Oliveri Legal Pty Ltd v Cassegrain Tea Tree Oil Pty Ltd

Introduction

1. The proceedings commenced with the filing of a summons on 13 May 2021. A statement of claim was filed on 3 June 2021. The current claim is described in an amended statement of claim filed on 3 June 2022. There is a defence filed on 15 July 2022 and an amended reply filed on 7 August 2023.
2. In essence the claim is for unpaid legal fees incurred by a Mr Claude Cassegrain (now bankrupt) and allegedly guaranteed by the defendant (generally referred to as CaTTO). I will henceforth refer to Mr Claude Cassegrain as Mr Cassegrain. The guarantee is said to arise from a Guarantee and Indemnity Agreement dated 19 December 2008 (the Agreement). The validity and enforceability of the Agreement is the core issue in the case. It was signed by Mr Cassegrain on his own behalf and purportedly on behalf of the defendant.
3. The defence says, "Claude Cassegrain did not ostensibly sign the agreement in any capacity as a director and/or as a secretary of CaTTO." The first of the agreed list of issues expresses the matter in the following way: "Is CaTTO bound to the terms of the Guarantee and Indemnity Agreement ("G & I") and the Retainer Agreement? a) have those documents been properly executed? b) did Claude Cassegrain have authority to execute the documents on behalf of CaTTO? c) Is CaTTO otherwise bound under s 129 of the Corporations Act 2001?"
4. The plaintiff's written submissions emphasise the importance of the validity of the Agreement: "2. The relief sought by Oliveri legal is conferred by the Guarantee and Indemnity Agreement, dated 19 December 2008."
5. It must follow that if the Agreement is not enforceable against the defendant, then the action will fail.
6. Besides this primary issue, assuming the Agreement was enforceable, secondary issues that I will address include: 1. the construction of the Agreement, in particular was it both a guarantee and indemnity or just an indemnity? 2. was the claim under the Retainer Agreement (the Retainer) time barred? 3. if otherwise valid, would enforcement of the Retainer be contrary to public policy?
7. Each side filed affidavits ahead of the hearing. Ultimately, both sides did not read all of the filed affidavits, consequently narrowing the scope of the oral evidence to one witness each.
8. Two affidavits (14 September 2022 and 20 February 2023 respectively) of Mr Emanueli Oliveri were read. He was cross-examined. On the defendant's side an affidavit of Mr Graham Lockett (25 November 2022) was read, and he was also cross-examined.
9. The plaintiff tendered parts of one of the affidavits that had been filed by the defendant, but not read, as constituting admissions on the defendant's part. This was the affidavit of Mr Thomas Cassegrain who was at the relevant time, and still is, a director of the defendant.
10. The orders sought by the plaintiff are almost all concerned with property owned by the defendant. Declarations concerning caveats and a mortgage in respect of the properties are sought. Finally, a declaration is requested that the defendant is indebted to the plaintiff in the sum of $1,838,758.76. Interest is also claimed.
11. The sum stated in the last paragraph is made up as follows: 1. the product of a costs assessment of $598,496.75; 2. an amount owing pursuant to a Retainer: $825,000; 3. interest on the $825,000: calculated at $386,674.56; 4. payment for the services of two employees of the plaintiff (Mr Marcus Wicken and Mr Clay Muir) assessed by the trustee in bankruptcy at $239,067; and 5. the total is then reduced by $210,479.55, being monies received by the plaintiff from Mr Cassegrain's bankrupt estate.

Background

1. The plaintiff is a firm of solicitors. Mr Oliveri is the director and managing solicitor of this firm.
2. In 2008 Mr Cassegrain was one of two directors of the defendant. Mr Thomas Cassegrain was the other director. He was then living in France. Mr Cassegrain was also the company's secretary and managing director. Mr Lockett was a director of the defendant between 2014 and 2020.
3. As at 2008, Mr Cassegrain was a practised litigant, having been involved in a number of cases across assorted jurisdictions. Two of his cases were in the NSW Supreme Court (Gerard Cassegrain & Co Pty Ltd v Claude Cassegrain (file No 4647 of 2008) and Dennis Cassegrain & Ors v Gerard Cassegrain & Co Pty Ltd (file No 281625 of 2008)). His then solicitors said that they could no longer act for him because of a conflict of interest. He needed new solicitors.
4. To this end, he approached and spoke to Mr Oliveri on the telephone on 2 December 2008.
5. The defendant was not a party to the Supreme Court litigation.
6. Based on Mr Oliveri's affidavit dated 14 September 2022, which, at least in the early stages, is largely uncontradicted, the chronology went as follows.
7. During the telephone conversation on 2 December 2008, Mr Cassegrain told Mr Oliveri that he had "very little in the way of cash flow and may not be in a position to pay your fees until the end of the matter." He continued: "I have shares in a number of companies and I am a director of some of those companies which are worth up to $20,000,000. I will pay your fees in full at the end of the matter."
8. Not surprisingly Mr Oliveri said it was not the firm's policy to cover disbursements (such as counsel's fees), but he was prepared to otherwise delay collection of the fees until the end of the litigation. At first instance, the two cases did not end until 2011 (Gerard Cassegrain & Co Pty Ltd v Claude Cassegrain [2011] NSWSC 1156) and 2012 (Dennis Cassegrain & Ors v Gerard Cassegrain & Co Pty Ltd [2012] NSWSC 403), respectively.
9. In the same telephone conversation on 2 December 2008, Mr Cassegrain then asked Mr Oliveri to open an account in the name of the defendant. Mr Oliveri queried the request. Mr Cassegrain responded: "I will provide you with Cassegrain Tea Tree Oil Pty Ltd's details today. I am the managing director of Cassegrain Tea Tree Oil Pty Ltd and I want to pay legal costs by my preferred method. Don't worry, you will have additional security for your fees and disbursements to be paid and secured by me and Cassegrain Tea Tree Oil Pty Ltd."
10. This exchange then followed: "Oliveri: Claude, these proceedings could take over a year to be finalised. In the circumstances, Oliveri Legal usually requires that the client provide a Guarantee and Indemnity to secure its costs and disbursements. It will need to come from an entity or person with assets. Cassegrain: I am a director of Cassegrain Tea Tree Oil Pty Ltd. It has assets in land. The company will provide the guarantee and indemnity. Please send it to me and I will have Patakas Lawyers look over it for Cassegrain Tea Tree Oil Pty Ltd."
11. Following the telephone call, Mr Oliveri sent Mr Cassegrain a costs agreement and the Agreement. In short compass, the latter document purports to be an indemnification and guarantee of all legal fees incurred by the plaintiff in acting for Mr Cassegrain, the indemnity and guarantee being provided by both Mr Cassegrain and the defendant.
12. As will be seen below, the construction of the Agreement is awash with controversy and contradiction.
13. Presumably following the telephone conversation, Mr Cassegrain wrote to the plaintiff on 2 December 2008, giving some background to the litigation and attaching some relevant documents. The letter is written under the letterhead of the defendant and ends with: "Claude Cassegrain Managing Director"
14. On 3 December 2008 Mr Cassegrain signed the Costs Agreement and returned it to the plaintiff. The estimate of costs in cl 3.1 is $33,000.
15. I note at this stage that the Agreement does not only relate to the Costs Agreement, rather it purports to guarantee "payment of all legal costs and associated disbursements (including the counsels' fees) in accordance with the payment terms of invoices rendered for these said services."
16. The guarantors are listed as Mr Cassegrain and the defendant. The document was returned to the plaintiff, having been signed on 19 December 2008. It was purportedly executed by Mr Cassegrain on his own behalf and separately on behalf of the defendant. There is nothing to suggest that, as foreshadowed by Mr Cassegrain, the document was ever looked over by Patakas Lawyers or anyone else.
17. The signature boxes also provide for the signatures of witnesses. No witnesses signed the document, giving rise to one of the arguments on the Agreement's validity, raised by the defendant.
18. Further, on 19 December 2008 Mr Cassegrain sent the plaintiff a cheque for $10,000, drawn on the account of the defendant. The cheque was to be deposited in the plaintiff's trust account. The receipt for the cheque indicates that it was provided "for and on behalf of Cassegrain Tea Tree Oil P/L." The money was assigned to "cost and disbursements".
19. In February 2009 Mr Oliveri spoke to Mr Cassegrain expressing concern that the Supreme Court proceedings were more complicated, and costly, than he had envisaged.
20. Mr Cassegrain suggested a retainer agreement to meet Mr Oliveri's concerns. A retainer agreement, dated 27 February 2009, was prepared by Mr Oliveri and signed by Mr Cassegrain, both in his personal capacity and as a director of the defendant. The Retainer provides for an annual payment of $120,000 plus GST for the plaintiff's services in respect of the Supreme Court proceedings.
21. The defendant submitted that the limitation period in respect of the claim under the Retainer had expired before these proceedings were commenced.
22. Continuing with Mr Oliveri's version, for approximately the next two years, Mr Oliveri had the carriage of the Cassegrain litigation. It was time-consuming and included long telephone conferences with Mr Cassegrain and constant updates of briefs to counsel.
23. At the end of 2010 Mr Oliveri employed a Mr Marcus Wicken as a solicitor. Mr Oliveri told Mr Cassegrain that he wished Mr Wicken to take over the Cassegrain file. Mr Cassegrain, subject to some conditions, agreed.
24. In April 2011 Mr Oliveri noticed that some invoices were unpaid. He says he was comforted by reassurances from Mr Cassegrain and by the existence of the Agreement.
25. By September 2011 the unpaid invoices had mounted, and no monies had been received under the Retainer. Mr Oliveri spoke to Mr Cassegrain and asked him to direct how incoming fees should be distributed between unpaid invoices and the Retainer. This generated a handwritten note from Mr Cassegrain, on the defendant's letterhead, dated 1 September 2011, in which some directions were given in relation to two cheques, but no mention is made of the Retainer.
26. In January 2013 Mr Muir was employed by Mr Oliveri to take over from Mr Wicken.
27. In August 2014 Mr Oliveri spoke to Mr Cassegrain. He told him that the hourly rate for Mr Muir's services was to be increased. Mr Oliveri followed up by sending Mr Cassegrain a Costs Agreement and Standard Costs Disclosure on 22 August 2014.
28. The new Costs Agreement was not returned by Mr Cassegrain. On 15 September 2015 Mr Cassegrain entered bankruptcy.
29. I have referred above to the history so far given as being Mr Oliveri's version. As already noted, Mr Cassegrain did not provide any evidence. While I permitted cross-examination of Mr Oliveri on the reliability of his recollection, I did not allow a contrary version to be put to him. Notwithstanding the extraordinary fact that Mr Oliveri made no file notes of any conversations he had with Mr Cassegrain, I have no no option but to accept Mr Oliveri's version of their interactions, at least to the extent of their general effect.
30. Mr Oliveri has been a solicitor for a long time and must have been aware of the importance of taking a file note of conversations. Obviously there may have been conversations which were no more than friendly banter, but in this case the conversations described were all of significance.
31. Mr Oliveri said that a conversation on 28 January 2016 was effectively informal; confirming what he already knew. But the conversation includes, on his version, an explicit admission that his firm was owed a good deal of money, at that stage estimated to be about $1.4m. I simply cannot understand how he found it appropriate to not make a written record of this conversation, or even to later confirm the conversation in correspondence.
32. Another matter I found most surprising was the estimation of $33,000 in the estimate for the Costs Agreement. I appreciate that Mr Oliveri was anxious to have a costs agreement in place and had no real idea of the complexity of the litigation. But he did know that it might last for about a year and that senior and junior counsel would be involved. Even in 2008, $33,000 seems too low.
33. Mr Oliveri said the figure had no sound foundation. Perhaps more importantly, within weeks he realised that $33,000 was nowhere near enough, yet he made no attempt to amend the estimate.
34. Mr Oliveri agreed that none of the work that he had done had been on behalf of the defendant.
35. Mr Oliveri said that he continued to speak to Mr Cassegrain after he had become a bankrupt because he felt that he remained the director of the family business.
36. Mr Thomas Cassegrain is the son of Mr Cassegrain. Mr Thomas Cassegrain became a director of the defendant on 13 July 2005 and has maintained that position to the present. His affidavit is dated 2 December 2022. I have already mentioned that it was not read by the defendant, but the plaintiff relied on parts of the affidavit as admissions.
37. The parts relied upon included the following: 1. it was "CaTTO's common practice to loan money to shareholders and the children from time to time"; 2. monies loaned to Mr Cassegrain were paid directly to third parties, like the plaintiff, or into Mrs Felicity Cassegrain's bank account; 3. when Mr Cassegrain became bankrupt the defendant submitted a proof of debt in the amount of $1,705,876.14; 4. on 28 January 2016 Mr Thomas Cassegrain and Mr Lockett had a meeting with Mr Oliveri in the latter's office in East Sydney. I will return below to Mr Thomas Cassegrain's version of the conversation that took place at this meeting; and 5. from 30 June 2016, and continuing to the present time, the defendant's financial statements have borne a note stating: "A Caveat has been launched on the Company's land title to secure a debt incurred by a previous Managing Director $1,331,675. The current Directors have not admitted liability."
38. In 2014 Mr Lockett was asked to be a director of the defendant, in part to introduce a regime of "governance propriety" which was apparently lacking in the company. I have the clear impression that prior to 2014, it was a company dominated by Mr Cassegrain with little attention paid to formality.
39. Mr Lockett was a director of the defendant between 24 October 2014 and 17 June 2020. He was the company secretary between 19 November 2014 and, again, 17 June 2020. He had a previously long association with Mr Cassegrain, although there was not much interaction in the years up to 2013.
40. Mr Cassegrain was also a director alongside Mr Lockett, but Mr Cassegrain dropped out due to his bankruptcy in 2015. Other directors at that time were Mr Thomas Cassegrain and Mr Philip Henshaw.
41. Mr Lockett states that he was aware that Mr Cassegrain and his wife (Mrs Felicity Cassegrain) had loan accounts with the defendant. Mr Lockett goes on to say that he "did not know what was the purpose of the loan funds…" and added in his oral evidence: "Well, as shareholders they are entitled to a loan account with the company, yes."
42. Mr Lockett did not enquire into the background of the loans, taking the view that Mr Cassegrain was entitled to use the funds as he wished, noting that he was subject to an obligation to repay the funds.
43. Mr Lockett states that he first became aware of the guarantee document when it was emailed to him by Mr Muir on 11 January 2016. He says he then tried to find minutes of a directors' meeting in which there was approval for executing the guarantee or giving Mr Cassegrain authority to enter into the Agreement. Mr Lockett could not find any such authority and, on 18 January 2016, confirmed this fact by email to Mr Muir.
44. Following a meeting on 28 January 2016, to which I will return below, the plaintiff, on 8 February 2016, lodged caveats in respect of three properties owned by the defendant.
45. In late April 2021 Mr Oliveri had a conversation with Mr Cassegrain, with Mr Thomas Cassegrain apparently listening-in. Mr Cassegrain said: "CATTO is not proposing to pay Oliveri's legal debt. CATTO will challenge the validity of the guarantee and indemnity and Retainer on the basis I did not understand the documents."
46. Perhaps with the tacit approval of Mr Thomas Cassegrain, Mr Cassegrain seems to have changed tack, alleging that he had not understood the documents. If Mr Oliveri is correct in his recollection of the events and of the words and actions of Mr Cassegrain, the new allegation would seem somewhat bold.

The meeting on 28 January 2016

1. The meeting is important because the plaintiff says that the words spoken by Mr Thomas Cassegrain were a clear admission of the defendant's acceptance that it was a party to, and bound by, the Agreement.
2. Although Mr Thomas Cassegrain's version is different to that of Mr Oliveri, it is also different to that of Mr Lockett. The plaintiff took comfort from the difference, more to suggest Mr Lockett's version was wrong than to adopt that of Mr Thomas Cassegrain.
3. The principal parts of the three versions are as follows: 1. according to Mr Oliveri: "Thomas: CATTO acknowledges Oliveri Legal's debt through the Guarantee and Indemnity and the Retainer Agreement. However, CATTO's request is that Oliveri Legal not proceed against CATTO at this stage to recover the debt. CATTO will pay the debt to Oliveri Legal if Oliveri Legal is prepared to wait until after the Trustee determines how much is recovered from Claude's shares in Expressway Spares and the shares of CATTO. Oliveri: on that basis, I agree to not proceed to recover the debt now. However, Oliveri Legal will request that CATTO agree to a caveat being lodged over all CATTO's property, relying on the guarantee and indemnity and Retainer Agreement. Thomas: CATTO agrees to the caveat." 1. according to Mr Thomas Cassegrain, Mr Lockett said: "CaTTO requests that Oliveri not pursue CaTTO for any alleged debt until after the trustee has dealt with Claude's bankruptcy and you have received Dividends from his estate. Claude has a significant shareholding in Expressway Spares and your debt may yet be fully satisfied by the trustee." 1. according to Mr Lockett, he said: "The signature of Claude Cassegrain on the draft guarantee on behalf of CaTTO does not constitute a guarantee from CaTTO. CaTTO's constitution requires the signature of two directors not one, and our policy also requires an associated resolution of the board of directors of CaTTO to provide such a guarantee… I will continue to investigate the records of CaTTO to see whether there has been any resolution authorising Claude sign as a single director… I am not aware of any consulting work Oliveri has undertaken on behalf of CaTTO, and if that is the case, there could be no justification for CaTTO providing any guarantee to Oliveri…. The alleged guarantee by CaTTO is invalid until such time as there is a second signature of a CaTTO director on the document."
4. Mr Lockett was stridently cross-examined about the conversation, the suggestion being that his asserted words had never been spoken and that Mr Oliveri's version was correct.
5. Mr Oliveri's version is confirmatory of the plaintiff's assertion that the company was bound by the guarantee. It could also be seen as an explicit admission. Mr Lockett's version is consistent with the company never having authorised entry into the Agreement.
6. As far as the respective observations, including demeanour, of Mr Oliveri and Mr Lockett are concerned, I cannot say that either person came across as more or less honest than the other. However, I have come to the view that Mr Lockett's version should be preferred. He impressed me as a person who had been given the specific task of introducing formality and governance into the workings of the company and I am inclined to believe that he would not have made any admissions without good cause.
7. Mr Lockett said that he and Mr Thomas Cassegrain had entered the meeting with a position to which they stuck, as confirmed in the letter of 9 February 2016.
8. The minutes of the directors meeting held on 20 January 2016 are consistent with his version as expressed at the meeting some eight days later. Not only do the minutes indicate that the Agreement is disputed but state that searches had "been unable to find any mention or approval for the latter in CaTTO Board Minutes."
9. In addition, the letter Mr Lockett wrote to the plaintiff, on 9 February 2016, is consistent with his expressed attitude. The letter states: "1. We do not admit that your firm is owed legal fees of $1.5 million 2. We do not admit that we guaranteed payment of legal fees by Claude Cassegrain or indemnified Oliveri Legal Pty Ltd in relation to its fees; 3. We do not admit that the document headed Guarantee and Indemnity Agreement dated 19th of December 2008 is valid or enforceable; and 4. We do not admit that you have a caveatable interest in the company property."
10. I think the above quoted passage is a clear statement of the defendant's position. It was suggested to Mr Lockett that his use of the words "we do not admit" was deliberately less than a denial and, essentially, an acknowledgement that the defendant's position remained arguable. I reject this suggestion. I doubt Mr Lockett had Bullen & Leake & Jacob's Precedents of Pleadings (18th ed) (2016) to hand when drafting the letter.
11. As to Mr Oliveri's version, like that of Mr Lockett, it is not based on any file note or contemporaneous memorandum. That Mr Oliveri chose not to make a file note, then or ever, must impact significantly upon the reliability of his memory. He was a solicitor yet took a distinctly casual approach to aspects of his work, including making file notes (if only of important meetings), recording times for his work and estimating, or at least monitoring estimates, of the value of his firm's services.
12. I do not know the nature of the plaintiff's business but if Mr Oliveri was even moderately busy, his recording of his working details was lamentable and may be regarded as contributing to the plaintiff's loss of the case.
13. Returning to Mr Lockett's evidence, and consistent with his approach to the dispute, he wrote to the plaintiff on 19 July 2016 disputing the validity of the invoices that had been forwarded to the company. He stated that those invoices should "have been addressed to Claude Cassegrain or his Trustee in Bankruptcy." In the same letter he repeated the defendant's position as stated in the earlier letter of 9 February 2016.
14. Another indication of Mr Lockett's attitude towards the matter was calling for an explanation from Mr Cassegrain. This produced a somewhat self-serving email from Mr Cassegrain on 13 January 2016. Mr Cassegrain wrote: "I had never been cognisant that CaTTO and I personally had an outstanding guarantee until I was given the copy with my signature. If I had, I defiantly (sic) would have made the Bank, you three and my Trustee aware. I am in shock and do not know what to do or say."
15. While I doubt that Mr Cassegrain was in shock, his statement that he was unaware that there was an outstanding guarantee by CaTTO is at least consistent with the defendant's case.
16. Mr Lockett was asked about entries in the defendant's accounts, in particular the loan account held by Mr Cassegrain. The accounts for 2014/15 show $210,000 in legal fees having been paid to the plaintiff.
17. Mr Lockett was questioned about the lodging of caveats. He accepted that words to the effect that there was no objection to the caveats had been spoken on 28 January 2016, but in re-examination he explained his reasons for that attitude, derived from previous experiences that he had encountered. I do not think any acquiescence in the lodging of caveats is indicative of any acceptance of the defendant being a party to the Agreement.

Resolving the issues

1. The first issue is whether or not CaTTO is bound to the Agreement. If this issue is found against the plaintiff, then there must be a verdict for the defendant. If the issue is found in favour of the plaintiff, then the remaining issues are essentially a series of cascading defences attacking various parts of the plaintiff's claim.

Authority to bind the defendant

1. CaTTO was described as a family company. As previously stated, in 2008 the directors were Mr Cassegrain and Mr Thomas Cassegrain. The shareholders were Mr Cassegrain and his wife, Mrs Felicity Cassegrain.
2. A corporation is a separate entity from its shareholders. For this reason, the Corporations Act 2001 (Cth) dictates a number of provisions designed to maintain the distinction and ensure the company is acting as if it was a separate person. This even applies where a single person is both the sole director and sole shareholder of the company.
3. In 2008, the Corporations Act, included the following relevant provisions: 124 Legal capacity and powers of a company (1) A company has the legal capacity and powers of an individual both in and outside this jurisdiction. A company also has all the powers of a body corporate, including the power to: (a) issue and cancel shares in the company; (b) issue debentures (despite any rule of law or equity to the contrary, this power includes a power to issue debentures that are irredeemable, redeemable only if a contingency, however remote, occurs, or redeemable only at the end of a period, however long); (c) grant options over unissued shares in the company; (d) distribute any of the company's property among the members, in kind or otherwise; (e) grant a security interest in uncalled capital; (f) grant a circulating security interest over the company's property; (g) arrange for the company to be registered or recognised as a body corporate in any place outside this jurisdiction; (h) do anything that it is authorised to do by any other law (including a law of a foreign country). A company limited by guarantee does not have the power to issue shares. Note 1: For a company's power to issue bonus, partly - paid, preference and redeemable preference shares, see section 254A. Note 2: A CCIV's power to issue shares is affected by sections 1230 and 1230B. (2) A company's legal capacity to do something is not affected by the fact that the company's interests are not, or would not be, served by doing it. (3) For the avoidance of doubt, this section does not: (a) authorise a company to do an act that is prohibited by a law of a State or Territory; or (b) give a company a right that a law of a State or Territory denies to the company. (4) Subsection (1) does not prevent a mutual entity that is a company limited by guarantee issuing MCIs. 125 Constitution may limit powers and set out objects (1) If a company has a constitution, it may contain an express restriction on, or a prohibition of, the company's exercise of any of its powers. The exercise of a power by the company is not invalid merely because it is contrary to an express restriction or prohibition in the company's constitution. (2) If a company has a constitution, it may set out the company's objects. An act of the company is not invalid merely because it is contrary to or beyond any objects in the company's constitution. 126 Agent exercising a company's power to make contracts and execute documents (including deeds) (1) A company's power to make, vary, ratify or discharge a contract, or execute a document (including a deed), may be exercised by an individual acting with the company's express or implied authority and on behalf of the company. The power may be exercised without using a common seal. (2) This section does not affect the operation of a law that requires a particular procedure to be complied with in relation to the contract. 127 Execution of documents (including deeds) by the company itself Executing a document without a common seal (1) A company may execute a document without using a common seal if the document is signed by: (a) 2 directors of the company; or (b) a director and a company secretary of the company; or (c) for a proprietary company that has a sole director - that director, if: (i) the director is also the sole company secretary; or (ii) the company does not have a company secretary. Note 1: If a company executes a document in this way, people will be able to rely on the assumptions in subsection 129(5) for dealings in relation to the company. Note 2: The requirement to sign may be satisfied electronically: see Division 1 of Part 1.2AA (about technology neutral signing). Note 3: Because a CCIV has no natural person directors and no company secretary, it executes documents through the directors and company secretary of its corporate director: see section 1223. Executing a document with a common seal (2) A company with a common seal may execute a document if the seal is fixed to the document and the fixing of the seal is witnessed by: (a) 2 directors of the company; or (b) a director and a company secretary of the company; or (c) for a proprietary company that has a sole director - that director, if: (i) the director is also the sole company secretary; or (ii) the company does not have a company secretary. Note 1: If a company executes a document in this way, people will be able to rely on the assumptions in subsection 129(6) for dealings in relation to the company. Note 2: Because a CCIV has no natural person directors and no company secretary, it executes documents through the directors and company secretary of its corporate director: see section 1223. (2A) For the purposes of subsection (2), the fixing of a common seal to a document is taken to have been witnessed by a person mentioned in paragraph (a), (b) or (c) of that subsection if: (a) the person observes, by electronic means or by being physically present, the fixing of the seal; and (b) the person signs the document; and (c) a method is used to indicate that the person observed the fixing of the seal to the document. Note: For provisions about technology neutral signing, see Division 1 of Part 1.2AA. Executing a document as a deed (3) A company may execute a document as a deed if the document is expressed to be executed as a deed and is executed in accordance with subsection (1) or (2). Note: For provisions about technology neutral signing, see Division 1 of Part 1.2AA. (3A) A company may execute a document as a deed in accordance with subsection (1): (a) without that execution being witnessed; and (b) regardless of whether the document signed by the director or company secretary of the company, as applicable, is in physical form or electronic form. Note: An effect of paragraph (b) of this subsection is that, despite any common law rule, the document may be executed without the use of paper, parchment or vellum. (3B) Delivery is not necessary if a company executes a document as a deed in accordance with subsection (1) or (2). Other ways of executing documents not limited (4) This section does not limit the ways in which a company may execute a document (including a deed). Note: For example, a company's constitution may set out other ways in which a document (including a deed) may be executed. 128 Entitlement to make assumptions (1) A person is entitled to make the assumptions in section 129 in relation to dealings with a company. The company is not entitled to assert in proceedings in relation to the dealings that any of the assumptions are incorrect. (2) A person is entitled to make the assumptions in section 129 in relation to dealings with another person who has, or purports to have, directly or indirectly acquired title to property from a company. The company and the other person are not entitled to assert in proceedings in relation to the dealings that any of the assumptions are incorrect. (3) The assumptions may be made even if an officer or agent of the company acts fraudulently, or forges a document, in connection with the dealings. (4) A person is not entitled to make an assumption in section 129 if at the time of the dealings they knew or suspected that the assumption was incorrect. 129 Assumptions that can be made under section 128 Constitution and replaceable rules complied with (1) A person may assume that the company's constitution (if any), and any provisions of this Act that apply to the company as replaceable rules, have been complied with. Director or company secretary (2) A person may assume that anyone who appears, from information provided by the company that is available to the public from ASIC, to be a director or a company secretary of the company: (a) has been duly appointed; and (b) has authority to exercise the powers and perform the duties customarily exercised or performed by a director or company secretary of a similar company. Officer or agent (3) A person may assume that anyone who is held out by the company to be an officer or agent of the company: (a) has been duly appointed; and (b) has authority to exercise the powers and perform the duties customarily exercised or performed by that kind of officer or agent of a similar company. Proper performance of duties (4) A person may assume that the officers and agents of the company properly perform their duties to the company. Document duly executed without seal (5) A person may assume that a document has been duly executed by the company if the document appears to have been signed in accordance with subsection 127(1). For the purposes of making the assumption, a person may also assume that, if any person who signs the document states next to their signature that: (a) they are a director of the company - that is the case; or (b) they are the company secretary of the company - that is the case; or (c) they are the sole director of the company and that the company does not have a company secretary - that is the case; or (d) they are the sole director and sole company secretary of the company - that is the case. Note: For provisions about technology neutral signing, see Division 1 of Part 1.2AA. Document duly executed with seal (6) A person may assume that a document has been duly executed by the company if: (a) the company's common seal appears to have been fixed to the document in accordance with subsection 127(2); and (b) the fixing of the common seal appears to have been witnessed in accordance with that subsection and subsection 127(2A). For the purposes of making the assumption, a person may also assume that, if any person who witnesses the fixing of the common seal states next to their signature that: (c) they are a director of the company - that is the case; or (d) they are the company secretary of the company - that is the case; or (e) they are the sole director of the company and that the company does not have a company secretary - that is the case; or (f) they are the sole director and sole company secretary of the company - that is the case. Note: For provisions about technology neutral signing, see Division 1 of Part 1.2AA. Officer or agent with authority to warrant that document is genuine or true copy (7) A person may assume that an officer or agent of the company who has authority to issue a document or a certified copy of a document on its behalf also has authority to warrant that the document is genuine or is a true copy. (8) Without limiting the generality of this section, the assumptions that may be made under this section apply for the purposes of this section.
4. The plaintiff's case is that CaTTO is bound to the Agreement because Mr Cassegrain legitimately executed the document on behalf of the company. Section 127(1) says a document may be executed without a common seal; that is the case here. But the subsection continues that if there is more than one director of the company, it must be signed by two directors or a director and a company secretary. In other words, there must be more than one person executing the document. That did not occur here.
5. The plaintiff's answer to this obstacle is as follows: 1. Mr Cassegrain was the managing director of CaTTO; 2. as managing director, Mr Cassegrain had the authority to bind the company. The articles of association of the company (originally called Endwise Pty Ltd) are the source of this authority. Under art 105, the business of the company is vested in the directors. As to the managing director, art 95 says: "The Directors may from time to time in trust to and confer upon a managing director for the time being such of the powers exerciseable under these presents by the Directors as they may think fit and may confer such powers for such time and to be exercised for such objects and purposes and upon such terms and conditions and with such restrictions as they think expedient and they may confer such powers either collaterally with or to the exclusion of and in substitution for all or any powers of the Directors and may from time to time revoke withdraw altar or vary all or any of such powers". 1. under art 106(l) the directors have the power: "to enter into and execute all kinds of guarantees bonds and indemnities for securing the payment or performance of any debts or obligations whether past present or future by any person whomsoever (including any Director or shareholder or any person dealing with the Company) whether the Company has or has not any interest in or derives or does not derive any benefit from the payment or performance of the debt or obligation in respect of which such guarantee bond or indemnity is given and whether they relate in any way to the business carried on by the company or not and notwithstanding that at the time of the entering into or execution of any such guarantee bond or indemnity a fight usury relationship may exist between the Company and the person in respect of whose debt or obligation such guarantee bond or indemnity is given." 1. the next step, based on art 95, is derived from the decision of the High Court in Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72; [1975] HCA 45, at 79: "Bruce McWilliam junior being the managing director upon whom under the articles all powers of management could be conferred had, undoubtedly in our opinion, ostensible authority to make the contract."
6. When Mr Oliveri spoke to Mr Cassegrain on 2 December 2008, he had no independent knowledge of CaTTO. Mr Cassegrain told him that he was a director of the company and that the company would provide the guarantee and indemnity. Mr Oliveri made no enquiries, such as a company search, and did not ask Mr Cassegrain for any proof of his authority to bind the company. In other words, he simply took the spoken word of Mr Cassegrain as sufficient. But how could it be sufficient if it permits a person to bind the company by simply saying that he is a director of that company?
7. The opportunity to verify Mr Cassegrain's authority was available to Mr Oliveri. Mr Oliveri could have: 1. asked Mr Cassegrain about the company, how many directors it had, whether there was authority to bind the company; or 2. conducted a company search, which would have told him that there was more than one director; or 3. required the execution of the Agreement to have been made pursuant to s 127 of the Corporations Act.
8. Instead, Mr Oliveri: 1. took none of the above steps; and 2. he accepted the signing of the Agreement by Mr Cassegrain without a witness, notwithstanding the provision for a witness and the instructions in the document, which stated: "Signing the personal Guarantee and Indemnity - All Directors, Sole traders, Business partners and any other Guarantors All Directors, Sole traders Business partners and any other Guarantors complete and sign below as Guarantors in the presence of independent Witnesses (not Spouses or Family members), Spouses of all Directors, Sole Traders and Business Partners are requested to also sign below as guarantors in the presence of independent Witnesses."
9. Mr Oliveri simply accepted the signature (and word) of Mr Cassegrain.
10. The plaintiff submitted that it had the protection of s 129(3) of the Corporations Act to make the assumptions that Mr Cassegrain had been duly appointed and had the authority to enter into the Agreement.
11. I do not think the plaintiff was entitled to the assumptions stipulated by s 129(3), for two reasons: 1. Mr Cassegrain had never been held out by the company to be an officer or agent of the company. The only holding out that had occurred was by Mr Cassegrain himself, either orally or through letters he wrote on the company letterhead. Surely there must be something more than self-promoting and self-serving assertions; and 2. section 128 of the Corporations Act says the assumptions are available "in relation to dealings with a company". But there had been no dealings with the company. The dealings were with Mr Cassegrain for his own purposes, namely the pursuit of his personal litigation. As already mentioned, not a single legal service was provided to the defendant. The defendant was unknown to the plaintiff before Mr Cassegrain made contact in late 2008.
12. In relation to dealings with the company, the plaintiff referred me to Soyfer & Anor v Earlmaze [2000] NSWSC 1068, submitting that because the articles of association allowed CaTTO to enter into a guarantee agreement, it must follow that the entry into the Agreement was a dealing of the company pursuant to s 128. I disagree. CaTTO is a company running a tea tree plantation; its articles of association give it powers to do many things, but that does not mean that the plaintiff was dealing with it in respect of the Agreement. The plaintiff was not dealing with the company at all, he was simply asking the company to guarantee his dealings with Mr Cassegrain.
13. At this stage I think I should refer to the plaintiff's submission that a "Jones v Dunkel" inference (derived from Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8) should be drawn from the defendant not calling Mr Cassegrain and Mr Thomas Cassegrain as witnesses.
14. The plaintiff submitted that the "failure by Claude and Thomas to adduce evidence on this point is a reason for increasing the strength of the inference to be drawn from the evidence that Claude in fact had implied actual authority or ostensible authority to sign the Guarantee and Indemnity and the Retainer Agreement".
15. I was referred by the plaintiff to other "Cassegrain" litigation said to highlight the point being made in this case. In Gerard Cassegrain and Co Pty Ltd v Cassegrain (2013) 87 NSWLR 284; [2013] NSWCA 453, at 294, Beazley P (as her Excellency then was) said: "In the present case, I have come to a different view as to the letter of 27 February 1997 from that of the trial judge. I consider that it was a direction by Claude on behalf of himself and Felicity as transferees to Mr McCarron to register the transfer. Notwithstanding that the evidence of agency to which I have referred was not determinative, I am of the opinion that there was sufficient evidence from which an inference may be drawn that Claude was Felicity's agent for the purposes of directing Mr McCarron to register the first transfer. Felicity took the risk that by not giving evidence, or by not calling the two persons, namely, Claude or Mr McCarron, who could have refuted agency, that this inference would be drawn. This does not place any onus on Felicity, either to call or to rebut evidence or to prove an absence of agency. It is only to say that there was evidence from which the inference could be drawn and I consider that the inference ought to be drawn that in respect of the first transfer, Claude acted as Felicity's agent in giving instructions to Mr McCarron. To find otherwise would be to find that Mr McCarron acted without her authority, a matter that was never alleged."
16. The difference here is that there is a clear allegation that Mr Cassegrain acted without the defendant's authority and secondly, this decision was, in part, overturned in the High Court, although not specifically in relation to the above quoted passage (Cassegrain v Gerard Cassegrain & Co Pty Ltd [2015] HCA 2). However, the High Court observed at [42]: "Without more, the conclusion that Claude had taken the steps necessary to procure registration of the transfer from the company to Felicity and him as joint tenants did not show that his fraud was within the scope of any authority she had, or appeared to have, given to him. Without more, it did not show that knowledge of his fraud was to be imputed (in the sense of 'brought home') to her. And in this case, there was nothing more identified, whether in argument or in the reasons of the Court of Appeal."
17. I agree that an inference can be drawn, but it should not go further than a conclusion that the evidence of Messrs Cassegrain would not have assisted the defendant's case. While I could perhaps go a little further and draw an inference that Mr Cassegrain had, by his wiles, manipulated a seemingly gullible Mr Oliveri, I do not think I can bolster the inference to the extent that it suggested Mr Cassegrain was acting with the authority of the defendant, actual, implied or ostensible. The plaintiff was effectively asking the Court to use the inference to shift the onus of proof, so as to place the obligation to disprove the authority on the defendant. I do not think an inference going that far is open to be drawn.
18. The plaintiff also submitted that Mr Cassegrain had ostensible authority, primarily derived from his position as managing director, to enter into the Agreement on behalf of the defendant. The plaintiff referred me to the decision of Hammerschlag J (as his Honour then was) in Junker v Hepburn [2010] NSWSC 88 (Junker), at 47: "Ostensible authority often coincides with, but sometimes exceeds, actual authority. For instance, when a board appoints a managing director, they may expressly limit his authority, but his ostensible authority will include all the usual authority of a managing director. The company is bound by his ostensible authority in his dealings with those who do not know of the limitation: Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549 at 583 per Lord Denning M.R."
19. However, if one goes back to the previous paragraph in Junker, it can be seen that the topic of ostensible authority began with the words: "Apparent or ostensible authority is conferred where a principal represents that another has authority."
20. There has been no representation here by the principal. As already stated, there have only been the representations by Mr Cassegrain about himself. To counter this argument the plaintiff took me to Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549 itself, at page 583: "I need not consider at length the law on the authority of an agent, actual, apparent, or ostensible. That has been done in the judgments of this court in Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd. It is there shown that actual authority may be expressed or implied. It is express when it is given by express words, such as when a board of directors pass a resolution which authorises two of their number to sign cheques. It is implied when it is inferred from the conduct of the parties and the circumstances of the case, such as when the board of directors appoint one of their number to be managing director. They thereby impliedly authorise him to do all such things as fall within the usual scope of that office. Actual authority, express or implied, is binding as between the company and agent, and also as between the company and others, whether they are within the company or outside it. Ostensible or apparent authority is the authority of an agent as it appears to others. It often coincides with actual authority. Thus, when the board appoint one of their number to be managing director, they invest him with not only implied authority, but also with ostensible authority to do all such things as fall within the usual scope of that office. Other people who see him acting as managing director are entitled to assume that he has the usual authority of a managing director. But sometimes ostensible authority exceeds actual authority."
21. The distinction in the current case, in my view, is that in Hely-Hutchinson there was a history of the managing director entering contracts without the knowledge of the company, but later the company acquiescing in the managing director's actions. Mr Cassegrain may well have entered guarantees previously, but there is no evidence to that effect and certainly no evidence of the company approving such conduct.
22. This is illustrated in Birjandi v Todaytech Distribution Pty Ltd [2005] WASCA 44, where, referring to Hely-Hutchinson, the WA Court of Appeal stated, at [34]: "A managing director has implied actual authority to make day-to-day contracts in the course of the company's normal trading activities: Biggerstaff v Rowatt's Wharf Ltd [1896] 2 Ch 93; Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549."
23. Giving guarantees was not part of the defendants "normal trading activities".
24. The plaintiff also referred me to the decision of Diplock LJ in Freeman and Lockyer v Buckhurst Park Properties [1964] 2 QB 480 at 503: "The representation which creates 'apparent' authority may take a variety of forms of which the commonest is representation by conduct, that is, by permitting the agent to act in some way in the conduct of the principal's business with other persons. By so doing the principal represents to anyone who becomes aware that the agent is so acting that the agent has authority to enter on behalf of the principal into contracts with other persons of the kind which an agent so acting in the conduct of his principal's business has usually 'actual' authority to enter into."
25. The distinction here is twofold: 1. there is no evidence of the defendant permitting Mr Cassegrain "to act in some way in the conduct of the principal's business with other persons"; and 2. Mr Cassegrain was not "acting in the conduct of his principal's business"; to the contrary, he was acting entirely in the conduct of his own business, namely the pursuit of his personal litigation.
26. I emphasise here that I find it difficult to conclude that any authority, of any type, existed based entirely on only Mr Cassegrain making representations (whether orally or in writing) only for his own benefit and without any independently corroborating oral or written statement. Even the cheque for $10,000, sent on 19 December 2018, is signed by Mr Cassegrain.
27. It is to be remembered that the defendant was a company with another director and another shareholder. Mr Cassegrain did not have the authority, without more, which rest in a single director, single shareholder entity. Mr Oliveri dealt with Mr Cassegrain effectively as if he was dealing with a "one man company".
28. The result is that I do not think the defendant was a legally bound party to the Agreement. Accordingly, the action must fail.

Is the Agreement a guarantee and indemnity or just an indemnity?

1. There is another reason why I think the action cannot succeed. Assuming the defendant had been validly made a party to the Agreement, the question arises as to what precisely the Agreement stipulates.
2. The Agreement was regarded by Mr Oliveri as his standard form document and was presumably drafted "in-house". A clearer and more precise document would have been substantially beneficial to the plaintiff, who will lose the case in part because of the lack of clarity, equivocality, and failure to include important elements in the document. For example, a requirement that it be signed pursuant to s 127 of the Corporations Act would have avoided a great deal of argument. Perhaps excluding the Retainer, I have no reason to believe that the legal work claimed by the plaintiff was not performed. It is not entitled to any type of quantum merit claim, leaving its failure in this case substantially at the feet of the practice's seemingly casual methods of operation.
3. The plaintiff's construction of the agreement is that it contains both an indemnity and a guarantee. The defendant submitted that it could not be construed to extend past an indemnity.
4. The plaintiff submitted that: "The indemnity appears in the first five lines on page 1 of the document and the guarantee appears in the first six lines on page 2 of the document".
5. With respect, the plaintiff's allotment of the indemnity and guarantee to the separate pages of the document has the appearance of a retrospective justification of what is a very poorly drafted agreement.
6. The defendant pointed out that, on the face of the document, it contained the absurdity of Mr Cassegrain being his own guarantor and also having a right to claim any fees he paid to the plaintiff from the defendant, arising from the joint and several liability. As submitted by the defendant: "We have a situation here because it's joint and several liability that bizarrely, under this agreement, if payment was made by Claude Cassegrain, he could seek contribution for the payment that he has made under this document as against CaTTO because he's jointly and severally liable, so he has a right of contribution against a co-indemnifier. And if it was a guarantee, of course, that would be nonsense. The only right would be right of subrogation in the hands of CaTTO against Mr Cassegrain."
7. The plaintiff submitted that the distinction between the indemnity and the guarantee was to be seen in the words "jointly and severally" on the first page (the indemnity) compared to "jointly or severally" on the second page (the guarantee).
8. I suspect the change from "and" to "or" was not deliberate and probably a typographical error. An example of how easily such an error might be made is to be found in the plaintiff's written submissions, which state, quoting from the second page, at [43]: "On a proper construction of the operative clauses at the top of page 2, Oliveri may recover any amount outstanding relating to those legal matters for which Oliveri has been retained, from the guarantors jointly and severally…."" (emphasis added).
9. But more importantly, I do not accept that the second page of the document provides for a separate undertaking from the first page. I think the Agreement purports, by the whole of its terms, to provide for an indemnity and a guarantee with a signing provision (on page 2) applicable to both purposes. Unfortunately, its inbuilt inconsistencies, such as the guarantee by Mr Cassegrain of himself and the joint and several liability provisions, leave the document in such a state that it can only exist as an indemnity.
10. Firstly, if the pages were to be treated separately, then the document makes no provision for the execution of the indemnity. Secondly, the second page contains the words "In particular, we understand and accept that this Guarantee and Indemnity are irrevocable…." How then can it be asserted that the indemnity forms no part of the second page?
11. Further, the box on the page clearly refers to the execution of both a guarantee and an indemnity. Interestingly, the word "personal" in the box might be seen as suggesting the provision for execution does not relate to a corporate entity. I do not, however, place much weight on this point, it is simply another anomaly in a very odd document.
12. My interpretation of the Agreement as being enforceable as no more than an indemnity seems to have been the approach taken by Parker J, at least in argument, when the matter came before his Honour on 3 June 2022 for an application to amend the statement of claim. Ultimately, his Honour gave leave for the amendment but, in informal reasons, stated: "The claim has been put in a very narrow way and Mr Wilson has made it clear and I would propose to make it clear by way of formal annotation on the court record that he is not relying on the indemnity aspect of the agreement except for a single invoice and he is otherwise saying that, as a matter of construction, the agreement casts an obligation of guarantee on the company which doesn't run until the liability, principal liability is determined and doesn't depend upon the issue of invoices or any other step being taken before the liability is determined."
13. The single invoice referred to by Parker J is dated 22 February 2016 and was rendered by the plaintiff for the sum of $750,000 plus GST. This figure arises from the Retainer dated 27 February 2009.
14. The invoice claims retainer fees from 1 July 2009 to 30 September 2015.
15. The plaintiff conceded that if the Agreement is valid only as an indemnity, then its terms extend only to the recovery of any amount owing under the Retainer (the claim for $850,000) and not for the balance of the claim as described above at [11].
16. The defendant, assuming the existence of only an indemnity, then submitted that: 1. any recovery of amounts owed under the retainer were time-barred; and 2. it would in any event be contrary to public policy to permit the retainer claim to succeed, the claim having been rejected by a costs assessor.

The limitation argument

1. The limitation period is six years (Limitation Act 1969 (NSW) s 14). The proceedings were commenced in May 2021. The defendant submitted that the monies payable under the Retainer would have accrued at the end of each of the three years for which the claim was made, namely 2009, 2010 and 2011.
2. The plaintiff submitted that the retainer fee did not accrue until the issuing of the invoice in February 2016 so that the commencement of the proceedings in 2021 did not offend the limitation period.
3. The Retainer contains these terms concerning payment: "c) The retainer is to be paid by CC each year in addition to the writers entitlements under the existing costs agreements. d) CC agrees (to) pay the retainer in the amounts and at the intervals specified from time to time at the writer's discretion."
4. In his argument, the plaintiff relied on the conversation between Mr Oliveri and Mr Cassegrain on 27 February 2009 when Mr Oliveri said to Mr Cassegrain: "As the Guarantee and Indemnity has been signed, I will invoice you for my services and for the retainer agreement at the end of your proceedings."
5. No invoices were sent by Mr Oliveri until 22 February 2016, thus commencing the accrual period for this claim.
6. I think the plaintiff's approach has the following problems: 1. under the terms of the Retainer the fee was to be paid "each year"; and 2. the discretion to vary the amounts and intervals of the payment was never the subject of any communication to Mr Cassegrain, other than the conversation which seems to have actually preceded the signing of the Retainer.
7. Notably this exchange occurred between Parker J and senior counsel for the plaintiff on 3 June 2022: "HIS HONOUR: How is the 825 calculated? WILSON: That is the figure of 120,000 per year for the period from 1 July 2009 to 30 September 2015 plus GST and that is set out in the invoice. HIS HONOUR: It is in the invoice but it hasn't been pleaded. WILSON: No but it is in the invoice and the invoice is referred to. HIS HONOUR: So that I understand it, you say that the retainer agreement lasted for that period and therefore that amount accrued do you between 2009 and 2015? WILSON: Correct, your Honour. HIS HONOUR: When did each amount accrue, the end of each year, I suppose? WILSON: Yes, your Honour, we say that. So that is the case, your Honour."
8. Two matters arise from the above exchange: 1. there seems to be an acknowledgment that the retainer fee accrued annually and was not deferred; and 2. the claim stretching to 2015 is contrary to the agreement between Mr Cassegrain and Mr Oliveri that the Retainer was only referable to the two proceedings that were on foot when the agreement was signed, and which came to an end in 2011 and 2012 respectively. This is confirmed in the following passages from the cross-examination of Mr Oliveri: "Q. So, that was a retainer agreement on its face that related only to those two sets of proceedings. Correct? A. That's correct. Q. Now, when did those proceedings come to an end? A. I can't recall now. Q. Can I just show you this. That's a judgment of his Honour, Justice Barrett, on 29 September 2011. Correct? A. That's correct. Q. And that was one of the matters that is referred to in that retainer agreement. Correct? A. That's correct. Q. And there was another judgment of the Supreme Court which disposed of the other matter referred to there on 27 April 2012. Do you recall that? A. Yes." and "Q. There's no follow up retainer agreement that relates to any other proceedings; correct? A. That's correct. Q. There's no follow up retainer that relates to any proceedings concerning an appeal from these judgments; correct? A. That's correct."
9. I note the invoice dated 22 February 2016 refers to "various legal proceedings". If "various" means more than two, then the invoice is inconsistent with Mr Oliveri's evidence.
10. The effect of the above cross-examination of Mr Oliveri is that any claim under the Retainer could not stretch beyond 2012. Taken with the accrual for the years from 2009 to 2012 commencing at the end of each respective year, six years would have elapsed before the commencement of the proceedings.
11. I find, therefore, that the claim under the Retainer, had it been otherwise valid, would have been defeated by the limitation period.

Public policy

1. The Retainer was included in the application for a costs assessment made by the plaintiff. The costs assessor was Mr Geoffrey Meadows. His assessment is dated 7 July 2019. I think it worth quoting from the Costs Assessment, from paragraph 12.4.8: "12.4.8. In my opinion, except in a few instances, it is not possible to determine which of the thousands of attendances itemised by the costs applicant relate to particular proceedings. 12.4.9. It may be the case that the costs applicant intended the retainer agreement; as he apparently intended the second costs agreement (undated but sent to the client by email on 22 August 2014), to simply expand to cover all and any work performed by the costs applicant for Mr Claude Cassegrain or for any relevant Claude Cassegrain enterprise. 12.4.10. If that is the case, as I have already implied above, it is in my opinion not in compliance with the letter or the spirit of Part 3.2 of the LPA 2004. 12.4.11. The costs applicant does not explain what is meant by an "addendum" to existing costs agreements. If it means that the retainer Agreement becomes part of the existing costs agreement, it has the same shortcomings, particularly in relation to lack of disclosure. I agree with the submissions of the cost respondent that, to the extent the retainer agreement is or is part of a costs agreement it should be set aside pursuant to s 317 and s 328 of the LPA 2004. 12.4.12. If I am wrong in that regard, I find that in any case it is not possible to determine whether the retainer should be paid for all or part of any particular year. It cannot be the case that the retainer ls payable whether or not the practitioner has provided legal services pursuant to the retainer. Whether such services have been provided cannot be determined on the basis of the. particulars provided in the itemised bills. 12.4.13. For those reasons I decline to assess the claims pursuant to the retainer Agreement and I do not allow the annual sum claimed pursuant to the retainer Agreement because I am unable to determine whether "legal advice from the writer'' was provided in any particular· year. In not providing a reasonable method for making a determination that the annual retainer is payable, in addition to the previous reasons I set the retainer Agreement aside as I am satisfied that the agreement is not fair or reasonable pursuant to s 328 of the LPA 2004. 12.4.14. It is not disputed that Mr Cassegrain signed the retainer agreement nor that although the agreement. refers to the Guarantee and Indemnity in the name of Mr Cassegrain and of Cassegrain Tea Tree Oil Pty Ltd it is Mr Cassegrain who has agreed to pay the retainer. On that basis I would accept that the retainer agreement is a contract between the parties and under the normal contract law principles it may be the case that Mr. Cassegrain is liable to pay the retainer. However the fact that the agreement may be a valid contract does not make it a costs agreement and even if it is I have determined that it should be set aside. Mr Oliveri may have a claim under the retainer Agreement but in my opinion not through this application and not pursuant to the LPA 2004."
2. A review of the Costs Assessment was unsuccessful.
3. The plaintiff drew support from the assessor's comment that "the agreement may be a valid contract". However, the Retainer was a means by which the plaintiff was to recover legal fees from Mr Cassegrain. As such it fell within, as found by the assessor, the scope of the Legal Profession Act 2004 (NSW) (the LPA). The assessor found that the agreement was not "fair or reasonable" under this Act.
4. In my view, to allow the Retainer to have force contrary to a finding that it was not fair and reasonable would be against public policy.
5. In Wilkinson v Osborne (1915) 21 CLR 89; [1915] HCA 92 at 98, Isaacs J said: "The Courts must, to quote Lord Watson's words in the Nordenfelt Case, ascertain, with as near an approach to accuracy as circumstances permit, what is the rule of policy for the then present time. When that rule has been ascertained, it becomes their duty to refuse to give effect to a private contract which violates the rule and would, if judicially enforced, prove injurious to the community.' The Courts refuse to give effect to such a bargain, not for the sake of the defendant, not to protect any interest of his - indeed, they do not fail to notice that his failure to abide by his agreement sometimes adds dishonesty to illegality - but they refuse to enforce the bargain for the sake of the community, who would be prejudiced if such a bargain were countenanced."
6. The rule of policy applicable in 2008, and in fact continuing to the present, is that the incurring of legal fees should be governed by legislation, such as the LPA, which dictates rules by which the public is protected from an unfair or haphazard collection of legal fees. To allow the retainer claim to succeed would be to circumvent the protection provided by the LPA.
7. It follows that if I had found the Retainer was not time-barred then I would have found that enforcing this agreement would have been contrary to public policy and not enforceable.

Summary of findings

1. I have made the following findings: 1. the defendant was not a party to, and therefore not bound by, the Agreement; 2. the previous finding was made because I was not satisfied that Mr Cassegrain bound the defendant by simply stating that he was capable of doing so, against a background of there being two directors and more than one shareholder; 3. the protections and assumptions provided by the Corporations Act did not come to the plaintiff's aid; 4. if I was wrong on the above findings, and the defendant was a party to the Agreement, then the Agreement could only operate as an indemnity and not as a guarantee; 5. as conceded by the plaintiff, if the Agreement was only an indemnity it could only be applied to recover monies owed under the Retainer; 6. monies could not be recovered under the Retainer because their recovery had been pursued after the expiry of the limitation period of six years; and 7. if I was wrong about the limitation period, then the Retainer could not be enforced because such enforcement would have breached public policy.

Orders

1. I make the following orders: 1. Verdict and judgment for the defendant. 2. The plaintiff is to pay the defendant's costs of the proceedings. 3. The parties have liberty to raise any issues arising which might vary the costs order.

Amendments 11 September 2023 - Para 60(2) the word Species deleted and replaced by the word Spares 15 November 2023 - Jurisdiction amended to Equity 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: 15 November 2023