Equuscorp Pty Ltd v Wilmoth Field Warne

Court of Appeal (Vic)|2007-12-10|Before: BUCHANAN, ASHLEY and NEAVE JJA

The application was referred to the court hearing the appeal and cross-appeal. As we have heard full arguments on the questions of the ability of WFW to recover on a quantum meruit and the amount of its disbursements, we will state our conclusions in case these proceedings are taken further.

**135 In its defence to the amended statement of claim raising the question of the validity of the agreement, WFW alleged that, if the agreement was void because it contravened the Act, the firm was entitled to be paid for its legal work on the basis of a quantum meruit. Although WFW pleaded a quantum meruit, it did not advance that case at trial. Written and oral submissions made on behalf of WFW appeared to assume that there was no right to recover any payment for work done under an agreement that was void because it contravened the Act. No evidence was led to establish the reasonable value of the work performed by WFW.

137 Counsel for WFW contended that s 102 of the Act did no more than render the agreement unenforceable. He relied upon the decision of the High Court in Pavey & Matthews Pty Ltd v Paul[95]. In that case the majority of the Court held that an action upon a quantum meruit for work done under a contract was not precluded by a statue which provided that the contract 'is not enforceable against the other party to a contract unless the contract is in writing signed by each of the parties or his agent in that behalf and sufficiently describes the building work the subject of the contract.' The majority of the Court was of the view that action on a quantum meruit was not an action by which the plaintiff sought to enforce the oral contract, and thus was not caught by the statute.

138 Counsel also relied upon the decision of the Full Court of South Australia in Upjay Pty Ltd v MJK Pty Ltd[96]. In that case it was held that an action upon a quantum meruit succeeded notwithstanding that the work was performed by a person who held an oral authorisation, when a statute provided that he was 'not entitled to commission or other consideration for services as an agent unless the person ... is authorised in writing to act as an agent.' Wicks J, with whom Doyle CJ and Williams J agreed, said:**

As the contractual obligation for the payment of commission is unenforceable there is no agreement or request from which a promise to pay might be expressed or implied. Without a contractual obligation, the way is clear for the proceedings on a quantum meruit to apply and for the Court to determine fair and just remuneration to be recoverable having regard to the nature, value and extent of the services provided.[97]

139 Where a contract is declared void by statute, the availability of restitution for benefits provided under the contract depends upon the purpose of the invalidating legislation. As McHugh JA said, in Hurst v Vestcorp Pty Ltd[98]:

Whether restitution is possible in respect of benefits accepted under a contract declared by statute to be unenforceable depends on the intention of the legislature.[99]

In the present case, s 102 provides not only that a contract contravening the Act is unenforceable, but also that a legal practitioner who has entered into such a contract 'is not entitled to recover any amount in respect of the provision of legal services in the matter to which the costs agreement related.' Further, the Act expressly provides for the circumstances in which costs may be recovered on a quantum meruit. Those circumstances do not include the provision of services under a void agreement. Section 93 of the Act provides:

(a) under a costs agreement made in accordance with Division 3; or

(b) in the absence of a costs agreement, in accordance with an applicable practitioner remuneration order or scale of costs; or

140 Accordingly, in our opinion, WFW would not be entitled to recover on a quantum meruit for the work to which the agreement related if the agreement contravened the Act.

141 In his reasons for judgment the trial judge said:

I conclude therefore that the costs agreement is void and that WFW may not recover any amount for the provision of legal services in any matter to which the costs agreement relates. The restriction in s 102(3) to remuneration for legal services presumably means that the prohibition attaches to its legal fees rather than to disbursements which it incurred in the furtherance of the client's interests.

142 Equus contends that his Honour erred: if the agreement is void, it maintains that WFW cannot recover either fees for its own work or amounts it has paid to others. Equus relies upon the definition of the term 'legal costs' in s 3 of the Act, which is:

"Legal costs" means all amounts that a person has been or may be charged by, or is or may become liable to pay, a legal practitioner or firm for the provision of legal services including disbursements but not including interest ...

It was submitted that in order to render the definition in s 3 and the prohibition in s 102(3) consistent, it was necessary to construe the expression 'legal services' in s 102(3) to include disbursements.

**143 We disagree. The fact that the definition of 'legal costs' is expressed to include disbursements in charges for the provision of legal services does not require the construction of the expression 'legal services' in s 102(3) for which Equus contends. If anything, the fact the disbursements are expressly mentioned in the definition may indicate that otherwise disbursements are not included in fees for the provision of legal services.

144 In our view the legal services to which s 102(3) refers are the legal services supplied by a legal practitioner or firm which has entered into a costs agreement that contravenes the provisions of the Act. If s 102(3) had been intended to prevent the recovery of all charges, including disbursements, the obvious means of achieving that result would have been to employ the term 'legal costs' instead of the words 'amount in respect of the provision of legal services'. The words 'in respect of' are of wide import[100], but in our view in s 102(3) they do not serve to broaden the scope of the expression 'legal services'.**

**145 For the foregoing reasons we are of the opinion that Equus was entitled to reopen its case and that the doctrine election did not prevent Equus contending that the agreement was void as one forbidden by the Act. We are of the opinion, however, that the agreement did not contravene the Act.

146 We would allow the cross-appeal and set aside paragraphs 1, 2 and 4 of the judgment given and orders made by the trial judge on 7 April 2006. We will hear the parties as to the orders which should be made in lieu thereof.

[1] Equuscorp Pty Ltd v Wilmoth Field Warne [2006] VSC 28, [5].

[4] The arbitration began on 28 November 2005 and continued throughout November, December January and February. On 23 May 2006 the arbitrator published his interim award in relation to the majority of issues, dismissing Equuscorp's claim on all issues that were decided. Following submissions, the arbitrator determined that each party should bear its own costs of the arbitration. Pursuant to the Commercial Arbitration Act 1984 WFW appealed this costs determination to a single judge sitting in the Practice Court of the Supreme Court. On 26 November 2006, that judge dismissed the application but on 15 February 2007 the Court of Appeal allowed an appeal and remitted the matter back to the arbitrator for determination according to law: see Wilmoth Field Warne (a firm) v Equuscorp Pty Ltd [2007] VSCA 28.

[5] House v the King [1936] HCA 40; (1936) 55 CLR 499, 504-505.

[6] For example both parties relied on Ketteman v Hansel Properties Ltd [1987] AC 189, a case concerning leave to amend.

[7] Commonwealth v Verwayen (1990) 170 CLR 394, 456 (Dawson J) ("Verwayen"); State of Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146, 154 (Dawson, Gaudron and McHugh JJ). See also Rule 36.01 of the Supreme Court (General Civil Procedure) Rules 2005.

[11] As to which see Smith v New South Wales Bar Association (No 2) [1992] HCA 36; (1992) 176 CLR 256, 265 (Brennan, Dawson, Toohey and Gaudron JJ). In Metwally v University of Wollongong (No 2) [1985] HCA 28 (Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ) it was assumed without deciding that a court could vacate an order even after it had been perfected, though this power should be exercised with great caution. See also State Rail Authority of NSW v Codelfa Construction Pty Ltd (No 2) [1982] HCA 51; (1982) 150 CLR 29, 38; Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471.

[13] Ibid 215 (Toohey, Gaudron, McHugh, Gummow and Kirby JJ).

[15] The questions in the Equus statement of claim which were determined in the first proceedings are set out in Equuscorp Pty Ltd v Wilmoth Field Warne (No 3) [2004] VSC 164, [7].

[16] His Honour concluded that Equus had not terminated the agreement by its first and second notices of default. Whether Equus terminated it by its third notice of default depended on allegations of default which were referred to arbitration.

[17] In Smith v New South Wales Bar Association [1992] HCA 36; (1992) 176 CLR 256, 266-67 (Brennan, Dawson, Toohey and Gaudron JJ) it was said that "different considerations may apply depending on whether the case is simply one in which the hearing is complete, or one in which reasons for judgment have been delivered" though that comment appears to relate to the admission of new evidence after the decision to permit re-opening had been made.

[20] (1990) 170 CLR 394, 456 (Dawson J), 464-5 (Toohey J) and 482 (Gaudron J). See also Etna & Anor v Arif & Ors [1999] VSCA 99; [1999] 2 VR 353, 367-368 (Batt JA) (Charles and Callaway JJA concurring); Shinn & Ors v Commonwealth of Australia [2004] VSC 221, [13]-[14] (Kaye J); Rebolledo v Royal & Sun Alliance Financial Services Ltd [2002] NSWSC 104, [32]-[33] (Palmer J); and Craven v Hidding [2004] TASSC 147, [22]- [24] (Blow J).

[23] Cf Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 200 ALR 447, [51] (Gleeson CJ, McHugh and Gummow JJ) relating to the situation where the raising of a new point on appeal may require consideration of additional evidence.

[24] As to which see Ketteman v Hansel Properties Ltd [1987] AC 189, 220; The State of Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146, 170 (Kirby J).

[25] Indeed his Honour confined the effects of the grant of leave by refusing to give leave to Equus to amend their statement of claim to cover moneys paid to WFW under earlier retainers. [See AB B 14 and see AB B 18].

[26] As to the approach to be taken in such cases see McCarthy v McIntyre [2000] FCA 1250;[21] -[33]; Manwelland Pty Ltd v Dames & Moore Pty Ltd {2001] QCA 436.

[27] WFW did not argue that this was a case of waiver: see Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 64; (1920) 28 CLR 305. In Commonwealth v Verwayen (1990) 170 CLR 394, Mason CJ at 406-407 treated waiver as a concept which could be dealt with under the principles of estoppel and election and Deane J at 449 said that waiver was being absorbed by the more flexible doctrine of estoppel by conduct. See also Dawson J at 451, 458. By contrast, Brennan J at 424 and Toohey J at 475 regarded waiver as distinct from estoppel. Gaudron J at 485 regarded estoppel and waiver as different, but analogous principles.

[28] Equuscorp Pty Ltd v Wilmoth Field Warne (No 4) [2006] VSC 28, [23]-[24].

[30] Equuscorp Pty Ltd v Wilmoth Field Warne (No 4) [2006] VSC 28, [25].

[32] Ibid 664. The by-laws did not comply with legislative requirements regulating procedures for their enactment.

[33] Reliance was placed on Verschures Creameries, Ltd v Hull and Netherlands Steamship Company, Ltd [1921] 2 KB 608.

[34] This would depend on whether the situation was characterised as posing an election between inconsistent remedies or inconsistent rights. Where a person has alternative remedies to enforce a right "no question of election arises until one or other claim has been pursued until judgment" . See United Australia Ltd v Barclays Bank Ltd [1941] AC 1, 30 (Lord Atkin). By contrast, where the rights are inconsistent with each other, a person must choose between exercising one or other of them, see Sargent v ASL Developments Ltd [1974] HCA 40; (1974) 131 CLR 634, 641 (Stephen J). For an example of such a case see Suttons Motors Pty Ltd v Campbell (1956) 73 WN (NSW) 212. In Ciaverella v Balmer [1983] HCA 26; (1983) 153 CLR 438, 449, the distinction between alternative rights and remedies was described as "fundamental".

[36] [1974] HCA 40; (1974) 131 CLR 634, 643. See also the cases cited therein.

[39] [1986] HCA 14; (1986) 160 CLR 226, 244 (Gibbs CJ, Mason, Wilson, Brennan and Dawson JJ) ("Con-Stan Industries"). See also Thompson v Palmer [1933] HCA 61; (1933) 49 CLR 507, 547 (Dixon J); Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641, 657 ( Latham CJ) 674 (Dixon J).

[40] [1982] QB 84. Note that the trial judge, Robert Goff J, relied upon the earlier decision of Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd; Old & Campbell Ltd v Liverpool Victoria Friendly Society [1982] QB 133 ("Taylors Fashions"). Taylors Fashions, which was also cited by Deane J in Verwayen (1990) 170 CLR 394, 444 and Mustill J in The "Leila" [1985] 2 Lloyds Reports 172, concerned a situation where both parties had proceeded on the same mistaken assumption. Oliver J had found that the inquiry which he had to make was simply whether, in all the circumstances, it was unconscionable for the defendants to seek to take advantage of the mistake which, at the material time, the parties shared.

[44] Ibid. Note that the Court of Appeal also held that, having regard to the fact that the bank's subsidiary company was its alter ego, the monies owing were covered by the guarantee.

[45] [1982] QB 84, 120 (Lord Denning MR).

[46] Ibid 121 (Lord Denning MR). See also, 126 (Eveleigh LJ) and 131 (Brandon LJ). Note that Eveleigh LJ said that this had the effect that the bank could realise securities provided by the plaintiff, but doubted whether the contractual action would have succeeded if the security was insufficient.

[47] [1982] QB 84, 130 (Brandon LJ).

[49] (1990) 170 CLR 394, 409. His Honour cited Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387, 419 (Brennan J), 404 (Mason C J and Wilson J) and Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641, 674-675.

[56] Ibid 413 (Mason CJ), 445 (Deane J).

[57] Unreported South Australian Supreme Court 1 November 1995.

[58] Meagher, Gummow and Lehane, Equity: Doctrines and Remedies (4th Ed, 2002) 540.

[59] Patterson, Robertson and Heffey, Principles of Contract Law (2nd Ed, 2005), 188-189.

[61] Ibid 77. See also Eslea Holdings Ltd v Butts (1986) 6 NSWLR 175, 185-189 (Samuels JA).

[63] [1994] VicRp 66; [1994] 2 VR 333, 380. Fullagar J agreed with Ormiston J. Marks J delivered a separate judgment in which he said at 342 that "it is artificial in the extreme to define detriment narrowly".

[64] (1990) 170 CLR 394, 448-449 (Deane J), 461-462 (Dawson J), 416 (Mason CJ).

[65] Equuscorp Pty Ltd v Wilmoth Field Warne [2006] VSC 28, [30].

[66] [1982] QB 84. This case concerned a situation where both parties had proceeded on the same mistaken assumption. Oliver J had found that the inquiry which he had to make was simply whether, in all the circumstances, it was unconscionable for the defendants to seek to take advantage of the mistake which, at the material time, the parties shared.

[67] (1990) 170 CLR 394, 412-416 (Mason CJ), 429-430 (Brennan J), 475-476 (Toohey J), 487 (Gaudron J). See also Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387, 405 (Mason CJ and Wilson J) 419 and 423 (Brennan J), and Commonwealth v Clark [1994] VicRp 66; [1994] 2 VR 333, 383 (Ormiston J).

[68] Cf Commonwealth v Verwayen (1990) 170 CLR 394, 447-48 (Deane J), 461-462 (Dawson J).

[69] A similar question has arisen in a number of cases concerning the operation of waiver. See Commonwealth v Verwayen (1990) 170 CLR 394, 486 (Gaudron J).

[70] Equuscorp Pty Ltd v Wilmoth Field Warne [2006] VSC 28, [29]. His Honour referred to Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993, 1016 and Overmyer Industrial Brokers Pty Ltd v Campbells Cash and Carry Pty Ltd [2003] NSWCA 305.

[72] In re A Bankruptcy Notice [1924] 2 Ch 76, 97 (Atkin LJ) cited therein.

[76] Cf Australasian Concrete Services v Multiplex Constructions [1999] NSWSC 1140, [52] (Hunter J).

[77] [1964] AC 993, 1016-1017.

[78] Victoria, Report of the Attorney-Generals' Working Party on the Legal Profession Reforming the Legal Profession (August 1995) [9.6]-[9.8].

[79] Cf JS Bloor (Measham) Ltd v Calcott [2002] 09 EG 222.

[80] Equuscorp Pty Ltd v Wilmoth Field Warne (No. 3) [2004] VSC 164, [11] (Byrne J).

[83] The Legal Practice Act 1996 - including, of course, ss 97-99, construction of which is central to resolution of the issues presently before this Court - was repealed by the Legal Profession Act 2004 (Act No 99/2004). There are provisions in the 2004 Act which address the general subject-matter of ss 97-99 (and s 102) of the 1996 Act. They are not identical with the repealed provisions. It is in light of their repeal that we refer to ss 97-99 and 102 in the past tense.

[85] Which referred, inter alia, to the May 1994 Report of the Access to Justice Advisory Committee (the Sackville Report) to the Commonwealth government.

[86] Hansard, Assembly, 20 June 1996, pp 982 and following, particularly p 985.

[87] Reference being made to s97(4)(b).

[88] That being calculated by multiplying $400 per hour by the number of hours charged.

[89] (1997) 187 CLR 384, 408 (Brennan CJ, Dawson, Toohey and Gummow JJ).

[90] [1997] HCA 53; (1997) 191 CLR 85, 112-113 (McHugh J).

[91] [1998] HCA 28; (1998) 194 CLR 355, 381-382 (McHugh, Gummow, Kirby and Hayne JJ) - particularly touching the problem of giving each provision a meaning which best gives effect to its purpose and language whilst maintaining the unity of the statutory scheme.

[92] [2006] HCA 13; (2006) 80 ALJR 733, 751 [87] (Kirby and Hayne JJ).

[94] We note that no argument was advanced by Equus, if it could have been, that there was any want of compliance with s 97(4)(a).

[97] Above, at [72]. See also Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2006] VSCA 6.

[99] Above at 445. See also Australian Breeders Co-operative Society Pty Ltd v Jones & Ors [1997] FCA 1405; (1997) 150 ALR 488 at 541 (Wilcox and Lindgren JJ).

[100] See, for example, Trustees Executors and Agency Co Ltd v Reilly [1941] VicLawRp 22; [1941] VLR 110 at 111 per Mann CJ.

Legal Practice Act 1996

Legal Reform Act 1993

Arbitration Act 1984

Court (General Civil Procedure) Rules 2005

Legal Practice Act 1996

Legal Reform Act 1993

Arbitration Act 1984

Court (General Civil Procedure) Rules 2005

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