Wende & Ors v Ferry

[2004] HCATrans 334

[2004] HCATrans 334

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S439 of 2003

B e t w e e n -

HERBERT WENDE

First Applicant

MARGARET WENDE

Second Applicant

MARK LLOYD

Third Applicant

and

ROBERT LESLIE FERRY T/AS FERRY’S LAW FIRM

Respondent

Application for special leave to appeal

GLEESON CJ
KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 10 SEPTEMBER 2004, AT 9.35 AM

Copyright in the High Court of Australia

MR M. LLOYD appeared in person. 

MR H. WENDE appeared in person. 

MR G.A. LAUGHTON, SC:   May it please the Court, I appear for the respondent.  (instructed by David Roe) 

MR LLOYD:   I am Mark Lloyd, one of the “others” referred to.  We have an authority here from Margaret Wende, who is the third applicant for ‑ ‑ ‑

GLEESON CJ:   You are going to put the argument on behalf of the applicants, are you, Mr Lloyd?

MR LLOYD:   Yes, I will read the address.

GLEESON CJ:   All right.  Yes, Mr Lloyd.

MR LLOYD:   At the hearing of the case at the Local Court at Gosford ‑ ‑ ‑

KIRBY J:   Why do you not go to the centre and put it on the podium, and then we will hear you clearer. 

MR LLOYD:   At the hearing of the case at the Local Court at Gosford, his Honour Magistrate Swanson could not have come to a decision the way he did.  The weight of evidence was too strong in our favour.  Likewise, his Honour Judge Burchett had to find in our favour, but did not, at the appeal hearing in the Common Law division of the Supreme Court at Sydney.  The Court of Appeal did not give reasons for its decision.  Judges must give reasons for their decisions, to which I refer to a couple of cases: 
Kiama Constructions v Davey (1996) 40 NSWLR 639 and Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247.

A well‑off person can enjoy the protection of the law in civil matters in as much as he can afford to employ lawyers.  People with modest income cannot afford lawyers.  If they are forced into a situation where they must rely on lawyers for legal services, they are vulnerable and could quite easily be exploited by lawyers who might compound their problems.

Our problems started when an unscrupulous bank nearly doubled interest rates on our small business loan in breach of a long term contract.  We took our case to the Australian Banking Industry Ombudsman, who, after three years of dealing with our case, found in our favour and recommended that the bank should compensate us.  The bank agreed to the Ombudsman’s recommendations in writing, but some months later went back on the agreement and sued us for an outrageous amount of money.  We had no choice but to employ a solicitor.

KIRBY J:   All of this happened long before the matter which is the subject of the dispute.  The matter which is the subject of the dispute is a dispute over $6,200 in legal costs.

MR LLOYD:   Yes, I am just about to come to that.

KIRBY J:   And you have to understand the large number of cases that the High Court of Australia has to deal with, of the greatest importance to the nation, of very important legal principles and questions, and this is a dispute over $6,200.  It would require the clearest possible injustice and the clearest possible important principle of law to persuade the Court to take on a matter of that dimension, I have to be quite candid to you, speaking for myself.  It is $6,200.  It is important to you, it is an important matter for you, but in the big picture of the issues that come before this Court it is very rare to get a case on costs and it is not very much costs, as costs go.  I have to be candid to you, so that you will understand that and address any remarks to me with those points in mind. 

MR LLOYD:   Okay.  With limited financial means, we were vulnerable to exploitation by solicitors, and exploited we were by four separate legal firms.  The matter was settled later on on the terms set out by the Australian Banking Industry Ombudsman without the involvement of a solicitor.  In hindsight, we can say that none of those four legal firms, which we had employed one after the other, had sufficient skills and expertise to deal with finance, banks and primary producers.  None of those four legal firms apparently had any intention to run the case properly and in full. 

After wasting a lot of time at our expense without progressing the case, all of those four solicitors stopped working on it or abandoned the case, yet we were billed by each of those four solicitors even though none of the four solicitors had to offer anything useful in return.  With three of those solicitors, we settled their bill by negotiation.  The respondent has refused to negotiate or compromise. 

A solicitor can expect that his bill will be paid largely or fully.  If he has not done much, he cannot be taken to account for it, he does not run any risks and has made easy money.  A client with limited means is greatly disadvantaged in the conflict with a solicitor.  The respondent’s bill was $6,200, about one third of the total costs quoted to run the case fully.  The respondent did not offer anything useful in return.  His Honour Magistrate Swanson said in his judgment: 

It is also claimed that Mrs Nicholson did little to advance their claim against the bank.  To an extent, that may be true.

Accordingly, his Honour should have decided that none or only a little money was due and not the full amount, yet he decided that we should pay all of the bill.  This is inconsistent and unjust.  In neither of the appeal hearings did the judges say why we should pay all of the bill when practically nothing was achieved by the respondent.  It is the basis of any contract, and certainly the expectation and understanding, that a fair value is to be returned.  The honourable judges did not give any reason why it should be otherwise when it was accepted already that the respondent had not delivered much. 

The very basis of the injustice here is that a solicitor can simply terminate a case with impunity.  The assumption seems to be that the client does not suffer a loss from the breach of contract.  All the client needs to do is to pay the solicitor, collect his file and find another solicitor to carry on.  The reality differs.  Usually, a new solicitor wants to run the case his way and virtually starts from scratch by rewriting documents already in existence.  In this case, the respondent refused to pass on the file; however, there was practically nothing of use to pass on with the file.  We therefore did not take any action to have the file recovered. 

The damage was the lost time on the case, exposing us to the harsh conditions the bank imposed on us, resulting in loss of income and personal suffering, as well as the respondent’s failure to file a cross‑claim worth in excess of $100,000.  To that point in time, the respondent had not bothered to employ a barrister, which should have been one of the first things to do, confirming that he never seriously ran the case.

The respondent had failed to file a defence on time, failed to answer a request for particulars, produced a highly deficient defence which was against our instructions, failed to take account of the special legislation governing primary producers and given false advice.  The respondent neglected to file a cross‑claim as instructed, a serious breach of contract.  Another of the solicitors on the case who had also neglected to file a cross‑claim was reprimanded for this serious neglect by the Law Society of New South Wales. 

Neither his Honour Magistrate Swanson nor the honourable judges explained why the respondent was not required to file a cross‑claim, as instructed.  The respondent produced a lengthy and unnecessary chronology which accounted for approximately half of the bill, even though the respondent had been supplied a complete and detailed chronology.  The respondent did not indicate that the chronology needed to be written up again at great expense.  He was not instructed to do so. 

The costs agreement stipulates work that the respondent will undertake.  Writing a lengthy chronology does not form part of the costs agreement.  Magistrate Swanson was made aware of this; his Honour Judge Burchett ignored it.  The honourable judges did not comment on it in the appeal hearing.  The costs agreement provides:

These terms and conditions are part of the cost agreement.

This means that there are other parts to the agreement.  At least one other part of the agreement was a verbal part.  Although the costs agreement does not provide it in writing when payment of fees is due, as required by the Legal Profession Act, there was the verbal agreement that payment of the bill was only due at the conclusion of the case.  This was the only way we could afford to employ the respondent, as he knew. 

The respondent had, as part of our evidence for our cross‑claim, all our financial details, including tax returns, balance sheets, banking records, et cetera.  The respondent was fully aware of our financial position.  It would have been an unconscionable act by the respondent to enter into a contract with us, being fully aware that we could not fulfil the contract, yet the respondent wanted to change the billing arrangements to payments of his bill prior to the end of the case, even though he knew we could not comply.  It is admitted by the respondent that he wanted to change the billing arrangements.  It is also admitted that paying at the end of the case was a condition set out by us.  The respondent now required that all of his bill was paid within 14 days. 

The respondent refused to permit us any other arrangement for payment.  The costs agreement, for instance, permitted him to take security.  The respondent also claims that the costs agreement permits him to change when payment is due at will, without our consent.  This in itself could not be a valid condition in the contract, as it does not set specific terms that provide certainty.  The fact is that the costs agreement only mentions in a deficient way when bills may be sent out.  It fails to comply with the Legal Profession Act to specify when payment is due. 

It would be an injustice to permit the respondent to take advantage of his deficient contract at our expense.  The costs disclosure was accompanied by a letter.  The letter did not contain any advice that we should consider and sign the costs disclosure.  On the contrary, the letter advised:

We apologise for the formality of the Costs Agreement, however, we must provide this disclosure as a matter of Law.

We understood this advice to mean that the costs disclosure was of no importance and Mrs Nicholson should be trusted to look after our interests.  On reading the costs disclosure, we found some parts meaningless and other parts inapplicable.  Following the advice from Mrs Nicholson, the cost disclosure was not signed nor ever mentioned again, except that we found it proper to provide a letter to Mrs Nicholson accepting her price list for her services.  This was expressed as follows:

Your method of calculating and quantum of charges for your work as expressed in your letter dated 18 July 2000 are acceptable to us.

The fact that there was a list of items accepted means that only the list and nothing else was accepted.  This was the only reason to write to Mrs Nicholson in respect of the costs disclosure.  Mrs Nicholson should have taken further steps if she was unhappy with what we accepted.  As the solicitor, it was her duty to foresee possible future complications and to take extra steps if necessary.  Not doing so was negligent and should not advantage Ferry’s Law Firm.  We expected that the verbal part of the agreement would be honoured, especially as the respondent knew and understood that this was essential.  The respondent is in breach of contract. 

During the appeal process, the respondent raised on legal grounds objections to our presentation of the case.  We suspect that he is right when it comes to the understanding of the law.  However, when parties are before a court of law, justice needs to be provided equally to everyone and not just people with a good understanding of law, such as solicitors.  An information leaflet provided to us by Gosford Local Court states:

Do I need to know the law?  No, but it helps.  The magistrate is a trained lawyer and will understand the legal issues or know where to research the answer to any legal issue which arises.

Here is an example of how we are being denied justice because we are unable to express our defence in a way a lawyer would express our defence.  The transcript of the hearing before his Honour Judge Burchett says on page 25, line 40:

HIS HONOUR:        Now, does that complete your argument?
LLOYD:      Not quite.  I am just re-capping on a couple of points;  that being the authority for the model costs disclosure of the Law Society and that is important because Ferrys Law Firm’s costs disclosure –

At which his Honour interrupted:

HIS HONOUR:        That is not right.  That is not right.  The authority is the statue of the New South Wales Parliament and if there is something that the Law Society has done that is relevant in some way, well, that has to be proved before the Magistrate, you can’t bring it before me, because I can only deal with the legal validity of what the Magistrate has done on the material that the parties have put before him.

The facts of the case are simple.  We took on the respondent as the solicitor to run the case fully to the end and then pay for his services.  The Law Society is empowered by the Legal Profession Act to make rules for solicitors.  For this, a solicitor is required to tell the client when the bill is to be issued and when a bill needs to be paid.  A solicitor is required to run a case efficiently and diligently until the case is completed.  Our expectation and requirement, therefore, is completely backed up by the Legal Profession Act and the Solicitors’ Rules. 

When we were before the Local Court, we said that the respondent was in breach of the Rules:  see transcript of hearing before Magistrate Swanson at page 27 and page 42 of the application book.  Whether, as laymen, we expressed our claims sufficiently in legal terms should not matter.  The court had told us that the magistrate would know the law.  He needed to act accordingly.  What his Honour Judge Burchett says is that if we do not know a particular law, we cannot expect to be protected by it.  We also believe that his Honour had not made himself sufficiently familiar with the case, having missed that we had put the Solicitors’ Rules before the magistrate.  We think his Honour conveniently relied on the claim of the respondent, as he had not read the case.

The respondent repeatedly claims that not all material forming our case was put before the Court of Appeal.  We say that the hearing in the Court of Appeal was only a hearing on an application for leave to appeal.  The honourable judges did not need to decide on the case but on whether we had good reasons to appeal, considering the case brought against us and our cross‑claim. 

The respondent says that special leave should not be granted because the outcome of the proceedings depended substantially upon credibility‑based findings of fact and upon construction of a document.  We say the outcome of the proceedings should also have taken account of issues of law, namely, the Legal Profession Act (NSW), the Solicitors’ Rules, the Fair Trading Act and Trade Practices Act.  The respondent also claims that special leave should not be granted because the amount in issue does not justify the costs, delays and inconvenience of the appeal process.  This applies to either party. 

The respondent has made no attempt to settle the matter. If he believed the amount involved was too small to justify the cost of the appeal process, he could have made attempts to settle the matter.  Unfortunately for us, the respondent has a great advantage over us as a lawyer.  Whether he is right or wrong does not matter; if he was a betting man, he would be foolish to settle. 

In discussing the factual issues, the respondent claims that our case was that because a request was made for the payment of fees before the Supreme Court proceedings were completed, the respondent had breached his retainer.  This is a misrepresentation.  The respondent demanded payment for all the work done so far within 14 days, in breach of the agreement.  He abandoned the case when we told him we could not comply.  He refused to negotiate suitable terms. 

The respondent states that appeals from the Local Court are limited to errors of law.  This is not true.  Appeals from the Local Court are allowed for denial of justice, natural justice, as well as for matters of law.  The respondent says that the applicants admitted that they were aware of the terms of the costs agreement, but understood that the terms would not be required to be complied with.  This is a most unfair misrepresentation of what we said. 

We were outraged about the unfair line of questioning during the hearing and the interpretation of our reply.  We were asked whether we understood the costs agreement and said that we did.  Anyone with basic reading skills would understand the costs agreement.  We could not possibly claim incompetence in very basic skills, but our understanding of the agreement was different from what the respondent now claims it means.  The basic fact is that the solicitor on the case was soon to leave her employment with the respondent, and misinterpreting the contract seemed an easy way out for the respondent. 

The respondent argues that issues relating to sections of the Legal Professions Act were not raised before the magistrate.  We say whether or not issues relating to legislation were raised before the magistrate is not relevant.  We were told by the Local Court in a pamphlet we were sent before the first hearing that we did not need to know the law, that the magistrate would know the law or know where to research legal issues that arose.  A person’s protection under the law is not limited by his knowledge of the law. 

The respondent argues that his Honour Judge Burchett found no error of law on the part of the magistrate and construed the costs agreement as being neither vague nor uncertain.  This is because his Honour erred in the understanding of our argument.  Our point was that even if the agreement were interpreted the way his Honour sees it, reading “another” as “other”, the expression of billing arrangements still does not comply with section 175 of the Legal Profession Act.  The Law Society of New South Wales is empowered by the Legal Profession Act to make rules for solicitors.  The Law Society says:

Your lawyer will also tell you when you will be sent a bill and when you are expected to pay.

Neither Judge Burchett nor the two Court of Appeal judges considered this issue.  Our point here is that the written part of the costs agreement does not say when payment must be made, but only when bills are issued, albeit in a deficient way.  When the bill must be paid is contained in the verbal part of the costs agreement, and that is at the end of the case.  His Honour Judge Burchett rejected the importance of the Law Society of New South Wales when we brought up this point, by saying that it was not raised before the magistrate.  Yet the magistrate ought to have known this, and it was, in fact, raised.

In discussing the verbal agreement, the respondent simply repeats what Magistrate Swanson and Judge Burchett said.  We say that at no stage has the respondent refuted what we claimed was the verbal agreement, namely, that payment of fees would be required at the end of the case, because we could not afford to pay any other way.  Correspondence from the respondent supports our point.  The Court of Appeal judges raised the question of whether the costs agreement included a course that excluded any other or a verbal agreement.  When a copy of the costs agreement was produced to them, however, they did not consider this question further.  This was an error of law.  As both parties agree on what the verbal agreement was and as it was not excluded from the costs agreement, then, as a matter of law, it must be considered to be part of the costs agreement.

We did not go to court to engage in a contest of knowledge of the law and legal procedures.  It is obvious that such a contest could never be won by us.  The honourable judges had a duty to look at the essence of the case rather than to take a legalistic approach.  The case is a simple one, with the sequence of events and facts largely, if not all, agreed by both parties.  The following is agreed by both parties:  there was a contract for legal services between the parties with the respondent as the service provider; the contract was partly verbal and partly in writing; the verbal part of the contract defined that the payment of the bill would fall due at the end of the case, the respondent knew that this was the only way we could pay his bill. 

The respondent wished to change when payments were due to payments for all the work done so far within 14 days and then payment every three months.  None of the changed conditions had ever been

discussed before, but were imposed on us without any prior reference to us.  The respondent knew that we were unable to comply, but the contract was then unilaterally terminated by the respondent against our wishes.  All this is well documented, undisputed and was accepted by his Honour Magistrate Swanson.

The dispute is about the written part of the costs disclosure.  Here the respondent claims that he may change terms of payment at will without our permission.  We say the costs disclosure has not been accepted by us.  It is deficient in its expression of terms and does not comply with section 175(2)(c) of the Legal Profession Act.  We further say the respondent does not comply with Rule 1.1 of the Solicitors’ Rules, which states ‑ ‑ ‑

GLEESON CJ:   Thank you, Mr Lloyd, your time is up.  Take a seat.

MR LLOYD:   Okay.  Thank you.

MR WENDE:   Can we please ‑ ‑ ‑

GLEESON CJ:   No, time is up.  Take a seat.

MR WENDE:   Would it be possible to hand in a copy to the Court and to the other party?

GLEESON CJ:   Yes.  It should have been done at the beginning if you wanted to do that, but hand it up.

MR WENDE:   Sorry. 

GLEESON CJ:   Thank you. 

MR WENDE:   If I may also speak ‑ ‑ ‑

GLEESON CJ:   Take a seat, please.  Your time is up. 

MR WENDE:   Yes, your Honour. 

GLEESON CJ:   In this matter the applicants were sued by their former solicitors for an amount of approximately $6,200 said to be owing for legal costs.  They defended that action and cross‑claimed for alleged professional negligence, amongst other things.  A magistrate upheld the solicitors’ claim for costs and dismissed the cross‑claim.  An appeal against the magistrate’s decision was dismissed by a judge of the Supreme Court of New South Wales.  Leave to appeal against the decision of the judge of the Supreme Court of New South Wales was refused by the Court of Appeal on the ground that no error was shown in the decision of the primary judge.

This is an application for special leave to appeal to this Court.  The case raises no issue suitable for a grant of special leave and there are insufficient prospects of success to warrant a grant.  The application is dismissed with costs.

AT 9.58 AM THE MATTER WAS CONCLUDED