Warne v ACN 603 541 411 Pty Ltd trading as Chandlers International Lawyers

Catchwords: CONTRACTS – claim for unpaid legal fees – where primary judge determined that various alleged oral contracts and variations of terms of retainer were inconsistent with written record – where primary judge preferred contemporaneous documents over honest recollection – whether the primary judge erred in factual findings as to the timeline of meetings between the parties – whether the primary judge erred in failing to find that the oral agreements contended by the appellant did occur.

Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), rr 51.51

Cases Cited: ACN 603 541 411 Pty Ltd trading as Chandlers International Lawyers v Colin Philip Warne [2024] NSWDC 284
Akins v National Australia Bank (1994) 34 NSWLR 155
Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26; 260 CLR 1
Gestmin SGPS SA v Credit Suisse (UK) Limited [2013] EWHC 3560
Housing Commission of New South Wales v Tatmar Pastoral Co Ltd [1983] 3 NSWLR 378;(1983) 53 LGRA 325
The Nominal Defendant v Cordin [2017] NSWCA 6
Warne v ACN 541 411 Pty Ltd t/as Chandlers International Lawyers [2024] NSWCA 244

Category: Principal judgment

Parties: Colin Phillip Warne (Appellant)
Chandlers International Lawyers (Respondent)

Representation: Counsel:
C Warne (Appellant) (Self-represented)
J Granger with S Steinhoff (Respondent)
Solicitors:
HT Law Pty Ltd (Respondent)

File Number(s): 2024/00282252

Publication restriction: Nil

JUDGMENT

1. WARD ACJ: This appeal involves a dispute about legal fees. The appellant, Mr Colin Philip Warne, retained a law firm (Chandlers International Lawyers (Australia) Pty Ltd (Chandlers), the principal of which is a solicitor, Mr Mark Treisman), to act for him in two matters. First, in October 2018, in relation to a claim to recover loans allegedly made by Mr Warne and related companies to Sydney Harbour Tallships Pty Ltd (SHTS). Second, in July 2019 to recover moneys allegedly owed to Mr Warne by Dominion WFS Pty Ltd (Dominion). Mr Warne’s attempts to recover moneys from SHTS and Dominion were unsuccessful, as I will explain shortly.

2. Chandlers ceased acting for Mr Warne in February 2021 at a time when the unpaid fees in relation to both matters totalled slightly in excess of $100,000. As itemised in the respondent’s statement of claim filed on 4 December 2023 in the District Court (at [15]), a sum of $39,326.84 was owing in relation to the Dominion matter and the balance in respect of the SHTS matter. Chandlers assigned to the respondent (another entity of which Mr Treisman is the director) the debts allegedly owed by Mr Warne to Chandlers.

3. The respondent commenced proceedings in the District Court in December 2023, seeking recovery of the debts alleged to be owing by Mr Warne, and succeeded in obtaining an order for judgment (including interest and costs) in the sum of $121,724 (ACN 603 541 411 Pty Ltd Trading as Chandlers International Lawyers v Colin Philip Warne [2024] NSWDC 284 (the primary judgment)).

4. Mr Warne then appealed from that decision. By his amended notice of appeal, Mr Warne raises in essence three grounds of appeal (though they are not styled as such), (see [51] below), challenging the findings of the primary judge, Newlinds SC DCJ, on three matters relating to the costs claimed in respect of the SHTS matter. None of the grounds of appeal relates to the fees claimed for the Dominion matter. Further, no issue is raised on appeal as to the finding by his Honour that the assignment was valid (see primary judgment at [25]). Nor is this appeal the appropriate forum for consideration of Mr Warne’s complaints as to Mr Treisman’s compliance with his professional obligations in relation to the provision of proper costs disclosure and assessments or Mr Warne’s allegations of negligence or dishonesty (not raised by the pleaded issues in the District Court).

History of the dispute

5. Mr Warne, in his written and oral submissions, has explained in some detail the history of the matter leading up to the costs dispute which was determined by his Honour. From that explanation and a review of the documents that were before his Honour, the dispute arose as follows.

6. In 2018, Mr Warne sought legal advice, from a barrister (Mr Brett Young), as to a claim to recover loans totalling some $275,000 allegedly made by him to a company in which his son, Mr David Warne, had been involved with David Warne’s former friend and business partner (Mr Martin Woods). Mr Warne alleged that SHTS had agreed to repay him the money, and to provide him with security over a ship (the Soren Larsen) in respect of the loans (see AT 2.9-11). This was disputed by SHTS, although Mr Warne placed reliance on an alleged oral acknowledgment by Mr Woods that he would honour his word.

7. On 10 October 2018, Mr Warne met with Mr Young, Mr Liam Byrne (another barrister) and Mr Treisman (the director and principal of Chandlers) in relation to the proposed commencement of civil proceedings against SHTS to recover the moneys claimed to be owing. It is not disputed that, at that meeting, there was reference to a sum of $60,000 in relation to the costs of the proceedings. Therein lies the nub of the dispute. Mr Warne is adamant that what was agreed at that meeting was that the fees would be capped at $60,000 (although he quite candidly told this Court that the word “capping” “never came into the conversations” – see AT 4). The respondent maintains, on the other hand, that the reference to $60,000 at this meeting was no more than an estimate.

8. Mr Warne said that the quote of $60,000 made it commercially viable for him to proceed with the case (see AT 5.40-41). Shortly after the 10 October 2018 meeting, Mr Treisman issued a Costs Disclosure and Costs Agreement which gave a disclosure of the relevant hourly rates applicable for work in relation to the matter and contained an estimate of costs of up to $13,200 for assessing the claim to determine the specific claim or claims to prosecute (the SHTS Agreement). Both the covering letter dated 12 October 2018 and the SHTS Agreement contained clear statements to the effect that the amount there estimated ($13,200) was not a quote or cap on the overall costs of the matter. The SHTS Agreement expressly noted that the total costs might exceed the estimate and that it was based on present information and instructions. The covering letter foreshadowed that there would be a more accurate estimate of fees for the whole matter forthcoming. The SHTS Agreement provided for the payment of interest and collection costs on unpaid fees (General Terms of Business at [3] and [4]).

9. Mr Warne says that at the 10 October 2018 meeting Mr Treisman said that this was a simple case and that Mr Treisman “agreed that, legally, I should be able to recover the money” (see AT 2). However, in oral submissions on this appeal, Mr Warne emphasised that Mr Treisman’s evidence later in the District Court proceedings was that the case was very complicated. As will become apparent, as matters developed this quite clearly was far from a “simple case” as opposed to a simple debt claim. As to the prospects of success, it is relevant to note that, while the 12 October 2018 letter expressed the opinion that there appeared to be confirmation that a debt was owed, Mr Treisman also said that it was unclear who the debtor was and that Mr Treisman needed to understand which entity received the benefits of the money advanced (acquisition of title to a ship). Reference was made to the need to obtain company searches in the Cook Islands. Accordingly, even then it appeared that there was some complication to the claim and, subsequently, further information emerged which caused Mr Treisman to make further investigation of the claim.

10. Mr Warne attaches a sinister connotation to an email forwarded with that 12 October 2018 letter, being an email dated 10 October from Mr Young of Counsel to Mr Treisman, in which Mr Young referred to the meeting which had occurred on 10 October 2018 and referred to Mr Warne having an understanding that a minimum estimate of fees for disputes of this kind was $50,000 to $100,000 (plus GST). Mr Warne thinks, based on this communication (and other documents not in evidence before his Honour), that the “tactics” of the legal representatives were not to tell him that this matter could cost a couple of hundred thousand dollars (AT 6.2-8). Mr Warne also complains that “the barrister” had acknowledged that the company could be insolvent and he would not be able to get security (AT 6.9-10) (referring to a document that was not before his Honour prepared by way of a briefing note before the initial conference with him).

11. In submissions, Mr Warne said that the “whole issue really” is that Mr Treisman did not provide him with a proper costs agreement (AT 6). Mr Warne has the feeling that the legal representatives knew before the meeting on 10 October 2018 that this was not going to be a simple case for him to recover his money and, as noted, believes that it was a tactic to send him the 12 October 2018 email quoting a figure of $50-100,000 and not mentioning the $60,000 in the costs agreement. Mr Warne describes this as “totally dishonest behaviour” (AT 7.31; see also AT 14.46-50). Those matters were not, however, pleaded in the case at first instance and cannot be advanced here.

12. Mr Warne responded to Mr Treisman’s 12 October 2018 email on the same day but without referring to or disputing the suggestion in Mr Young’s email as to his understanding of there being a minimum estimate of between $50,000 and $100,000 for a dispute of the kind contemplated against SHTS.

13. By early November 2018, it is apparent from the communications from Mr Treisman that Mr Warne was being advised that the previous costs estimate was being revised upwards. On 9 November 2018, there was a meeting between Mr Warne and Messrs Treisman and Young. In an email subsequently sent by Mr Treisman to Mr Warne on 13 November 2018, reference was made to Mr Warne having been told at that meeting that estimated legal costs based on a three-day court trial would be significantly in excess of $60,000.

14. There were other communications between Mr Treisman and Mr Warne as to the costs of the SHTS proceedings, including on 6 December 2018, in a letter on which Mr Warne here places reliance, where Mr Treisman summarised the various meetings and evidence then being considered in relation to the proposed proceedings against SHTS (including the meetings on 10 October and 9 November 2018). That letter made reference to the discussion on 9 November 2018 (that the initial estimate of around $60,000 would be exceeded). It provided an updated estimate for the costs of an application for a Mareva injunction and a three-day final hearing of $120,000. Mr Warne admits that at that stage he knew that to take the case to trial it could cost up to $120,000.

15. As at that stage, Mr Treisman wrote that they were “presently refining” the following claims: a “simple debt claim action for the outstanding amount”; an “equitable security [claim] on the Soren” (i.e., the ship); and a claim that the Warne Investment Trust had half ownership of the ship “based on the trust structure of the business through [Mr Warne’s] directorship of Harbour Discovery Pty Ltd and its role in the Warne Investment Trust”. Therefore, on any view of things, by this time what was contemplated went far beyond a “simple debt claim”.

16. By May 2019, there were already unpaid fees. On 13 May 2019, Mr Warne met with Mr Treisman and Mr Young. At that meeting (as recorded in a letter from Mr Treisman of that date) there was a discussion as to a proposed payment arrangement for outstanding and future fees. By letter dated 13 May 2019, Mr Treisman set out the proposed arrangement. The arrangement provided for a staged payment of all outstanding fees and a proposed regime for future fees whereby 70% of future bills would be paid as and when invoiced (see at (b)). As to the payment of the remaining 30% the letter set out the following:

(c) If the matter is settled or determined in your favour (without an award for costs), you will additionally pay (as a first charge over all moneys received from the defendant) the unpaid balances of all the bills rendered in the matter together with interest;

(d) If the matter is settled or determined in your favour (with an award for costs), you will additionally pay (as a first charge over all moneys received from the defendant) the unpaid balances of all the bills rendered in the matter together with interest and an additional ‘uplift fee’ equal to 30% of the face value of all the bills rendered in the matter;

(e) If you abandon the matter, you will additionally pay the unpaid balances of all the bills rendered in the matter (ie. Without the additional ‘uplift fee’ equal to 30% of the face value of all the bills rendered), in addition to any costs that may be payable to the defendant for the plaintiff’s withdrawal or abandonment.

17. On 23 July 2019, a statement of claim was filed initiating the SHTS proceedings (see letter dated 3 September 2020 from Mr Treisman, summarising the status of the SHTS proceedings).

18. Meanwhile, earlier that month Mr Warne had given Chandlers instructions in relation to a claim to recover other moneys (around $1 million) that he had lent to Dominion. On 1 July 2019, Mr Treisman issued Mr Warne a costs agreement in relation to the Dominion matter (the Dominion Agreement), in similar form to the SHTS Agreement.

19. On 6 March 2020, Mr Treisman sent Mr Warne an email attaching draft litigation budgets in respect of the SHTS and Dominion matters. As to the latter, what was then apparently contemplated was the making of claims against the former directors of Dominion for “unconscionable conduct/ unjustified [sic] enrichment”. Those draft budgets record an estimate of future costs in the amount of $164,450.00 for the SHTS proceedings, and an estimate of future costs in the amount of $200,890.80 in respect of the Dominion matter. Mr Treisman’s email set out the amount of then owing unpaid fees and the amount of unbilled work-in-progress.

20. The proposed Dominion proceedings apparently went nowhere. Mr Warne in oral submissions said that the company owed him a million dollars but went into liquidation after a letter of demand was sent; and that he received nothing (AT 11.21-27).

21. As to the SHTS proceedings, by September 2020 the matter had been listed for a show cause hearing as to why the statement of claim should not be dismissed for lack of prosecution (see Mr Treisman’s letter dated 3 September 2020, outlining the status of the SHTS proceedings).

22. In his 3 September 2020 letter, Mr Treisman referred to a letter dated 28 April 2020 from the defendant in the SHTS proceedings, where a number of “substantive” complaints had been made about the statement of claim, including the lack of detail in relation to the issue of David Warne’s authorisation by SHTS to enter into contracts on its behalf and lack of a basis for the claims of repayment by the “Google payments” (referred to elsewhere as the “fourth loan” or “fourth loans”).

23. A notice of motion was filed by SHTS on 12 May 2020, seeking to strike out the claim in its entirety (with leave to file an amended pleading). On 12 June 2020, by consent, leave was granted for the filing of an amended statement of claim in those proceedings (with the defendant to be paid $5,000 by way of costs of the motion and any costs thrown away by the amendment).

24. Mr Treisman stated in his letter of 3 September 2020 that one of the “strategic aims” of filing the SHTS statement of claim was to try and bring the defendant “to the negotiation table”. He noted that the claims related to four separate alleged loans and gave rise to a number of legal and factual issues. Mr Treisman advised Mr Warne of the potential risks, costs and rewards of the proceedings, including the “higher risk” claims relating to the first and fourth loans (the latter, as adverted to above, apparently encompassing the “Google fees”).

25. Relevantly, the 3 September 2020 letter also stated that Chandlers was unable to offer any further financial accommodation and therefore that fees and disbursements in the matter “moving forward” would have to be paid as and when due in the normal manner, if Mr Warne wished to proceed.

26. The letter suggested that further claims outside of the contract might be considered (including claims for restitution for the amount paid by Mr Warne) but said that consideration of such a claim would add further to the estimated costs in the matter.

27. The letter also referred to a without prejudice offer made by the defendant to settle the matter on a “walkaway” basis.

28. Attached to the letter was a draft amended statement of claim.

29. On 8 September 2020, Mr Warne sent an email to his accountant, asking that an amount of $10,000 be transferred to Chandlers. In that email Mr Warne stated that he told Mr Treisman “$10000 is all that I could pay until the case is settled. He believes we should win and is prepared to punt it”. Mr Warne relies on this in relation to the third finding challenged by his appeal. Mr Treisman denies that he expressed such a view.

30. Matters seem to have come to a head by early November 2020. On 3 November 2020, Mr Treisman sent an email to Mr Warne stating that they appeared to be at an impasse as Mr Warne had instructed him not to file the amended statement of claim unless it included the “fourth loans” and the claim for security; and Mr Treisman was not comfortable including those claims “in reliance of [sic] the December 2016 admissions by Woods” without having received a second opinion from another barrister which would enable him to sign off on the reasonable prospects of those claims.

31. Further, Mr Treisman said he required payment of the requested funds into the trust account in order to deal with the strike out application. Mr Treisman stated that he would have no choice but to withdraw as the solicitor on record if they could not overcome the said “impasse” and if he was not provided with the requested funds.

32. It appears that Mr Treisman then acceded to a request by Mr Warne that he not involve another barrister to reconsider the evidence and that he do this himself since, by email sent on 6 November 2020, Mr Treisman expressed a different view as to the claim for security and repayment of the “fourth loan”, stating that he considered that those should be included in the amended statement of claim. Mr Treisman also considered that other parties should be added as additional defendants to the proceedings and that further consideration should be given as to whether the District Court had sufficient equitable jurisdiction to determine the amended statement of claim with the then proposed collateral contract/promissory estoppel claims (referring to High Court authority Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26; 260 CLR 1).

33. In other words, notwithstanding the apparent difficulty in obtaining timely payment of his fees, Mr Treisman was proposing an expansion of the case at yet further cost.

34. In the same email, Mr Treisman advised that the defendant’s strike out application had been before the Court that day (i.e., 6 November 2020) and that he had sought an adjournment with no order as to costs on the basis of his filing a motion to withdraw as Mr Warne’s solicitor. That notice of intention was served with the letter. Mr Treisman stated that he would not be able to continue to act unless he had adequate funding to enable Chandlers properly to conduct the matter.

35. On 9 November 2020, Mr Treisman emailed Mr Warne advising of a without prejudice offer by the defendant that Mr Warne walk away from the litigation “at this time” and that the costs paid and presently owing costs would be refunded/waived. That offer was not accepted by Mr Warne.

36. By letter dated 3 December 2020, Mr Treisman advised SHTS’ lawyers that he was instructed to reject an offer of 28 October 2020 and enclosed a “verified draft amended” statement of claim.

37. On 9 December 2020, Mr Treisman communicated to Mr Warne a further settlement offer that he had received, for settlement for a lump sum cost payment of $75,000 and waiver of the $15,000 costs order against Mr Warne (equating, he said, to an effective $100,000). Mr Treisman noted that he had recommended acceptance of that offer but that Mr Warne had instructed him to reject it and that he had made a counter offer of $150,000 plus costs ($75,000), payable immediately and the balance on an agreed payment schedule. Mr Treisman advised that Chandlers urgently required payment of $15,000 to prepare and file the application for leave to file the amended statement of claim and supporting affidavit. Mr Warne indicated that he had instructed his accountant to transfer the funds “immediately” (9 December 2020 email).

38. On 11 December 2020, the defendant’s strike out application came before Balla ADCJ in the District Court. Mr Treisman reported to Mr Warne that several settlement offers had been exchanged that morning. The outcome was that the Court made orders terminating the SHTS proceedings without prejudice to, and with a full reservation of Mr Warne’s rights to reinstitute his claims against SHTS as set out in the amended statement of claim and awarding SHTS its costs on the ordinary (i.e., party/party) basis.

39. In January 2021, when Mr Treisman reminded Mr Warne that payment of nearly $50,000 was due shortly, Mr Warne advised that he was unable to find that amount and legal fees “will be paid out of the settlement”. Ultimately, the dispute as to the unpaid fees culminated in Mr Warne accusing Mr Treisman of negligence and requesting a refund of $50,000 and then Mr Warne advising on 22 March 2021 that he would proceed with the case himself. Mr Treisman denied any negligence on his part and invoked a solicitor’s lien in respect of unpaid fees when Mr Warne demanded the return of the files (though I note that such a lien would not permit the refusal to deliver up files necessary for the conduct of litigation).

40. On 23 February 2021, Mr Treisman wrote to Mr Warne to advise him that Chandlers was suspending further work on all matters until the outstanding amount was paid in full or a payment arrangement was agreed to in writing. At that time, the unpaid fees amounted to $100,067.

District Court proceedings

41. Proceedings were then commenced in the District Court by the respondent by a statement of claim, filed on 4 December 2023, seeking recovery of the outstanding fees. Mr Warne filed a defence on 22 December 2023, among other things denying the alleged indebtedness (see [15]; [17]) and denying the alleged obligation to pay the amounts claimed.

42. Relevantly, in answer to the whole of the claim, Mr Warne pleaded that:

24.1 in approximately October 2018 Mr Treisman provided me with an oral estimate that the total legal costs (including expenses such as filing fees and counsel's fees) to conduct recovery litigation against SHTS would be $60,000;

24.2 in May 2019 Mr Treisman agreed to continue acting on terms that a proportion of costs would be payable when due and the balance would be payable on successful conclusion;

24.3 on approximately 8 September 2020 I had a conversation with Mr Treisman to the effect that I was unable and unwilling to pay anymore in legal fees and expenses beyond the amount of $71,479 across both matters together with another $10,000 and Mr Treisman said that he believed that I would win the case and he was prepared to punt his fees on success and I agreed to continue with the case on the condition that further legal fees and expenses would only be payable if I was successful in the SHTS Proceedings. By this conversation the terms of any pre-existing costs agreement were varied and became subject to an overriding condition that no further fees or expenses (including those already invoiced but unpaid) would be payable unless the SHTS proceedings were successful;

24.4 on approximately 8 September 2020 I paid to Chandlers International Lawyers $10,000 which brought the total amount paid in fees and expenses to $81,479;

24.5 Mr Treisman conducted the SHTS Proceedings on my behalf and after trial the Court entered judgment for the defendant - I was unsuccessful;

24.6 Because I was unsuccessful in the proceedings, under the agreement pleaded in paragraph 24.3 above, no further legal fees and expenses are payable

43. The respondent, in reply, denied [24] of the defence and pleaded that, on or about 13 May 2019, Chandlers wrote to Mr Warne proposing a payment arrangement in respect of outstanding invoices and offering a payment arrangement in respect of future invoices. The respondent pleaded that the proposal included that a percentage of fees would be deferred to completion of the matter, whether successful or not; that interest would be charged on outstanding amounts; and that the proposal included an uplift fee in the event that the matter was successfully concluded with an award of costs in favour of the respondent (see [4] of the Reply). The respondent further pleaded in its reply that Mr Warne did not agree to the proposed (13 May 2019) arrangement and failed to make the payments in accordance with the proposal.

44. His Honour heard the matter on 2 July 2024 and gave brief ex tempore reasons that day, ordering judgment in favour of the respondent in the amount of $121,724, comprising the debt in respect of the unpaid fees together with interest and costs.

Primary judgment

45. His Honour identified the issues arising for determination as being: first whether there was an oral agreement between the solicitors and Mr Warne in October 2018 to the effect that, whatever the actual legal fees might be incurred, fees would be capped at $60,000 (primary judgment at [6]); second, whether there was an agreement reached between the solicitors and Mr Warne in May 2019 to the effect that there would be payment over time on terms allowed (primary judgment at [15]); and, third, whether there was another oral agreement made between the solicitors and Mr Warne in September 2020 to the effect that the solicitors were prepared to “punt” their fees (primary judgment at [20]).

46. As to the first issue, his Honour, while having no reservation as to the honesty of Mr Warne’s belief as to the agreement for capping of costs (see at [8]), was not satisfied, having regard to the contemporaneous documents identified in the chronology of documents marked MFI 2 that Mr Warne’s defence based on the alleged oral agreement for a cap on fees of $60,000 was made out (primary judgment at [13]). His Honour considered that it was very unlikely that anything along the lines that Mr Warne remembered was said (as to capping of costs) but said that, even if it was, it was clearly superseded by the written costs contract sent to Mr Warne (which provided for acceptance by signing or by continuing to instruct the solicitors thereafter) (primary judgment at [12]).

47. As to the second, his Honour noted that the solicitors’ position was that there was such an agreement and that it was set out in a letter of 13 May 2019 but that Mr Warne’s position was that the terms of the agreement were different to those contained in the letter (being those in an oral conversation sent before that letter) (primary judgment at [16]-[17]). Mr Warne claimed that the agreement was to the effect that only a proportion of the then outstanding legal fees would be payable and that the balance would be payable on successful conclusion of the matter. His Honour considered that the contemporaneous record was compelling and was satisfied that the only arrangement that was put in place around May 2019 was as set out in the 13 May 2019 letter from Mr Treisman (primary judgment at [18]). Hence, his Honour was not satisfied that Mr Warne had made out a defence based on an (alternative) oral agreement made in May 2019.

48. Third, as to the contention by Mr Warne that there was an oral agreement in September 2020 that the solicitors would “punt” their fees (i.e., in effect act on a no win no fee basis), his Honour rejected this on the basis that it was inconsistent with contemporaneous documents prepared by the solicitors (referring to letters of 3 September 2020 and 6 November 2020) (primary judgment at [21]-[22]). His Honour considered that it was “highly unlikely to the point of coming close to implausible” that Mr Treisman would have done so (primary judgment at [23]).

49. Each of the conclusions reached by his Honour on those three issues has been put in issue on Mr Warne’s appeal.

Appeal

50. Mr Warne filed a notice of appeal on 1 August 2024. The respondents moved unsuccessfully for this to be dismissed as incompetent but successfully obtained an order that the notice of appeal be struck out with leave to refile an amended notice (Warne v ACN 541 411 Pty Ltd t/as Chandlers International Lawyers [2024] NSWCA 244). Mr Warne then filed an amended notice of appeal dated 21 October 2024.

51. Although complaint is still made by the respondent as to deficiency in the amended grounds of appeal (namely, that they do not identify the respects in which any alleged errors occurred), it is clear that (leaving aside complaint by Mr Warne as to his Honour overlooking the responsibility of the legal profession in cost assessing for their clients), Mr Warne challenges his Honour’s decision in respect of each of the three matters his Honour had identified for determination: the alleged oral agreement that costs would be capped at $60,000; the alleged arrangement the subject of the 13 May 2019 letter; and the alleged oral agreement that Mr Treisman would “punt” the matter to recover his fees.

52. Suggestions in written and oral submissions by Mr Warne that the costs disclosure was inadequate or misleading, or that the legal representatives engaged in tactics to recover fees in excess of the capped fees; or that the legal representatives in some way conducted the proceedings negligently; or that the assignment was to avoid liability on the part of Chandlers to Mr Warne, do not go to the matters raised on the appeal and are not here considered further for that reason.

Further evidence

53. I deal with each of the three conclusions challenged on appeal in turn. However, first, I address the objection raised by the respondent to the inclusion of material in the Blue Book prepared by Mr Warne for this Court, which was not before the Court at first instance (identified in an index prepared by the respondent and contained in the Orange Book from p 13ff under the heading “Other Documents”).

54. The respondent, in its submissions, notes that Mr Warne had not made an application under r 51.51 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) for this Court to receive new evidence and objected to its inclusion. Leaving aside the objection to material that was duplicated in the Blue Book (as identified in the index in the Orange Book), and the three pages of submissions (headed “Blue Book – New Information”) that the respondent had no difficulty being treated as just that, the basis of the respondent’s objection to this Court receiving the new evidence is that none of the usual requirements for the admission of further evidence.

55. In particular, the respondent says that all of the material pre-dates the hearing at first instance and was available to Mr Warne at that time, noting that the further evidence comprises documents either belonging to Mr Warne (documents 3, 4, 14, 15) or sent to Mr Warne (documents 6-9, 16, 19-22), or is information that was publicly available at the time of the hearing below (document 13). The respondent notes that Mr Warne confirmed in cross-examination before his Honour that he had access to his notebooks (relevant to documents 3, 4, 14 and 17), when he prepared his affidavit, despite not including documents from his notebook in that affidavit has been met.

56. The respondent says that because the documents were already in Mr Warne’s possession, or already publicly available, Mr Warne cannot demonstrate that, even exercising reasonable diligence, this evidence would not have been available for use at the trial. Further, the respondent submits that the majority of the additional documents relates to information that was briefed to Chandlers in relation to the SHTS Agreement or Mr Warne’s summary of legal fees paid (and does not otherwise relate to the key factual issues in dispute, namely, the existence of any of the alleged oral agreements). Hence, it is submitted that the additional documents are of limited, if any, probative value; and could not have led to a different judgment at first instance.

57. When the appeal was heard, this Court proceeded on the basis that, if the inclusion of this material were to be treated as an informal application to adduce further evidence, it would be dealt with in the final reasons for judgment (see AT 10.32-44). For that purpose, I have reviewed the material to which objection was taken by the respondent. I also note that of those documents the only ones to which reference was made by Mr Warne in oral submissions were: a letter dated 23 May 2019 from Bromhead Legal (SHTS’ solicitors), the first two pages of which being duplicates of other pages in the Blue Book but the third page not being included earlier in the Blue Book, and a draft briefing note prepared by Mr Byrne of Counsel and forwarded to Mr Young on 25 September 2018 (before the first 10 October 2018 meeting attended by Mr Warne).

58. The first of the documents to which reference was made in oral submissions may well simply have been included to correct an omission from the copy of the letter already included in the Blue Book but, in any event, nothing turns on it. Mr Warne referred to the 23 May 2019 letter simply in explanation of the history of the dispute, this letter being the letter that disputed the existence of the alleged loans and the claim for security over the ship (see AT 10.8-9). The second of those documents was referred to by Mr Warne in the context of his perception that the legal representatives had used the 10 October 2018 email from Mr Young to Mr Treisman as part of some tactic in effect to mislead him into proceeding with the claim (see AT 7.24-33). That concern, strongly held as it appears to be, is not part of the issues here for determination as I have explained already.

59. As to the other documents to which objection was taken, I agree that they do not satisfy the test for receipt of further evidence on the hearing of an appeal. In that regard, and for the benefit of Mr Warne who is not legally qualified, I note that in Akins v National Australia Bank (1994) 34 NSWLR 155, Clarke JA said at 160:

The Court is empowered to receive further evidence upon the hearing of an appeal (s 75A(7)) of the Supreme Court Act 1970)but pursuant to subs (8) of that section may not receive further evidence after a trial on the merits “except on special grounds”. Although it is not possible to formulate a test which should be applied in every case to determine whether or not special grounds exist there are well understood general principles upon which a determination is made. These principles require that, in general, three conditions need be met before fresh evidence can be admitted. These are: (1) It must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; (2) The evidence must be such that there must be a high degree of probability that there would be a different verdict; (3) The evidence must be credible.

60. I accept that most of the material sought to be included in the Blue Book and to which objection is taken is material that on its face Mr Warne already had in his possession or which would have been publicly available and that it has limited or no relevance to the facts in issue. By way of example, the copy of a LexisNexis article on Key Considerations when preparing an estimate of legal costs says nothing as to the three matters that his Honour was called upon to determine (and appears to be part of Mr Warne’s complaint that Mr Treisman did not comply with his professional obligations when making his costs estimate(s) or making cost disclosures).

61. None of that material should be admitted (and, even if it were admitted, none would make any difference to the determination of the appeal).

Ground 1 – alleged October 2018 agreement for a $60,000 cap on fees

62. Mr Warne contends that his Honour overlooked a document in his affidavit which confirmed that Mr Treisman “quoted him $60,000 to run the case”. Although not identified in the amended notice of appeal, it is clear from the submissions that the document on which Mr Warne relies for this contention is the letter dated 6 December 2018 from Mr Treisman to him providing a summary of the 10 October 2018 meeting at which the initial estimate of $60,000 was discussed (referred to earlier in these reasons).

63. The respondent argues that his Honour did not overlook the 6 December 2018 Letter for the following reasons. First, that Mr Warne was taken to the 6 December 2018 Letter in cross-examination (2 July 2024;T 41.36-49; T 42.1-16) and his Honour referred Mr Warne to a part of this letter during his cross-examination (2 July 2024; T 43.35-36). Second, that his Honour’s ex tempore judgment made clear that his Honour had had regard to all of the contemporaneous documents in evidence in arriving at his conclusion (primary judgment at [9]) and referred (primary judgment at [10]) to the chronology prepared by the respondent, which includes reference to the 6 December 2018 letter.

64. Insofar as complaint is made in this appeal ground to his Honour having preferred the contemporaneous written evidence over Mr Warne’s memory, the respondent points to the authorities which support reliance on contemporaneous documentation in commercial causes over the recollection of witnesses of oral conversations (citing Leggatt J in Gestmin SGPS SA v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm) (Gestmin) at [15]-[23]).

65. The respondent says that the following contemporaneous documents contradict Mr Warne’s memory that there was an agreement at the meeting on 10 October 2018 to cap fees at $60,000.

66. First, the email from Mr Young to Mr Treisman on 10 October 2018, which was forwarded to Mr Warne by Mr Treisman on 12 October 2018, in which Mr Young stated that Mr Warne *“*understands a minimum of say A$50-$100k (plus GST) as legal fees is a possible estimate of these types of commercial disputes”. Second, the SHTS Agreement which contains a statement that the respondent had provided an estimate only and that the estimate was not a fixed quote or cap on what may be charged to Mr Warne and that the total costs may exceed the estimate; and which set out examples of variables which may affect and change the estimate. Third, Mr Treisman’s email dated 13 November 2018 which stated that Mr Warne was told on 9 November 2018 that legal fees were going to be significantly in excess of $60,000. Fourth, the 6 December 2018 letter which summarised the meetings on 9 and 30 November 2018, between Mr Treisman and Mr Warne, where Mr Warne was informed that Chandlers’ costs would be in excess of $60,000 and provided an estimate of $120,000 for a three-day hearing in addition to any fees and disbursements that may have been incurred in further preparation of Mr Warne’s claim.

67. The respondent notes that Mr Warne in his response to the 10 October 2018 email which was forwarded to him, did not challenge the initial estimate; that (although not admitting the terms of the SHTS Agreement) Mr Warne continued to provide instructions to Chandlers following the receipt of that agreement (see cl 2 of the General Terms of Business); that, in his oral opening submissions, Mr Warne accepted the proposition put to him by his Honour that he read the 13 November 2018 letter as simply saying “this would usually cost between 50 to 100 but we’ve agreed to do it at 60” (2 July 2024; T 5.29-32) and conceded that he might receive another estimate, but continued to maintain that he had “agreed to proceed on the $60,000” (2 July 2024; T 33.40-43); that Mr Warne conceded in cross-examination that in the 13 November 2018 email Mr Treisman was advising him that a three-day hearing would cost more than the initial estimate he had been given (2 July 2024; T 39.1-3); and that Mr Warne acknowledged in his evidence that he was advised that taking the case to trial could cost up to $120,000 (at [10] of Mr Warne’s affidavit affirmed on 11 April 2024).

68. The respondent further emphasises that there are no contemporaneous records to corroborate Mr Warne’s recollection and points out that during cross-examination, Mr Warne conceded that he ignored further communications which said the costs would be more than $60,000 (2 July 2024; T 35.2-5).

69. The respondent submits that, having regard to the terms of the contemporaneous records referred to above, it could never have been understood that the $60,000 estimate was a fixed cap on the total costs estimated.

Determination

70. It is apparent from Mr Warne’s oral submissions, and I hasten to say that I do not say this critically, that he does not appreciate the distinction between an estimate of costs (or a budget for costs) and an agreement to fix costs at a particular amount. Mr Warne accepts that the word “capping” was not used in the 10 October 2018 meeting but he maintains that this was what was agreed (see AT 4.44-50). That contention is wholly inconsistent with the contemporaneous documents. Indeed, the word “cap” was used in the costs disclosure and costs agreement sent only two days after the 10 October 2018 meeting, where it is made clear that the estimate given by Chandlers was not a fixed cap on costs and that actual costs might exceed the estimate.

71. True it is that the 12 October 2018 costs agreement did not mention an estimate of $60,000 and that the subsequent 6 December 2018 letter in its terms accepts that the original estimate given (which must have been at the 10 October 2018 meeting) was an estimate of $60,000. However, what is abundantly clear from the contemporaneous documents is that, as the SHTS matter progressed, Mr Treisman was providing (and admittedly revising upwards) costs estimates for specific tasks; and Mr Warne did not dispute that it was open for such a revision to be made. The fact that costs were estimated on a task by task basis is a logical explanation for the fact that the first disclosure/costs agreement contained only an estimate for the costs up to the point of preparation of a statement of claim and did not mention the sum of $60,000. I do not accept that there is a sinister connotation to be drawn from the fact that $60,000 was not mentioned in the 12 October 2018 correspondence even were that relevant to the issues raised on the current appeal (which it is not).

72. Nor do I accept that there is some incongruity in a costs agreement having been issued at a stage when the solicitor might not have enough information on the whole matter to make such an assessment (which seems to be the thrust of the submission made in argument by Mr Warne in this Court at AT 10). It is by no means uncommon for solicitors to provide costs estimates of particular tranches of work in relation to the conduct of litigation, as Mr Treisman did here.

73. Insofar as the complaint is that his Honour erred because he overlooked the 6 December 2018 letter, I am not persuaded that it was in fact overlooked, not least because it is referred to in the index of documents (MFI 2) to which his Honour expressly said he had referred. It is not necessary for a judge to set out in detail in his or her reasons (and particularly in ex tempore reasons) the content of every document to which regard is had in reaching the relevant conclusion (nor every submission – see Housing Commission of New South Wales v Tatmar Pastoral Co Ltd [1983] 3 NSWLR 378 at 385-386;(1983) 53 LGRA 325 per Mahoney JA for example). It is clear that, in his Honour’s brief ex tempore reasons, his Honour was using a shorthand means of identifying the material to which his Honour had had regard. By reference to MFI 2, this included the 6 December 2018 letter. The fact that his Honour had only that day referred to part of the document in the course of Mr Warne’s cross-examination simply reinforces that his Honour is not likely to have overlooked it when giving judgment later that day.

74. I see no error in his Honour’s conclusion that there was no oral agreement that the $60,000 was an agreed cap on costs. His Honour quite properly placed weight on the contemporaneous documents (see for example the endorsement in The Nominal Defendant v Cordin [2017] NSWCA 6 per Davies J at [166] of what was said in Gestmin). Those contemporaneous documents were inconsistent with any such agreed cap.

75. The challenge to the first of his Honour’s conclusions is not established.

Ground 2 – 13 May 2019 cost agreement

76. In submissions on the appeal, the respondent does not dispute that in May 2019 Chandlers provided Mr Warne with a proposed payment arrangement but contends that the arrangement did not state that the balance of Chandlers’ bills were only payable if the matter was “successfully” concluded.

77. The respondent points out that in cross-examination Mr Warne had difficulty recalling the agreement as alleged by him in his defence and says that Mr Warne appeared to accept that there is no written record of the alleged oral agreement (2 July 2024; T 46.25-28; T 60.25-27).

78. The respondent also points to the following disparities between Mr Warne’s recollection and the contemporaneous documents. First, that the agreement reached during the 13 May 2019 meeting between Mr Warne, Mr Treisman and Mr Young is recorded in a letter from Mr Treisman of the same day, which summarises the meeting. Second, that the terms of the agreement alleged by Mr Warne were different to those contained in the letter of 13 May 2019 (and, despite a request in the letter that Mr Warne let Mr Treisman know if he disagreed with the description of the agreement reached at the meeting, there is no record of any dissent). It is noted that Mr Warne conceded in cross-examination below that he “obviously didn’t” disagree with the description of the agreement because he paid Mr Treisman some money to continue pursuing the case (02/07/2024; T 48.41-42).

79. Thus, the respondent submits that his Honour did not err in finding that the arrangement with Mr Warne was as set out in the letter dated 13 May 2019; and says that Mr Warne had not made out his defence in relation to the alleged oral conversation.

Determination

80. There is some irony in the fact that the respondent now apparently embraces the finding by his Honour that there was an oral agreement in the terms recorded in the 13 May 2019 letter given that the respondent in its reply pleading in the District Court denied such a proposition (as noted above at [43]).

81. There was some debate in the course of submissions with counsel appearing for the respondent in this Court as to the import of the 13 May 2019 arrangement in the event that Mr Warne did not succeed in the SHTS litigation, insofar as the remaining 30% of the then contemplated future fees were concerned (see AT 22.10- 24.35). That is because the regime provided for in its terms (see as set out above at [16]) appears to deal with the deferred future fees only in three of four possible circumstances (namely, a win without costs, a win with costs, and abandonment of the proceedings), not with the fourth possibility of a loss after the conclusion of a contested hearing. Nothing, however, turns on this in circumstances where I accept the submission that the fact that Mr Warne did not reinstitute the SHTS proceedings after the dismissal of these proceedings without prejudice to his right to do so amounts in substance to an abandonment of the proceedings (enlivening paragraph (e)).

82. As to the challenge to the finding that the 13 May 2019 email recorded the terms of an oral agreement that day, Mr Warne does not point to any particular error by his Honour. The fact that his Honour preferred the version recorded in the contemporaneous account of the arrangement (not disputed at the time by Mr Warne) does not demonstrate any error in his Honour’s reasoning.

83. The challenge to his Honour’s finding on the second issue is thus also not established.

Ground 3 – alleged agreement to “punt” legal fees

84. In Mr Warne’s defence, the alleged agreement to “punt” the fees is alleged to have occurred on 8 September 2020 (see defence at [24.3]).

85. The respondent maintains that the contemporaneous correspondence at the time of the alleged oral agreement, which Mr Warne never challenged in writing, contradicts Mr Warne’s allegation in relation to the oral agreement.

86. In that regard, it is noted that on 3 September 2020, Mr Treisman sent Mr Warne a further letter, in which he stated that if Mr Warne wished to proceed with the matter, and for Chandlers to continue acting for him, Chandlers required payment. The letter also outlined the fees presently owed by Mr Warne for both the SHTS and Dominion matters and requested immediate payment of $15,000.

87. Mr Warne asserts that on 8 September 2020 he had a conversation with Mr Treisman in which Mr Treisman agreed that Mr Warne would only need to pay further legal fees if he was successful in the SHTS proceedings. In cross-examination, Mr Warne acknowledged that such an agreement “contradicted” the 3 September 2020 letter and he accepted that the alleged September 2020 agreement was only in respect of the SHTS Agreement (2 July 2024; T 51.8; T 49.10-15).

88. The respondent points out that the only document referring to the alleged 8 September 2020 conversation is an email from Mr Warne to his accountant in which Mr Warne used the word “punt”. The respondent says that the alleged agreement is otherwise entirely inconsistent with Mr Treisman’s correspondence with Mr Warne after the alleged agreement, both in relation to his prospects of success and Mr Treisman’s fees. In support of that submission, the respondent points to the following.

89. First, that on 3 November 2020, Mr Treisman stated in an email to Mr Warne that he required “payment of the requested funds” into the respondent’s trust account (that request being inconsistent with an agreement to ‘punt’ his fees). Second, on 6 November 2020, Mr Treisman sent Mr Warne a copy of a Notice of Intention to Withdraw, stating that he would *“*have no choice but to withdraw unless we can resolve our current impasse” and that “You have not provided additional funding to enable me to properly conduct [sic] your matter, despite my requests for same” (again inconsistent with an alleged agreement to ‘punt’ fees). Third, on 9 December 2020, Mr Treisman wrote to Mr Warne to advise him of without prejudice discussions he had engaged in with SHTS’ lawyer, who intended to proceed with a strike out application. Mr Treisman’s email advised that to file an application for leave to amend his pleadings, the respondent would be required to make urgent payment of $15,000.

90. The respondent notes that Mr Warne agreed that he never responded to Mr Treisman’s correspondence to refer to an agreement of the kind he pleaded was reached in September (see 2 July 2024; T54.37-55.2), and that Mr Warne told Mr Treisman he had instructed his accountant to pay Mr Treisman a further $15,000. After paying the requested $15,000, in February 2021 Mr Warne made a payment proposal to Mr Treisman that he would pay $50,000 when he recovered at least $200,000 from SHTS. The respondent says that such a proposal is inconsistent with Mr Warne’s asserted agreement with Mr Treisman that the latter would “punt” his fees. The respondent points out that the February 2021 proposal was not acceptable and Mr Warne was advised that Chandlers would be suspending further work pending agreement on payment arrangement of settlement of their account. The respondent submits that this establishes Mr Treisman would not have, and did not, agree to “punt” his fees.

91. The respondent also contends that Mr Warne conceded in cross-examination that Mr Treisman did not agree to “punt his fees” (2 July /2024; T 49.46-58). In context, that exchange was as follows:

Q: It’s your evidence, is it, that on 8 September you had a conversation with Mr Treisman to the effect that you would only have to pay further legal fees if you were successful in the SHTS proceedings?

A. Yeah.

Q. That conversation did not discuss the Dominion fees, did it?

A. No.

Q. No, so this is just an agreement in respect of the SHTS fees?

A. Yeah.

…

Q. If your version of events is to be believed, the intention was that Mr Treisman would continue to act until the proceedings ended and if he was successful he’d get paid; is that correct?

A. Yeah, if he achieved a, a, a 300,000 settlement, which should cover my 275 loan and he, he would be paid his, all his fees that were owning to him.

Q. So that’s actually not what was agreed, was it? Mr Treisman didn’t agree to punt his fees?

A. I don’t, I don’t think so no.

Determination

92. I see no error in his Honour’s conclusion that the alleged agreement for Mr Treisman to “punt” his fees was not established (primary judgment at [23]). In that regard, I place weight on the fact that such an agreement is inconsistent with the contemporaneous documents (to which the respondent has pointed) and that it is highly implausible having regard to the whole of the correspondence in relation to costs assessments and disclosures to which I have referred. Mr Treisman appears to have been at pains to make clear that he would be charging Mr Warne at every step in the proceedings (including when he recommended the joinder of additional parties to run a proposed collateral contract/promissory estoppel claim, even though by then the costs had well and truly blown out, having regard to the original $60,000 estimate).

93. That conclusion is supported by the evidence given by Mr Warne in cross-examination (referred to above at [91]) although I do not regard that as a clear admission or dispositive because of the inherent contradiction in Mr Warne’s evidence on that topic and his seeming confusion in parts of the cross-examination.

94. The third challenge to his Honour’s findings is also not made good.

Conclusion

95. It is most unfortunate, particularly of course for Mr Warne, that the estimate for the costs of the SHTS proceedings was exceeded to such an extent, particularly given his evident concern as to the budget for such costs in light of his financial circumstances. Nevertheless, he was apprised of those revised cost estimates on a consistent basis and he continued to instruct Mr Treisman in the proceedings (up until the final dispute as to costs), knowing of the hourly rates he would be charged for the work carried out and that additional work was being carried out at additional cost. Any complaint that Mr Warne has as to the costs estimation process carried out by Mr Treisman, or Mr Treisman’s compliance with his costs disclosure obligations as a solicitor, is one that, as I indicated in the course of oral submissions, Mr Warne must raise elsewhere. This Court is simply ruling on an appeal from the decision made by his Honour on the pleaded case before him.

96. Mr Warne’s fundamental complaint is that he has incurred substantial fees with nothing to show for this. Unfortunately, that is the risk of litigation. Moreover, even if he had established error in his Honour’s reasoning and conclusions as to the issues in dispute, the result could not have been a complete refund of the legal fees paid to the respondent, as he has sought. There was and is no challenge to the costs agreement in relation to the retainer in the Dominion matter, which represented a portion of the amount for which judgment was given in the respondent’s favour.

97. For completeness, I add that there is also no basis for the claim by Mr Warne for relief in respect of a “payment of $150,000 offered*”**.* This appears to be a reference to a settlement sum offered in relation to the SHTS proceedings. Mr Warne chose to reject the settlement offers made to him. He did not make any claim in relation to this issue at first instance and it does not arise on appeal.

98. As to costs, the respondent indicated in its submissions that it wishes to be heard on the form of any costs order made on this appeal.

Orders

99. For the above reasons, I propose the following orders:

100. Appeal is dismissed with costs.

101. Direct that any submissions by the respondent as to the basis on which such costs should be ordered to be assessed, not exceeding 3 pages, be filed within 7 days.

102. Direct that any submissions by the appellant as to costs, not exceeding 3 pages, be filed within 14 days.

103. Direct that any submissions by the respondent in reply as to costs, not exceeding 1 page, be filed within 2 days of receipt of the submissions provided for in Order 3 above.

104. Note that the issue of costs will be determined on the papers without an oral hearing.

105. MITCHELMORE JA: I agree with Ward ACJ.

106. KIRK JA: I agree with Ward ACJ.

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