Sneddon Hall & Gallop Pty Ltd & Ross & Others (Civil Dispute)
[2011] ACAT 36
•25 February 2011
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
SNEDDON HALL & GALLOP PTY LTD & ROSS & OTHERS (Civil Dispute) [2011] ACAT 36
XD 1282 to 1286 of 2010
Catchwords: CIVIL DISPUTE – costs agreement – termination of costs agreement – had there been an irretrievable breakdown of the relationship between the parties? – construction of notice of intention to terminate agreement – repudiation – had the clients failed to give proper and timely instructions? – had the clients failed to follow the solicitors’ advice? – ‘just cause’ for terminating the retainer – liability to pay the accounts rendered
Tribunal: Ms J. Lennard, Senior Member
Date of Orders: 25 February 2011
Date of Reasons for Decision: 23 May 2011
IN THE ACT CIVIL & )
ADMINISTRATIVE TRIBUNAL ) FILE NUMBERS
XD 1282 to 1286 of 2010
| SNEDDEN HALL & GALLOP PTY LTD |
| Applicant (XD 1282 to 1286 of 2010) |
| LYDIA MARGARET ROSS |
| Respondent (XD 1282 of 2010) |
| JEFFREY MAXWELL READ |
| Respondent (XD 1283 of 2010) |
| SUSAN VIVIEN READ |
| Respondent (XD 1284 of 2010) |
| SHARON YUH-SHYAN LIM |
| Respondent (XD 1285 of 2010) |
| IAN CAMPBELL MCFARLANE |
| Respondent (XD 1286 of 2010) |
Tribunal : Ms Jann Lennard, Senior Member
Date : 25th February 2011
ORDER
1. Respondent is to pay an amount of $10,000.00 to the Applicant within 62 days of the date of this Order.
.................................
Ms J Lennard
Senior Member
REASONS FOR DECISION
On or about 4 April 2008, each of the Respondents (namely, Ms Lydia Margaret Ross, Dr Jeffrey Maxwell Read, Ms Susan Vivien Read, Ms Sharon Yuh-Shyan Lim and Mr Ian Campbell McFarlane) entered into a contract with the Applicant (Sneddon Hall and Gallop Pty Ltd) for the provision of legal services by the Applicant to them in relation to a claim by the Respondents for compensation against a solicitor. The Respondents agreed to retain the Applicant and each of the Respondents signed a costs agreement with the Applicant.
The Applicant terminated the costs agreements and applied to the ACAT for the payment of amounts that it claimed that each Respondent owed to it. The applications against the Respondents were heard together and as such, the Tribunal’s order of 25 February 2011 applies to each application. Accordingly, the Tribunal provides one set of reasons for them.
The costs agreement signed by Dr Read was on a ‘No Win No Fee’ basis.
The costs agreements signed by Mr McFarlane, Ms Lim, Ms Read and Ms Ross were standard costs agreements and not on a ‘No Win No Fee’ basis.
Each of the costs agreements contained, at clause 12 in Dr Read’s agreement and at clause 14 in the other agreements, the following clause:
TERMINATION OF THIS COSTS AGREEMENT
You [the client] may terminate our services at any time in writing. However we [Sneddon Hall & Gallop] will be entitled to be paid for work done and disbursement incurred by us up until that time.
In addition to any circumstances in which we may by law be entitled to cease acting for you, we may give written notice that we intend to cease acting for you if:
(a) you have not paid any of our professional charges and/or disbursements within 30 days of our billing them to you; or
(b) you fail to pay money into our trust account for anticipated disbursements or otherwise secure the payment of anticipated disbursements in a timely manner; or
(c) you fail to provide us with proper, accurate, truthful, and/or timely instructions; or
(d) you unreasonably refuse to follow our advice in relation to your matter and we believe that your refusal has caused an irretrievable breakdown in our relationship with you.
If you terminate our services or if we cease acting for you in accordance with this clause, we will send you an account for our professional charges and disbursements for all work performed by us and for all disbursements incurred by us up until that time, or performed or incurred since our last account to you. If we have agreed to charge you a fixed fee for our professional charges for completing your matter, we will charge you a pro rata proportion of that fee for the work done, and we will charge you in full for any disbursements incurred. [words added in square brackets]”
The Applicant terminated the contract of retainer by letter to each Respondent dated 18 November 2009. In the letter the Applicant stated that they have ‘reluctantly come to the conclusion’ that they can no longer ‘act for the group’. The letter further stated that the group has failed since 14 July 2009 to give proper or timely instructions, and
Accordingly, pursuant to clause 14 of the Cost Agreement, we give notice of our intention to terminate the contract of retainer from 30 November 2009.
The Applicant rendered a statement of account to each of the Respondents on or about 5 February 2010. The Respondents did not pay the accounts and the Applicant made a Debt Application to the Tribunal for payment. Each of the accounts exceeded the $10,000.00 limit of the Tribunal. The Applicant has abandoned the excess of the claim (s 20, ACT Civil and Administrative Tribunal Act 2008) and made application for the payment of $10 000 by each of the Respondents pursuant to the terms of the retainer and costs agreement.
The matter came before the Tribunal on 25 February 2011. Mr Bill Andrews represented the Applicant. All Respondents were present, but they as a group were represented by Dr Jeffrey Read.
There was a great deal of documentary evidence before the Tribunal, much of it was repetitive and related to the action against a solicitor which the Respondents had originally retained Mr William Andrews and the Appellant to prosecute. This material was carefully considered by the Tribunal in so far as it gave a picture of the complexity of the matter and provided background to the relationship between the parties.
The Tribunal also had before it copies of correspondence between the Applicant and the Respondents in relation to the carriage of that action and the termination and subsequent issuing of accounts by the Applicant.
The Applicant and the Respondents made submissions in writing and during the hearing.
The issues before the Tribunal
The application is made pursuant to the terms of the contract of retainer and costs agreement detailed in paragraph 5 above. The Applicant asserts that the termination of the agreement was in compliance with the relevant clause. The Applicant included in submissions documentary evidence of correspondence between the parties which demonstrated that the Respondents had failed to give proper instructions and that the relationship between the parties had irretrievably broken down.
It was common ground between the parties that the termination clause was a contractual term, and that the Applicant was entitled to terminate in writing if there was a failure by the Respondents to give proper and timely instructions or to refuse to follow the advice of the Applicant and the refusal caused the relationship to become irretrievably broken down.
In their written submissions dated 28 January 2011, the Respondents admit that the Applicant gave them a written notice of intention to terminate the agreement. The Respondents resist the application on the following broad grounds:
a.that they were willing to give proper instructions;
b.the relationship had not irretrievably broken down; and
c.the Legal Profession (Solicitor) Rules 2007 ACT[i] (the Rules) require ‘just cause’ for termination and the Applicant did not have such just cause.
The question for the tribunal is then whether there is evidence that the Respondents had failed to give proper and timely instructions and that the relationship between the parties had irretrievably broken down, and whether there was just cause for terminating the agreement.
What does the contract mean?
The Tribunal is required to give meaning to the words the parties have used. The words are to be given their ordinary meaning and construed in the context of the contract as a whole. Contracts are not created in a vacuum and they are to be given the meaning that reflects the purpose of the contract and complies with commercial common sense.[ii] The termination clause provides that the lawyer may bring the contract to an end if the client has failed to provide instructions, refused to follow advice and the relationship broke down. In these circumstances, the lawyer would usually not be able to fulfil his or her duty to the client and/or properly advance the client’s matter. The ‘No Win No Fee’ agreement (that is, the agreement with Dr Read) does not, when given meaning as a whole, contemplate that the lawyer is not entitled to be paid in circumstances where the conduct of the client prevents the matter going forward. The lawyer is not expected to ‘throw away’ the cost incurred to that point.
The Respondents argued that even if the clause were to operate, it permitted the parties only to give a notice of intention to terminate but not to terminate the agreement. This interpretation makes nonsense of the clause. The clause is a contractual device which allows either party to bring the agreement to an end. A notice of termination simply requires notice and fulfils a solicitor’s obligations under the Rules to consider the consequences for the client of termination. The meaning asserted by the Respondents would mean that the client may terminate at any time but the lawyer is confined to the empty remedy of giving notice of an action that is not permitted.
During the hearing, Dr Read argued, nevertheless, that the lawyers were permitted to terminate the contract under the termination clause but only for repudiatory conduct on behalf of the clients. Further he argued that ‘just cause’ under the Solicitors’ Rules could only be made out by repudiatory conduct on the part of the client. The Tribunal finds that neither the clause of the agreement nor the Rules require repudiation as the sole justification for termination of a contract of retainer.
Repudiation occurs whenever one party indicates to the other that they do not intend to perform according to the contract. Repudiation may be established by the express statement or implied from the conduct of the party. If one party adopts a dilatory, cavalier or recalcitrant approach to the performance of its obligations that may amount to repudiation and allow the other party to terminate.[iii]
The Tribunal examined the evidence before it in relation to the following questions of fact: (a) Had the Respondents failed to give proper and timely instructions? (b) Had the Respondents failed to follow the advice of the Applicant? (c) Had there been an irretrievable breakdown of the relationship?
An examination of the documents provided by the Respondents and the Applicant shows that the Respondents had failed to respond to request for instructions, had failed to supply all documents necessary for the prosecution of the matter and had refused to follow advice, particularly in relation to obtaining valuations of the property to assist in quantification of damages. In particular the Tribunal refers to the following evidence:
i.Letter dated 9 November 2009, from Mr Ian McFarlane to the Applicant, headed RE WALDORF SYDNEY SOUTH ACTIONS FOR DAMAGES. This is in response to a letter from Mr Williams dated 18 November.... and wherein he indicated that he had not had proper instructions in relation to the conduct of the claim since July 2009 and indicated that the directions that were being given were not appropriate and demonstrated an ‘erroneous understanding of the law’. In his letter Mr McFarlane demands that Mr Williams supply “ in writing a list of the specific ‘proper instructions’ which you consider necessary and are prepared to accept...” This cannot be construed as in any way constituting proper instructions, and in any event, came after the Applicant had given notice of an intention to terminate the agreement.
ii.Email of 5 November 2009 from Mr Bill Andrews to Dr Read – reference to failure to provide instructions.
iii.Email correspondence dated 24 March 2009 indicates that on the matter of obtaining valuations and quantifying damages Dr Read did not provide proper instructions and would not heed the advice of
Mr Andrews. During the hearing, Dr Read referred to the valuation method and asserted that it was not possible to value the disputed property as residential premises. His assertions indicate a misunderstanding of both the process of valuation and the necessity of being able to quantify damages in an action.
It is evident from the correspondence that Mr Williams formed the view that he could no longer properly discharge his obligations and responsibilities as solicitor for the group. This was, in all the circumstances, a reasonable conclusion to reach.
The Tribunal finds that the Respondents had failed to give timely and proper instructions, had refused to take the advice of their lawyers and that the relationship had reached a point where the description of ‘irretrievably broken down’ was appropriate.
The tone and approach adopted by the Respondents as evidenced in the many examples of correspondence, as well as the approach and conduct adopted at the hearing by the Respondents, especially Dr Read, confirm the Tribunal’s view that the relationship had broken down and that the atmosphere of trust and co-operation necessary to allow the appropriate and proper prosecution of the matter by the lawyers, was absent.
The matters considered above are also relevant to ‘just cause’. Acts such as those of the Respondents in this matter are in themselves sufficient to constitute just cause for the Applicant to terminate the agreement with them.
The Tribunal finds that the termination of the agreement by the Applicant was in accordance with the terms of the contract. It follows that the Applicant is entitled, in accordance with the contract, to render accounts.
The ACAT took into account other matters, which confirm the decision to order the Respondents to pay the accounts:
a.During the hearing, Dr Read repeatedly asserted that the Respondents wanted to, and intended to, pay the Applicant; and
b.The repeated submissions made at the beginning of the hearing that the Respondents would pay but required the Applicant to wait until the conclusion of the matter before the Supreme Court of the ACT;
c.While the Tribunal has found that repudiation by the Respondents was not a necessary prerequisite for the termination of the agreement, the conduct of the Respondents in failing to give proper and timely instructions, refusing to obtain the valuation despite repeated advice and requests, and the giving of directions as to the manner of conducting the matter, were such that Mr Williams formed the view that the Respondents no longer had confidence in him and were not willing to accept his advice in relation to the conduct of their claims. In all the circumstances it is open to the Tribunal to find that the Respondents, by their accumulated conduct, repudiated the agreement with the Applicant.
Orders were made requiring each of the Respondents to pay an amount of
$10 000 to the Applicant.
………………………………..
Ms J Lennard
Senior Member
[i] Termination of Retainer
5.1 A practitioner must complete the work or legal service required by
the practitioner's retainer, unless :
(a) the practitioner and the practitioner's client have otherwise
agreed;
(b) the practitioner is discharged from the retainer by the
client; or
(c) the practitioner terminates the retainer for just cause, and
on reasonable notice to the client.
[ii] Schenker & Co (Aust) Pty Ltd v Maplas Equipment & Services Pty Ltd[1990] VR 834
[iii] Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989)166 CLR623.
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