White v Attwells

[2020] NSWSC 1520

Supreme Court

New South Wales

Medium Neutral Citation:

White v Attwells [2020] NSWSC 1520

Hearing dates:

28, 29 October 2020

Decision date:

30 October 2020

Jurisdiction:

Common Law

Before:

Adamson J

Decision:

(1)   Dismiss the plaintiff’s notice of motion filed on 31 March 2020.

(2)   Declare that the parties have not entered into a binding agreement to settle these proceedings which, accordingly, remain on foot.

(3)   Subject to any application for a contrary order being made in writing to my Associate within seven days, order the plaintiff to pay the defendant’s costs of the hearing of the separate question.

(4)   Direct the parties to confer on an appropriate timetable for the filing and service of submissions on outstanding orders, including the costs of the plaintiff’s proposed filing of a notice of discontinuance and provide draft short minutes to my Associate within seven days hereof.

(5)   Grant liberty to the parties to restore the matter before me on three days’ notice to my Associate.

Catchwords:

CONTRACTS — Construction — Agreement between parties to a dispute purporting to settle proceedings — Whether parties entered binding agreement to settle proceedings — Meaning of “resolve this matter” — Objective intention of parties — Context of agreement — Whether terms of agreement sufficiently clear

CONTRACTS — Unjust contracts — Contracts Review Act 1980 (NSW) — Inequality in bargaining power — Unfair tactics — Where plaintiff approached defendant through intermediaries rather than defendant’s solicitor — Where defendant had not received advice

Legislation Cited:

Bankruptcy Act 1966 (Cth), s 60

Contracts Review Act 1980 (NSW), ss 7, 9

Legal Profession Act 2004 (NSW) (rep), ss 319, 324, 327

Uniform Civil Procedure Rules 2005 (NSW), r 42.1

Cases Cited:

Attwells v Jackson Lalic Lawyers Pty Ltd [2013] NSWSC 1510

Attwells v Jackson Lalic Lawyers Pty Ltd [2013] NSWSC 925

Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 259 CLR 1; [2016] HCA 16

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24

Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335

Re Minister for Immigration & Ethnic Affairs; Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6

Taylor v Johnson (1983) 151 CLR 422; [1983] HCA 5

Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429; [1968] HCA 8

Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd (No. 4) [2011] NSWSC 720

White v Attwells; Attwells v White [2019] NSWSC 1278

Category:

Procedural and other rulings

Parties:

Gary Alan White (Plaintiff / Cross-defendant)
Noel Bruce Attwells (Defendant / Cross-claimant)

Representation:

Counsel:
J K Raftery (Plaintiff / Cross-defendant)
R D Newell (Defendant/Cross-claimant)

Solicitors:
Not applicable (Plaintiff / Cross-defendant)
L C Muriniti & Associates (Defendant / Cross-claimant)

File Number(s):

2017/239938

Judgment

Introduction

1. Gary White (the plaintiff), a former solicitor, claims that proceedings 2017/239938 (the fees proceedings) have settled on the basis of an agreement which he reached directly with Noel Attwells (the defendant) in February 2020. He contends that the settlement of the proceedings included not only his claim, but also the defendant’s cross-claim against him for reimbursement of all monies paid to him for legal services on the basis of s 327 of the Legal Profession Act 2004 (NSW) (rep) and for an account to be taken of all monies received by Mr White from Mr Attwells, as well as all existing costs orders and the costs of both proceedings. The defendant contests that there was any settlement.

2. The issues between the parties were the subject of a notice of motion filed by Mr White on 31 March 2020 in which he seeks a declaration that the parties settled the proceedings on the basis that the defendant would pay $52,274.99 to the plaintiff (which has been paid). By amended notice of motion filed on 30 March 2020, Mr Attwells seeks various declarations to the effect that the matter did not resolve by agreement.

3. The issues were subsequently defined by pleadings (points of claim and points of defence), which were filed by the parties. On 18 May 2020, I ordered that the question whether the parties had entered into a binding agreement to settle the fees proceedings be determined as a separate question.

4. The matter has a long history. It is convenient to summarise it as briefly as circumstances permit. The findings of fact are made only for the purposes of the separate question.

Relevant facts

The proceedings against Jackson Lalic

The genesis of the proceedings

5. Gregory Attwells (Noel Attwells’ brother) and Barbara Lord were the guarantors of certain secured advances made by the ANZ Banking Group Limited (ANZ) to a company, Wilbidgee Beef Pty Limited. They retained Jackson Lalic Lawyers Pty Ltd (Jackson Lalic) to act as their solicitors and to advise them about their obligations to the ANZ under the guarantee.

The 2011 costs agreement

6. In about June 2011, Gregory Attwells and Ms Lord retained Mr White to act on their behalf in proceedings to be brought against Jackson Lalic alleging that they had given them negligent advice concerning their obligations to the ANZ. They signed a conditional costs agreement on 28 June 2011 (the 2011 costs agreement) which entitled Mr White to payment of his costs upon a “successful outcome”.

The commencement of proceedings

7. Mr White filed proceedings in this Court on behalf of Gregory Attwells and Ms Lord against Jackson Lalic. Jackson Lalic, for whom Sparke Helmore acted, denied liability on the basis of alleged immunity from suit.

The involvement of Noel Attwells in the Jackson Lalic proceedings

8. In late 2011, both Gregory Attwells and Ms Lord became bankrupt. Jason Gronan and Terry Van Der Velde were appointed trustees in bankruptcy of Mr Attwells’ estate. By deed of assignment dated 5 March 2012, the trustees assigned Gregory Attwells’ rights against Jackson Lalic to Noel Attwells. As a consequence of the assignment, an amended statement of claim was filed, which added Noel Attwells as a plaintiff. Although a bankrupt, Gregory Attwells remained a plaintiff as he claimed damages to the extent of damages to his reputation, relying upon the operation of s 60(4)(a) of the Bankruptcy Act 1966 (Cth).

Orders for, and determination of, the separate question

9. On 10 July 2013, Schmidt J ordered, by consent, that the question whether Jackson Lalic was immune from suit be determined separately: Attwells v Jackson Lalic Lawyers Pty Ltd [2013] NSWSC 925. After a contested hearing, Harrison J declined to answer the separate question on the basis that the question was not an appropriate one for such determination as the facts had not yet been determined: Attwells v Jackson Lalic Lawyers Pty Ltd [2013] NSWSC 1510. Accordingly, no substantive order was made.

10. On 20 September 2014 Gregory Attwells died and Noel Attwells was appointed administrator of his estate.

The appeal to the Court of Appeal

11. Jackson Lalic successfully appealed against the decision of Harrison J: Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335. The orders made by the Court of Appeal (Bathurst CJ, Meagher, Ward JJA) on 1 October 2014 included an order that the separate question of whether the plaintiffs’ claim is defeated entirely, because the defendants are immune from suit, be answered in the affirmative. Accordingly, the Court of Appeal ordered that judgment be entered for Jackson Lalic.

12. From about February 2015, Mr Muriniti, of L C Muriniti & Associates, was involved in the Jackson Lalic proceedings, initially as the city agent for Mr White, and subsequently as the solicitor on the record for Mr Attwells.

The appeal to the High Court

13. Mr Attwells’ application for special leave to appeal against the decision of the Court of Appeal was granted by the High Court on 7 August 2015.

14. On 4 September 2015, Mr White wrote to Noel Attwells, confirming the grant of special leave to appeal. He attached an invoice in the sum of $49,446 (including GST and disbursements) for the application for special leave. He said, in part:

“We note that this office has carried you in all litigation matters to date including:

1.   The original proceedings commenced by Greg;

2.   The separate question proceedings before Harrison J where the court found in our favour;

3.   The appeal by Sparke Helmore to the NSW Supreme Court of Appeal;

4.   The application to the High Court of Australia for leave to appeal.

The attached account relates to item 4 above.

However, we advise that we cannot continue to carry all the costs herein (which currently amount to approximately $180,000).

We require a payment of $33,000.00 (being $30,000 plus GST) in part payment of our costs on the High Court Appeal on or before 15 September 2015.”

15. Mr White admitted that, of the amount of $33,000 claimed, $17,000 had been paid by Noel Attwells in three tranches: $10,000 on 28 September 2015; $4,000 on 2 November 2015; and $3,000 on 16 May 2016. Mr Attwells’ evidence was that he had borrowed these sums from his wife. It was common ground that Noel Attwells’ payment to Mr White on 16 May 2016 was the last payment he made to Mr White for legal fees.

The documents executed on 2 November 2015

The deed dated 2 November 2015

16. On 2 November 2015 Mr Attwells and Mr White executed a deed prepared by Mr White (the 2015 deed). The 2015 deed purported to make Noel Attwells liable for all the costs of the Jackson Lalic proceedings to that date and for the future. The evidence does not reveal any prior written agreement to which Noel Attwells was a party, which bound him to pay Mr White’s legal fees.

17. The recitals to the 2015 deed included the following:

“G.   Attwells has incurred or agreed to pay the legal costs and disbursements to Whites set out in Clause 2 of this Deed. Further he has agreed to pay an amount of $4,500.00 on or before 2 November 2015 and not less than $15,000.00 by Friday 6 November 2015.

H.   The balance of any amounts referred to in clause 2 of this Deed and any further legal costs incurred by Attwells with White in the Jackson Lalic proceedings shall be paid by Attwells to Whites on the successful outcome of the proceedings.

I.   Whites have agreed to continue acting in the Jackson Lalic Proceedings on behalf of Noel Bruce Attwells subject to the terms and conditions set forth below.”

18. In the 2015 deed, the words, “successful outcome” were defined to mean an award or judgment including damages in Mr Attwells’ favour, an award or judgment of costs in his favour, a settlement agreed by Mr Attwells with or without an order for costs or an arbitration or mediation in his favour.

19. Clause 2 of the 2015 deed (which is referred to in recitals G and H set out above) provided:

“2.    STAGES IN THE PROCEEDINGS AND COSTS

2.1    The Jackson Lalic Proceedings are divided into the following stages and have incurred the following solicitor/client costs:

(a)    STAGE 1

The proceedings up to the Deed of Assignment dated 5 March 2012.

The agreed costs up to 5 March 2012 are $75,000.00.

(b)    STAGE 2

The proceedings from 5 March 2012 up to and including the Order of Schmidt J on 10 July 2013 to determine separately whether the Plaintiffs' claim was defeated entirely because the defendant was immune from suit.

These costs were agreed at $79,200.00

(c)    STAGE 3

The period from the 10 July 2013 to the decision of Justice Harrison on the separate question on 17 October 2013.

These costs amounted to $27,760.00

(d)    STAGE 4

The appeal period from the handing down of the Justice Harrison decision on 17 October 2013 to the handing down of the decision of the Court of Appeal of the Supreme Court of New South Wales on 1 October 2014.

These costs amounted to $48,816.00.

Attwells has paid $12,000 towards these costs.

(e)    STAGE 5

From 1 October 2014 to the 7 August 2015 (the granting of Leave to

Appeal to the High Court of Australia.

These costs amounted to $49,446.00.

Attwells has also paid $12,000.00 towards these costs.

(f)    STAGE 5

From 7 August 2015 to the hearing of the Appeal by the High Court of Australia on 3 November 2015.

These costs amounted to $78,381.00.”

The 2015 costs agreement

20. On 2 November 2015 Mr White also purported to enter into a conditional costs agreement with Noel Attwells (the 2015 costs agreement). The 2015 costs agreement purported to cover costs which related to services already rendered as well as future services. As with the 2015 deed, it set out the course of the litigation in various defined stages and set out a figure for the costs associated with each stage.

21. The date on which Mr White ceased to be instructed by Mr Attwells does not appear precisely from the evidence but it would appear that Mr White ceased legal practice and, accordingly, ceased to act for Mr Attwells by late 2015.

The success in the High Court

22. The appeal to the High Court was heard on 8 March 2016. By that time, Mr Muriniti was the solicitor on the record for Noel Attwells. On 4 May 2016 the High Court allowed Mr Attwells’ appeal and found that Jackson Lalic were not immune from liability: Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 259 CLR 1; [2016] HCA 16. The High Court ordered Jackson Lalic to pay Mr Attwells’ costs “of the proceedings on the separate question in the courts below and of the appeal to [the High] Court.”

The settlement of the proceedings against Jackson Lalic

23. In about November 2016, Mr Attwells entered into a deed with Jackson Lalic to settle the proceedings. The deed specifically excluded the costs of the separate proceedings in this Court, in the Court of Appeal and in the High Court, which the High Court had ordered Jackson Lalic to pay to Mr Attwells.

The present proceedings

Procedural matters

Documents filed and directions made by the District Court

24. On 7 August 2017, by statement of claim filed in the District Court (in proceedings 2017/239938), Mr White commenced the fees proceedings against Noel Attwells for recovery of his outstanding fees in the Jackson Lalic proceedings, including the fees incurred in the determination of the separate question in this Court and the Court of Appeal proceedings. The total outstanding fees were said to amount to $329,603, exclusive of interest.

25. On 17 October 2017 Mr White filed a notice of motion for default judgment. On that day, default judgment was entered in favour of Mr White in the sum of $353,332.61 inclusive of costs.

26. On 18 December 2017 Mr Attwells filed a notice of motion seeking an order setting aside the default judgment.

27. On 18 December 2017, Mr Attwells filed a statement of claim in the District Court against Mr White and Mr Kelly SC (proceedings 2017/382284) for alleged negligent advice that there were good prospects of recovering damages from Jackson Lalic (the negligence proceedings). In the statement of claim, Mr Attwells alleges that he incurred substantial costs as a result of becoming a plaintiff in proceedings against Jackson Lalic and in maintaining, funding and ultimately settling those proceedings.

28. On 2 February 2018 directions were made by consent regarding the filing of evidence and any further notices of motion in the fees proceedings. There was a further directions hearing on 16 March 2018 at which orders were made by consent, including that the default judgment be stayed pending determination of Mr Attwells’ application to have it set aside.

29. At a directions hearing on 3 April 2018, the Court directed Mr White to file any motion to set aside a subpoena issued at the request of Mr Attwells by 11 May 2018. On 13 April 2018 further directions were made by consent for the hearing of any outstanding applications by notice of motion. On 25 May 2018, Mr White was granted leave to file a notice of motion to set aside a subpoena. Further directions were made by consent at a directions hearing on 20 July 2018.

30. On 14 September 2018 Mr White instructed Pattison Hardman, legal costs consultants, to prepare for assessment the costs of the separate question in this Court and the costs of the appeal to the NSW Court of Appeal. He did not inform Mr Muriniti or Mr Attwells that he proposed to have these costs assessed.

31. On 20 September 2018, the matter came before Levy DCJ for the hearing of the notices of motion. The motions, other than the motion to set aside default judgment, were resolved by consent. The motion to set aside default judgment was listed for hearing on 23 November 2018. On that date, Strathdee DCJ adjourned the hearing of the motion and made further directions about the filing of evidence.

32. On 1 November 2018 Mr Attwells filed a summons in this Court, seeking an order that the fees proceedings be transferred to this Court. On the following day, he filed a further summons seeking that the negligence proceedings be transferred to this Court.

33. Mr Muriniti swore an affidavit on 20 December 2018 which was filed in the District Court on the same date, to which he annexed a draft amended defence and cross-claim which he foreshadowed would be filed on behalf of Mr Attwells if the fees proceedings were transferred to the Supreme Court. Of present relevance, the draft cross-claim alleged that the 2015 deed and 2015 costs agreement were void and that Mr White was liable to repay any amounts for legal services that had been paid.

34. On 23 January 2019, Mr Attwells’ notice of motion to set aside default judgment was listed for hearing on 1 March 2019 with an estimate of one day. Further directions were made about the filing of affidavits. On 28 February 2019, the hearing date of 1 March 2019 was vacated and a hearing date of 15 March 2019 was allocated. The motion was heard on 15 March 2019 by Balla DCJ, who reserved her decision.

35. On 19 March 2019, Balla DCJ ordered that the default judgment be set aside and ordered Mr White to pay Mr Attwells’ costs of the motion.

36. On 22 March 2019, Mr White delivered the documents relating to the costs assessment to Sparke Helmore for their consideration. Once again, this was done without any consultation with or notice to Mr Muriniti or Mr Attwells.

The continuation of proceedings in the Supreme Court

37. By order made on 16 April 2019, McCallum J transferred these proceedings and the negligence proceedings from the District Court of New South Wales to the Common Law Division of this Court.

38. Further notices of motion in both the fees proceedings and in the negligence proceedings were filed which were listed for hearing on 24 June 2019 before Gleeson J. At the conclusion of the hearing on 24 June 2019 further directions were made for the filing of written submissions. Gleeson J also made orders on 24 June 2019 granting leave to Mr White to file a notice of motion dated 21 June 2019 in the fees proceedings for leave to amend his statement of claim.

39. On 14 August 2019, Mr White sent documents to John Levingston, a costs assessor, which included a copy of the 2015 costs agreement together with various tax invoices for fees. He informed Mr Levingston in the email:

“Please note that the conditional costs agreements included fixed and agreed costs.”

40. Before the assessment was undertaken, Mr Levingston, the costs assessor, sought documents from Mr White to ascertain whether Mr White had authority to obtain a costs assessment on behalf of Mr Attwells. Mr Levingston’s reasons recorded that Mr Attwells had relied on three separate documents: a letter of 3 June 2011 signed by Greg Attwells which purported to be an irrevocable authority to receive; the 2011 costs agreement and the 2015 costs agreement. Mr Levingston said in his reasons that on the basis of these three documents he was “satisfied that Mr White is entitled to act for the Attwells in this Application.”

41. It was common ground that Mr White had informed neither Noel Attwells nor Mr Muriniti that he had applied for these costs to be assessed. Nor had he sought Noel Attwells’ authority to apply for such assessment.

40. On 25 September 2019, Gleeson J made orders and published reasons: White v Attwells; Attwells v White [2019] NSWSC 1278. In the fees proceedings, Mr Attwells was granted leave to file a defence and cross-claim against Mr White. Mr White was ordered to pay Mr Attwells’ costs of the motion but Mr Attwells was ordered to pay Mr Kelly’s costs of the motion. In the negligence proceedings, the time for service of the statement of claim was extended and leave was granted to amend the statement of claim. Mr Attwells was ordered to pay the defendants’ (Mr White’s and Mr Kelly’s) costs thrown away by the amendment. The defendants were ordered to pay Mr Attwells’ costs associated with part of the motion filed on 7 June 2019 (being for an extension of time for service of the statement of claim).

Mr Attwells’ cross-claim in the fees proceedings

43. In his cross-claim (which was filed with the defence on 15 October 2019) Mr Attwells claimed relief which included an order setting aside the 2015 costs agreement and the 2015 deed, a declaration declaring those documents to be void and an order directing Mr White to refund to Mr Attwells all monies paid to him on account of professional fees in connection with the Jackson Lalic proceedings. The cross-claim also sought the following order, in prayer 4(d):

“An order pursuant to section 243(g) ACL [Australian Consumer Law] directing the Cross-Defendant, at his own expense, to account to the Cross-Claimant (including the Cross-Claimant as legal personal representative of the late Gregory Attwells) for all monies received by him from or on behalf of the Cross-Claimant and from or on behalf of Gregory Attwells in connection with professional fees, counsel's fees or other disbursements in connection with the Jackson Lalic matter.”

44. In his affidavits in support of the cross-claim, Mr Attwells deposed to his estimates of amounts paid to Mr White over the years for the conduct of various proceedings, including the Jackson Lalic proceedings. However, he also deposed that he does not have records to establish the precise amounts and payment. This is the basis for the order sought in prayer 4(d) above. As referred to above, the evidence showed that the last payment made to Mr White was made on 16 May 2016 (referred to above), which was some period after Mr White had ceased to act. Mr Attwells said at [14] of his affidavit of 12 May 2020:

“Doing the best that I can, I believe that I have paid to Gary White (and the barristers briefed by him) an amount of approximately $71,923.50 in total for the time that I retained him and indirectly a further amount of $225,000 which I provided to my brother to pay Gary White during the time he was retained by my brother Greg and which Greg informed me and I verily believe he paid to Whites Lawyers.”

45. Mr Muriniti deposed that he has asked Mr White for copies of all his timesheets and trust account records to justify the amounts claimed in the invoices he has rendered to Mr Attwells but that Mr White has failed to produce such records.

46. This evidence was not adduced in the hearing before me for the purpose of findings being made as to its accuracy. Rather, it was adduced to indicate what was at stake in the cross-claim and to provide context for the alleged agreement made in February 2020 to settle the fees proceedings, including the cross-claim.

Costs assessment

Assessment of the costs of the first instance separate question

47. On 2 September 2019, Mr Levingston issued a certificate to the Manager, Costs Assessment, and the parties for the costs of the first instance question of Harrison J (assessment no 2019/220209). The Manager, Costs Assessment sent the final certificate to the parties on 6 November 2019. It specified an amount of $36,438.50, which comprised costs of $35,834.75 and an amount for the filing fee of $603.75.

Assessment of the costs of the appeal to the Court of Appeal

48. On 30 September 2019, Mr Levingston issued a certificate to the Manager, Costs Assessment, and the parties for the costs of the appeal (assessment no 2019/220224). The Manager, Costs Assessment sent the final certificate to the parties on 14 January 2020. It specified an amount of $54,133.24, which comprised costs of $53,499.17 and an amount for the filing fee of $643.07.

Further procedural steps

49. On 8 October 2019 Mr White’s notice of motion for leave to amend the statement of claim in the fees proceedings was listed for hearing on 10 February 2020. In the draft amended statement of claim served in support of the notice of motion Mr White alleged that he was entitled to payments of fees on the basis of the 2015 deed and the 2015 costs agreement for Stages 1-5 (but not 6) as set out in those documents (extracted above). The total of his claim on this basis was $256,222. He alleged that as the High Court had made costs orders in favour of Noel Attwells, this amounted to a “successful outcome” under cl 1.1(d) of the 2015 deed. The draft pleading alleged, in the alternative, that Mr White was entitled to payment under the 2011 costs agreement and the deed of assignment dated 5 March 2012.

Correspondence between Sparke Helmore and Mr White about the costs which had been assessed

50. On 13 January 2020, Malcolm Cameron of Sparke Helmore wrote by email to Mr White to say that the cheque in payment of the costs of $36,438.50 (for the separate question) would be drawn in favour of Noel and Gregory Attwells. Mr Cameron also said:

“The cheque will be available in a day or two. I will be happy to deliver it to the costs applicant upon receipt of a direction and authority signed by them so I know where they want the money paid.

In circumstances where you are no longer practising as a solicitor, if I do not receive a signed direction and authority from the costs applicant via you I will need to contact the costs applicant directly lest it be suggested that my client has delayed in paying the assessed costs without contacting the party entitled to payment.”

The directions to pay

51. On about 14 January 2020, Mr White rang Mr Attwells’ brother, David, to tell him that he had obtained the costs assessments. Mr White said in evidence that he contacted him because he had known him for several years. David Attwells denied that he knew Mr White. I accept that Mr White had heard that Noel had another brother, David, but I accept David Attwells’ evidence that they did not know each other. I consider that Mr White rang David Attwells because he appreciated that he could not approach Noel directly (because of the litigation between them) and he did not want to contact Mr Muriniti.

52. David Attwells’ told Mr White that he did not want to get involved but that Mr White could send the material to him and he would pass it on to Noel. At about this time, David Attwells rang Noel and had a conversation to the following effect:

David:   You might be happy about this, there’s some money coming towards you from Gary White. Gary White wants to email some documents. I’ve asked him to email them to me and then I’ll email them to you at work.

Noel:   How come Gary White’s contacted you?

David:   Gary White said that he can’t speak to you directly so he’s contacted me for me to speak to you.

Noel:    OK, well send the documents through when they arrive.

53. On 15 January 2020 at 9.51am Mr White sent an email to David Attwells, in which he explained the amount that would be paid by Sparke Helmore, on behalf of Jackson Lalic and how that amount should be divided up between Noel Attwells and himself (Mr White). In the correspondence, Mr White asserted that, of the amount of $36,438.50 (for the costs of the proceedings at first instance), Noel Attwells would be entitled to $18,141.75 and he (Mr White) would be entitled to the balance ($18,296.75). Mr White asserted that, in respect of the assessment for the Court of Appeal proceedings, the “full amount” should be paid to him, as Noel Attwells had not made any payments in respect of those proceedings.

54. Mr White concluded the email to David Attwells by saying:

“I confirm that any amounts payable to and received by me will be deducted from the claim by me.

…

If you are happy with the documents please arrange for Noel to read and sign the same.”

55. There were three attachments to the email:

1. a direction to pay entitled “DIRECTION TO PAY – SEPARATE QUESTION” which was addressed to Sparke Helmore and which provided that it be signed by Noel Attwells on his own behalf and also by Noel Attwells as administrator of Greg Attwells’ estate and witnessed, which provided that $18,296.75 was to be paid to Mr Attwells and $18,141.75 was to be paid to Mr White (this is the reverse of what was said in the covering letter, which provided for Mr White to get the larger of the two figures);

2. a direction to pay entitled “DIRECTION TO PAY – NSW COURT OF APPEAL” which was in a similar format to (1) above, but which provided, “You [Sparke Helmore] are hereby authorised and directed to pay the amount set out in the certificate of costs assessment 2019/220224 (which relates to costs in the NSW Court of Appeal) directly to GARY ALAN WHITE”; and

3. a draft acknowledgement to be signed by Noel Attwells on his own behalf and as administrator that:

“1.   I have signed the attached Directions to Pay of my own free will and without duress or undue influence.

2.   I have read and understand the contents of both directions and in signing the same have not sought legal advice. I have considered legal advice but agree to waive the same.

“3.   For the sake of clarity the directions are as follows

A.   Costs Assessment for the NSW Supreme Court - Separate Question Payable to:

Noel Bruce Attwells the sum of $18,296.75.

Gary Alan White the sum of $18,141.75

B   Costs Assessment of the Supreme Court of NSW Court of Appeal

Amount to be determined by the assessor and certificate to be issued but payment of full amount to Gary Alan White

4   Any amounts paid to Gary Alan White are to be deducted from any amount claimed by Gary Alan White against Noel Bruce Attwells in the proceedings commenced in the Supreme Court of NSW 2017/00239938.”

56. When David Attwells looked at the documents he appreciated that, if Noel signed them, he would receive about $20,000. He did not look more closely at the documents than that. He did not give Noel any advice about the documents and did not see it as his role to do so. David saw himself as no more than a conduit through which Mr White could pass documents to Noel. He did not know Mr White and neither understood nor considered why he was being used as a go-between.

57. David Attwells was unable to forward the documents to Noel Attwells’ email because it kept bouncing back but said that he would send them to Wayne Hardy-Smith, an accountant who also worked at Alliance Motor Auctions, where both Noel and David Attwells were employed.

58. At 11.13am on 15 January 2020, David Attwells forwarded the email from Mr White to Mr Hardy-Smith with the message, “your thoughts mate”. Mr Hardy-Smith responded at 11.22am:

“DA [David Attwells]

Sorry, but I am not sufficiently informed about what is going on to be able to give an opinion.”

59. On 16 January 2020, at 12.08pm, Mr White also forwarded the email with its attachments to Mr Hardy-Smith. In the covering email he wrote:

“Attached is a copy of email sent to David [Attwells] yesterday and documents for signature by Noel.

If documents are acceptable can you arrange for documents to be signed by both Noel in his own capacity and as administrator for the estate of Gregory Ian Attwells, witnessed by you, and scanned and emailed back to me.

I am prepared to pick up the cheques to Noel and myself in the Separate Question matter. I can probably do this first thing next week but I may need to pick up the original directions for this purpose.”

60. When Mr Hardy-Smith received the email he printed out the documents and gave them to Noel Attwells. He did not explain them to him. Mr Hardy-Smith did not know that Mr White was no longer a solicitor. Nor was he aware that Noel was opposed to Mr White in litigation or that Noel had his own solicitor, Mr Muriniti, who was acting for him in the litigation against Mr White.

61. Noel Attwells understood from reading the documents that the documents had been sent to him so that he could get some of his money back.

62. At 12.56pm on 17 January 2020, Mr Hardy-Smith responded by email sent at 12.56pm which purported to attach a document which he had been authorised to release to him. The email also requested that the cheque to Noel be sent “Priority Paid” to Noel at a specified address in Moorebank. The attachment to the email constituted a signed direction to pay in respect of the separate question addressed to Sparke Helmore which had been signed by Noel Attwells and apparently witnessed by Mr Hardy-Smith. Neither the other direction to pay, in respect of the Court of Appeal proceedings, nor the acknowledgment was signed or returned.

63. At 2.18pm on 17 January 2020, Mr White sent an email to Mr Cameron attaching Mr Hardy-Smith’s email of earlier that day and the signed direction to pay in respect of the separate question. By email sent to Mr White at 3.21pm, Mr Cameron confirmed that the cheques would be sent the following Monday.

64. As referred to above, the costs assessment for the Court of Appeal proceedings, which assessed the costs at $54,133.24, was sent to Mr White and Sparke Helmore in mid-January 2020.

65. On 31 January 2020, Mr Cameron sent an email to Mr White informing him that he had funds to pay the costs assessment of $54,133.24 for the Court of Appeal costs. He asked him for a direction to pay, signed by Noel Attwells, to allow him to disburse the funds to finalise the matter.

66. On 6 February 2020 at 3.51pm, Mr White sent a further email to David Attwells and Mr Hardy-Smith, informing them that he had received a further certificate from this Court for the party/party costs of the “Jackson Lalic matter”. He attached the certificate referred to above in the sum of $54,133.24 (in assessment no 2019/220224), a statement explaining the amounts which was entitled “ASSESSMENT OF COSTS – NSW COURT OF APPEAL” and a direction to pay.

67. In the statement, Mr White said of present relevance:

“Payment of Current Court of Appeal Assessment

As there is no payment entitlement of moneys due in reimbursement of moneys paid by Noel or Greg, the full amount of the costs and barristers fees referred to in the Certificate is payable directly to Gary White.

However as a gesture of goodwill I am prepared to allow a payment of $4000 to Noel from the funds received.

As indicated previously a credit will be allowed for all payments to me pursuant to the assessments and I will forward an amended statement for Noel's benefit to that effect within 21 days.

I attach herewith as attachment 3 a direction to pay. Please have Noel sign the direction (in the 2 places) and date it, and please have his signature witnessed.”

[Emphasis added.]

68. The direction to pay was headed “DIRECTION TO PAY – NSW COURT OF APPEAL”. It was addressed to Sparke Helmore and authorised the payment to Noel Attwells of $4,000 and the payment to Mr White of $50,133.24. When Noel saw the direction to pay, he “didn’t think it was a fair sum, to be honest”.

The hearing of Mr White’s application for leave to amend his statement of claim

69. In the meantime, on 10 February 2020, Mr White’s application for leave to amend his statement of claim came on for hearing before Cavanagh J. Mr White appeared on his own behalf. Mr Newell appeared on behalf of Mr Attwells. Mr White read affidavits in support of the motion and Mr Newell read an affidavit of Mr Muriniti in opposition to the motion. Cavanagh J had already read the written submissions prepared by Mr Newell, which were to the effect that the amendment would be futile because Mr White could not succeed on his proposed amended statement of claim.

70. Mr Newell contended that the proposed amendments added three further bases for Mr White’s claim for costs against Mr Attwells, none of which was arguable. In the original statement of claim, the basis of the claim was the deed of assignment (referred to above). The proposed amendment sought to add, first, the 2011 costs agreement, second, the 2015 costs agreement and the 2015 deed and, third, a claim for quantum meruit, apparently based on s 319 of the Legal Profession Act.

71. Mr Newell contended that the 2011 costs agreement could not bind Noel Attwells because he was not a party. He argued that the 2015 costs agreement was void under the Legal Profession Act because it contravened s 324, that Mr White could not claim on quantum meruit because this was excluded by s 327 of the Legal Profession Act and that Mr White was obliged to repay all the amounts he had received from Mr Attwells as legal fees in the Jackson Lalic proceedings.

72. Mr Newell relied on Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd (No. 4) [2011] NSWSC 720 (Ventouris) (Slattery J). In that case, Slattery J said:

“[23] … Legal Profession Act, s 327(4) provides that where one law practice, relevantly in this case Mr Benson, has entered a costs agreement with another law practice, relevantly his instructing solicitors, has entered into a costs agreement in contravention of Legal Profession Act, s 324, Mr Benson, as a law practice, "...is not entitled to recover any amount in respect of the provision of legal services in the matter to which the costs agreement related...".

[24]   In my view this statutory language is quite intractable. It wholly excludes, in my view, the possibility of recovering fees on a quantum meruit or any other restitutionary basis outside the costs agreement itself.

[25]   I say that for two reasons. First, Legal Profession Act, s 327 (2) expressly contemplates that fees may be recoverable under a void costs agreement under Legal Profession Act, s 319(1)(c). Thus to a limited extent the legislation expressly preserves restitutionary remedies. But then in the same section, s 327, in the limited case of contravention of s 324, the legislation uses language that on any view covers and removes such restitutionary remedies.

[26] Also the words ‘any amount’ and ‘in respect of’ in s 327(4) are apt to cover any kind of restitutionary claim. The words ‘...the provision of legal services in the matter to which the costs agreement related...’ clearly encompass any kind of work associated with the subject matter of these proceedings to which Mr Benson's costs agreement relates, whether or not under the costs agreement itself.

[27] The second reason for my conclusion is that the words "and must repay any amount received in respect of those services to the person from whom it was received" in s 327(4) leave no room to doubt that the legislation intends that restitutionary claims be wholly excluded. The maintenance of a restitutionary claim for services is inconsistent with requiring the repayment of moneys already paid for those services.

[28]   It can only be inferred from this statutory language that the Legislature wished in the strongest possible terms to deter the making of costs agreements, which included uplift fees, for the conduct of damages claims. The Legislature has succeeded in producing that result in this case.

[29] That is the law and effect must be given to it. But it is unfortunate, at least for Mr Benson, who I will observe has conducted these proceedings with professionalism, with attention to detail and with determined effort in his client's interests. A mistake appears to have been made here by the inclusion of the uplift fee in the costs agreement, leading to a contravention of s 324(1). The benefit of that mistake will redound to a limited extent to the benefit of the plaintiff and to a major extent to the benefit of the defendants in these proceedings.”

[Emphasis added.]

73. Mr White accepted that he purported to charge an “uplift fee” but said that this was done on the basis of an oral agreement between him and Noel Attwells. His Honour adjourned the court for a short period to permit Mr White to consider the provisions of the Legal Profession Act on which Mr Newell had relied.

73. When the matter resumed later that day, Mr Newell informed the Court that the motion was resolved by consent on the basis that Mr White would withdraw his application for leave to amend the statement of claim and pay Mr Attwells’ costs of the motion. Accordingly, Cavanagh J did not need to determine the point raised by Mr Newell. Nor is it necessary for me to make any such determination, save as to note that the statements of Slattery J in Ventouris set out above appear to form the basis of the cross-claim brought by Mr Attwells against Mr White in the fees proceedings, which Mr White contended was settled as part of the resolution of the fees proceedings in February 2020.

74. In cross-examination, Mr White admitted that he had decided to settle the fees proceedings “basically just after the hearing before Cavanagh J”. This is consistent with the change which is reflected in the documents referred to below. Prior to 10 February 2020 Mr White stipulated, in the documents he sent to Mr Attwells, that any monies he received from the costs assessment would be credited to Mr Attwells’ outstanding account. Thus, notwithstanding the payment of the separate question costs, Mr White pressed his claim in the fees proceedings. However, as set out below, Mr White’s approach changed after 10 February 2020 in that he purported to settle the fees proceedings, or at least wished to do so.

75. I do not accept that Mr White’s decision to settle after the hearing on 10 February 2020 was a result of his realisation that “even if I won eventually, that I was highly unlikely to … be paid”. Mr White admitted in cross-examination that he knew from mid-2015 that he was unlikely to be paid by Mr Attwells. Rather, I consider that Mr White was apprehensive that he would be exposed to a liability to repay everything he had received from Mr Attwells, which was the subject of the cross-claim and appreciated that he had not obtained leave to amend his statement of claim, which, until the hearing on 10 February 2020, he thought would be granted.

Further correspondence between Mr White and associates of Noel Attwells which led to the signing of the second direction to pay on 13 February 2020

77. At 4.31pm on 12 February 2020, Mr White sent an email to David Attwells and Mr Hardy-Smith which said, “Attached please find further notes and new direction”. The direction to pay was headed: DIRECTION TO PAY – NSW COURT OF APPEAL. The division of proceeds between Mr Attwells and Mr White which was set out in this document appears from the “further notes” document which was entitled “ASSESSMENT OF COSTS – NSW COURT OF APPEAL” which said, of present relevance:

“NSW COURT OF APPEAL

We were ultimately successful in these proceedings.

Neither Noel nor Greg paid anything in relation to either my costs or the counsels fees and disbursements.

The fees in the current assessment (NSW Court of Appeal) total $54,133.24.

I paid the filing fee of $634.07 and the costs of the preparation of the Application $5,909.35. I am happy to provide a tax invoice if you desire.

I am prepared to concede that between 2014 and 2015 (but not during the Court of Appeal matter) you paid an amount of $12,000 but that was in relation to other matters.

I also did a lot of work for you after Greg's death for which I did not charge or charged at a reduced rate, for instance, the Application for Administration of Greg's estate.

Accordingly I am prepared to resolve this matter on the following basis:

$16,000.00 to Noel Bruce Attwells

$39,133.24 to Gary Alan White

I attach amended direction.”

[Emphasis added to highlight the passage relied on by Mr White as constituting an offer to settle the claim, the cross-claim and the costs, including all previous costs orders in the fees proceedings.]

78. Mr Raftery, who appeared for Mr White, contended that the portion emphasised in the passage extracted above amounted to an offer by Mr White to resolve the fees proceedings, including the statement of claim, the cross-claim, costs orders already made and the costs of the proceedings. I am not persuaded that these words bear that meaning. The highlighted words mean no more than that Mr White was prepared to agree that the proceeds of the costs assessment would be divided between himself and Mr Attwells such that Mr Attwells would receive $16,000 and Mr White would receive the balance of $39,133.24. The construction of a contract depends on objective intention: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352 (Mason J); [1982] HCA 24. The words set out above are manifestly inadequate to achieve Mr White’s subjective intention (a desire to settle the whole fees proceedings, including the cross-claim because of the complexion cast on his claim in the hearing before Cavanagh J).

79. At 9am on 13 February 2020, the matter was in the Registrar’s list for directions. Mr Newell appeared on behalf of Mr Attwells and, according to the court record, Mr Watson, a legal practitioner, appeared on behalf of Mr White. On that day, the parties consented to the matter being adjourned to 11 March 2020. The Registrar made orders to that effect.

80. At 10.22am on 13 February 2020 Mr Hardy-Smith sent an email to Mr White in which he wrote:

“I have been advised that Noel will accept the amount of $20,000.

Would you kindly amend the ‘Direction to Pay – NSW Court of Appeal’ document to reflect these changes.”

81. Noel Attwells explained in his cross-examination that when he made this counter-offer he had in mind the considerable fees he had already paid to Mr White. Mr Raftery sought to draw from this evidence a concession that Mr Attwells had been prepared to give up his rights under the cross-claim in the fees proceedings and the costs orders already made in his favour in return for the payment of $20,000. I am not satisfied that Mr Attwells had these matters in either his objective or subjective contemplation or that his evidence ought fairly be understood as making the concession that Mr Raftery seeks to draw from it. I regard his counter-offer as no more and no less than an attempt to get a bigger portion of the total pool of cash ($54,133.24) than the $16,000 already offered by Mr White.

82. Noel’s motivations were simple and immediate (he needed money). His response was influenced by unsophisticated notions of fairness. Although he was prepared to agree to Mr White being paid more from the pool than he was, he did not want the disparity to be as great as Mr White had proposed. In so far as Mr Hardy-Smith was involved, I am not satisfied that his contribution was other than as a conduit. Neither David Attwells nor Mr Hardy-Smith had any idea of the fees proceedings or what was at stake. Noel Attwells’ knowledge of the proceedings to which he was a party was sketchy. He relied heavily on Mr Muriniti for all legal issues, but did not consult him with respect to the correspondence about the costs assessment.

83. At 10.44am on 13 February 2020, Mr White sent an email to Mr Hardy-Smith which said:

“Thanks Wayne,

I have amended the direction to pay and attach herewith.

If you can get it signed by Noel in both places and witnessed – and dated – and email the same to me asap this morning I can arrange for Noel’s cheque to be sent tomorrow morning.”

84. Noel Attwells signed the direction to pay in relation to the costs of the appeal to the Court of Appeal which provided that, of the $54,133.24 which was to be paid by Sparke Helmore on behalf of Jackson Lalic, Noel Attwells was to receive $20,000 and Mr White was to receive $34,133.24. His signature was witnessed by Mr Hardy-Smith on 13 February 2020, being the Thursday after the hearing before Cavanagh J on Monday 10 February 2020.

85. Noel Attwells did not appreciate that Mr White intended the documents, if signed, would resolve the fees proceedings. Although Noel accepted that he could have asked his then solicitor, Mr Muriniti, about the effect of the documents, he did not do so because he did not understand that they might affect his legal rights to claim remedies under the cross-claim in the fees proceedings. I accept his evidence that he thought it was safe to sign the documents because he understood that he was receiving money and “couldn’t see the risk in it”. I also accept his affidavit evidence as follows:

“In retrospect I realise I should have conferred with my solicitor but at the time getting $20,000 when I’m in difficult financial circumstances was tempting and I did not realise what the consequences of me signing the documents were, but I did believe that all I was doing was signing a document to authorise the payment of $20,000 which was due and payable to me. I couldn’t see the harm of signing a document authorising a payment of $20,000.

…

I did not understand at the time that signing these documents might adversely impact or have any impact at all on the litigation in which I was involved against Gary White on my rights against Gary White in two separate Supreme Court Proceedings [the fees proceedings and the negligence proceedings]. That has now been explained to me and I am extremely alarmed and concerned that such an approach was made to me in a manner which circumvented my solicitor.”

86. I accept Mr Attwells’ evidence in cross-examination:

“But I had no idea this [the documents which had been sent by Mr White about the costs assessment] had anything to do with where we are today [the fees proceedings]. It wasn’t explained to me at all.”

87. When asked what he thought the documents he received related to, Noel Attwells said, and I accept:

“I’m not a hundred percent sure, to be honest. Alls I know is I thought it might have been some relevant costs coming back to me through the previous cases, appeals court and things, which was totally separate to where we are today.”

88. I also accept Mr Attwells’ evidence that he assumed that his solicitor knew about the documents. Mr Raftery sought to draw from Noel Attwells’ assumption that Mr White had sent the documents to Mr Muriniti the inference that Noel must have appreciated that the documents related to the fees proceedings. I reject this submission. In my view, Mr Attwells’ assumption, which he accepted had no basis, reflected his credulity and innocence. It also indicated that Mr Attwells continued to trust Mr White, who had acted as his solicitor for many years before he had lost the right to practice. I accept Mr White’s evidence that he “had gotten on very well with Noel Attwells when I acted for him and I, I think he would agree with that”. Mr Attwells appears to have been entirely unaware of the possibility that Mr White would act in a way which was adverse to Mr Attwells’ interests. Had Mr Attwells appreciated the risk he was running in dealing with Mr White directly (through unknowing conduits who could not protect him because they were ignorant of the context and not legally trained), he would have consulted Mr Muriniti.

Further correspondence between the parties through Mr Muriniti

89. At 3.51pm on 12 February 2020 (the day before the alleged settlement agreement was reached), Mr Muriniti, who was unaware of the correspondence between Mr White and Noel Attwells, wrote to Mr White. Although the letter was headed “Without prejudice – save as to costs” it was not objected to. I am satisfied that, if the letter was otherwise privileged (it does not contain an offer) there was an imputed waiver. In substance, Mr Muriniti suggested that Mr White discontinue the fees proceedings as follows:

“We urge you to carefully consider your position. If you are minded to discontinue the proceedings it would be on the basis that your claim against our client be dismissed with costs, our client’s Cross-Claim would survive but it might be possible to visit any judgment obtained by our client on Lawcover as your professional insurer.”

90. Mr Muriniti urged Mr White to prepare itemised bills of costs because Lawcover had asserted that Noel Attwells had failed to mitigate his loss by failing to pursue the costs orders made by the High Court in respect of the separate question or the Court of Appeal. It is plain from this correspondence that Mr Muriniti had no idea that Mr White had already applied for assessment of those costs, that the costs had been assessed and that the direction to pay in respect of the separate question had already been signed by Noel Attwells.

Mr Muriniti’s letter of 13 February 2020

91. At 4.17pm on 13 February 2020, Mr Muriniti wrote to Mr White referring to the circumstance that the matter had been adjourned to enable Mr White to consider his position. Mr Muriniti foreshadowed that if Mr White did not discontinue his proceedings, Mr Attwells would make an application for summary dismissal of Mr White’s claim.

92. At 8.15pm on 26 February 2020, after Mr Muriniti’s office had closed for the evening, Mr White sent an email to Mr Muriniti attaching a letter confirming that he had received a total of $52,274.99 “in satisfaction of the costs payable in respect of my previous firm acting for Noel Attwells in the professional negligence proceedings against Jackson Lalic Lawyers Pty Ltd”. He attached a notice of discontinuance of the fees proceedings for Mr Muriniti to sign and offered to mention his appearance at the mention on 27 February 2020.

93. The draft notice of discontinuance said, of present relevance:

“NOTICE DETAILS

1    The plaintiff discontinues the whole of these proceedings.

2    The plaintiff does not represent any other person.

3    The defendant discontinues the whole of the cross claim.

4    The defendant does not represent any other person.

5    Each active party consents to the discontinuance.”

…

TERMS OF DISCONTINUANCE

1    The amended statement of claim be discontinued.

2    The cross claim be discontinued.

3    Each party is to bear his own costs.”

94. When Mr Muriniti attended Court for the directions hearing at 9.30am on 27 February 2020, he was unaware of the email which had been sent at 8.15pm the previous evening. While he was waiting for the matter to be called, a legal practitioner, whom I assume to have been Mr Raftery (since the court record shows that he appeared for Mr White on that day), informed him that the matter had settled. Mr Muriniti informed Mr Raftery that he had no instructions that the matter had settled and asked Mr Raftery to stand it over for 14 days to permit him to get instructions. The Court stood the matter over to 11 March 2020.

95. Mr Muriniti called Noel Attwells to ask him whether the matter had settled. Noel Attwells responded:

“I don’t know anything about a settlement. I was just sent some documents and told that if I sign those documents, I would get some money.”

96. Mr Muriniti asked further questions and then told Noel Attwells that he should not have signed documents without getting advice first. Noel Attwells said:

“Well I didn’t understand that. I thought that Gary White had spoken to you about the documents. I don’t know why, I just assumed that it was alright for me to sign them.

…

I don’t understand, I’m completely confused. All I know is that I was told that if I signed a document that some money [was] coming to me, and I just assumed that you knew about it and it was alright with you.”

97. When Mr Muriniti asked Noel Attwells if he had read the documents, Noel Attwells responded:

“No, not really, I thought it was alright to sign them. I thought you had seen them, I looked at them and all I could see was that I was supposed to get some money back.”

98. On 27 February 2020 there was further correspondence between Mr Muriniti and Mr White in which Mr Muriniti alleged that Mr White had induced Mr Attwells to sign the documents and Mr White confirmed that he had not spoken to Mr Attwells at all about the matter. Mr Muriniti’s unchallenged evidence is that if Noel Attwells had asked him whether to sign the documents he would have strongly advised him not to sign them.

Other factual matters relevant to the separate question

99. It was common ground Mr White did not consult Mr Attwells or Mr Muriniti before he applied for the costs of the separate question and the Court of Appeal to be assessed. He purported to establish his authority to make such an application by providing documents to Mr Levingston.

100. Noel Attwells’ background and education are relevant to the Contracts Review Act 1980 (NSW) defence and the claim of unconscionability. I accept his evidence that he is “not proficient in matters involving paperwork or reading legal documents”. He left school in 1972 after he obtained his School Certificate. He has had no other formal education since leaving school. When he left school he started working as a car detailer. He has worked in the automotive industry ever since. He is currently employed as a yard manager for Alliance Car Auctions which operates a car auction business. He is not involved in the selling of motor vehicles although he has sold “the odd car on a few occasions”.

101. Noel Attwells presented as a relatively unsophisticated person who was inclined to trust people and not investigate the motives for their conduct. He was impressed with the prospect of receiving money and did not appreciate that he was giving anything up by agreeing to accept particular amounts. He had no idea that Mr White would contend that, by signing the directions to pay, the fees proceedings had settled. I am satisfied that if Noel Attwells had appreciated that he was at risk of losing anything as a result of signing the documents, he would have contacted Mr Muriniti. Neither his brother David, nor Mr Hardy-Smith, gave him any advice. Nor could either have appreciated the context in which Mr White sought to have the documents signed.

Consideration

102. In order to determine whether the proceedings have been settled, it is necessary to address whether there was a concluded agreement between Mr White and Mr Attwells and, if so, whether its effect was to resolve the fees proceedings, including the cross-claim. If these questions are answered in the affirmative, a further question arises: whether the agreement ought be set aside under the Contracts Review Act. Mr Newell withdrew the submission that the settlement, if there was an agreement, ought be set aside for unilateral mistake, since he accepted that the Court’s jurisdiction under the Contracts Review Act was wider than the common law remedies for unilateral mistake as articulated in Taylor v Johnson (1983) 151 CLR 422; [1983] HCA 5.

Whether there was an agreement between the parties and, if so, what were its terms

103. The question whether the fees proceedings have settled turns on the construction of the exchange of correspondence and the effect of the signed directions to pay set out above.

104. In substance, Mr Raftery submitted that these documents establish that the parties had an intention to create legal relations by concluding a binding agreement to resolve the proceedings which was performed by Mr Attwells’ signing of the directions to pay and acceptance of the balance of the amount from the sums paid by Sparke Helmore on behalf of Jackson Lalic.

105. Mr Newell, who appeared on behalf of Mr Attwells, accepted that Mr Attwells had signed the directions to pay but said that the only agreement reached was as to what was to happen with the amounts paid by Jackson Lalic to discharge Jackson Lalic’s liability for costs to Mr Attwells. He submitted further that the fees proceedings included claims by Mr White for all of the costs incurred by Greg and Noel Attwells in connection with the Jackson Lalic proceedings, apart from the costs of the separate question and the appeal to the Court of Appeal. Mr Newell also relied on the circumstance that costs orders had been made in favour of his client in the fees proceedings, including the order that Mr White pay Mr Attwells’ costs of setting aside the default judgment and the costs of Mr White’s notice of motion for leave to amend the statement of claim which was withdrawn on 10 February 2020. He submitted that it was telling that there was no mention of what was to happen to the balance of the fees claimed by Mr White and no mention of what was to happen with the costs orders.

103. I am not persuaded that the words “resolve this matter” in Mr White’s email of 12 February 2020 above are sufficient to give effect to Mr White’s subjective intention to settle the proceedings. Although, as the authorities indicate, the resolution of proceedings can be achieved with few words, the language must be sufficiently clear to indicate that what is proposed is the settlement of proceedings. The words “resolve the matter” are consistent, in the context, with the “matter” being confined to the topic of the division of the proceeds available from the costs assessment of the Court of Appeal proceedings. They are inconsistent with the “matter” being given the extended meaning for which Mr Raftery contended.

104. Further, if the “matter” means something other than the division of the proceeds of the costs assessment, it is entirely unclear what it means and what it covers. The Court should prefer a construction of an agreement which is valid rather than one which would deprive it of legal effect: Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429 at 437 (Barwick CJ, McTiernan, Kitto and Windeyer JJ agreeing); [1968] HCA 8. If “the matter” is confined to its narrow, obvious meaning, the agreement as to the division of the funds to be paid by Sparke Helmore is sufficiently clear and gives effect to the parties’ mutual objective intentions.

105. The ambiguity in the term “matter”, if it is construed more broadly, is evident from Mr Raftery’s submission. His primary contention was that the word “matter” in Mr White’s email of 12 February 2020 means “the fees proceedings, including the claim and the cross-claim and all existing costs orders and the costs of the fees proceedings themselves”. In the alternative, he contended that the “matter” means “the fees proceedings, including the claim and the cross-claim” but that it did not include all existing costs orders or the costs of the fees proceedings themselves. The lack of clarity in the definition of “matter”, once a different construction is adopted rather than the narrow one (the division of the proceeds of the costs assessment), is a strong indication that the parties did not intend “matter” to be given a wider meaning. It is also of significance that, when responding to the offer, Mr Attwells did not question the meaning of “matter” but simply put a counter-offer of a figure he was prepared to accept.

106. It is also significant that there was no reference to the proceedings by name (or description), parties or matter number in Mr White’s email of 12 February 2020. There was nothing in the text to alert Mr Attwells of what was in Mr White’s mind, if his intention was to resolve the fees proceedings. Further the negligence proceedings were also on foot between the parties but it was not suggested that these were included.

107. For the reasons given above, I am satisfied that the signing of the directions to pay by Mr Attwells constituted an agreement between him and Mr White as to the division of the proceeds of the payments of costs assessments made by Sparke Helmore on behalf of Jackson Lalic. The only matters which were agreed were that a particular sum would be paid from those proceeds to Mr Attwells and a particular sum would be paid from those proceeds to Mr White. I do not discern from the correspondence or the signing of the directions any indication that Mr Attwells intended to release Mr White from the claim made under the cross-claim or from the costs orders which had been made in his favour. Nor do I discern that there was any agreement between the parties that the agreement as to division of monies paid by Jackson Lalic would affect the result of the fees proceedings or the respective liabilities of Mr White and Mr Attwells inter se.

108. For the reasons given above, I am not satisfied that the fees proceedings were resolved. Mr White has failed to establish an agreement with Mr Attwells to that effect. Although Mr White has proved that there was an agreement to divide the proceeds of the costs assessments in a particular way, this does not establish the agreement as alleged. Accordingly, Mr White’s notice of motion ought be dismissed.

Contracts Review Act defence

112. In these circumstances, it is not necessary to address the claim by Mr Attwells that, if there was an agreement to settle, it ought be set aside under the Contracts Review Act. However, as the primary judge, I am obliged to make all necessary findings of fact. On this basis I make the findings set out below on the assumption (contrary to my findings set out above) that there was a contract to the effect contended for by Mr Raftery: namely, that the fees proceedings, including all costs questions had been settled. Before doing so, I propose to summarise the effect of the Contracts Review Act.

113. The Court has power under s 7 of the Contracts Review Act to declare a contract void, or refuse to enforce a contract, or vary its terms if it finds a contract to have been unjust in the circumstances relating to the contract at the time it was made, if it considers it just to do so. The matters to be considered by the Court are set out in s 9, which provides in part:

“9      Matters to be considered by Court

(1)     In determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court shall have regard to the public interest and to all the circumstances of the case, including such consequences or results as those arising in the event of:

(a)     compliance with any or all of the provisions of the contract, or

(b)     non-compliance with, or contravention of, any or all of the provisions of the contract.

(2)     Without in any way affecting the generality of subsection (1), the matters to which the Court shall have regard shall, to the extent that they are relevant to the circumstances, include the following:

(a)     whether or not there was any material inequality in bargaining power between the parties to the contract,

(b)     whether or not prior to or at the time the contract was made its provisions were the subject of negotiation,

(c)     whether or not it was reasonably practicable for the party seeking relief under this Act to negotiate for the alteration of or to reject any of the provisions of the contract,

(d)     whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the contract,

(e)     whether or not:

(i)     any party to the contract (other than a corporation) was not reasonably able to protect his or her interests, or

(ii)     any person who represented any of the parties to the contract was not reasonably able to protect the interests of any party whom he or she represented,

because of his or her age or the state of his or her physical or mental capacity,

(f)     the relative economic circumstances, educational background and literacy of:

(i)     the parties to the contract (other than a corporation), and

(ii)     any person who represented any of the parties to the contract,

(g)     where the contract is wholly or partly in writing, the physical form of the contract, and the intelligibility of the language in which it is expressed,

(h)     whether or not and when independent legal or other expert advice was obtained by the party seeking relief under this Act,

(i)     the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under this Act, and whether or not that party understood the provisions and their effect,

(j)     whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief under this Act:

(i)     by any other party to the contract,

(ii)     by any person acting or appearing or purporting to act for or on behalf of any other party to the contract, or

(iii)     by any person to the knowledge (at the time the contract was made) of any other party to the contract or of any person acting or appearing or purporting to act for or on behalf of any other party to the contract,

(k)     the conduct of the parties to the proceedings in relation to similar contracts or courses of dealing to which any of them has been a party, and

(l)     the commercial or other setting, purpose and effect of the contract.”

114. The matters in s 9(2) will be addressed in turn. As to s 9(2)(a), there was a material inequality in bargaining power between Mr White and Mr Attwells which arose from the differences in their education and background. Mr White was qualified as a solicitor and, although he has since lost his right to practice, he practised in the profession for over 40 years, albeit mainly in franchise and commercial matters rather than litigation.

115. As to s 9(2)(b), there was negotiation about the amount which would be paid to Mr Attwells. Relevantly, Mr White proposed a payment of $16,000 to which Mr Attwells responded with $20,000, which was accepted by Mr White. This negotiation was of little significance in the context of the agreement and the potential consequences to Mr Attwells of the settlement.

116. As to s 9(c), it was not reasonably practicable for Mr Attwells to negotiate for different terms of settlement of the proceedings. He did not sufficiently understand what the fees proceedings were about (or the points raised in the defence and cross-claim based on the Legal Profession Act) to be able to negotiate in any meaningful way.

117. As to s 9(2)(e), Mr Attwells was not reasonably able to protect his interests. He was both innocent and ignorant of the effect of the agreement which Mr White proposed. David Attwells and Mr Hardy-Smith were entirely in the dark about the fees proceedings or the context generally and neither was qualified to help Noel Attwells. Further, neither wanted to give advice to Noel or become involved. David Attwells’ minimal involvement extended only to suggesting that he might ask for $20,000 instead of $16,000. For the reasons given above, I am satisfied that this derived from a rudimentary view of fairness and did not reflect any understanding of what was at stake.

118. As to s 9(2)(f), Mr White had achieved significantly higher formal education qualifications than Mr Attwells. He appreciated that Mr Attwells did not have the means to pay his legal fees and that his education had been basic.

119. As to s 9(2)(g), the statement made by Mr White, in which the phrase “resolve the matter” is contained, is not intelligible. As referred to above, there is neither express, nor necessarily implied, reference to the fees proceedings. If “matter” means anything other than the division of the costs assessment for the Court of Appeal proceedings, the reader is left to guess about what “matter” could conceivably mean.

120. As to s 9(2)(h), it is plain that Mr Attwells did not seek legal advice although he could have done so. He accepted that Mr White did not discourage him from approaching Mr Muriniti for legal advice. In my view it is telling that Mr Attwells did not seek legal advice from Mr Muriniti. Had he had any appreciation that he was giving anything up or exposing himself to a risk, I am satisfied that he would have contacted Mr Muriniti. However because he believed that the only effect of what he was signing was that he would receive $20,000, he did not see the need to contact Mr Muriniti. Indeed, he assumed that Mr Muriniti already knew about the documents and that it was all right with him. These matters indicate the extent to which Mr Attwells failed to appreciate his own vulnerability and the extent to which it could be exploited by Mr White.

121. As to s 9(2)(i), the documents were not explained to Mr Attwells. The only explanation given was that he would receive some money if he signed them. Mr Attwells had no appreciation of the effect of the documents beyond that.

122. As to s 9(2)(j), Mr White had previously acted as Mr Attwells’ solicitor. For the period of that retainer, which lasted at least from March 2012 when the trustees of Gregory Attwells bankrupt estate assigned his rights against Jackson Lalic to Noel Attwells, to the end of 2015, when Mr White lost his right to practise, Mr White owed Mr Attwells fiduciary duties. These fiduciary duties included a duty to act in Mr Attwells’ interest and not his own. In these circumstances, I infer that Mr Attwells came to regard Mr White as someone against whom he need not be on his guard. Even though Mr White subsequently sued Mr Attwells in the fees proceedings and Mr Attwells subsequently sued Mr White in the negligence proceedings, Mr Attwells did not appear to harbour any grudge or hard feelings against Mr White. For Mr White to approach Mr Attwells through innocent conduits such as David Attwells and Mr Hardy-Smith, rather than through Mr Muriniti, amounted, in these circumstances, at least to “unfair tactics” within the meaning of s 9(2)(j). It is not necessary to determine whether Mr White’s conduct amounted to undue influence.

123. As to s 9(2)(l), Mr Newell submitted that I should also take into account the alleged improvidence of the settlement in determining that it is unjust and ought be set aside. In order to determine whether Mr Attwells would be better off settling the proceedings on the basis contended for by Mr Raftery or whether it would be in his interests to press the cross-claim, it would be necessary to determine the cross-claim. It is not appropriate to do this at this juncture. It is sufficient to note that it cannot be concluded that the settlement was necessarily in Mr Attwells’ interests, particularly as, on Mr White’s primary case, Mr Attwells had also given up the benefit of the costs orders which had already been made in his favour. Further, it is relevant that, had Mr Muriniti been consulted on whether he would recommend a settlement on that basis, he would have strongly advised Mr Attwells against such settlement.

124. The matters in s 9(2)(d) and (k) are covered by the findings above.

125. On the basis of the matters referred to above, I am satisfied that the contract (as propounded by Mr White and on the assumption set out above) would be unjust in the circumstances relating to the contract at the time it was made. If I had found that such a contract had been made, I would have refused to enforce its terms beyond the agreement about the division of proceeds of the costs assessment, which was without prejudice to the parties’ rights generally and without prejudice to the fees proceedings.

Conclusion

126. It follows that Mr Attwells is entitled to succeed on his amended notice of motion. While several prayers were sought in that notice of motion, the only substantive order required is a declaration that the fees proceedings have not settled.

127. I note that Mr Attwells also sought a declaration that Mr White was not entitled to the monies paid to him pursuant to the directions to pay signed by Mr Attwells. I do not regard the determination of the separate question as the appropriate time to determine that question, which arises on the cross-claim. The issue for me on the separate question was whether the fees proceedings, including the cross-claim, had been settled. I have answered that question in the negative. The question of Mr White’s entitlement to retain any funds which he has been paid for legal fees arises on the cross-claim, which is yet to be determined.

Costs

128. I have not heard the parties on costs. There would not appear to be any reason why costs ought not follow the event in accordance with the general rule: Uniform Civil Procedure Rules 2005 (NSW), r 42.1. However, I will invite the parties to make an application for a different order if so advised.

Further progress of the matter

129. Mr Raftery informed me that, if Mr White was unsuccessful in obtaining a declaration that the fees proceedings have settled, he would seek leave to file a notice of discontinuance of his statement of claim in the fees proceedings. He accepted that the cross-claim would remain on foot. Mr Newell accepted that Mr White ought be entitled to file a notice of discontinuance of his statement of claim and that Mr White would be entitled to file a defence to the cross-claim. He accepted that, in these circumstances, the Court did not need to determine Mr Attwells’ notice of motion for summary dismissal of Mr White’s claim.

130. Mr Newell contended that it ought be a condition of any grant of leave to Mr White to file a notice of discontinuance that Mr White pay the costs of the fees proceedings in so far as they related to this separate question and the statement of claim. Mr Raftery contended that it was not appropriate to order Mr White to pay the costs of the statement of claim in the fees proceedings because the matter ought be regarded as having been resolved without a determination on the merits and that the principles in Re Minister for Immigration & Ethnic Affairs; Ex Parte Lai Qin (1997) 186 CLR 622 at 624; [1997] HCA 6 applied. These are matters for further argument. The parties are to agree on short minutes for a timetable for these matters to be addressed on the papers.

Orders

131. For the reasons given above, I make the following orders and directions:

1. Dismiss the plaintiff’s notice of motion filed on 31 March 2020.

2. Declare that the parties have not entered into a binding agreement to settle these proceedings which, accordingly, remain on foot.

3. Subject to any application for a contrary order being made in writing to my Associate within seven days, order the plaintiff to pay the defendant’s costs of the hearing of the separate question.

4. Direct the parties to confer on an appropriate timetable for the filing and service of submissions on outstanding orders, including the costs of the plaintiff’s proposed filing of a notice of discontinuance and provide draft short minutes to my Associate within seven days hereof.

5. Grant liberty to the parties to restore the matter before me on three days’ notice to my Associate.

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Decision last updated: 30 October 2020