Issac Brott & Co v Levene [2004] VSC 79

Issac Brott & Co v Levene [2004] VSC 79 - VSC 2004 case summary — Zoe

[11]

"There ought to be judgment in favour of the defendant. Mrs Levene understands her position to be that she is not obliged to pay. That is as simply as it can be put and about as complicated as it needs to be. My view is that the evidence is quite eloquent of that agreement, and I simply refer you to Exhibits DL1-63. The evidence contained in those exhibits is on all fours with what is said in McKenzie v The Director-General at paras. 54-7. In other words, in my view the evidence supports the proposition that the prima facie position that there is a retainer is displaced. That is, that there is an agreement that Mrs Levene will not pay, with some qualification in relation to actual recovery. So there is another question, I suppose, that I have to ask myself; should she pay if she recovers, and the answer to that is no, because in my view the evidence discloses much more than that first limb (which allows Mrs Levene to succeed) and what I say is that the evidence allows some very easy inference about the relationship which existed between Mrs Levene, Mr Brott and Mr Canzoneri, which Mrs Levene left at a point where she said she did not have to pay. I think, probably, if she turned her mind to it she would agree with me, that the inference that is to be drawn is that the reality is that Mr Canzoneri is Mr Brott's client and Mrs Levene is very much secondary to this relationship, despite very superficial appearances. Of course, a retainer is not at first blush a superficial appearance, but it is relegated to superficiality by the evidence and the inferences that can be drawn. I draw the very strong conclusion, which can be inferred from the evidence, that the introduction of Mrs Levene to Mr Brott was a pre-emptive strike by Mr Canzoneri to forestall action against him, and that Mr Brott and Mr Canzoneri by virtue of association and appreciation of the overall situation both knew it. It has been submitted that non-compliance with Rule 12 is fatal. I see it as fatal to Mr Brott's case in another way, in that the non-compliance with Rule 12 betrays the secondary status of Mrs Levene. In my view, he has probably not seen fit to oblige her with that statement because she on the one hand was not seen as the client, so far as the second limb is concerned; what goes with that is that she was not seen as having the obligation to pay either, in the same way that all significant demands are to Canzoneri when, if Mr Brott was correct, one would think they would be to Mrs Levene or Mr Canzoneri's attention, or, equally strongly, to both. In any event, my view is that it is correct on the evidence to conclude that there is, at least on the face of it, an agreement that she would not pay, and that is, after all, all that is called for in McKenzie v The Director-General, to break the nexus - the apparent nexus, solicitor/client nexus. His Honour did not really ask for much as long as it was strong evidence; and the evidence is overpowering here, in my view, simply because it leads to that second conclusion, that Canzoneri is in fact the client."

[33]

"Diana Levene attends. I ask Sebastian Canzoneri to wait until I speak to the client and I will then call him explained billing and must be paid. She says S/C said he will pay told her I will look to her for payment. Told her S/C given me details of transactions and review the cheque advance and the relationship. He is currently funding her with respect to a dress shop problem he has pumped money into venture. Says not having relationship with him. Told her potential conflict and explain about criminal charges against S/C. Says he didn't rob her but simply bad business and everyone caught in recession. Tell her police investigation underway and he may be charged by police she says it doesn't affect her and she likes him. He is helping her with money explained might be able to sue his practice and claim from insurance if they have insurance but it probably would be cancelled by fraud and would advisably issue against him and partners to invoke policy - she says to do it. She says I can be paid from settlement - I said no I can help out and go easy on account but must be paid disbursements as they arise and some fees whilst other can be deferred. She says S/C will help her. She says no use suing S/C he had lost everything she says she will not complain to police because he helped her our (sic) and was currently helping her out. She wants to know prospect sof (sic) getting money. I tell her if there is insurance policy in existence, if she relied on him and no fraud and if money invested negligently okay but don't have enough info yet. With respect to bank action on cheque told her S/C says others (other clients) have recovered but I haven't seen cases and need to get counsel's advice. S/C called in - tell him what we spoke about. He insists that bank have paid other clients cheques in cases but can't tell me citations (will provide info). He says plenty of assets in practice to pay investors but his ex partners stole them. He says he doesn't know if the insurance policy was current at time and the terms, i.e. if obviated by fraud. He will check in his garage at home and will tell me. Says will pay Levene's costs but when we get award wants money back. She says okay. I tell them that solicitor/client costs might not be recovered from other side if we will (sic) and additional amount for solicitor/client costs will need to be paid. She says okay and okay to repay S/C. S/C will help."

[57]

"The first relevant principle of law is that pre-contractual conduct is only admissible on questions of construction if the contract is ambiguous and if the pre-contractual conduct casts light on the genesis of the contract, its objective aim, or the meaning of any descriptive term: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 at 347-352. The second relevant principle is that post-contractual conduct is admissible on the question of whether a contract was formed: Howard Smith & Co Ltd v Varawa [1907] HCA 38; (1907) 5 CLR 68 at 77; Barrier Wharfs Ltd v W. Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647 at 668, 669, 672; B. Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9,147 at 9,149, 9,154-9,156; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9,251 at 9,255. The third relevant principle is that post-contractual conduct is not admissible on the question of what a contact means as distinct from the question of whether it was formed. As explained by Priestley JA (Meagher JA agreeing) in Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 326-330, the status of the relevant High Court authorities is unclear: hence unless it is demonstrated that the later decisions of the Victorian Full Court and Court of Appel against admissibility, Ryan v Textile Clothing & Footwear Union of Australia [1996] VicRp 67; [1996] 2 VR 235 and FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] VicRp 76; [1993] 2 VR 343, are clearly wrong or they are overruled, they should be followed in New South Wales. No attempt was made to demonstrate that they are clearly wrong. The fourth relevant principle is 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 of rectification should be ordered or an estoppel by convention found. No argument of these kinds was advanced in this case."[14]

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Judgment (89 paragraphs)

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Cases Cited (6)