New South Wales Supreme Court CITATION : WENDE & ORS v. FERRY [2002] NSWSC 767 CURRENT JURISDICTION: COMMON LAW DIVISION FILE NUMBER(S) : SC 10255/2002 HEARING DATE(S) : 27/08/2002 JUDGMENT DATE : 30 August 2002 PARTIES : Herbert Wende; Margaret Wende and Mark Lloyd - Appellants Robert Leslie Ferry t/as Ferrys Law firm - Respondent JUDGMENT OF : Burchett AJ at 1 LOWER COURT Local Court JURISDICTION : LOWER COURT 890 of 2000 FILE NUMBER(S) : LOWER COURT Swanson SM JUDICIAL OFFICER : COUNSEL : G. Laughton - Respondent M. Lloyd & H. Wende - Appellants in Person SOLICITORS : Ferrys Law Firm - Respondent Appellants in Person CATCHWORDS : LEGAL PRACTITIONERS - costs agreement - "billing arrangements". LEGISLATION CITED : Legal Profession Act 1987 Local Courts (Civil Claims) Act 1970 DECISION : Appeal is dismissed with costs. IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION BURCHETT AJ FRIDAY 30 AUGUST 2002 10255/02 HERBERT WENDE, MARGARET WENDE AND MARK LLOYD; APPELLANTS v. ROBERT LESLIE FERRY T/AS FERRYS LAW FIRM; RESPONDENT JUDGMENT 1 HIS HONOUR: This is an appeal from the decision of a Magistrate, Mr Swanson SM, in a proceeding in the Local Court at Gosford in relation to the respondent solicitor's claim to recover professional costs against his former clients, the appellants, and their cross-claim for (amongst other things) the allegedly negligent performance of the legal work in question. The Magistrate entered judgment for the respondent, with costs, for the sum of $6,200.17 plus interest from 26 October 2000, and dismissed the cross-claim. An appeal to the Supreme Court, limited to a point of law, is provided in respect of such a case by s.69 of the Local Courts (Civil Claims) Act 1970. 2 The appeal raises a number of grounds, which are very diffusely stated. The Amended Summons begins by alleging "grounds of denial of natural justice", but although much is said under this general heading, none of it is to the point. The Amended Summons then contains some grounds based on ss.174, 175 and 182 of the Legal Profession Act 1987 and the Solicitors' Rules. Issues are sought to be raised under these grounds which were not raised before the Magistrate. The Amended Summons then goes on over a number of pages to raise grounds which challenge the findings of the Magistrate on questions of fact. Finally, the appellants complain of the peremptory terms in which the Magistrate dismissed their cross-claim, which, to the extent that his findings on the claim of the respondent did not necessarily dispose of it, he dismissed as frivolous. 3 An understanding of the nature of the dispute requires a brief statement of the facts out of which it arose. The appellants were in the year 2000 waging litigation with their bank, which had already involved proceedings before a Banking Ombudsman and had then crystallised in a Supreme Court action brought by the bank for the recovery of over two hundred thousand dollars. In that Supreme Court proceeding, the appellants were desirous of changing solicitors. To this end, a conference was arranged for 17 July 2000 with a Mrs Charmaine Nicholson, a solicitor employed by the respondent. At the conference, there was discussion about the respondent taking over as solicitor for the appellants. The appellants' evidence before the Magistrate was that, when arranging this conference and at it, they made clear their inability to pay legal fees except at the completion of the proceedings. The Magistrate found that, on the day after the conference, Mrs Nicholson wrote a letter to the appellants which included the following: We enclose our Costs Agreement which has been prepared based on the information you have provided as [ scilicet us] about the dispute. We apologise for the formality of the Costs Agreement, however, we must provide this disclosure as a matter of Law. 4 The Costs Agreement enclosed with this letter contained a clause: 4. Billing Arrangements We will send you a Bill of Costs containing particulars of our charges and other expenses: (a) When all the work is completed and/or, (b) Monthly or at another [ sic ] times while the work is in progress. We may ask you to provide security for the payment of our costs, charges and disbursements. 5 There was a reply to this letter, dated 31 July 2000: Thank you for your offer of legal services. Your method of calculating and quantum of charges for your work as expressed in your letter dated 18 July 2000 are acceptable to us. … 6 The Magistrate's reasons make it clear he accepted Mrs Nicholson's evidence that she was required to do a considerable amount of work during the period of more than a month which followed. For whatever reason, the Magistrate found that there were no files available from the former solicitors. The Magistrate described what was done in some detail. He made it clear that he was satisfied the complaints of the appellants that the work was not performed skilfully and carefully were unjustified. Indeed he found that "Mrs Nicholson and [Mr Ferry] acted reasonably, professionally and responsibly in dealing with a complex set of circumstances". 7 On 7 September 2000, the respondent sent a lengthy letter to the appellants discussing the situation in the litigation. This letter included: At this stage, we enclose an Interim Memorandum of Costs & Disbursements/Tax Invoice for your attention. We wish to keep you appraised of the time being spent on this matter and the costs being incurred. When we initially conferred with you, we disclosed our hourly rate and advised that we did not usually require payment of our costs until the completion of proceedings and may also request some security for costs. Of course, this depended on the nature of the case and your prospects with respect to liability. You will see that our Costs Agreement, at paragraph 4, refers to Billing Arrangements. Given the difficulty that we anticipate that you shall have in defending these proceedings, we are not prepared to wait for payment of our Costs to the end of the proceedings. We propose to forward Interim Accounts to you on quarterly basis for payment. If you have any difficulty, please let us know. 8 It is apparent that this letter brought forth an immediate response by telephone, for a further letter was sent by the respondent on 12 September 2000, which included the following: In response to that letter [ie of 7 September 2000], Mrs Charmaine Nicholson of our office had a lengthy telephone discussion with Mr Wende on 8 September 2000. In particular, we were informed by Mr Wende that you could not afford to attend to payment of our costs on a quarterly basis. Following discussion of this matter with the principal of this firm, it has been decided that we shall not continue to act in this matter if our costs are not paid on a quarterly basis. 9 Following this letter, the appellants did not pay the interim account, and declined to accede to the payment of quarterly accounts for the future. As a result, the respondent ceased to act for the appellants, who shortly afterwards reached a settlement with the bank. 10 In his reasons for judgment, the Magistrate identified the issues raised by the appellants in resisting the respondent's claim for $6,200.17 for professional costs in respect of the work done by him (including $439.35 for disbursements), as follows: · that Mrs Nicholson did little, if anything to advance their claim against the bank; · that there was no need for her to prepare the Chronology, which consumed a good deal of the time charged for; · that Mrs Nicholson failed to meet Court directions, failed to comply with their instructions, and acted contrary to their instructions; · that the claim for expenses on a quarterly basis was in conflict with the agreement between the parties at their first conference, and that accordingly the Plaintiff was in breach of its [sic] contract with the Defendants. 11 It is apparent, on the face of his Worship's statement of the issues, that each of them raises a question of fact, although the last, if not literally, at least in substance, also raises a question of construction in relation to the respondent's Costs Agreement, which seems to have been based on a form suggested by the Law Society. The propositions of fact on which the first three issues relied were firmly rejected by the Magistrate, and, although much was said by the appellants about the facts, nothing was put that suggested any error of law in this respect. 12 As regards the final point, the Magistrate concluded that the contract of retainer was not wholly concluded during the conference itself, but included the Costs Agreement forwarded the following day, the conditions of which he considered were adopted by the appellants by the letter of 31 July 2000. Since the Costs Agreement included cl.4(b), the Magistrate's view was that the billing arrangements insisted upon by the respondent were not contrary to the terms of his retainer. Indeed, the transcript of the hearing in the Local Court reveals that the submissions for the appellants made on 23 November 2001 included a clear admission of awareness of the terms of the Costs Agreement, though coupled with an explanation to the effect that they understood those terms would not be required to be complied with. Plainly, the Magistrate was entitled to accept the admission, while rejecting the explanation. I can see no error of law in the manner in which he dealt with this issue. 13 Upon this appeal, the appellants sought to raise fresh arguments. It did not seem to me that any of them disclosed an error of law on the part of the Magistrate. In particular, the appellants attacked the alleged uncertainty of the Costs Agreement in respect of "the billing arrangements" which are required to be disclosed by s.175(2)(c) of the Legal Profession Act 1987. The argument appeared to be that the incorrect English of the expression "or at another times" in cl.4(b) of the Costs Agreement vitiated the statement of the billing arrangements which that agreement purported to make. But the full expression is "monthly or at another times while the work is in progress", and in that context the meaning cannot be in doubt. It is perfectly plain that the word "another" has been inserted in error when "other" was intended. It would make a mockery of the common sense construction of contracts to read this provision in any other way. So read, there is nothing vague or uncertain about it; it reserves to the solicitor the right to send progress bills monthly or at such other intervals as he may choose. 14 So far as the cross-claim is concerned, the Magistrate was satisfied, as a fact, that the work was competently done. It is not, of course, as was pointed out during the hearing in the Local Court, inconsistent with the due performance of legal work, that clients may not like the advice they have been given, or even that in retrospect it may appear incorrect. In the light of his findings, nothing put to him in the submissions urged on behalf of the appellants required the Magistrate, as a matter of law, to do other than to dismiss the cross-claim, as he did. 15 The appellants claimed they were denied natural justice at the hearing before the Magistrate, but they were unable to point to anything that even suggested there was substance in this assertion. 16 The appeal is dismissed with costs. ********** Last Modified: 09/09/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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