Renton Resources Pty Ltd v Johnson Winter & Slattery - [2005] SASC 231

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
RENTON RESOURCES PTY LTD & ANOR v JOHNSON WINTER & SLATTERY
Judgment of The Full Court
(The Honourable Justice Vanstone, The Honourable Justice Anderson and The Honourable Justice Layton)
1 July 2005
PROFESSIONS AND TRADES - LAWYERS - REMUNERATION - TAXATION OF COSTS AND FEES - GENERAL PRINCIPLES - UNUSUAL AND UNNECESSARY COSTS AND EXPENSES
PROCEDURE - COSTS - APPEALS AS TO COSTS
Appeal from a decision of a Master of the Supreme Court - appellants sought to have the retainer agreement with the respondent, a firm of solicitors, set aside as not being fair or reasonable - Master found that the retainer agreement was fair and reasonable, and declined to set it aside - Master refused to order a taxation - on appeal the appellants also sought to have fees charged by respondent while acting as agents for another firm of solicitors included in the taxation - held: retainer agreement fair and reasonable - question as to some charges rendered - Master erred in not ordering a taxation - appeal allowed - order for a taxation in relation to all accounts rendered after the retainer agreement entered.
Legal Practitioners Act 1981 s42, referred to.
Re Raven; Ex parte Pitt (1881) 45 LT 742, applied.
McNamara Business and Property Law v Kasmeridis (2004) 90 SASR 151, considered.

RENTON RESOURCES PTY LTD & ANOR v JOHNSON WINTER & SLATTERY
[2005] SASC 231
Full Court: Vanstone, Anderson and Layton JJ

VANSTONE J I agree that the appeal should be allowed and with the reasons given by Anderson J.
ANDERSON J This matter involves a dispute about solicitors’ fees claimed by the respondent (“JWS”) for representing the appellants in litigation in the Supreme Court of South Australia.
The appellants sought a review of the costs claimed by JWS under s42(1)(b) of the Legal Practitioners Act 1981 (“the Act”). They have appealed to the Full Court from the decision of a Master of the Supreme Court, given on 28 September 2004. In that decision the Master found that there were two separate written agreements between the appellants and JWS. He found that the second of these agreements was to pay a fixed sum and he therefore refused the appellants’ application for a taxation of the costs.
Background
Initially the appellants were represented by Cridlands in the Northern Territory and then by Mallesons Stephen Jaques (“Mallesons”) in Perth, with JWS acting as Adelaide agent for Mallesons from about October 1999. In September 2001 the appellants decided to instruct JWS directly, and on 22 October 2001 the second appellant, Mr Renton, signed a retainer letter provided by JWS (“the retainer agreement”). This was referred to as the first agreement.
The terms of that retainer included a statement that:
We will charge on the basis of time spent on your work. Unless we agree other hourly rates with you, we will charge the following rates [a schedule of hourly rates followed]…
The time we charge for includes time spent…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2005] SASC 231
Decision Date: 1 July 2005

CaseChat Overview and Summary

The appeal in Renton Resources Pty Ltd v Johnson Winter & Slattery involved the appellants, Renton Resources Pty Ltd and Mr Renton, challenging the fairness and reasonableness of a retainer agreement with the respondent, Johnson Winter & Slattery (“JWS”), a firm of solicitors. The appellants also sought to have certain fees, specifically those charged while JWS acted as agents for another firm of solicitors, included in the taxation of costs. The matter was initially heard by a Master of the Supreme Court, who found that the retainer agreement was fair and reasonable and declined to set it aside or order a taxation. The appellants subsequently appealed to the Full Court.

The central legal issue before the Full Court was whether the retainer agreement was fair and reasonable and whether the Master erred in not ordering a taxation of costs. The appellants argued that the retainer agreement was unfair and unreasonable because it did not adequately account for their concerns about cost control. They also sought to have certain fees included in the taxation that the Master had refused to order. JWS, on the other hand, contended that the retainer agreement was binding and that there was no basis for a taxation as there was an agreement for a specified amount.

The Full Court found that the retainer agreement was fair and reasonable, and thus the Master's decision to not set it aside was upheld. However, the Court held that the Master erred in not ordering a taxation of the costs. The Full Court reasoned that while there was a binding agreement for a specified amount, the appellants had also sought to have fees charged by JWS while acting as agents for another firm included in the taxation. This led to a question as to whether some of the charges rendered were reasonable. Consequently, the Court allowed the appeal and ordered a taxation of all accounts rendered after the retainer agreement was entered into. The Full Court's decision recognised the binding nature of the retainer agreement but also acknowledged the need for a thorough review of all costs to ensure fairness and reasonableness.

In conclusion, the Full Court allowed the appeal and ordered a taxation of all accounts rendered after the retainer agreement. The Court found the retainer agreement to be fair and reasonable, but recognised that there were issues concerning certain charges that warranted a taxation. This decision ensures that all aspects of the costs incurred by the appellants are properly reviewed and taxed, thereby providing a more comprehensive and fair assessment of the legal fees.

Orders

Orders of the court

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Background

Background to the litigation

The appellants sought a review of the costs claimed by JWS under s42(1)(b) of the Legal Practitioners Act 1981 (“the Act”). They have appealed to the Full Court from the decision of a Master of the Supreme Court, given on 28 September 2004. In that decision the Master found that there were two separate written agreements between the appellants and JWS. He found that the second of these agreements was to pay a fixed sum and he therefore refused the appellants’ application for a taxation of the costs. Background Initially the appellants were represented by Cridlands in the Northern Territory and then by Mallesons Stephen Jaques (“Mallesons”) in Perth, with JWS acting as Adelaide agent for Mallesons from about October 1999. In September 2001 the appellants decided to instruct JWS directly, and on 22 October 2001 the second appellant, Mr Renton, signed a retainer letter provided by JWS (“the retainer agreement”). This was referred to as the first agreement. The terms of that retainer included a statement that:We will charge on the basis of time spent on your work. Unless we agree other hourly rates with you, we will charge the following rates [a schedule of hourly rates followed]…The time we charge for includes time spent on interviews, preparing or reading documents or correspondence, telephone calls, attending at meetings, undertaking research and travelling in the course of undertaking work for you…You should note that our usual hourly rates may result in you paying more on a time basis for our services than if we charged on the relevant Court scale of costs. Whilst agreeing to the terms, Mr Renton wrote to Mr Johnson, the partner at JWS with conduct of the matter, expressing his concern about the potential for the costs of the litigation to blow out. On 22 October 2001 Mr Renton wrote:We trust that you understand that we are not a large corporation with unlimited resources and you are mindful of our needs to keep costs to a minimum.In particular we request that thought be given to providing services in the most cost effective way in addition to delegating work to ourselves wherever possible.Please itemise all accounts and agree that we shall not be held responsible for expenses where work has not been carried cost effectively. On 25 October 2001 Mr Johnson replied to that letter by email stating, “I confirm the terms as set out in that letter”. On 12 February 2002, when the matter was being prepared for trial, Mr Johnson emailed Mr Renton, stating that:We would like to make some provision for the fees of senior counsel. We request that you deposit $20,000 in our trust account on account of his fee. We ask that you do so by Friday 15/2. If there is a problem with this please let us know.In fact Mr Renton was only able to raise $10,000 at that time, but indicated he would make arrangements to pay the balance as soon as possible. By 15 February 2002 the appellants were in arrears in their payments to JWS. The appellants’ trial regarding a valuation dispute commenced in the Supreme Court before Wicks J on 18 February 2002, and continued until 27 February 2002 when it was adjourned until 15 July 2002.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

VANSTONE J ANDERSON J LAYTON J

On 21 June 2002 Mr Renton replied by email, stating:I wish to confirm my acceptance of your arrangement based on my understanding that the following matters are agreed:1. The file will be made available to Strachan Carr as required.2.Monies received are used to settle disbursements as discussed, in particular the account of Stephen Walsh QC.Decision of the Master In proceedings before the Master the appellants sought to have the costs claimed by JWS reviewed pursuant to s42(1)(b) of the Act. Section 42(1) of the Act provides that:(1) On the application—(a) of a person claiming to be entitled to legal costs; or(b) of a person who is liable to pay, or who has paid, any legal costs,the Supreme Court may tax and settle the bill for those costs.JWS, in contrast, submitted that it was s 42(6)(a) and (7) that applied. Sections 42(6) and (7) provide that:(6) A legal practitioner may make an agreement in writing with a client for—(a) payment of a specified amount by way of legal costs (which may—but need not—consist of a daily, hourly or other time-related rate for professional work carried out by the legal practitioner on the client's behalf); or(b) payment of legal costs in accordance with a specified scale; or(c) subject to any limitations imposed by the Society's professional conduct rules or the regulations—payment of a contingency fee to be calculated on a basis set out in the agreement on fulfilment of a condition stated in the agreement.(7) The Supreme Court may, in proceedings under this section, rescind or vary an agreement under subsection (6) if it considers that any term of the agreement is not fair and reasonable. Before the Master, JWS submitted that there were two binding agreements in writing between their firm and the appellants, the first being the retainer agreement, and the second consisting of the emails of Mr Johnson and Mr Renton dated 14 June 2002 and 21 June 2002 respectively. Those emails, which deal with the payment plan and the $71,099.74 owing to JWS, are set out earlier in these reasons. JWS submitted that this second agreement was an agreement for a specified amount, and because of this there was, in effect, nothing to tax. The Master states in his reasons that:I am in these reasons considering whether or not there are any and if so what agreements in writing to which s 42(6)(a) applies. If there are any such agreements should they be varied or rescinded by the operation of s 42(7) of the Legal Practitioners Act. His Honour found that the retainer letter described above constituted such an agreement and that none of the terms were not fair and reasonable. He therefore declined to vary or rescind anything in that agreement. In relation to the second agreement, the Master found that the emails of 14 June 2002 and 21 June 2002, as well as a letter from Strachan Carr to JWS dated 13 June 2002, which is exhibit AFJ 12 of the Affidavit of Mr Johnson sworn on 9 July 2004, also constituted an agreement for the purposes of s42(6)(a)[MSOffice2]. He again found that none of the terms were not fair and reasonable. The Master ordered that the appellants pay JWS $71,099.74, the amount that was still outstanding at the time of judgment, and declined to direct a taxation pursuant to s42(1)(b) of the Act. In refusing to direct a taxation, his Honour stated:In my view therefore the obligation of Renton Resources and Renton to pay legal costs is crystallised finally by the agreement contained in exhibits AFJ12 to 14 of document 72 for the reasons I have given and the agreement is neither unfair nor unreasonable. There is no basis upon which to direct a taxation. I consider that JWS is entitled to an allocatur in the amount of $71,099.74.Appeal to the Full Court

Ratio Decidendi

Legal Principle Established

Established by: VANSTONE J, ANDERSON J, LAYTON J

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