Alvin Bryant v Law Society of New South Wales

Supreme Court of NSW|2016-09-08|Before: Garling J

Judgment

In early 2011, the plaintiff, Mr Alvin Bryant, made a claim against the Legal Practitioners Fidelity Fund pursuant to Part 3.4 of the Legal Profession Act 2004, in relation to dealings he had with Mr Lesley Abboud, a solicitor. The plaintiff claimed that he entrusted to Mr Abboud an amount of $1,000,000, which Mr Abboud had dishonestly failed to repay to him on demand.
On 20 February 2014, the Fidelity Fund Management Committee considered and rejected Mr Bryant's claim. The Committee noted that the claim had not been brought in time and refused to allow further time.

Proceedings in this Court

On 29 July 2015, the plaintiff filed a Summons in this Court against the defendant, the Law Society of New South Wales, which administers the Fidelity Fund. The Summons sought the following relief: "1. An order pursuant to section 437 of the Legal Profession Act 2004 (the Act) allowing the plaintiff a further period to make a claim against the Fidelity Fund. 2. Alternatively, an order that the decision of the Law Society Council, by its delegate the Fidelity Funds Management Committee, of 20 February 2014 refusing to allow the plaintiff a further period to make a claim against the Fidelity Fund be set aside, or alternatively, quashed. 3. A declaration that the failure of Leslie About, solicitor to repay $1,000,000 entrusted to him by the plaintiff amounted to: (a) a default within the meaning of section 419 of the Act; and (b) a default of a law practice within the meaning of section 434 of the Act. 4. A declaration that the plaintiffs' claim relating to Leslie Abboud, made upon the Fidelity Fund pursuant to Part 3.4 of the Act, be allowed in whole or in such part or parts as the Court thinks fit together with interest pursuant to section 445 of the Act … 5. Alternatively to paragraph 4, an order pursuant to section 65 of the Supreme Court Act 1970, directing the defendant to fulfil its duty by making a determination pursuant to section 442 of the Act in respect of the plaintiff's claim relating to Abboud according to law. 6. Alternatively, an order in the nature of mandamus requiring the defendant to make a determination under section 442 of the Act in respect of the plaintiff's claim relating to Abboud according to law. …"

Current Notices of Motion

The proceedings presently before the Court consist of two motions filed by the defendant. The first, filed on 25 August 2016, seeks, in effect, a declaration that the plaintiff's claim against the Law Society settled on 6 June 2016. The second, filed on 27 April 2016, seeks an order that prayers 2 to 6 of the plaintiff's Summons be struck out or, alternatively, dismissed.
It was common ground at the hearing that, if the defendant was successful on the first motion, then there was no need to consider the second motion.

Factual Background

On 23 May 2016, the plaintiff's solicitor, by letter, made an offer to settle the proceedings on terms that the plaintiff discontinue his claim, the defendant pay the plaintiff's costs agreed at $47,000, and the plaintiff enter a deed releasing the Fidelity Fund from all future claims. The letter expressed the reasons behind the offer in this way: "In our client's view both your client's overly technical position, and its practical approach to his claim, are without merit. Notwithstanding that our client is now elderly, and with some health limitations, he is committed to litigating his claim so that the proper and just outcome of compensation for Abboud's defaults is achieved. Our client recognises, however, that there is a benefit to him in achieving some finality in relation to his claim at reduced cost expense, and in a contracted timeframe. For those reasons, our client is willing to compromise his position."
The offer was expressed to be made in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333. The offer was also left open for acceptance until 5pm on 31 May 2016.
On 29 May 2016, the defendant's solicitor, by email, responded to that letter in the following terms: "The society accepts the offer of your client to receive $47,000 provided the Society receives a Deed of Release plus verdict for the defendant … plus no order as to costs."
On 31 May 2016, the plaintiff's solicitor, by letter, responded to that email in the following terms: "We refer to your email dated 29 May 2016 and advise that our client accepts your client's offer. Please find attached draft Deed of Settlement."
On 6 June 2016, the defendant's solicitor, by letter, approved the terms of the draft Deed of Settlement, subject to certain amendments being made to the Deed which were primarily typographical in nature. Later that day, the plaintiff's solicitor, by email, responded to that letter, stating: "Our client agrees to the amendments to the Deed of Settlement sought in your letter of today's date. We attach for your reference, a copy of the revised Deed in marked up and also in clean format for execution by your client."
On 27 June 2016, the solicitor for the Law Society sent the following email to the solicitor for the plaintiff: "We are ready to exchange deeds. My client has the original signed and a cheque payable to your office. Would you like to meet at the Society to exchange or, alternatively, can you send the Deed signed by your client and a signed set of Terms. I will then send you the signed Deed and cheque and then move to lodge the Terms."
The Terms of Settlement which had been provided in a form suitable for filing in the Court were simple. They contained the following consent orders: "By consent and without any admissions: 1. Verdict for the defendant. 2. All previous costs orders are vacated. 3. No orders as to costs of the proceedings."
The email was responded to by the solicitors for the plaintiff on 28 June 2016 with a statement including the following: "We expect to have the originally executed Deed at our offices by Tuesday next week. The reason for the delay is that our client has had some difficulty accessing emails."
That email then noted that the matter was listed for mention before the Court on Monday 4 July 2016, and in light of that date, proposed the following course: "1. (a) writing to the Common Law Registrar seeking, by consent, an order that the proceedings be adjourned for two weeks to allow for exchange of Deeds in finalisation of terms; or (b) our mentioning your appearance at the directions hearing on Monday and seeking, by consent, an order that the matter goes over for a period of two weeks; 2. meeting with you at the Law Society or at our offices (centrally located at 161 Castlereagh Street) on say, Wednesday 6 July 2016 to exchange Deeds."
On 28 June 2016, the plaintiff's solicitor, with the consent of the defendant's solicitor, informed the Registrar by email that the parties had "agreed terms and executed a Deed of Settlement resolving the proceedings". The email attached proposed consent orders seeking an adjournment to enable the exchange of Deeds and the filing of settlement terms with the Court.
On 12 July 2016, the solicitor for the Law Society wrote to the solicitor for the plaintiff enquiring whether she had the executed Deeds. There was apparently no response. On 15 July 2016, the solicitor for the Law Society wrote to the solicitor for the plaintiff, noting that the matter was in court on 18 July 2016 and asking whether a further adjournment of two weeks was necessary to get the Deed. That was responded to by an email the same day from the solicitor for the plaintiff to the solicitor for the Law Society in the following terms: "Thank you for your email. Yes, we are experiencing some continued delays in obtaining the Deed. I telephoned your offices yesterday to discuss the delay and left a telephone message. Is your client agreeable to an adjournment to 8 August 2016?"
By agreement between the solicitors, the proceedings were adjourned until 8 August 2016.
On 28 July 2016, Mr Bryant wrote a letter directly to the manager of the Fidelity Fund at the Law Society canvassing, at some length, the merits of his claim against the Fidelity Fund and asking that his claim be reconsidered.
Following upon that letter, on 1 August 2016, the solicitors for the Law Society wrote to the plaintiff's solicitor drawing attention to the contents of the letter and noting that it was "… unclear whether your client is now seeking to resile from the acceptance of his offer". Clarification of the situation was sought.
On 2 August 2016, the plaintiff's solicitors wrote a letter indicating that they had sought instructions from their client "… as to his position and specifically, whether or not he intends to return an executed Deed of Settlement and Release". The letter went on to note the difficulties which the solicitors were having in the following terms: "As may be clear from the content of the letter from our client to your client and this letter, it has become somewhat difficult to obtain clear instructions from our client. We trust that you will appreciate that we are endeavouring to achieve clarity and certainty concerning these matters. The plaintiff is 90 years old and resides in a remote part of Queensland, such that obtaining instructions in a timely manner is often impaired."
The letter sought the consent of the Law Society to an adjournment of the proceedings for a period of some weeks.
An adjournment was agreed to. Short Minutes of Order were filed by consent, which meant that the proceedings were stood over for mention to 29 August 2016.
On 24 August 2016, Gillis Delaney, the plaintiff's solicitors, notified the Law Society's solicitor that the plaintiff had terminated their retainer. They filed a relevant Notice in Court on that day.
This exchange, and the inability to bring the negotiations to a satisfactory conclusion, led to the Law Society's solicitors filing the first Notice of Motion.

Submissions

Counsel for the defendant filed submissions in support of the orders sought in the first Notice of Motion. Those written submissions canvassed the sequence of correspondence which has been set out above.
Counsel for the defendant submitted that, at the latest, an agreement to settle the proceedings was concluded in the email exchange on 6 June 2016, referred to at [10] above, when the plaintiff's solicitor agreed to the amendments to the Deed of Settlement sought by the defendant's solicitor and attached a copy of the Deed of Settlement reflecting those amendments. Counsel submitted that, by this point: "… all the terms between the parties [had] been agreed by the solicitors through that correspondence … It is conveyed in terminology which is offer and acceptance, used by the solicitors, and we say that was an agreement, and simply needed to be reflected in writing. The writing was drafted, provided, and agreed to, and simply required execution."
Counsel for the defendant submitted, in effect, that the agreement reached fell within the first of the categories outlined in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353.
The plaintiff did not make submissions that were directly relevant to the orders sought in the first notice of motion. The plaintiff appeared for himself at the hearing of the Motion, and made a number of submissions orally. Mr Bryant, in those oral submissions, described at some length to the Court the circumstances surrounding his dealings with the original solicitor, Mr Abboud, and the substance of the claim which he made against the Fidelity Fund arising out of his dealings with Mr Abboud. His submissions also concentrated on the facts and matters surrounding his attempts to recover the money with which he had dealt with Mr Abboud.
When Mr Bryant's attention was drawn to the particular issues which the Court was dealing with on the first Notice of Motion, it appeared that he agreed that he had instructed his solicitors to negotiate an agreement with the Law Society's solicitor. Ultimately, his oral submission came down to this: "There was no real attempt by [my solicitor] to pay out both sides so I could maintain my ability to continue with something, I notice, which I think is very serious, and that is that it is solicitors who have to fund the cost of those who pinch the money, so to speak, and I think that's corrupting the legal profession … I'm still writing articles. I would dearly love to take that matter up and point out that we can't have a corrupting factor like that. I want to do that."
It appeared from that submission that Mr Bryant was concerned that the proposed Deed of Release would preclude him from writing articles setting out his interaction with Mr Abboud, and lack of success with the Law Society. I clarified that matter with counsel for the Law Society, who agreed that there was no restraint envisaged by the Deed of Release, upon Mr Bryant writing articles about his experience.
Ultimately, Mr Bryant appeared to be submitting, although it was difficult to follow, that he had not instructed his solicitors to agree to a verdict in the proceedings in favour of the defendant, but instructed them to agree to a discontinuance of the proceedings.
In reply, counsel for the defendant submitted that the Court would make orders declaring the proceedings settled by an enforceable agreement, which required that the proceedings be discontinued in accordance with the agreement which had been reached.

Legal Principles

It is necessary to identify the relevant legal principles. I have recently set out those principles in Capital Securities No.1 Pty Ltd v Saliba [2016] NSWSC 1093. It is convenient to replicate here part of what was set out in that judgment.
On the issue of whether a binding contract has come into existence, the High Court of Australia identified in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 that there are several categories into which contractual negotiations fall in circumstances where parties have agreed on terms but also agreed that those terms will be dealt with by subsequent formal documentation. Those categories were described by the Court at 360 in these terms: (a) "[a case where] the parties have reached finality in arranging all the terms of the bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect"; (b) "… a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document"; and (c) "[the case] in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract".
The High Court held that in the first two categories there was a binding contract, but in the third there was not.
In Baulkham Hills Private Hospital Pty Ltd v G R Securities Ltd (1986) 40 NSWLR 622 at 628E, a fourth category of case, in addition to the three mentioned in Masters, was recognised by McLelland J, namely one in which: "… the parties were content to be bound immediately and exclusively by the terms which they had agreed upon, whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms." See: Sinclair, Scott & Co v Naughton [1929] HCA 34; (1929) 43 CLR 310 at 317 per Knox CJ, Rich and Dixon JJ; Love & Stewart v S Instone & Co (1917) 33 TLR 475 at 476 per Lord Loreburn.
Whichever category of case one is dealing with, it is important to identify the intention of the parties. McHugh JA (as he then was), with whom Kirby P and Glass JA agreed, described intention as the "decisive issue" in G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 634E. His Honour said: "… [T]he decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances … If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction."
In considering the application of this statement of principle to the facts of this case, it is to be observed that the parties' intention is not to be ascertained by reference to a single document, but rather to the words and phrases used in various email exchanges, and letters between the parties' solicitors.
In considering the question of whether a contract was formed, or an agreement was reached, the Court is not looking at the subjective intention of a party, but rather what the party's intention was, ascertained objectively. In Brambles Holdings v Bathurst City Council [2001] NSWCA 61; (2001) 153 NSWLR 113, Heydon JA (as he then was) also noted at [27] that: "The construction of a contract is an objective question for the Court, and the subjective beliefs of the parties are generally irrelevant in the absence of any argument that a decree or rectification should be ordered or an estoppel by convention be found."
In determining whether those email exchanges constituted a binding agreement, it is proper to take into account subsequent communications between the parties: Hughes v NM Superannuation Pty Ltd (1993) 29 NSWLR 653 at 670C per Sheller JA (Kirby P and Meagher JA agreeing): see also Howard Smith & Co Ltd v Varawa [1907] HCA 38; (1907) 5 CLR 68 at 77 per Griffith CJ; Barrier Wharfs Ltd v W. Scott Fell & Co. Ltd [1908] HCA 88; (1908) 5 CLR 647 at 669 per Griffith CJ, at 672 per Isaacs J; Brambles Holdings Ltd at [25] per Heydon JA.
Glass JA said in B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147 at 9149, referring to subsequent communications: "Such materials may be legitimately considered in order to determine whether prior dealings between the parties gave rise to a binding contract." See also Mahoney JA at 9155.
A convenient template for determining the existence of a binding contract was set out in Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, where Mahoney JA said at 326G that it was useful to consider three questions, namely: "… did the parties arrive at a consensus?; (if they did) was it such a consensus as was capable of forming a binding contract?; and (if it was) did the parties intend that the consensus at which they arrived should constitute a binding contract?"

Discernment

At the time the solicitors for Mr Bryant were corresponding with the solicitors for the Law Society, they were retained by Mr Bryant, and were the solicitors on the record in the proceedings. By reason of that retainer, they were authorised, both ostensibly and impliedly, to compromise the proceedings by a settlement, providing the terms of the settlement did not extend to any matter which was collateral to the proceedings: see Waugh v HB Clifford & Sons Ltd [1982] Ch 374 at 387 per Brightman LJ (with whom Cumming-Bruce and Ackner LJJ agreed); Cordery on Solicitors, Butterworths, 8th Edition, pp 77-83.
In this case, the retainer of the solicitor, Gillis Delaney, was only terminated on or shortly before 24 August 2016. Accordingly, the question for determination is whether, prior to that termination, an agreement had been reached to settle the proceedings. The answer to this question is to be found in the email correspondence between the solicitors.
The plaintiff's solicitors initiated the settlement negotiations by making an offer as set out in [6] above. The terms of that offer were clear and unequivocal. They were capable of acceptance. They did not resolve any matter extraneous to the subject of the proceedings. The terms of the offer made plain that the intention of the offeror was to resolve the proceedings. None of these matters would have been in any doubt to the recipient of the offer.
The addition in the offer of the reference to the decision in Calderbank, and the fixing of a defined period during which the offer was open for acceptance, support these conclusions.
The response from the solicitor for the Law Society, referred to in [8] above, demonstrates an intention to enter into a compromise agreement on the terms offered, but with one variation. The variation was that, rather than the proceedings being finalised by a Notice of Discontinuance, they would be finalised by a "verdict for the Defendant". No doubt reference to a verdict rather than a judgment was an unintended error. Since what was proposed by consent did not involve any decision by a jury, the use of the term "verdict" was legally meaningless. However, the substance of the email and variation were capable of being, and were in fact, understood by the solicitor for Mr Bryant.
The response by letter of 31 May 2016, referred to in [9] above, demonstrates clearly and without equivocation the acceptance of that variation by the solicitors for Mr Bryant.
Approaching the matter in accordance with the "convenient template" described by Mahoney JA in Air Great Lakes, from the terms of this correspondence I have reached the following conclusions: 1. The parties, through their respective solicitors, arrived at a consensus or an agreement, the terms of which were that the proceedings would be terminated in favour of the defendant Law Society, the Law Society would pay $47,000 by way of costs to the plaintiff, and a Deed of Release would be executed by both parties; 2. The terms of this agreement were certain and were capable, legally, of forming a binding contract; 3. The consensus reached between the parties was intended by each of them to give rise to a binding contract to resolve the proceedings; and 4. The agreement was concluded well before any question of the termination of the retainer of Gillis Delaney as Mr Bryant's solicitor was raised.
The agreement which was reached was intended to be immediately binding, although some further steps were necessary to give effect to that agreement, such as finalising the terms of any consent judgment and orders, and finalising the terms of the Deed of Release. Both of these steps were properly regarded by the solicitors as being matters of routine.
The subsequent conduct of the parties, referred to from [10] to [15] above, is wholly consistent with the conclusions which I have reached. I have not needed to have regard to these communications to determine whether an agreement was in fact reached, but I am content to reach a conclusion that they corroborate and are not at odds with the conclusions which I have separately reached.
In oral submissions, Mr Bryant, who appeared for himself in these proceedings, did not seem to dispute that an agreement had in fact been reached. Rather, to the extent that his submissions addressed the issues, it seems that he was concerned only with the difference between the filing of a notice of discontinuance to terminate the proceedings and the entry of judgment. Given the terms of the initial offer (discontinuance together with a Deed of Release), in my view there is no difference in substance and effect with the terms finally agreed to here (judgment for the defendant together with a Deed of Release). In those circumstances, and having regard to the clear terms in which the parties negotiated, these submissions do not stand in the way of any finding that there was a concluded agreement.

Conclusion

I have concluded that the parties, through their retained and properly authorised solicitors, have entered into a binding agreement to resolve these proceedings. The terms of that agreement are that: 1. the parties agree that there should be a judgment for the defendant in these proceedings, and otherwise as set out in [12] above; 2. the Law Society should pay to Mr Bryant, in accordance with his direction, the sum of $47,000 by way of his legal costs and expenses; and 3. each party should execute a Deed of Release in accordance with the Deed annexed to the email of the solicitors for Mr Bryant dated 6 June 2016.
This conclusion means that the Notice of Motion filed by the Law Society on 25 August 2016 succeeds. It follows that the Notice of Motion filed by the Law Society on 27 April 2016 should be dismissed as otiose.
Although I have concluded that the agreement reached was as set out, in the motion and in its submissions the Law Society did not press for any substantive immediate relief with respect to the deed of release.

Costs

The Law Society has succeeded on its principal Notice of Motion. I can see no reason why costs should not follow the event in accordance with r 42.1 of the Uniform Civil Procedure Rules, but there should be no order for the costs of the Motion rendered otiose by this judgment.
Given the discrete nature of the agreement reached to resolve the substantive proceedings, on terms that the Law Society pay the legal costs of Mr Bryant in the sum agreed to (without restriction by negotiation), I am of the view that the order for costs of the Motion ought not be set off against the sum payable by the Law Society. They should remain separate and discrete obligations.

Orders

The Court makes the following orders: 1. Declare that the plaintiff and the defendant entered into a binding agreement on 6 June 2016 to resolve the present proceedings (2015/221577) on terms that: 1. there be judgment for the defendant in the proceedings; 2. the defendant is to pay to the plaintiff the sum of $47,000 by way of legal costs; 3. there be no order as to costs of the proceedings; 4. all cost orders previously made in the proceedings be vacated; and 5. each party to execute a Deed of Release in the agreed form; 1. Order that there be judgment for the defendant in the whole of the proceedings; 2. Order that, subject to order (6) below, all previous costs orders be vacated; 3. Order that the defendant pay the plaintiff the sum of $47,000 by way of legal costs and expenses within 28 days of the date of these orders; 4. Order that, apart from orders (4) and (6), each party is to pay his and its own costs of the proceedings; and 5. Order that the plaintiff pay the defendant's costs of the Motion filed 25 August 2016.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 April 2018

(2001) 153 NSWLR 113

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