Associates that the fees to be paid by the plaintiff were not agreed. The correspondence (to which I am about to refer) is more consistent with the evidence of Oliveri. I do not accept Hooper’s evidence that the question of fees was agreed.

36 By letter dated 18 January 1995 from Hooper to Oliveri, Hooper confirmed that Di Lizio & Associates had agreed to act “on a no-charge-unless- successful basis”. The letter continued:

“The agreement between us is that we will pay any court filing fees as they arise and on a successful conclusion, your fees will be at a rate of up to $500 per hour and that a fully defended case running in court over 3 weeks will costs us in your fees and senior council (sic) fees the total sum of $300,000.00.

Based on this agreement we are instructing our current solicitors, Klimt & Associates that your firm will be taking over this matter as of today and that they are to pass on the file to you immediately.

37 Oliveri, as an employee of Di Lizio & Associates, replied by letter dated 19 January in these terms:

“Thank you for your letter of 18 January 1995.

We confirm that the contents of your letter in so far as they relate to this firm’s fees. However as far as barristers’ fees are concerned we will endeavour to instruct a barrister that will accept instructions on the same basis. Otherwise we will attempt to negotiate an acceptable arrangement for you. In any event this will need to be reduced to writing by the barrister in due course.

In the agreement between you and our firm the word “successful” should be defined because as pointed out by you there are two strands to your case.

1. DAMAGES

2. QUANTUM MERUIT

Please confirm that this is acceptable to you.”

38 Hooper replied with a counter-offer as to the costs to be paid. The counter-offer is set out in letters to Di Lizio & Associates dated 27 January and 29 January 1995. They contained an offer to pay as much as $2000 per hour if the plaintiff recovered 75 per cent of its claim. The rate per hour fell in proportion to a fall in the percentage of the claim recovered. Oliveri did not reply to those letters and Hooper sent two more letters dated 9 and 10 February 1995 with an amended counter-offer but those letters were not answered. I accept Oliveri’s evidence that he did not respond to those letters because he thought they made unrealistic proposals. The arrangements proposed by Hooper bordered on the fantastic. Hooper also gave evidence that on about 10 February 1995 he spoke to Oliveri and Mario Di Lizio as to the terms on which the plaintiff would retain Di Lizio & Associates. He said that Di Lizio had said:

“I prefer that we continue with the existing arrangements and you pay $80 an hour for Dominic’s time. I don’t want to be putting my money into funding litigation.”

39 On 25 January 1995 Hooper signed a document addressed to Mr Klimt asking for delivery of the plaintiff’s file and documents to Di Lizio & Associates. The document was sent to Mr Klimt by facsimile transmission on 1 February 1995. Mr Klimt ceased to act and Di Lizio & Associates became the solicitors on the record.

40 Oliveri then drafted an amended statement of claim which was filed on 28 March 1995. The damages claimed by the plaintiff (including interest) totalled $702,306,172. The original statement of claim had claimed damages for breach of contract in an unspecified amount. In the alternative, it made a claim for $191,998 for what it alleged had been the reasonable costs of works and services supplied by the plaintiff to Daihatsu.

41 In June 1995 Messrs Clayton Utz, the solicitors for Daihatsu, wrote to Di Lizio & Associates threatening an application for security for costs. The application was grounded on the fact that the plaintiff had not lodged its financial returns and it was alleged that the plaintiff did not have any assets. Oliveri showed the letter to Hooper who said that the plaintiff was an exempt proprietary company and was not obliged to file financial statements. Oliveri did not reply to the letter from Clayton Utz. Clayton Utz then issued the threatened application for security for costs.

42 In July 1995 Oliveri took one week’s leave. While Oliveri was on leave, Hooper wrote a letter dated 31 July 1995 to Mario Di Lizio. In that letter he complained of the conduct of Oliveri. One of those complaints was that Oliveri’s failure to respond to the letter from Clayton Utz had caused the application for security for costs to be made. On his return, Oliveri was informed of those allegations. Mario Di Lizio replied to Hooper by a three page letter dated 4 August 1995. The letter included a reply to the criticisms made by Hooper and terminated the retainer. At the end of the letter he said:

“More importantly as to the whole conduct of this matter it is clear from your letter that you are not satisfied with the conduct of your case. Further it is clear from you (sic) letter at this stage of proceedings you believe that our firm is responsible for an action or inaction which may have caused you damages. Whether or not this view is correct is not particularly relevant, the important aspect is that you believe it to be so. In such circumstances it is not possible in my view to represent you.

Plaintiff instructs Garland Hawthorn Brahe

43 Hooper then instructed Messrs Garland Hawthorn Brahe to act for the plaintiff. Mr Brenden Miller of that firm had the conduct of the matter. That firm was prepared to act on either a non-contingency basis or on a contingency basis. The fees agreement is set out in a letter dated 24 October 1995. It is sufficient to note that Miller’s fees on a non-contingency basis were to be charged at the rate of $225 per hour (and at $165 per hour for a junior solicitor). If the fees were to be charged on a contingency basis, the fees arrangement as set out in a letter was:

“2. Contingency:

any part

44 Notwithstanding the termination of the retainer by Di Lizio & Associates, Oliveri and Hooper remained friends. They met for coffee in Giottos or the Arch Coffee Lounge, each being a coffee shop in Stanley Street, East Sydney. On those occasions Hooper informed Oliveri of developments in the action against Daihatsu. Occasionally they met for dinner with their respective partners. A friendship developed between them.

45 In the period after 1995 Oliveri continued to act for Hooper and his companies. One matter in which Oliveri acted was an action in the Federal Court of Australia by the plaintiff against Detroit-Diesel-Allison Australia Pty Ltd and Others. He was not the solicitor for the plaintiff when the action was commenced. He became its solicitor at some time in 1997. In these proceedings, Hooper and Oliveri referred to that action in the Federal Court by the expression “the DETCO proceedings” or by a similar expression. I will refer later to the DETCO proceedings.

46 Garland Hawthorn Brahe continued to act for the plaintiff in its action against Daihatsu until June 1998. In 1998 differences arose between Hooper and Miller concerning the conduct of the action. In addition, Garland Hawthorn Brahe sought to alter the terms on which they had been retained. On 4 June 1998 Miller gave the plaintiff notice that he would cease to act as the plaintiff’s solicitor.

Plaintiff instructs Oliveri Attorneys

47 By July 1998, Oliveri was acting as the solicitor for the plaintiff in the action against Daihatsu.

48 Oliveri and Hooper gave different accounts as to the circumstances in which Oliveri agreed to act and as to the basis on which his fees were to be paid. Before noting their respective accounts, I set out facts that are not in dispute or that are established by objective facts. On 7 May 1998 Hooper sent a draft letter to Oliveri in response to a letter from Garland Hawthorn Brahe in which it sought to alter the terms on which that firm was to be retained by the plaintiff. Hooper asked Oliveri for his comments on the letter. On or about 20 May 1998 Hooper showed Oliveri a memorandum of fees from Garland Hawthorn Brahe and asked for his advice about paying those fees. Oliveri advised Hooper that the plaintiff should pay the disbursements. The plaintiff paid the disbursements.

49 On 4 and 5 June 1998, Miller and Hooper had an exchange of letters by email or facsimile transmission. On 4 June Hooper had delivered to Miller affidavits filed on behalf of Daihatsu and his answers to them. I find these documents were delivered in the morning. At 2.49 pm on 4 June Miller sent a fax to Hooper giving notice that he intended to file a notice that he had ceased to act for the plaintiff. Hooper responded with a request that the plaintiff’s documents be returned. The letter included the following:

“Nothing of significance has occurred since your decision to continue with the case other than our delivery to you of the affidavits and responses thereto. Further more, all communication with you since your decision to continue has been in written form as Mr. Hooper has been working non-stop in order to complete the responses to the defendants (sic) affidavits as you can see, there is over 100 pages in the response.

“I refer to your facsimile of the 4th inst.

I disagree that nothing of significance has occurred since my decision in May to continue with the case other than the deliver of the affidavits in your response. Quite clearly I have attempted to obtain from you information regarding the various complaints you have made against me and/or the firm concerning negligence, delay, mismanagement and our costs. You still even today have failed to address those issues.

As indicated I am presently copying the files for my records. I will advise when this has been completed.

You have failed to address the question of the payment or the securing of our costs prior to our handing the file to other solicitors. I would have thought, given your quantum meruit claim against Daihatsu, you would have appreciated our right to be paid for work done to date. A bare reference to our retainer agreement does not address this issue any way satisfactorily.

As a business man yourself I cannot understand how you expect me to deal with you on a commercial basis when you dispute the fees charged and fail to address the issue of payment of those fees or securing our costs in the sitatuion (sic) where you wish us to promptly release your file. This is not a matter that can be put on hold if you want the files released.

I look forward to hearing from you in respect of some proposal regarding payment or the securing of our costs.”

50 On 10 June 1998, Hooper sent a letter by facsimile transmission to Garland Hawthorn Brahe seeking return of the plaintiff’s documents. The documents were not returned.

51 By July 1998, Oliveri was acting for the plaintiff. Hooper instructed Oliveri to issue proceedings seeking an order that Miller give up all documents held by him relating to the action against Daihatsu. Those proceedings were issued on 27 July 1998. About one month later, Miller returned the plaintiff’s documents.

52 Under cover of a letter dated 19 June 1998 the plaintiff had sent an application to Justice Corporation, a funder of litigation, for assistance in the payment of counsels’ fees in the action against Daihatsu. In that letter which was written by Hooper, it was stated that the plaintiff had instructed Oliveri to act for it on “a no-win–no-pay contingency basis”. Justice Corporation refused the plaintiff’s application.

53 The above facts are not in dispute. I now set out the different accounts of the Hoopers and Oliveri as to the terms on which Oliveri agreed to act for the plaintiff.

54 Oliveri gave the following account. On about 7 May 1998, Hooper came to see him and asked him to act for the plaintiff. Oliveri replied that he could not manage a case of that magnitude. Hooper denied this conversation.

55 According to Oliveri, when Hooper consulted him concerning the memorandum of fees from Garland Hawthorn Brahe, he advised Hooper to pay the disbursements and also advised him to mend his relationship with Miller so that Miller would continue to act for the plaintiff.

56 Oliveri said, that after Hooper had received by facsimile transmission the notice dated 4 June 1998 from Miller advising his intention to terminate the plaintiff’s retainer, Hooper showed it to him. They then had a conversation in which Hooper asked him to act. Oliveri replied that he could not afford to take on the action and again suggested to Hooper that the plaintiff seek to persuade Miller to continue to act. Oliveri’s evidence was that Hooper and he had an exchange to the following effect:

“Hooper: ‘No, he told me he doesn’t think I can win. That’s the real reason he is stepping out of the case. He has already charged more than the $50,000 he would be entitled to if I lose the case. I can’t work with him any more. You take on the case and I will pay you on the same basis as the deal I have with Brenden.’

Oliveri: ‘I know I’ll regret it, but why don’t you collect your file from Brenden and if you can’t find someone else to do your case, I will do it. I will prepare a costs agreement after I get the file.’”

57 Miller did not release the file. According to Oliveri in mid June 1998 Hooper again spoke to him and said words to the effect:

“Hooper: ‘Will you act for me? I can’t find any one else. Why don’t we agree to work on the same costs agreement that I have with Brenden until we get the file and then we can enter into another agreement.’

Oliveri: ‘OK. We had better get the file as quickly as possible.’”

58 Hooper’s evidence in his affidavit of 22 June 2004 was that in late May 1998 Oliveri and he had a conversation which he described in these terms:

“The Defendant said words to me to the following effect:

This claim is worth hundreds of millions. I will act for the company and my fees for representing it will be ten per cent nett of the amount that might be recovered against Daihatsu Australia Pty. Limited from the litigation after paying all disbursements.”

I said to the Defendant words to the following effect:-

‘Does that mean if we settle the claim for fifty million dollars tomorrow you will get about five million dollars tomorrow?’

The Defendant said:-

‘Yes. I don’t want to go on the records yet because I’m not out of my bankruptcy. Just hang in there for a while and when I’m discharged I’ll take it over.’

The Defendant also said words to the following effect:-

‘But you will have to work for me in my office on these proceedings and on any other matters of mine that I may ask you to work on while I’m acting in this matter. I won’t be able to pay you wages or anything, but now you’ll have to work full time. I’ll check what you do.’

I said words to the following effect:-

‘You know I have limited funds so I am happy to accept that arrangement.’

I already had in place a similar arrangement with the Defendant in respect of other proceedings commenced by the Plaintiff in 1997.”

59 Hooper’s evidence was that Oliveri agreed to act for 10 per cent of the amount recovered after disbursements had been paid. He said the arrangement was very similar to the fees arrangement already in place in respect of the DETCO proceedings. Hooper said that Oliveri agreed to those arrangements and became the solicitor on the record. The plaintiff’s letter to Justice Corporation dated 19 June 1998 included the sentence:

“As we have an arrangement with Mr Oliveri concerning the solicitor’s fees, we are seeking the assistance of JUSTICE CORPORATION PTY LTD with our counsel’s fees. “

60 Whatever the terms of the retainer, it is clear the plaintiff had retained Oliveri to act as its solicitor before 27 July 1998. That is apparent from the fact that Oliveri had filed two documents on behalf of the plaintiff on 27 July 1998. One was the summons seeking orders that Miller deliver up the plaintiff’s documents relating to the Daihatsu. The other was an offer of compromise that Oliveri served on the solicitors for Daihatsu, offering to compromise the action for the sum of $7,500,000.

61 In an affidavit sworn 3 May 2006, Hooper deposed to a conversation which he alleged that he had had with Oliveri and Mario Di Lizio on 20 July 1998 at the corner of Stanley Street and Palmer Street, East Sydney. According to Hooper, Di Lizio had asked what had been agreed as to Oliveri’s costs in the Daihatsu litigation and that Oliveri had replied, “10 per cent of whatever net amount John gets either by settlement or judgment”. Hooper added an explanation of what Oliveri had said and, according to Hooper, Di Lizio then said, “10 per cent sounds fair then”. Di Lizio convincingly denied this allegation in cross-examination. Oliveri also denied the conversation. He said that he was not at any time at the corner of Stanley and Palmer Streets on 20 July 1998 because he was required to attend throughout that day at the Administrative Appeals Tribunal. There is evidence in the plaintiff’s documents that Oliveri was before that tribunal on 20 July 1998 in proceedings concerning his bankruptcy. I unhesitatingly reject Hooper’s evidence and find that no such conversation occurred on 20 July 1998.

An offer of compromise

62 Both Hooper and Oliveri described the circumstances which led to the offer of compromise. Oliveri’s evidence was that the Hoopers came to his office and instructed him to make the offer. Hooper’s account is long and to the effect that Oliveri agreed to an amount that was based on Oliveri receiving 10 per cent of the amount of the offer, namely, $700,000. The offer was $7,500,000. Oliveri denied that account saying that he had simply advised Hooper that it was be desirable to make an offer of compromise. The day after he had given that advice, the Hoopers came to his office and instructed him as to the amount they wished to offer. The account given by Hooper has a real air of unreality. I do not accept it. It has all the hallmarks of an attempt to embellish the plaintiff’s case. I am encouraged to reach that conclusion by the fact that Hooper alleged that Oliveri had said at the meeting at which the offer was discussed, “After I have paid Bradley 10 per cent of whatever I get I will clear over $600,000”. Dr Bradley was an expert retained to act for the plaintiff in the Daihatsu action. The plaintiff alleged that he was retained on a contingency basis. That is denied by both Oliveri and Dr Bradley. I accept their denials. The offer of compromise was served on 27 July 1998. I find that Dr Bradley was not then instructed by Oliveri. He was not instructed to act until later by letter from Oliveri dated 21 September 1998. That letter refers to previous conversations between Oliveri and Dr Bradley but, when the letter is read as a whole, it is reasonable to find, as I do, that those conversations had occurred shortly before the letter was written. They did not occur before 27 July 1998. Furthermore, the letter notes that Dr Bradley’s fees were to be $500 per hour. I find that was the basis upon which Dr Bradley rendered a note of his fees. The letter of 21 September 1998, therefore, establishes that Dr Bradley had not been retained when the terms of the offer of compromise were being considered by Hooper and Oliveri. Furthermore, it supports the evidence of both Oliveri and Dr Bradley that Bradley was not being paid on a contingency basis. Hooper’s response to the letter of 21 September 1998 was to assert that that letter was “created by the defendant on” 1 February 2000 at 10.01.42 pm. The allegation was denied. The plaintiff did not point to evidence to support the allegation. Neither Oliveri nor Dr Bradley were asked any questions in cross-examination concerning the date when the letter was written. I unhesitatingly reject the allegation by Hooper.

63 Oliveri acted for the plaintiff in the proceedings against Daihatsu from July 1998 until judgment. He continued to act for the plaintiff in those proceedings until February 2003 when disputes arose between Hooper and Oliveri. By 27 February 2003 Messrs Connah Steed & Co were acting as the solicitors for the plaintiff and shortly thereafter filed a notice of change of solicitors in the Daihatsu action.

Hooper assists in preparing the case

64 It is common ground that Hooper worked with Oliveri on the preparation of the plaintiff’s case against Daihatsu. Hooper worked in Oliveri’s office on most working days and spent long hours working on the matter. As Oliveri said in cross-examination, Hooper worked full time on the case and was in his office “almost every day for a full day”. His work included typing letters from time to time, filing and serving documents and delivering briefs. Hooper would draft some documents which were then settled by Oliveri. Hooper also did a good deal of the photocopying in Oliveri’s office. If it was necessary to photocopy a large number of documents, Hooper would take the documents to a copying office. The plaintiff paid all fees incurred by Hooper when documents were photocopied by an organisation outside Oliveri’s office. The plaintiff also paid all other disbursements save the fees payable to two expert witnesses. On occasions, Hooper attended court to instruct counsel and he attended throughout the hearing of the action against Daihatsu.

65 Hooper had access to the files in the Daihatsu proceedings and to the computer network in Oliveri’s office. He provided Oliveri with technical support in using the computers and instructed Oliveri in some computer skills. There is a dispute as to the extent to which Hooper had access to the computer system. It is unnecessary to resolve that dispute. It is common ground that Hooper scanned both his own signature and that of Oliveri into the computer system so that letters could be sent electronically and taught Oliveri how to use the electronic signatures. Hooper said that he taught Oliveri how to change the date of time on the computer. Oliveri denied that. I accept his denial.

Judgment against Daihatsu

66 The hearing of the action against Daihatsu occupied some 51 days between 1 November 1999 and 30 April 2001. On 1 August 2001 Kirby J delivered judgment and made certain orders. He reserved for later submissions the orders to be made in respect of costs and interest and allowed the parties to make submissions on other outstanding issues. The action was listed before Kirby J again on 17 August and on 30 August 2001. On 13 September 2001 he published further reasons. The final orders were made on 21 September 2001.

A costs agreement is prepared

67 Oliveri gave evidence that, on 1 August 2001 after Kirby J had delivered judgment, he and Hooper returned to his office and he then prepared a costs agreement between his firm and the plaintiff in respect of the costs of the action against Daihatsu. I find he had not prepared any prior written costs agreement in respect of that action. Oliveri’s evidence was that Hooper took a copy of the document with him. Hooper denied this evidence. For reasons given below, I find that Hooper did make a copy for himself. The costs agreement has not been executed. It is dated 5 July 1998. Given the importance of this document in these proceedings, I set out relevant parts of the alleged agreement.

“ COSTS AGREEMENT BETWEEN SOLICITOR AN CLIENT

To: PM SULCS & ASSOCIATES PTY LTD

From: Dominic Oliveri

Thank you for your instructions to act for you in this matter. We are required by the Legal Profession Act (“the Act”) to set out the terms of our engagement which are as follows:

The Work

1. The work you require us to do is as follows:

Charges and expenses

2. We will charge you:

$500.00

(b)(sic) We will incur expenses on your behalf, which we will ask you to pay.

They will include:

§ photocopying at $2.00 per page

§ telephone and facsimile charges at $2.00 (local), $5.00 per minute (STD) $10.00, per minute (international).

Present estimate of charges and expenses in total

To that point, we estimate the expenses that we will incur on our behalf will total about $400,000

$1,300,000

We will advise you of any additional work required beyond the point indicated and of its estimated cost.

Persons responsible for work

Mr. Dominic Oliveri

Mr D. Oliveri

Billing arrangements

5. We agree that payment of fees to us is conditional upon you being successful in your claim and actually receiving payment of verdict moneys.

We may ask you to pay to us an amount to enable payment of expenses, or to provide security for them and our charges. In that case, we will assume, upon receipt of your payment, your authority to draw on the money paid for out charges and expenses, as they become due.

We will also assume your authority is given for any judgement or settlement moneys to be paid directly to our trust account and to pay ourselves from this money immediately after sending you our bill of costs.”

Commencement of work

11. We will begin the Work promptly when we receive your instructions subsequent to delivery to you of this costs agreement.

Acceptance of this offer

You may accept this offer by:

68 Hooper’s evidence was that he did not at any time accept the terms of the backdated costs agreement on behalf of the plaintiff. He denied that he took a copy of it with him. His evidence was that, after Kirby J had delivered judgment on 1 August 2001, he returned with Oliveri to Oliveri’s office. He said that they discussed the basis upon which the bill of costs against Daihatsu would be prepared. His evidence was that Oliveri said the bill would be drawn on the basis of back-to-back agreements that had been agreed. I will return to the question of back-to-back agreements. I later find that Oliveri prepared the backdated costs agreement on 1 August 2001 and Hooper had a copy of it.

69 Oliveri swore an affidavit to be used at the hearing before Kirby J on 17 August 2001 when issues as to costs and interests were to be argued. The affidavit was sworn on 16 August 2001 before Hooper who is a Justice of the Peace. Hooper agreed that he had read the affidavit at the time he attested the affidavit. In that affidavit, which contains 17 paragraphs, Oliveri gave a short history of the proceedings, listing each of the four firms who had acted for the plaintiff. The bulk of the affidavit contained estimates of fees and disbursements. In para 13 of the affidavit Oliveri stated that his fees were $400 per hour plus GST. GST had commenced to operate on 1 July 2000.

70 Hooper gave evidence that “some weeks later” Oliveri amended the affidavit without Hooper’s knowledge and sent copies to Kirby J, to the solicitors for Daihatsu and to counsel for the plaintiff. He said that he was pressured by junior counsel for the plaintiff to witness it. He said that the affidavit was filed. There was no evidence that a later affidavit was filed. The papers attached to Mr Black’s report contain the form of an affidavit to be sworn on 27 August 2001. It appears that this was the affidavit to which Hooper referred. However, it was not done “some weeks later” as Hooper asserted. There was no evidence that this affidavit was used in the proceedings before Kirby J. I reject Hooper’s evidence that the earlier affidavit was amended without his knowledge and that he acted under pressure. It was an allegation made late and lacked supporting evidence. If the allegation was true, it could have been supported by evidence of what had occurred at the hearing on 30 August. I note, however, that in paragraph 14 of that affidavit Oliveri again stated that his fees were $400 per hour plus GST.

An alleged supplementary fees agreement

71 Some 28 days after the date of the final orders in the Daihatsu action, Oliveri caused a statutory demand for the judgment debt to be served on Daihatsu. Oliveri’s evidence was that on about 30 October 2001 he and Hooper then had the following conversation:

“Hooper: ‘I know you’re entitled to get paid your fees now, but I really need some money urgently. I am going to get 80% of my costs paid from Daihatsu so there will be enough there to cover your fees and more. If you give the money to me when you receive it and wait for your fees until I receive them from Daihatsu, I will give you 10% of the net amount of the judgment on top of your fees.’

Oliveri: ‘If I understand you correctly, I don’t think I am allowed to do that.’

Hooper: ‘I can give you extra money if I want to and I want to give it to you any way.’

Oliveri: ‘When do you propose to give me the 10% extra?’

Hooper: ‘As soon as I pay out all the outstanding bills, I’ll give you 10% of what is left.’

Oliveri: ‘I accept on the basis that you pay out all the outstanding fees to the barristers as soon as you get the money and that you help me prepare the bill quickly so that it can be assessed without delay.’

Hooper: ‘I want to do that as much as you do. The barristers have done a great job and they deserve to get their money. You and I have been through a lot together. You know I always honour my agreements.’

Oliveri: ‘If you tell me that you will do that I accept your word.’”

72 The effect of this evidence of Oliveri is that Hooper, on behalf of the plaintiff, entered into a supplementary fees agreement by which, in consideration of Oliveri agreeing to defer payment of his fees, the plaintiff would pay an amount equal to 10 per cent of the judgment debt after payment of disbursements in addition to any costs otherwise payable to Oliveri. For reasons to be given later, I reject Oliveri’s evidence that Hooper agreed to enter into a supplementary agreement on behalf of the plaintiff.

Judgment debt is paid

73 Daihatsu paid the judgment debt on or about 30 October 2001 by a cheque that was received by Oliveri. Oliveri handed the cheque to Hooper. Oliveri’s evidence was that, when he handed the cheque to Hooper, he asked him to pay the fees to all barristers and other disbursements. Hooper denied the conversation. Hooper’s evidence was that, when he received the cheque, he said to Oliveri “if this doesn’t bounce I’ll pay the everybody out.” There is no material difference between these two versions of that conversation. It has no bearing on the outcome and, as will be seen, the fees of all barristers were paid. Hooper requested a special clearance of the cheque.

Hooper confers with counsel

74 On 31 October 2001 Mr Hooper telephoned Mr Smallbone, a barrister, and obtained an appointment to confer with him later that same afternoon. The conference was arranged on short notice. At that time Mr Smallbone had known Hooper for some years having acted for him personally as well as for the plaintiff. Smallbone also knew Oliveri and knew that he was acting for the plaintiff in the action against Daihatsu. Smallbone knew that Kirby J had recently given judgment for the plaintiff.

75 Neither a solicitor nor any other person was present at the conference. Hooper informed Smallbone that Kirby J had delivered judgment for the plaintiff against Daihatsu. He told Smallbone that Daihatsu had paid the judgment debt and said that he wished to discuss the question of costs. Hooper said that he had an agreement with Oliveri about the costs of the action but Oliveri was trying to change it. Hooper then gave Smallbone an account of the conduct of the case beginning at the time when Oliveri had taken over the conduct of the proceedings from Garland Hawthorn Brahe. Hooper said words to the effect that Oliveri had agreed to take over the conduct of the action on the basis that he would be paid 10 per cent of the proceeds of a judgment or settlement after deducting the expenses. Hooper told Smallbone that, at the time Garland Hawthorn Brahe had ceased to act, the plaintiff was not in a position to conduct the litigation unless the liability to pay solicitor’s fees was deferred until the end of the litigation and that those fees were contingent on the success of the action. It was in that context, said Hooper, that the costs agreement with Oliveri had been made.

76 Hooper then said to Smallbone that the plaintiff was preparing its bill of costs to serve on Daihatsu. He told Smallbone that Oliveri was proposing to prepare a bill on a time costing basis using hourly rates. Hooper said words to the effect that he felt uncomfortable with this because that was not the agreement that had been reached and that he did not agree with Oliveri’s proposed rates. Smallbone then asked Hooper how the backdated arrangement fitted “with the percentage fee”, to which Hooper replied to the effect:

“Dominic says that the percentage fee also covers the amount recovered from Dominic’s costs”.

An alleged exchange of emails

77 Hooper gave evidence that, after he had consulted Smallbone, he had an exchange of emails with Oliveri. This evidence constitutes an important aspect of the plaintiff’s case. According to Hooper, he sent an email on 1 November 2001 at 2.27 pm in these terms.

“Dear Dominic

I expect to have clearance on Daihatsu’s cheque tomorrow and I would like to settle all outstanding accounts tomorrow if possible. Our agreement is that your professional fees will be 10% of the net amount received by PMS after all other accounts have been paid. I have prepared the attached Excel spreadsheet to calculate what you are due now. Obviously, if DAP reimburses us for any part of these costs (after taxation) then that will increase the net amount received by PMS and you will receive a further 10% of that amount received. Please review the attached spreadsheet and advise if you agree with the basis on which the calculation is made so I can be in a position to pay you the $220,045.00 tomorrow (subject to clearance by the bank).

Hooper said that he attached to that email a schedule. The schedule is dated 31 October 2001. It is the disbursements schedule that has already been quoted. For convenience, I repeat the terms of that summary of the disbursements schedule.

Daihatsu Payment 30-October-2001	$3,273,357.00
Less Estimate of Disbursements	-$1,163,757.00
*Disputed Accounts Due	$90,850.00
Total	$ 2,200,450.00
10% of above total to Oliveri Attorneys on account of their fees:-	$220,045.00

78 Hooper said that on 1 November 2001 at 5.46 pm the defendant sent an email in reply in these terms:

“John,

10% is what we agreed and your calculations seem to be correct. I’ll be in the office at about 8.30 but I will have to leave by 9.30.

79 It is common ground that on 2 November 2001 Hooper handed Oliveri a cheque for $220,045 together with the disbursements schedule. On the same day, Hooper paid the fees due to counsel.

80 On 2 December 2001, Hooper sent Smallbone an email asking where he could find the relevant legislation in New South Wales on the question of costs. Smallbone answered that question. Hooper did not then send a copy of the disputed emails to Smallbone. He did not give Smallbone a copy of the disputed emails until 30 September 2002.

Hooper assists with party and party bill

81 Oliveri gave evidence that, shortly after Hooper had paid him the sum of $220,045, he and Hooper began to prepare the party and party bill of costs. For reasons which follow, I find that Oliveri and Hooper were engaged on that task from at least January 2002 until September 2002.

82 Oliveri gave evidence that early in 2002 he asked Hooper to prepare a spreadsheet with all the faxes and emails that had been sent in the Daihatsu litigation and with all barristers’ and witnesses’ expenses. Hooper said that he would prepare such a spreadsheet and scan in everything else that he could. Oliveri told Hooper that he would ask Ms Louise Butler to create a spreadsheet in which Hooper had put in a formula $400 per hour plus GST. Hooper denied this conversation. He also denied that he was at any time involved in the preparation of the party and party bill of costs. Hooper’s evidence was that he was preparing what he called a speculative draft of a solicitor and client bill of costs inclusive of all costs in what he called the “back to back agreements proposed” by Oliveri. For the reasons that follow, I reject Hooper’s evidence. I find that Oliveri made the request and Hooper gave the assistance requested.

83 I find that Hooper asked Oliveri if he would send him a specimen bill. It is common ground that on 17 January 2002 Oliveri sent Hooper an email with a specimen bill attached. The email is headed “Daihatsu bill”. The email was in these terms:

“Attached please find specimen bill. The formula in the bill is 385 per hour inclusive but the DAP bill is for 400 ph plus GST as most of the work is not subject to GST.”

84 On 18 January 2002 Oliveri sent Hooper another email. The subject of the email was described as “DAP BILL” the email reads:

“Attached please find new specimen called Hooper bill. We can work with this. ”

85 The finding that Hooper was preparing the party and party bill of costs is confirmed by the third page of the attachment to the email of 18 January 2002 which is a form of bill of costs addressed to Daihatsu care of its solicitors. It begins “Re PM Sulcs Pty Ltd v Daihatsu Pty Ltd”. It is then headed “Bill for Professional Costs”.

86 Other emails confirm that in 2002 Hooper was working on the party and party bill of costs. The first is an email from Hooper to Oliveri on 11 February 2002. It reads:

“Attached is a bill with GHB’s fees and costs. We need a copy of the court file to move ahead. Can you act on asap. John.”

87 On 12 March 2002, Hooper sent to Oliveri an email to which was attached a draft bill of costs in the form of a party and party bill of costs. The email did not have any message. It simply attached the draft bill which contained 70 pages. It contains many items and is obviously an early form of the draft party and party bill of costs.

88 On 23 May 2002, Hooper sent another email to Oliveri concerning the bill to be sent to Daihatsu. It is in these terms:

“Attached is the updated DAP bill spreadsheet which is inclusive of Hancock, Garnsey, Stevens and Deloittes itemised accounts. I have not yet found a way to export a list of emails sent/or received so it looks as thought these will have to be input manually.”

89 On 1 August 2002 Hooper sent an email to Oliveri that read:

“Dominic

Attached is a spreadsheet with a complete list of documents (as best as I can do) which highlights BGM’s omissions. John”

90 On 4 September 2002, Mr T Hancock sent an email to Oliveri. He sent the email to Oliveri in answer to a telephone call earlier that day. It is clear from the email that Oliveri had asked Hancock to provide details of all his fees. In the course of the email Hancock said that he had asked his secretary to send to Hooper the next day “a complete statement and copies of all my accounts”. The fact that he was going to send such a statement is entirely consistent with Hooper preparing a party and party bill of costs. There was no need for Hancock to send copies of his accounts if a solicitor and client bill was being prepared because the plaintiff had by that time already paid Hancock’s fees.

91 I have no hesitation in finding that from at least mid January 2002 to early September 2002 Hooper was assisting Oliveri in the preparation of a party and party bill of costs to be served upon the solicitors for Daihatsu. I do not accept Hooper’s evidence that he was engaged in preparing a solicitor and client bill of costs. In making this finding, I do not overlook the fact that the bill of costs ultimately rendered to the plaintiff in February 2003 was presented in the same form as the bill to Daihatsu with certain amendments to make it suitable for a solicitor and client bill. I find that Oliveri simply took the party and party bill as a convenient form which he could adapt for the purpose of rendering the solicitor and client bill. However, he changed his rate of remuneration from $400 per hour as stated in the party and party bill to $500 per hour.

92 At one stage in cross-examination, Hooper said that he did not know the difference between a party and party bill of costs and a non-party and party bill. That evidence was plainly false. He later acknowledged that he knew the difference between a party and party bill of costs and a solicitor and client bill of costs. When making that acknowledgement, he accused Mr Linsday SC of using the expression “party and party costs” in cross-examination when he knew he was referring to solicitor and client costs. The accusation was entirely without foundation. Hooper’s accusation against Mr Lindsay was made in a vain attempt to bolster the plaintiff’s case.

93 By mid September 2002 the party and party bill of costs was almost complete save for the inclusion of disbursements (largely photocopying) that had been paid by Hooper. Oliveri was intending to serve the bill of costs on Daihatsu.

Hooper again consults counsel

94 On 30 September 2002, Hooper again consulted Smallbone concerning the claim for costs against Daihatsu and two other matters. One of those matter concerned the DETCO proceedings to which I will refer in a moment. The third matter concerned procedural steps in a costs dispute that the plaintiff had with Garland Hawthorn Brahe and involved allegations that the written costs agreement was champertous. At this conference, Hooper showed copies of the disputed emails that Hooper said he had exchanged on 1 November 2001 with Oliveri. Hooper’s instructions to Smallbone were that Oliveri intended to serve the bill of costs on Daihatsu, that the bill included items charged on a time costing basis that Hooper had not agreed, that the bill included work that Oliveri had not performed including work that Hooper had himself performed, and that the plaintiff had not entered into a fresh costs agreement with Oliveri. Hooper said that he and Oliveri had fallen into a serious dispute. He told Smallbone that he did not want Oliveri to send the bill of costs. Smallbone advised Hooper to send a letter to Oliveri. The same day Hooper sent Oliveri the following letter. The letter was in these terms:

RE: P. M. Sulcs & Associates Pty Ltd v Daihatsu Australia Pty Ltd

I confirm out instructions that no bill of costs is to be submitted to the Defendant in this matter unless and until:

(a) the bill in its final form has been submitted to me for approval; and

(b) I have thereafter provided to you a written direction to serve the bill in that form.”

95 At the meeting on 30 September 2002 Smallbone also gave advice to Hooper concerning the DETCO proceedings. The evidence did not descend to detail but it appears that the plaintiff had at some stage in the proceedings made an offer to settle its claim in those proceedings for $75,000 and had not withdrawn the offer. Later, when the parties were negotiating a compromise of the action in a substantially higher amount than $75,000, the defendants accepted the earlier offer of $75,000. Hooper had consulted two senior counsel and both had advised him that the plaintiff was bound by the acceptance of its offer. Smallbone advised Hooper that the plaintiff should obtain from at least one of the senior counsel confirmation in writing of that advice. It appears that the Hoopers had claimed that Oliveri had been negligent in failing to withdraw the earlier offer.

A meeting on 30 September 2002

96 Oliveri deposed to a meeting at his office on 30 September 2002. The Hoopers denied that meeting and said that the meeting occurred at a later date. I accept Oliveri’s evidence that it occurred on 30 September. He was about to go overseas, a fact that would fix the date of the meeting in his memory. I am encouraged to make that finding because Mrs Hooper deposed that the meeting occurred when Oliveri was about to depart on a holiday overseas. Oliveri and Mrs Hooper gave different accounts of the conversation at that meeting. I find that they discussed issues relating to the DETCO proceedings and to Oliveri’s costs in the Daihatsu litigation. That conclusion is borne out by Smallbone’s evidence as to the matters on which he had earlier advised Hooper on 30 September.

97 Oliveri said that at this meeting Hooper gave him instructions to file the party and party bill of costs. I do not accept that evidence as it is inconsistent with the letter to Oliveri dated 30 September 2002 referred to in paragraph [94] above. Oliveri also said that the Hoopers had insisted that he should only receive 10 per cent of the fees recovered from Daihatsu. According to Oliveri, this conversation became acrimonious and he asked the Hoopers to leave his office.

98 Mrs Hooper said that she and her husband spoke to Oliveri concerning the DETCO proceedings. They believed that Oliveri’s error had led to the acceptance of the offer of $75,000 by the other parties to the proceedings, an error that had caused them to lose the opportunity to settle for a higher amount. They wanted to discuss how to overcome this error. She said Oliveri was abrupt with them. She deposed that Oliveri said that they would have to sue him but he would be paid his fees in that matter at an hourly rate and not as a percentage of the recovery. Mrs Hooper said that at this meeting Oliveri handed her husband a cheque for $75,000 payable to the plaintiff. I find that the matters mentioned by Mrs Hooper were discussed. I find that Oliveri handed the Hoopers a cheque payable to the plaintiff for $75,000.

A later meeting

99 Mrs Hooper deposed to a second conversation with Oliveri when he returned from his trip overseas. She was unable to state when the meeting occurred. In cross-examination, she said that it might have been late in 2002. She believed it was before a meeting the Hoopers had with Oliveri on 7 February 2003. Her evidence was that Oliveri said that the Hoopers would have to sue him in relation to his conduct in the DETCO matter but he wanted to be paid at an hourly rate. She added that, in regard to the Daihatsu litigation, Oliveri had said that he was “prepared to compromise whatever fees were awarded as your costs so you can keep what you have now”. She said that Hooper then asked Oliveri to put that last statement in writing so that he and his wife could consider it. Oliveri refused, saying, “ I won’t put anything in writing. You’ll have to trust me”. I find that there was a conversation on this occasion in which the Hoopers sought to limit Oliveri’s fees to 10 per cent of the amount recovered from Daihatsu after payment of disbursements but that Oliveri insisted on being paid at an hourly rate. He did, however, express a willingness to accept whatever was recovered from Daihatsu upon a party and party bill. That is consistent with his evidence that he had not agreed to a fee that was a percentage of the amount recovered but wanted to be paid at an hourly rate. Oliveri was doing no more than saying that he would accept what was recovered on the party and party bill in payment of his costs. It is to be noted that, according to the Hoopers, the parties were still debating the terms on which Oliveri was to be paid his professional fees.

Party and party bill nears completion

100 In a letter dated 21 October 2002 from Hooper to Oliveri, Hooper gave Oliveri further instructions concerning the party and party bill of costs in the Daihatsu proceedings. The letter was in these terms:

RE: P M Sulcs & Associates Pty Ltd v Daihatsu Australia Pty Ltd

I did not receive your facsimile letter dated 17 October 2002 until today as it was not transmitted by you until late Friday at 6.27 PM

In regard to the bill of costs, my sole (but substantial) input to date has been to create an Excel spreadsheet comprising the calendar of days from 29/04/1993 through to 30/11/2001 and at your request -

§ Electronically scan and OCR the entire printout of the Supreme Court Registry file and merge it into the spreadsheet in date order.

§ Electronically scan and OCR all of Counsel’s bills and merge it into the spreadsheet in date order.

§ Electronically scan and OCR all witness bills in date order and merge it into the spreadsheet in date order.

§ Electronically scan and OCR all expert bills and merge them into the spreadsheet in date order.

§ Merge a WinFax Pro log supplied by you into the spreadsheet in date order.

§ Merge an itemised electronic copy of Garland Hawthorn Brahe bill into the spreadsheet in date order.

§ Merge an itemised electronic copy of Garland Hawthorn Brahe disbursements into the spreadsheet in date order.

§ Merge an itemised electronic copy of Deloitte Touche Tohmatsu bill into the spreadsheet in date order; and then

§ Highlight and draw a line through any items relating to Dr John T Bradley

This has resulted in my providing you with a spreadsheet of approximately 4500 rows.

The tasks I have not completed yet are the scanning and OCR of the bills of Watson Stafford Wilmot Klimt and the assembly of all of the photocopying, printing, binding, court and miscellaneous receipts as well as the bills of Tom Hughes QC and John Chippendall and Tom Hughes etc which I hope to be able to start after Christmas when I returned from the USA.

184 A costs agreement is void if it is not in writing or evidenced in writing: s 184(4) of the Legal Profession Act. Whatever oral agreement as to costs might have been made between the plaintiff and Oliveri, it would have no force or effect unless it was made in writing. The only written costs agreement was the backdated costs agreement. The backdated costs agreement was not executed by Hooper nor by any other person on behalf of the plaintiff. It has not been executed by Oliveri. I turn to examine whether it binds the parties.

185 Section 184(6) of the Legal Profession Act provides:

“(6) A costs agreement may consist of a written offer that is accepted in writing or by other conduct. A disclosure in accordance with Division 2 under section 175 or 176 may constitute an offer for the purposes of this subsection.”

186 I first consider whether Oliveri made a written offer in terms of the backdated costs agreement. There is no evidence that Oliveri expressly made an offer in writing either to the plaintiff or to Hooper on the plaintiff’s behalf. He did not hand Hooper a copy of it nor did he serve Hooper with a copy. Oliveri’s evidence is simply that he printed a copy of the backdated costs agreement for his file and that Hooper printed a copy and took it away with him. For the reasons already given, I accept that evidence. I have also found that Hooper and Oliveri agreed that Oliveri should take over the conduct of the litigation on the footing that he would prepare a costs agreement. It was contemplated that a written costs agreement would be prepared. In August 2001, Hooper and Oliveri had been working together on the Daihatsu litigation for a period in excess of three years. Given that Hooper and Oliveri both contemplated that a written costs agreement would be prepared, the conduct of Oliveri in preparing the costs agreement and Hooper in making a copy constituted an offer in writing. As the backdated costs agreement was prepared after judgment, it could not constitute disclosure under ss 175 and 176 of the Legal Profession Act.

187 There is no evidence that Hooper or any other person on behalf of the plaintiff orally stated that the plaintiff agreed to the terms of the backdated costs agreement. If the plaintiff is to be bound by the backdated costs agreement, it is necessary for Oliveri to establish that Hooper or another person on the plaintiff’s behalf by some other conduct agreed to the terms of the backdated costs agreement.

188 Mere silence on the part of the plaintiff does not, standing alone, constitute acceptance: Felthouse v Bindley (1862) 11 CB(NS) 869; 142 ER 1037; Empirnall Holdings v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523. However, the silence of the offeree in conjunction with other circumstances may indicate that the offeree has accepted the offer: Empirnall per Kirby P at 528 and per McHugh JA at 535 with whom Samuels JA agreed. I adopt the formulation of principle expressed by McHugh JA at 535:

Thornton v Shoe Lane Parking Ltd

MacRobertson Miller Airline Services v Commissioner of State Taxation (Western Australia)

The ultimate issue is whether a reasonable bystander would regard the conduct of the offeree, including his silence, as signalling to the offeror that his offer has been accepted.”

Rust v Abbey Life Assurance Co Ltd

189 Had the backdated costs agreement been drawn in July 1998 and then handed to Hooper and had Oliveri then prosecuted the action till judgment against Daihatsu, it would not be possible for the plaintiff to deny it was bound by the agreement notwithstanding that it had not been signed by Hooper or by any other person on behalf of the plaintiff. It would have been one instance of those cases where an offeree with a reasonable opportunity to reject the offer of services takes the benefit of the services contained in the offer, to adapt the words of McHugh JA in Empirnall. Such a course of dealing between the parties would indicate an acceptance of the offer. However, the backdated costs agreement was not drawn until after judgment had been delivered on 1 August 2001. There were two further hearings on 17 August and 30 August 2001 and Oliveri attended when a further judgment was delivered on 13 September 2001, the evidence does not point to any substantial amount of work being done by Oliveri in the further prosecution of the action after 1 August other than to prepare for the two hearings on 17 and 30 August, and to prepare the statutory demand addressed to Daihatsu. One major task which remained was the preparation of the party and party bill of costs. The fact that the backdated costs agreement was not prepared until after judgment in the Daihatsu litigation has the consequence that Oliveri cannot rely on the silence of the plaintiff or Hooper on the plaintiff’s behalf as acceptance of the terms of the backdated costs agreement. In addition to these considerations, the course of dealings between Hooper and Oliveri in late 2002 and early 2003 demonstrates that Hooper had not agreed to the terms of the backdated agreement.

190 It is useful to refer also to the terms of clause 12 of the backdated costs agreement. It will be recalled that it stated that the offer made could be accepted by

§ signing and delivering a duplicate of the agreement,

§ accepting it in writing,

§ orally accepting the agreement, or

§ giving instructions to commence the work referred to in the agreement. [My paraphrase]

191 There is another stronger reason for holding that the conduct of either the plaintiff or Hooper on behalf of the plaintiff did not constitute acceptance of the backdated costs agreement. Although Hooper had provided considerable assistance to Oliveri in the preparation of the party and party bill of costs, his assistance like his silence as to whether the plaintiff did or did not accept the terms of the backdated costs agreement is equivocal. There could be a number of reasons why Hooper assisted in the preparation of the party and party bill without being willing to accept the terms of the backdated costs agreement. One obvious reason is that the party and party bill was being prepared on the footing that Oliveri was charging the plaintiff at the rate of $400 per hour and, after the introduction of GST, at the rate of $400 per hour plus GST whereas the backdated costs agreement provided that Oliveri was to be paid at the rate of $500 per hour. In this respect it is to be recalled that Hooper had witnessed and had read the affidavit sworn by Oliveri on 16 August 2001 in which Oliveri had said that his fees were $400 per hour plus GST. The rate to be charged per hour is obviously a fundamental term of a costs agreement. There was no agreement between the plaintiff and Oliveri as to the rate or whether Oliveri would charge for his services and nothing in Hooper’s conduct could constitute an agreement on behalf of the plaintiff that it was willing to pay for those services at the rate of $500 per hour. For these reasons, the plaintiff did not by its conduct accept the terms of the backdated costs agreement. There is, therefore, no costs agreement in writing made between the plaintiff and Oliveri.

192 That conclusion renders it unnecessary to deal with the plaintiff’s contention that, in charging at the rate of $500 per hour, Oliveri was charging an unspecified premium contrary to s 187 of the Legal Profession Act.

193 Notwithstanding that no written costs agreement was made between Oliveri and the plaintiff, Oliveri is entitled to recover legal costs for his work in the conduct of the action against Daihatsu on a quantum meruit: Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221. Those costs will have to be assessed by Mr Hattersley pursuant to Division 6 of Part 11 of the Legal Profession Act and in particular with regard to s 208A and s 208B.

A claim for money had and received

194 One of the plaintiff’s prayers for relief is to recover $220,045 as money had and received by Mr Oliveri to the use of the plaintiff. There is no basis for the claim. I have already found that that amount was made in part payment of Oliveri’s fees. Oliveri is entitled to retain that amount until his costs have been assessed. Once his costs have been assessed, he must bring those moneys to account. Should his fees as assessed be higher than $220,045, he must deduct that sum from the amount of the fees as assessed. Should his fees be assessed in a lower amount, he must pay any surplus to the plaintiff.

The claim in detinue for files and documents

195 The first part of the claim in detinue is for the plaintiff’s files and documents relating to the Daihatsu litigation. Oliveri admits that he has possession of those files and documents but says that he is entitled to retain possession of them pursuant to his lien for his professional costs and disbursements. Paragraph 6 seeks an order for recovery up of the files and documents or, in the alternative, an order pursuant to s 209C of the Legal Profession Act that Oliveri deliver up the files and documents.

196 Oliveri has a possessory lien in respect of the files and documents but that lien is subject to the Solicitor’s Rules made pursuant to s 57B of the Legal Profession Act. Rules 8 and 29 specify rules in respect of client’s documents where the retainer has been terminated or new solicitors have been instructed. However, as rr 8.1 and 29.1 provide, those rules are subject to any contrary order made pursuant to s 209C.

197 When making an order pursuant to s 209C the Court will have regard to the intent of rr 8 and 29. The question whether, on termination of the retainer, a solicitor has a lien over the documents may depend on whether it is the client or the solicitor who has terminated the retainer or the circumstances in which the termination was brought to an end. However, the overriding principle is the interests of justice and that requires consideration of two factors. The first is that a litigant should not be deprived of material relative to the conduct of his or her case and the second is that the solicitors should not be left without payment of what is justly due to them: see A v B [1984] 1 All ER 265 at 274 and Ismail v Richard Butler (a firm) [1996] 2 All ER 506. Those remarks are no less applicable to the régime prescribed by the Solicitor’s Rules. As Hodgson J (as he then was) said in Jankowski v Mastoris (1995) 7 BPR 14589 at 14595:

“The cases to which I have referred do confirm that the court should not take an overly technical approach to the question of whether it is the client who has discharged the solicitor or the solicitor who has discharged himself, but rather look at that question as a matter of real substance.”

Doyles Construction Lawyers v Harsands Pty Ltd

Bolster v McCallum

Legal Profession Act

Bechara v Atie

198 It is very difficult to determine whether it was Oliveri or Hooper on behalf of the plaintiff who terminated the retainer. Differences had arisen between the Hoopers and Oliveri as a result of the allegation that Oliveri had been negligent in the conduct of the DETCO proceedings and the continuing debate in respect of Oliveri’s costs in the Daihatsu litigation. Those differences came to a head in early February 2003. The parties then had at least one meeting on 7 February that ended in bitterness and rancour. Oliveri and Hooper then exchanged acrimonious emails. This was an instance of parties who had had a long professional and personal relationship extending over a period of at least nine years coming to have differences that led to bitterness and acrimony. In those circumstances, it is inappropriate to attempt to decide who in fact discharged the other. The simple fact is that a long-standing professional relationship had come to an end. In making this finding, I do not overlook the fact that on 10 February 2003 Hooper sent an email to Oliveri asking if Oliveri was prepared to continue to act for the plaintiff in the DETCO proceedings and in the Daihatsu litigation. Oliveri was not prepared to do so. He sent his memorandum of costs. In my view, in early February 2003, the relationship between Hooper and Oliveri had broken down to such an extent that it was too late effectively to mend fences. It was better for both that the retainer should be terminated. The issue should not be determined by determining who determined the retainer but by reference to all of the surrounding circumstances. Only in that way will the interests of justice be served.

199 Judgment had been delivered in the Daihatsu litigation and the party and party bill of costs had been prepared. Oliveri was entitled to be reimbursed for his services rendered over a period of at least four years in that litigation. At the same time, the plaintiff has outstanding issues to resolve in the Daihatsu litigation. It will be unable to prosecute its claims unless it has the files and documents relating to that litigation which are still held by Oliveri. In order that the plaintiff may prosecute the remaining issues in the Daihatsu litigation, it is necessary that an order be made that Oliveri deliver up to the plaintiff all files and documents in his possession relating to that litigation. However, that order should be conditional on the plaintiff giving adequate security for the costs payable to Oliveri. The security can be provided by way of payment into court, bank guarantee or any other means which the parties may agree or which, in the absence of agreement, the court considers acceptable. Given that the plaintiff has been paid the judgment debt, that security should be for a substantial amount. Oliveri has already received $223,345 on account of his fees. His bill totalled $1,879,974. He deducted from that the sum of $223,345 so that the amount remaining due is $1,656,629. While that amount might be substantially reduced by the costs assessor, it must be remembered that the hearing of the action occupied some 51 days. The plaintiff will, therefore, be liable to pay a substantial amount to Oliveri for his costs. In all the circumstances, the most appropriate course is to hear the parties on the amount to be paid as security for costs and how that security is to be provided. Once that issue has been determined, there will be an order to the effect that, upon provision by the plaintiff of security for the defendant’s claim for outstanding costs in the sum as determined, the defendant should deliver to the plaintiff’s solicitors all files and documents relating to the Daihatsu litigation in the possession of the defendant.

The claim in detinue for the other items

200 I turn to the remaining items. I have already dealt with the claim for the IBM laptop computer. For the reasons already expressed, I find that the defendant does not have the computer in his possession and did not at any time wrongfully detain it. The claim in respect of the laptop computer must be dismissed.

201 The only evidence concerning the remaining items is affidavit evidence consisting of allegation and counter-allegation. The evidence was not tested by cross-examination. I have already expressed the view that the claim for these items was made as a cloak to give an aura of respectability to the claim for the laptop computer.

202 The plaintiff claims an order that the retained items be delivered up. The prayers for relief include a general claim for damages. It is not expressly directed to the claim in detinue. I infer that, if the goods cannot be delivered to the plaintiff, the plaintiff seeks damages: see s 93 of the Civil Procedure Act 2005. However, the plaintiff adduced no evidence as to the value of any item alleged to be detained.

203 I find that the desk, eight chairs and filing cabinet were delivered by Hooper to Oliveri’s office. I do not accept Hooper’s evidence that they were lent to Oliveri on terms that they were to be returned when requested by Hooper. That assertion is belied by the fact that Hooper allowed the items to remain at Oliveri’s office for almost four years after judgment in the Daihatsu litigation before any request was made that they be returned and for some two years after Oliveri has ceased to act for the plaintiff. In my view, the probability is that these items were no longer required by Hooper and had little, if any, commercial value. Hooper, therefore, made them available to Oliveri. Either Hooper gave them to Oliveri or he left them in Oliveri’s office because they were of no further use or value to him. The latter is more likely. On either view, Hooper had forsaken any claim to ownership or possession. Oliveri has disposed of these items. Even if I have erred in finding that Hooper had in one way or the other forsaken any claim to ownership or possession, he is not entitled to recover damages. There is no evidence of value and, as I have said, it is likely that they had no commercial value when Hooper brought them to Oliveri’s office.

204 Hooper gave no particulars of the stationery supplies he said that he had left at Oliveri’s office. Oliveri denied that Hooper had left any stationery at his office. The evidence is so unsatisfactory that I am not satisfied that the plaintiff has proved its claim that stationery was left in Oliveri’s office.

205 Although Connah Steed claimed in its letter that Hooper’s Masonic apron and leather case had been wrongfully detained, there is no claim made for those items in the further amended statement of claim. It is unnecessary to consider it.

206 Hooper said that he had left the whiteboard in Oliveri’s office at the same time as the desk, chairs and filing cabinet. Oliveri denied that Hooper had taken a whiteboard to his office. I find that Hooper did take the whiteboard to Oliveri’s office. I find it cannot now be located. Oliveri had probably disposed of it. I also find that, like the other items Hooper left at Oliveri’s office, the whiteboard was surplus to his requirements and of no commercial value and that Hooper had abandoned any claim to ownership or possession. Even if that finding is incorrect and it was wrongfully detained, neither the plaintiff nor Hooper has demonstrated any loss.

207 The final item claimed by Hooper is a Sola 240 volt power conditioner. That item was not claimed in either of the letters dated 27 May and 31 May 2005 when Connah Steed first alleged that Oliveri had wrongfully detained goods belonging to Hooper. It was not mentioned in the first affidavit sworn by Hooper on 22 June 2004. It is first mentioned in his affidavit of 29 July 2005 but Hooper says no more than it had been left in Oliveri’s office. Oliveri denied in his affidavit sworn on 24 August 2006 that he had ever seen the power conditioner in his office. Although Hooper answered other allegations in that affidavit of Oliveri, he did not answer that assertion. The evidence concerning the power conditioner is so unreliable and inconclusive that I am not satisfied that Hooper has proved that he left it at Oliveri’s office. I dismiss that part of the claim.

208 For all of the reasons the plaintiff’s claim in detinue is dismissed.

The claim in negligence

209 The plaintiff’s claim in negligence stems from the fact that at the trial of the action against Daihatsu the plaintiff sought to read affidavits of two experts, Dr Bradley and Professor Deegan. Their affidavits and reports had been provided to Daihatsu. Kirby J rejected their evidence as inadmissible. After publishing his reasons for judgment on 1 August 2001, Kirby J reserved for later argument his decision on the orders to be made in respect of costs and interest. He heard argument on those issues on 17 and 30 August. On 13 September 2001 he published reasons for judgment.

210 Daihatsu had contended that the plaintiff had made an ambit claim and that the claim had been based on the opinions expressed by Dr Bradley. Kirby J accepted that argument. His Honour noted that the affidavits of Professor Bradley were inadmissible and that the evidence had been struck out on 17 August 2000. Once Dr Bradley’s affidavit evidence had been struck out, Professor Deegan’s fell with it. Kirby J held that Daihatsu was entitled to recover its costs thrown away in seeking to meet the evidence of Dr Bradley and Professor Deegan. He took the view that the appropriate remedy was to reduce the amount of the costs to be awarded to the plaintiff. He ordered that the plaintiff should recover only 80 per cent of its party and party costs. I refer to the reasons of Kirby J in PM Sulcs & Associates Pty Ltd v Daihatsu Australia Pty Ltd– Costs and Interest [2001] NSWSC 798 at paras 21-36.

211 The plaintiff claimed that Oliveri had been negligent in preparing Bradley’s affidavit. The plaintiff also asserted that the evidence of Professor Deegan was not necessary and that Oliveri was negligent in engaging Professor Deegan as an expert. The plaintiff claimed damages being

§ the loss of a chance of recover all of its costs in the Daihatsu action;

§ any amount payable by the plaintiff to a third person (including Oliveri) for fees in relation to the evidence of Dr Bradley and Professor Deegan; and

§ costs wasted by reason of the time spent in the Daihatsu proceedings in dealing with the evidence of Dr Bradley and Professor Deegan.

212 The grounds on which the plaintiff’s claim is advanced are not clear. In paragraphs 32 and 36 of the further amended statement of claim the plaintiff’s claim is limited to a claim in negligence in respect of one affidavit which, it is alleged, Oliveri had revised and filed. However, no particulars are given of that affidavit. The evidence shows that at least two affidavits were sworn by Bradley and that is confirmed by the reasons of Kirby J. One affidavit was sworn in March 1999 and the other on 10 December 1999. The later one was settled by counsel. The statement of claim does not indicate which affidavit is the subject of the plaintiff’s claim.

213 In his affidavit sworn on 3 May 2006, Hooper deposed to an affidavit sworn in March 1999 and well as other subsequent affidavits sworn by Bradley. Hooper said that those affidavits were settled by counsel. However, Hooper did not expressly state which affidavit is the subject of the plaintiff’s complaint. It is to be inferred from that affidavit that the claim relates to the affidavit sworn by Dr Bradley in March 1999. That appears to be confirmed by Hooper’s later affidavit sworn on 25 March 2008.

214 The plaintiff’s evidence is at best sketchy. Hooper gave evidence of two conferences with Mr Garnsey SC and related what, he says, was the advice given by Mr Garnsey. As related by Hooper, that advice suggests that no attempt was made to get Bradley’s affidavit of March 1999 into evidence. That evidence is on its face inconsistent with the reasons of Kirby J who said that the affidavits of March 1999 and 10 December 1999 were struck out. It must be inferred from this remark that the plaintiff did attempt to get the affidavit into evidence. I do not, therefore, accept Hooper’s evidence on that topic. Hooper gave evidence that he was critical of the evidence of Dr Bradley. That was denied by both Dr Bradley and Oliveri. I accept Oliveri’s evidence that Hooper assisted in the preparation of the affidavit. That is consistent with his active involvement in the preparation of the plaintiff’s case. I place no reliance on Hooper’s evidence which is an attempt by Hooper to seek to distance himself from his involvement. In my view, Hooper’s criticisms have been made after the event and are grounded on the reasons that Kirby J gave for rejecting Dr Bradley’s evidence. Hooper also gave evidence that he instructed Oliveri not to engage Dr Bradley. I reject that evidence as well. It is entirely inconsistent with the later attempts to get Bradley’s affidavit into evidence. Most importantly, there is no evidence of negligence on the part of Oliveri on evidence from which negligence can be properly inferred. The affidavit of March 1999 was not proved. In the absence of that affidavit, it is not possible to make any finding as to negligence. The particulars of negligence in the further amended statement of claim indicate that the plaintiff’s claim in negligence proceeds on the footing that Oliveri was negligent only because the affidavit of Dr Bradley sworn in March 1999 was rejected as inadmissible.

215 As Professor Dal Pont notes in his text Lawyers’ Professional Responsibility 3rd ed (2005) Lawbook Co at para 5.95, an unfavourable outcome is not per se negligence. To like effect are the remarks of Callinan J in Boland v Yates (1999) 167 ALR 575 at [306]:

“…Whether a duty of care has been duly fulfilled cannot be decided just by looking at the outcome of the efforts of a professional person. Cases will be lost, and regrettably patients will not be cured, notwithstanding that the lawyers and doctors have been diligent and careful.”

216 One of the claims for damages by the plaintiff for the alleged negligence is for an amount equal to 20 per cent of the costs as assessed on a party and party bill of costs to be paid by Daihatsu. That claim is made to compensate the plaintiff for the reduction in its recovery of party and party costs as ordered by Kirby J. That will be a very substantial amount. It is not possible to fix what the amount will be but an estimate can be made. Oliveri’s bill of costs to the plaintiff is based on the party and party bill. It totals some $1.8 million. Experience indicates that many bills of costs are reduced on a taxation or other assessment. After making an allowance for a reduction, it is not unreasonable to suppose that an amount equal to 20 per cent of the party and party bill of costs will be at least $200,000. A claim for such a large amount requires more by way of evidence and argument than a mere assertion that Oliveri had acted negligently because the affidavit of Dr Bradley was ruled to be inadmissible.

217 For these reasons I am not satisfied that the plaintiff has proved negligence on the part of Oliveri. I therefore dismiss the claim for negligence.

218 Given that conclusion, it is not necessary to consider whether Oliveri is immune from suit on the ground that the work done by him in preparing Bradley’s affidavit was intimately connected with the case in court: Giannarelli v Wraith (1988) 165 CLR 543 and D’Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1.

219 The claim that Oliveri was negligent in engaging Professor Deegan must also fail. The particulars of negligence allege that Oliveri was negligent in failing to use reasonable care, skill and diligence in that he ought to have known that the evidence of Dr Bradley was inadmissible so that the evidence of Professor Deegan would, therefore, be irrelevant and inadmissible. Hooper further alleged that Oliveri should have known that the evidence of Professor Deegan was not necessary and could not cure any defects in Dr Bradley’s evidence. Here again, the plaintiff’s claim fails for want of evidence. I dismiss the claim.

Conclusion

220 For these reasons I dismiss the plaintiff’s claim that it has no liability to Oliveri for his costs. I also dismiss the plaintiff’s claim for repayment to it of the amount of $220,045 and its claim for damages for negligence. I allow the plaintiff’s claim in detinue to the extent only that it is entitled to have delivered to it its files and documents relating to the Daihatsu litigation. However, that order is conditional on the plaintiff giving adequate security for the costs payable to Oliveri. I uphold Oliveri’s cross-claim to the extent only that he is entitled to recover his costs on a quantum meruit.

221 I will hear the parties as to the terms of the order for security of the costs payable to Oliveri and as to the costs of this action.

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Citations

PM Sulcs & Associates Pty Ltd v Oliveri [2009] NSWSC 456

Most Recent Citation

Oliveri v P M Sulcs and Associates Pty Ltd [2012] NSWSC 1198

Cases Citing This Decision

4

Oliveri v P M Sulcs and Associates Pty Ltd (in liq) [2013] NSWCA 84

PM Sulcs and Associates Pty Ltd v Oliveri [2010] NSWCA 16

Helou v Nguyen; Re Application of Ly Lawyers [2013] NSWSC 1782

Cases Cited

12

Statutory Material Cited

2

Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810

Moratic Pty Ltd v Gordon [2007] NSWSC 5

CITATION:	PM Sulcs & Associates Pty Ltd v Oliveri [2009] NSWSC 456
HEARING DATE(S):	27, 28, 29 & 30 April 2009; 1, 5 & 11 May 2009
JUDGMENT DATE :	28 May 2009
JURISDICTION:	Equity
JUDGMENT OF:	Debelle AJ
CATCHWORDS:	PROCEDURE – Costs – Taxation – plaintiff had succeeded in litigation – defendant submitted bill of costs based on alleged costs agreement – whether costs agreement had existed – whether defendant retained on void contingency basis – Held no costs agreement existed and costs payable on quantum meruit basis as assessed under Division 6 of Part 11 of the Legal Profession Act 1987 - TORTS - Trover and detinue – Remedies – Action of detinue – Files and documents in relation to earlier litigation held pending payment of costs and disbursements – Held defendant entitled to lien – Order that defendant deliver up files and documents on provision by plaintiff of security for the costs payable to defendant
LEGISLATION CITED:	Evidence Act 1995 Legal Profession Act 1987
CATEGORY:	Principal judgment
CASES CITED:	A v B [1894] 1 All ER 265 Briginshaw v Briginshaw (1938) 60 CLR 336 Bechara v Atie [2005] NSWCA 268 Boland v Yates (1999) 167 ALR 575 Boyles v McCallum (1966) 85 WN (Pt 1) 281 D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1 Doyles Construction Lawyers v Harsands Pty Ltd (NSWSC, McClelland CJ in Eq, 24 December 1996, unreported) Empirnall Holdings v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 Felthouse v Bindley (1862) 11 CB(NS) 869; 142 ER 1037 Giannarelli v Wraith (1988) 165 CLR 543 Ismail v Richard Butler (a firm) [1996] 2 All ER 506 Jankowski v Mastoris (1995) 7 BPR 14589 Pavey v Matthews Pty Ltd v Paul (1987) 162 CLR 221 PM Sulcs & Associates Pty Ltd v Daihatsu Australia Pty Ltd - Costs and Interest [2001] NSWSC 798 Rust v Abbey Life Assurance Co Ltd [1979] 2 Lloyd's Rep 334 Watson v Foxman (1995) 49 NSWLR 315
TEXTS CITED:	Lawyers' Professional Responsibility 3rd ed (2005) Lawbook Co
PARTIES:	PM Sulcs & Associates Pty Limited ( Plaintiff) Dominic Oliveri (Defendant)
FILE NUMBER(S):	SC 3548/2004
COUNSEL:	R Aldridge SC/BJ Skinner (Plaintiff) GC Lindsay SC/GPF Rundle (Defendant)
SOLICITORS:	Connah, Steed & Co (Plaintiff) Penelope Purcell Solicitors (Defendant)