SWS Lawyers Pty Ltd v Matthew Tumbers

Local Court of NSW|2022-06-28

Judgment

The Plaintiff is a legal firm seeking to recover the cost of legal services provided in relation to three invoices totalling $35,062.10. Two invoices were issued on 31 July 2019 and the third invoice was issued on 7 July 2020. The invoices were raised under two separate retainers. The plaintiff seeks payment from Mr Matthew Tumbers.
The first invoice dated 31 July 2019 is for an amount of $4,788.30 and relates to work done in preparing a defence to a statement of claim on behalf of Matthew Tumbers. The second invoice is for an amount of $17,729.10 also dated 31 July 2019 which related to drafting a company information memorandum. The third invoice is for an amount of $20,544.70 dated 7 July 2020 which relates to further work done in relation to the information memorandum and for work done on a shareholding agreement for DBN Solutions Limited. A part payment of $8,000 was appropriated to the second invoice reducing the overall balance due to the amount claimed.
Matthew Tumbers disputes liability in respect to the provision of legal services. In essence, he denies entering into any agreement to engage the plaintiff for the provision of legal services and denies that he made any request for legal services to be provided.

First Invoice $4,788.30

Mr Hewitt states that he was contacted by Neil Tumbers in relation to legal proceedings commenced by Michael Kent against Matthew Tumbers. Neil Tumbers informed Mr Hewitt that Michael Kent had commenced proceedings in relation to a dispute relating to the purchase of a Kubota tractor. A copy of the cross claim was provided to Mr Hewitt.
A costs agreement was prepared on behalf of SWS Lawyers Pty Ltd dated 7 December 2018 directed to Matthew Tumbers offering the provision of legal services in relation to the proceedings commenced by Mr Kent. The costs agreement letter is marked as sent by email. The costs agreement letter bears a signature purportedly of Matthew Tumbers accepting the terms of the costs agreement.
A defence to the cross claim was filed on behalf of Matthew Tumbers by SWS Lawyers Pty Ltd. The cross claim was ultimately dismissed on 15 April 2019.
A tax invoice for legal services arising from the Local Court proceedings was issued for $4,788.30.

Second Invoice $17,729.10

On 23 January 2019 Mr Hewitt received an email from Neil Tumbers with a copy of the constitution and shareholders agreement for the company DBN Solutions Limited. The constitution and shareholders agreement appears to have been drafted by a solicitor at Martin Street Lawyers. It was forwarded by Neil Tumbers to Mr Hewitt marked "FYI".
On or about 24 January Mr Hewitt states that he had a meeting with Neil Tumbers and Neil Bilburnie who was introduced to him as a possible investor to assist the Tumbers trust.
Mr Hewitt states that other than a request for a copy of a patent in March 2019 he did not receive any further instructions until June 2019.
Mr Hewitt states that on 6 June 2019 he received an email from Mr Tumbers forwarding a company extract for DBN Solutions Limited. The email is marked "FYI".
Mr Hewitt states that on 11 June 2019 he received an email from Neil Tumbers with an attached proposed Information Memorandum for DBN Solutions Limited. The email is marked "This may be it". Another email of the same day attaches a copy of a document titled "New River Research & Development Pty Ltd - Offer Document."
Mr Hewitt states that on 14 June he received an email from Neil Tumbers attaching a copy of minutes of meeting of DBN Solutions. The email is marked "for your information".
On 27 June 2019 gives evidence of a meeting between himself and Terry Dunne who was introduced as "an old acquaintance" who was helping Neil Tumbers with organising a public company.
On 4 July 2019 Mr Hewitt states that he had a meeting with Neil Tumbers and Michael Wagner. Mr Wagner was looking to become involved in the proposed public company.
On 8 July 2019 Mr Hewitt received an email from Neil Tumbers containing a check list of actions for DBN Solutions Limited.
On 10 July 2019 Mr Hewitt received an email from Neil Tumbers attaching an Information Memorandum for DBN Solutions. The email states "As discussed today".
On 12 July 2019 Mr Hewitt states that he attended a meeting between Andrew Windybank, Ainnick Vincent (both specialists consultants at SWS Lawyers) and Neil Tumbers where a discussion was held regarding the draft Information Memorandum and proposed structure of a capital raising transaction was discussed and advice was provided.
Mr Hewitt states that, acting on instructions from Neil Tumbers he approached PKF Accountants for tax and restructuring advice for the proposed capital raising transaction.
Mr Hewitt then caused an invoice to be issued to Matthew Tumbers as Trustee for Tumbers Family Trust for work done between 9 January and 12 July 2019 for the sum of $17,729.10.

Third Invoice $20,544.70

On 13 July 2019 Andrew Windybank sent an email to Mr Hewitt and others within SWS Lawyers regarding capital raising for Neil Tumbers.
On 17 July an internal memorandum was prepared on the meeting dated 12 July 2019 outlining a summary of findings. On 19 July 2019 Mr Hewitt forwarded the document to Neil Tumbers.
On 19 July 2019 Mr Hewitt prepared a letter dated 19 July directed "To Whom it may concern" regarding the information memorandum and confirming that SWS Lawyers was assisting the Tumbers Family Trust to establish a special purpose entity for the purposes of capital raising.
On 31 July 2019 Mr Hewitt prepared a costs agreement letter on behalf of SWS Lawyers directed to Matthew Tumbers as the proposed director of a proposed DBN company. The costs agreement letter is marked as being sent to Neil Tumbers email address.
An email dated 1 August 2019 was sent by Neil Tumbers to Mr Hewitt seeking confirmation that "SWS are acting for the DBN Group under the terms and conditions agreed".
On 7 July 2020 a tax invoice was issued to Matthew Tumbers as trustee for Tumbers Family Trust for the work done between 13 July and 14 August 2019 in the sum of $20,544.70.
Mr Hewitt states that an amount of $8000 held in trust was applied as part payment of the second invoice number 3846 on 27 September 2019. The money was held in trust in the name of Matthew Tumbers as Trustee for Tumbers Family Trust.

Defence Evidence

Matthew Tumbers gave evidence by way of affidavit and in the witness box. In his affidavit he stated that he did not engage Mr Hewitt or any lawyer from SWS Lawyer to act on his behalf in any legal matters.
In relation to the defence to the cross claim filed in his name he referred this as being related to a dispute involving his father.
He states that his father never had any authority to instruct Mr Hewitt or any solicitor for SWS Lawyers on his behalf and no work was carried out for his benefit.
Neil Tumbers gave evidence by way of affidavit that he gave Mr Hewitt instructions to provide legal services on his own behalf as the dispute involved a commercial dispute that was, in reality, between himself and Kubota.
Neil Tumbers gave evidence that he informed Mr Hewitt on 24 January 2019 that he was creating a company called DBN Environmental Solutions Limited to raise capital. He states that he attended Mr Hewitts office some time later to explain the project, however that meeting was to be on a no charge basis.
Neil Tumbers gave evidence that while he attended meetings with Mr Hewitt in July and August 2019 he did not instruct him or his Firm to do any work in respect of his information Memorandum or otherwise.
Neil Tumbers provided an affidavit in support of the defence.

Assessment of Witnesses

The Court received evidence from Mr Hewitt, Neil Tumbers and Matthew Tumbers.
In relation to Mr Hewitt, it was apparent that he was a lawyer who paid little regard to the issues of which entity he might be dealing with or maintaining records of instructions and services provided. He paid little regard to the obligation of costs disclosure under the Legal Profession Uniform Law 2014 (NSW). By way of example, Mr Hewitt provided services on behalf of SWS Lawyer during the period of 9 January 2019 and 12 July 2019 purportedly to Matthew Tumbers as Trustee for the Tumbers Family Trust accumulating over $17,000 in charges yet there was no evidence of a costs disclosure or costs agreement relating to this work.
The second invoice refers to various services performed much of which is not supported by work in progress records, detailed instructions or other material. For example, the second invoice contains a schedule that itemises work done on 18 January 2019 being the review of proposed shareholder agreement. The email from Neil Tumbers forwarding this document does not request a review, it is sent for information purposes only. There is no evidence of a response by Mr Hewitt suggesting that a review has been undertaken by him or any advice provided. He was not requested to provide a legal service and it appears none was provided yet it appears as an item of charge.
While no doubt Mr Hewitt provided some legal services, he has, at least to a substantial extent, failed to provide appropriate records in support of that work.
Matthew Tumbers appeared to know little of the commercial dealings that involved DBN Solution Limited. It appears that Matthew Tumbers did not actively engage in the responsibilities of the role of director of the company. The only occasions that he involved himself in any dealings was at the direction of his father. The inference was clear that he was installed as a puppet director of the company under the control of his father.
Matthew Tumbers knew of Mr Hewitt but had not spoken to Mr Hewitt in relation to legal or commercial matters. Mr Tumbers did not have any knowledge of a number of documents prepared on behalf of DBN Solutions Limited. They included Information Memorandums, Shareholder Agreements and minutes of meetings.
Neil Tumbers did not give evidence in the witness box due to ill health. His affidavit was brief and did not address the vast majority of the communications that he had with Mr Hewitt. He does not explain how he came to the view that he believed that a meeting some time in mid-2019 was on a no-charge basis. Apart from work related to the first invoice he does not address the issue of what capacity he was acting when he was dealing with Mr Hewitt.

First Invoice

Mr Hewitt arranged for the preparation of a Cost Agreement offer document dated 7 December 2018. The agreement was addressed to Matthew Tumbers. The letter is directed to Matthew Tumbers personally stating thank you for your instructions. It refers to the scope of work being proceedings commenced by Michael Kent against you. The agreement provides various cost disclosures. It indicates that: "If you accept this offer you will be regarded as having entered into a costs agreement. You may indicate your acceptance of these terms orally or you may sign and return to use the attached copy of this letter and the general terms."
The Cost Agreement is signed in the section which acknowledges acceptance of the above terms and next to the printed name of Matthew Tumbers.
In the witness box Matthew Tumbers gave evidence that the signature on the cost agreement did not appear to be his signature. He was not confident in this assertion. In any event, there is no plea of non est factum contained in the defence in relation to the executed agreement. Even if there were such a plea, the burden of proof would fall on the defendant to show that it was not his signature (see, Petelin v Cullen (1975) 132 CLR 355; [1975] HCA 24, at 360 per Barwick CJ, McTiernan, Gibbs, Stephen and Mason JJ). Apart from Matthew Tumbers vague uncertainty as to whether he signed the document there is no other evidence to support the contention that he did not sign it or that there was some vitiating factor surrounding his signature appearing on the document. I am satisfied that he signed the costs agreement and is liable for the services provided within the scope of the costs agreement.
There is a secondary issue as to whether liability in relation to this invoice has been discharged by full payment of $8000. I will return to this issue after considering the second and third invoices.

Second and Third Invoice

The second invoice dated 31 July 2019 is issued to Matthew Tumbers in his capacity as trustee for the Tumber Family Trust. It relates to services provided between 18 January 2019 and 12 July 2019. The Invoice relates to an Information Memorandum for DBN Solutions raising capital for the company through the offering of shares in the company.
There is no costs agreement that relates to the services provided between 18 January 2019 and 12 July 2019.
The third invoice dated 7 July 2020 is issued to Matthew Tumbers as trustee for Tumbers Family Trust. It relates to services provided between 13 July and 14 August 2019.
On the 31 July 2019 Mr Hewitt prepared a costs agreement. The agreement is addressed to Matthew Tumbers, however, it appears to be sent to the email address of Neil Tumbers. The scope of work referred to in the agreement is to "provide advice in respect to the establishment of the DBN company and assistance in drafting the proposed Information Memorandum."
Matthew Tumbers did not communicate any acceptance of the agreement. The only communication produced by the plaintiff after the 31 July 2019 is an email from Neil Tumbers dated 1 August 2019 which states: "Hi Phil. Would you please send me on letterhead, confirmation that SWS are acting for the DBN Group under the terms and conditions as agreed. Need this for investor meeting this afternoon."
It is not a communication consistent with acceptance of the offer of legal services in the cost agreement.
The claim for payment of legal services referred to in the second and third invoice is not based on any contract. In the absence of any evidence of a costs agreement or costs disclosure it is perhaps a matter requiring costs assessment.
The plaintiff asserts that Matthew Tumbers is responsible for payment of the second and third invoice on the basis that the defendant instructed the plaintiff to undertake this legal service. Matthew Tumbers had no communication with Mr Hewitt during this period. The only communication was with Neil Tumbers. The plaintiff submits that Neil Tumbers instructed Mr Hewitt on behalf of Matthew Tumbers. To succeed the plaintiff must establish a relationship of agency between Neil Tumber and Matthew Tumbers in instructing Mr Hewitt.
Agency may be either actual, implied or ostensible.
There is no evidence of any express agreement between Neil Tumbers and Matthew Tumbers conferring authority upon Neil Tumbers to act on his behalf in instructing Mr Hewitt. There is no evidence that Matthew Tumbers was aware of any dealings that Neil Tumbers had with Mr Hewitt during this period. The evidence of Mr Hewitt was that he had a discussion with Neil Tumbers during which Neil Tumbers informed him that "Matthew did not handle issues with the trust well, so I want you to come through me." It is relevant that Neil Tumbers does not suggest that it was Matthew Tumbers who wanted Mr Hewitt to go through his father. The statement does not suggest any relationship of actual authority.
Implied authority is a form of actual authority. Notwithstanding the absence of an express agreement, the parties "may conduct themselves in such a way that it is proper to infer that the relevant authority has been conferred on the agent": Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50 at 132. An agent cannot have implied actual authority to inform an offeror that an offer has been accepted when no decision has been made by the principal to accept that offer: Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72 at 77-78.
In the present case it may be suggested that there was implied authority created by Matthew Tumbers leaving the management of the company business in the hands of his father.
In Bega v Lauvan Pty Ltd [2019] NSWCA 36 the Court of Appeal dealt with the issue of implied authority where a Mrs Bega entrusted her husband to manage financial affairs. The husband entered into a $1 million loan secured by the family home under which the finance was advanced to a third party. The trial court found that Mrs Bega was aware of the transaction and knew the purpose of the loan.
The distinction between the Bega case and the present case is that there is no evidence to suggest that Matthew Tumbers was aware of any instructions being provided by Neil Tumbers to Mr Hewitt. It is implausible to suggest that he was involved in any decision. It is clear that Mattew Tumbers was installed as a puppet director by his father. There is no need for the puppeteer to consult with its puppet. There was no implied authority.
Ostensible authority is the authority as it appears to others. The principle was stated in Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 at 530 per Diplock LJ: "An apparent or 'ostensible' authority … is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of 'apparent authority' so as to render the principal liable to perform any obligations imposed upon him by such contract. To the relationship so created the agent is a stranger. He need not be (although he generally is) aware of the existence of the representation but he must not purport to make the agreement as principal himself. The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract. It is irrelevant whether the agent had actual authority to enter into the contract."
There was no representation made by Matthew Tumbers which could be relied upon as providing ostensible authority. In Essington Investments Pty Ltd v Regency Property Pty Ltd [2004] NSWCA 375 Hodgson JA said at [44]: "It is to be noted that the representation of authority must either be made, or at least be permitted to be made, by the principal. In the present case, all the relevant representations were made by the agent, so that the real question is whether they were themselves authorised by the principal and so made by the principal or were relevantly 'permitted' to be made by the principal."
In Quikfund (Australia) Pty Ltd v Prosperity Group International Pty Ltd (In Liq) (2013) 209 FCR 368; [2013] FCAFC 5 the Full Court of the Federal Court said at [79]: "It is clear from the above brief conspectus of some the relevant authorities that assertions made by the alleged agent that he or she is acting for the alleged principal can never by themselves prove the existence of the alleged agency. More is required. There must be some conduct on the part of the alleged principal from which the relationship of agency can be inferred and which breathes life into the assertions of the alleged agent."
In the present case, there was no conduct on the part of Matthew Tumbers that would establish himself as a principal, in a personal capacity, and Neil Tumbers as his personal agent. The legal services provided under invoice 2 and 3 was not carried out for any personal benefit of Matthew Tumbers. The legal services may have benefited the company DBN Solutions Limited.
In viewing the evidence as a whole it is clear from the history of dealings between Mr Hewitt and Neil Tumbers that Mr Hewitt dealt with Neil Tumbers as a principal and not an agent. It is also clear that Neil Tumbers did not purport to hold himself out as an agent for a third party.
Neil Tumbers was the inventor of water treatments. He was the person who instigated patent applications to protect the intellectual property and then develop strategies to develop and exploit the use of those inventions.
Mr Hewitt gives an account of a conversation in 2015 when Neil Tumbers said words to the effect: "Phil, I have structured things so that nothing is in my name. I don't even have a bank account and I have put everything through the trust, but Matthew does not handle all the issues with the trust well, so I want you to come through me." This statement confirms that Mr Hewitt was aware that Neil Tumbers remained in complete control of financial and business matters.
Neil Tumbers created separate structures to manage his financial and commercial interests. Whatever legal services Neil Tumbers requested were for his own interests and benefit. It was not for Matthew Tumbers benefit.
There is no liability upon Matthew Tumbers in relation to the second and third invoice.
The final issue to be resolved is the payment of the sum of $8000 on 27 September 2019. The payment was drawn from a trust account held in the name of Matthew Tumbers as Trustee for Tumbers Family Trust. Matthew Tumbers gives authority for the payment in an email dated 25 September: "As per you discussion and emails with Dad re the distribution of the funds held in the trust account, please be advised $8000 is to be directed to Hewitt SWS Lawyers and the balance directed to the Tumbers Family trust bank account."
There was no direction by Matthew Tumbers as to which debt was to be paid. The plaintiff appropriated the payment to the second invoice.
Given that there was different works being carried out, and in the absence of any instructions, it was open for the plaintiff to determine which debt the payment was to be made.
The applicable principle was stated by Lord Macnaghten in Cory Brothers and Company v Owners of Turkish Steamship "Mecca"; the "Mecca" [1897] AC 286 at pp 293-294: "When a debtor is making a payment to his creditor he may appropriate the money as he pleases, and the creditor must apply it accordingly. If the debtor does not make any appropriation at the time when he makes the payment the right of application devolves on the creditor."
I am satisfied that the right to appropriate the payment fell to the plaintiff and it validly applied the payment to the second invoice.
The Court enters a verdict and judgment for the plaintiff in the sum of $4,788.30 together with interest calculated at the rate prescribed under Rule 75 of the Legal Profession Uniform General Rules 2015 (NSW) from 31 August 2019.
Costs are reserved. Magistrate Olischlager Local Court of New South Wales

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: 04 May 2023

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