ZKP Group Ltd v Connell - [2019] SASC 27

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
ZKP GROUP LTD v CONNELL
[2019] SASC 27
Judgment of Judge Dart a Master of the Supreme Court
28 February 2019
PROFESSIONS AND TRADES - LAWYERS - SOLICITOR AND CLIENT - RETAINER
STATUTES - ACTS OF PARLIAMENT - INTERPRETATION
EQUITY - GENERAL PRINCIPLES - FIDUCIARY OBLIGATIONS - GENERAL PRINCIPLES
Costs agreement - whether accepted by the client - Legal Practitioners Act 1981 (SA) - Schedule 3 - conduct amounting to acceptance - whether costs agreement should be set aside as not being fair and reasonable - obligations of disclosure contained in Schedule 3 - plaintiff sophisticated client - no obligation to make disclosure in respect of Supreme Court Scale - solicitors' fiduciary duties - fiduciary duty cannot modify or override a statutory provision.
Held:
1. Terms of costs agreement accepted by plaintiff.
2. No basis to set aside the costs agreement established.
Legal Practitioners Act 1981 (SA) Schedule 3, referred to.
Brooks & Anor v Young & Ors [2018] SASCFC 81, applied.
McNamara Business & Property Law v Kasmeridis & Anor (2005) 92 SASR 382; McNamara Business & Property Law v Kasmeridis & Anor (2007) 97 SASR 129, considered.

ZKP GROUP LTD v CONNELL
[2019] SASC 27
JUDGE DART:

This matter concerns a dispute about legal costs. The plaintiff is a public company. It retained the defendant, as its solicitor, for the purpose of obtaining a listing on the Australian Stock Exchange.
On 20 March 2017 the defendant provided a written letter of engagement (“the costs agreement”) addressed to Mr Lu Lijian, the Chairman of the plaintiff (“the Chairman”). It set out the scope of the work to be undertaken, which was considerable. The defendant operates on an agreed fee basis. The costs agreement set out the agreed fee in the amount of $250,000 plus GST. There was also an allowance for certain expenses. The agreed fee was to be paid in five equal payments at various milestones in the process.
The plaintiff in this proceeding simply seeks to set aside the costs agreement. There is a related proceeding between the parties, action SCCIV-18-133, which is an application to fix legal costs. In that action the plaintiff seeks to have three particular tax invoices adjudicated on the Supreme Court Scale. The invoices are each in the milestone amount of $55,000. The adjudication application has been put to one side until the Court determines whether the costs agreement should be set aside. At some time there was a falling out between the parties and the costs agreement was terminated by the plaintiff.
On the argument the Court had before it two affidavits. The first was from Mr Andrew Martin, a director of the plaintiff.[1] It contains a number of assertions. The first is that the costs agreement is unenforceable and that the invoices should be taxed on the Supreme Court Scale. It also asserts that the plaintiff never accepted the costs agreement. No issue was taken about the affidavit, but assertions are…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading ZKP Group Ltd v Connell

Details

AGLC: ZKP Group Ltd v Connell [2019] SASC 27
Case: [2019] SASC 27
Decision Date: 28 February 2019

CaseChat Overview and Summary

ZKP Group Ltd sued Connell over a costs agreement which the plaintiff claimed had not been accepted by the defendant. The defendant argued that the agreement should be set aside as not being fair and reasonable. The dispute was heard by the Supreme Court of South Australia. The court had to determine whether the costs agreement had been accepted by the defendant, whether the court should set aside the costs agreement as not being fair and reasonable, and whether the obligations of disclosure in Schedule 3 of the Legal Practitioners Act 1981 (SA) applied to the plaintiff as a sophisticated client. The court also had to consider whether the defendant's fiduciary duties could modify or override a statutory provision.

The court found that the costs agreement was accepted by the defendant through conduct amounting to acceptance, as the defendant did not object to the costs agreement and continued to act on behalf of the plaintiff. The court held that the obligations of disclosure contained in Schedule 3 of the Legal Practitioners Act 1981 (SA) did not apply to the plaintiff as a sophisticated client. The court further found that the defendant's fiduciary duties could not modify or override a statutory provision. The court rejected the plaintiff's argument that the costs agreement should be set aside as not being fair and reasonable, and held that the defendant was entitled to recover the costs as agreed.

The court ordered the defendant to recover the costs from the plaintiff in accordance with the terms of the costs agreement. The court also ordered the plaintiff to pay the defendant's costs of the proceedings. The court found that the defendant's conduct did not amount to a breach of the defendant's fiduciary duties. The court held that the defendant had acted in accordance with the statutory provisions and had not acted in a way that was inconsistent with the defendant's fiduciary duties.

Orders