HEARING DATE(S): 24 May 2004, 25 May 2004, 26 May 2004
JUDGMENT DATE: 15/07/2004
PARTIES: Leonardus Geradus Smits - First Appellant John Anthony Leslie - Second Appellant Plantoy Pty Ltd - Third Appellant Walter Edward Roach - First Respondent Valerie Anne Roach - Second Respondent Winnote Pty Ltd - Third Respondent Sydtech Pty Ltd - Fourth Respondent
JUDGMENT OF: Sheller JA Ipp JA Bryson JA
LOWER COURT JURISDICTION: Supreme Court
LOWER COURT FILE NUMBER(S): 50099/99
LOWER COURT JUDICIAL OFFICER: McClellan J
COUNSEL: J M Ireland QC - Appellants R M Smith SC/T G R Parker - Respondents
SOLICITORS: N/A Maurice Blackburn Cashman - Respondents
CATCHWORDS: RETAINER AGREEMENT - champertous agreement - Legal Profession Act 1987 - if recovery contingent upon successful outcome - repudiation - whether repudiation accepted - specific performance of agreement, apprehended bias - whether judge should have disqualified himself - whether waived right to seek disqualification
DECISION: 1 Appeal allowed 2 Set aside orders 1-4 made by McClellan J on 6 August 2002 3 In lieu thereof (a) Dismiss the proceedings against Mr and Mrs Roach (b) The appellants within fourteen days to bring in short minutes of orders for specific performance by the Roach companies of the agreement made on or about 16 September 1999 (the Ten Point Plan) 4 The appellants to pay Mr and Mrs Roach's costs of the proceedings and of this appeal on a party and party basis 5 The Roach companies to pay one-half of the appellants' costs of the proceedings before McClellan J and of this appeal but in respect of the costs of this appeal to have a certificate under the Suitors' Fund Act 1951 if so entitled.
JUDGMENT:
IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL
CA 40753/02 SC 50099/99
SHELLER JA IPP JA BRYSON JA
SMITS & ORS v ROACH & ORS
From 1 July 1995, Smits Leslie was engaged on behalf of the first, third and fourth respondents (‘the Roach clients’) to act for them in an action to recover damages for alleged negligence then proposed against Freehill Hollingdale & Page (‘Freehills’). Freehills is a firm of solicitors who acted for the Roach clients in the late 1980’s and early 1990’s in relation to the potential exploitation of peat deposits in Victoria. Smits Leslie continued to act as solicitors for the Roach clients in this matter, until there was a breakdown in the relationship which resulted in the termination of their retainer on 7 April 1999.
Smits Leslie prepared two retainer agreements. The first was signed in April 1997 (‘the first retainer agreement’) and the second on 23 June 1998 (‘the second retainer agreement’). The terms of the second retainer agreement are the subject of this…
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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AGLC
Smits v Roach [2004] NSWCA 233
Case
[2004] NSWCA 233
Decision Date
CaseChat Overview and Summary
The appeal in *Smits v Roach* concerned claims arising from retainer agreements and a settlement agreement between the appellants, Smits Leslie, and the respondents, Mr and Mrs Roach and the Roach companies. The appellants sought damages and specific performance based on these agreements. A significant issue at first instance involved an application by the appellants for the trial judge, McClellan J, to disqualify himself due to an undisclosed conflict of interest concerning his brother's partnership at a firm involved in related proceedings. The judge refused this application and subsequently made orders dismissing the proceedings and awarding costs against the appellants.
The legal issues before the appellate court included whether the trial judge erred in finding the retainer and settlement agreements illegal and unenforceable, particularly in light of the *Legal Profession Act 1987*. The court was also required to determine if the appellants were precluded from recovering remuneration on a quantum meruit basis, if the settlement agreement was valid under the *Corporations Law*, and whether the trial judge had erred in finding that the appellants had repudiated the settlement agreement and that this repudiation had been accepted by the respondents. Finally, the court had to consider whether the trial judge should have disqualified himself and whether the costs orders made were appropriate.
The appellate court allowed the appeal, setting aside the orders made by McClellan J. The court found that the trial judge had erred in his findings regarding the enforceability of the agreements and the appellants' entitlement to recovery. Specifically, the court determined that the agreements were not wholly illegal and that the appellants were entitled to recover reasonable remuneration for services rendered. The court also found that the respondents had not accepted a repudiation of the settlement agreement by the appellants. The court concluded that the trial judge should have disqualified himself.
In lieu of the original orders, the appellate court dismissed the proceedings against Mr and Mrs Roach. The court ordered the Roach companies to provide short minutes for specific performance of the settlement agreement, referred to as the "Ten Point Plan." The appellants were ordered to pay Mr and Mrs Roach's costs of the proceedings and the appeal, while the Roach companies were to pay half of the appellants' costs of the proceedings before McClellan J and the appeal, with a potential certificate under the *Suitors' Fund Act 1951* for the appeal costs.
Orders
Orders of the court
1 Appeal allowed
2 Set aside orders 1-4 made by McClellan J on 6 August 2002
3 In lieu thereof
(a) Dismiss the proceedings against Mr and Mrs Roach
(b) The appellants within fourteen days to bring in short minutes of orders for specific performance by the Roach companies of the agreement made on or about 16 September 1999 (the Ten Point Plan)
4 The appellants to pay Mr and Mrs Roach's costs of the proceedings and of this appeal on a party and party basis
5 The Roach companies to pay one-half of the appellants' costs of the proceedings before McClellan J and of this appeal but in respect of the costs of this appeal to have a certificate under the Suitors' Fund Act 1951 if so entitled.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
CLELLAN J
The claims by Smits Leslie relevant to this appeal can be described as follows:(a)Against Mr and Mrs Roach and the Roach companies, claims based on the second retainer agreement.(b)Against the Roach companies, damages and specific performance claims based on the Ten Point Plan. No agreement with Mr Roach was alleged to have been made in September 1999. Application for disqualification and decision at first instance The hearing of these proceedings (50099/99), on issues of liability only, began before McClellan J on 11 March 2002. On 21 March 2002 his Honour reserved his judgment which was published on 19 June 2002. By a notice of motion dated 25 June 2002 the plaintiffs applied to McClellan J to disqualify himself from making final orders in the proceedings and from hearing and determining any aspects of the proceedings other than the notice of motion and for his Honour to withdraw his reasons for judgment published on 19 June 2002. This application was supported by Mr Leslie’s affidavit of 25 June 2002. Mr Leslie said that neither he nor Mr Smits nor their junior counsel at the hearing, Mr Haffenden, was aware that, as the trial Judge had disclosed on 14 and 17 June 2002, his brother, Geoffrey Alan McClellan was a partner and Chairman of Freehills, and a defendant in the Freehills proceedings. Though in his affidavit Mr Leslie said otherwise, it became apparent that the plaintiffs’ senior counsel Mr Lindsay SC, was aware that the judge’s brother was a partner at Freehills. The application was dealt with on 26 June 2002 and refused by the trial Judge, who, after a further hearing on costs on 6 August 2002, went ahead and made orders that the proceedings be dismissed, the cross-claim dismissed, the plaintiffs pay the defendants’ costs of the proceedings up to 19 September 2000 on a party/party basis and after 19 September 2000 on an indemnity basis and the defendants pay the plaintiffs’ costs of the cross-claim on a party/party basis.Appeal The plaintiffs appealed from the whole of the decision of McClellan J. The grounds upon which they relied in the amended notice of appeal were as follows:“1.The trial Judge erred in finding illegal and unenforceable in whole:(a)the first retainer agreement made between the parties on or about 9 April 1997 (‘the first retainer agreement’);(b)the second retainer agreement made between the parties on 24 June 1998 (‘the second retainer agreement’);(c)the settlement agreement made between the parties on 16 September 1999 (‘settlement agreement’).2.His Honour erred in failing to find that the said agreements were unenforceable only to the extent that they were inconsistent with s188 of the Legal Profession Act 1987.3.His Honour erred in concluding that any claim by the appellants for a quantum meruit was precluded by the public policy of the Legal Profession Act 1987.4.His Honour erred in finding that the appellants were not entitled to recover reasonable remuneration for the legal services provided by them on a quantum meruit basis.5.His Honour erred in failing to find that the settlement agreement was valid and enforceable by virtue of s477 of the Corporations Law.6.His Honour erred in finding that the appellants had repudiated the settlement agreement.7.His Honour erred in finding that the respondents had accepted a repudiation by the appellants of the settlement agreement.8.His Honour erred in finding that the termination of the second retainer agreement precluded the appellants from any recovery against the respondents.9.His Honour erred in failing to disqualify himself on 26 June 2002 from determination of the proceedings.10.His Honour erred in making a costs order against the appellants and in failing to order the respondents to pay the appellants’ costs of the cross-claim on an indemnity basis.”Disqualification [ground 9 of the appeal]