Connolly Suthers (a firm) v Frost [1994] QCA 285 [1995] 2 Qd R 117

IN THE COURT OF APPEAL [1994] QCA 285 SUPREME COURT OF QUEENSLAND Appeal No. 269 of 1993 Brisbane Before Fitzgerald P. Davies J.A. Williams J. [Connolly Suthers v. Frost] BETWEEN: CONNOLLY SUTHERS (A FIRM) (Plaintiff) Respondent AND: GEOFFREY ELLIS FROST (Defendant) Appellant REASONS FOR JUDGMENT - THE COURT Judgment delivered 12/08/1994 This is an appeal against a judgment for a firm of solicitors against a former client in the sum of $71,138.84. The appeal was originally, in substance, on two grounds; the first that the learned trial judge was wrong in holding that the appellant's defence based on s. 7 of the Solicitors Act 1891 failed; the second that he was wrong in dismissing the appellant's defence based on unconscionable conduct or undue influence. At the commencement of this appeal, the second ground was abandoned. The judgment was in respect of moneys due under a deed of compromise dated 22 July 1992 by which the parties to the action and J.E. Frost & Associates Pty Ltd, one of the appellant's companies, compromised an action previously -- 1 of 8 -- 2 instituted in the District Court by the respondent against the appellant. The short history of the matter is as follows. In 1991 and early 1992 the respondent performed legal work for the appellant and several companies, and apparently one partnership, in which he was involved. By early 1992 the respondent had performed considerable work for which it had not been paid. Up to 15 January 1992 the respondent's unpaid accounts for this work totalled $48,789.41. In addition, the value of work in progress was estimated by the respondent at $21,500. In consequence of a meeting held between the parties on 14 February 1992, the respective amounts owing, for the purpose of compromise, were agreed at $48,000 and $9,000 and the appellant entered into a deed of guarantee with the respondent dated 27 February 1992 by which he acknowledged on his own behalf and on behalf of the other entities that these amounts were presently due and payable and guaranteed payment of them on or before 30 April 1992. The money was not paid by that date. There were some discussions in June about an extension of time for payment but when nothing came of those discussions the respondent issued a District Court plaint for $57,000, being moneys owing pursuant to the deed of guarantee. It was that action which was the subject of the deed of compromise of 22 July. It is in the light of those facts that the appellant -- 2 of 8 -- 3 contended below and in this Court that the deed of compromise was an agreement which came within s. 3 of the Solicitors Act. That section relevantly provides: "A solicitor may make an agreement in writing which his client respecting the amount and manner of payment for the whole or any part of any past or future services, fees, charges, or disbursements in respect of any business done or to be done by such solicitor in any capacity, either by a gross sum or by commission or percentage or by salary or otherwise, and either at the same time or at a greater or at a less rate as or than the rate at which he would otherwise be entitled to be remunerated subject to the provisions and conditions in this part of this Act contained: Provided always that, when any such agreement is made in respect of business done or to be done in any action in the Supreme Court of Queensland, the amount payable under the agreement shall not be received by the solicitor until the agreement has been examined and allowed by the taxing officer, and if it appears to the taxing officer that the agreement is not fair and reasonable, he may require the opinion of the court or a judge to be taken thereon by motion or petition, and such court or judge shall have power either to reduce the amount payable under the agreement or to order the agreement to be cancelled, and the costs, fees, charges, and disbursements in respect of the business done to be taxed in the same manner as if no such agreement had been made." It is accepted by the appellant that unless the deed of compromise was an agreement within the terms of s. 3, the appeal must fail. It may be assumed for the purpose of considering this question that the appellant was, at the time the deed was entered into, a client of the respondent for the purpose of that section. The question is whether the deed was an agreement "respecting the amount and manner of payment for ... services, fees, charges, or disbursements ...". -- 3 of 8 -- 4 Read literally and in isolation from their context, it might be possible to construe the words which we have quoted to mean that any connection between the agreement and the amount and manner of payment of fees might be sufficient to bring the agreement within s. 3. There is undoubtedly some connection in the present case. That is that the amount the subject of the deed of compromise is the amount sued on in the earlier District Court action, that amount is the amount agreed to be paid under the deed of guarantee and that amount in turn is the amount agreed between the parties as payable in respect of the respondent's claim for fees. The appellant contends that the connection was closer than that. He submits that the deed of 22 July was an amendment to the deed of 27 February. But that is not correct. The deed of 22 July did no more than incorporate by reference amounts of principal and interest stated in the deed of 27 February. The obligations which it stated were entirely new. Section 3 must be looked at in the context of Part I of the Solicitors Act and the Costs Act 1867. See s. 15 of the Solicitors Act. Read in that context, the purpose of s. 3 appears to be to enable a solicitor and his or her client to enter into an agreement with respect of costs which would have the effect of avoiding the necessity of taxation of the solicitor's bill except to the extent that, under the proviso to s. 3, the solicitor cannot receive payment under -- 4 of 8 -- 5 the agreement until it has been examined and allowed by the taxing officer or a court or a judge as one which is not unfair or unreasonable. In other words, read in that context, the making of an agreement pursuant to s. 3 is an alternative to delivery of a bill of "fees charges and disbursements" under s. 22 of the Costs Act. The relevant legislation therefore offers alternative means of charging; by agreement made before or after the work is done or by rendering a bill, after the work is done, which may then be subject to taxation. The alternative provided by s. 3 offers considerable advantages to a solicitor. One is that of avoiding taxation of an itemised bill. Another is the choice offered of manner of charging; by gross sum or commission or percentage or salary or otherwise. Even if it was correct to describe the deed of guarantee as an agreement within s. 3, we do not think it correct to so describe the deed of compromise. The "moneys owing", payment of which, by the deed of guarantee, the appellant guaranteed were described in that deed as moneys owing for fees rendered for professional services. By contrast, the payments agreed to be made under the deed of compromise, together with the securities agreed to be given under that deed, were of a different character. They were promised in compromise of the action brought on the deed of guarantee, the respondent on its part agreeing to -- 5 of 8 -- 6 discontinue that action. Though the amounts of the payments promised were the same as the amounts under the deed of guarantee, though payable at different times, the promise to pay them bore the character of part of a total promise made to compromise an action. Consequently the payments did not have the character of payments for past legal services and consequently were not payments for fees, charges or disbursements within the meaning of that term in s. 3. The appeal must therefore be dismissed. -- 6 of 8 -- IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 269 of 1993 Brisbane [Connolly Suthers v. Frost] BETWEEN: CONNOLLY SUTHERS (A FIRM) (Plaintiff) Respondent AND: GEOFFREY ELLIS FROST (Defendant) Appellant ____________________________________________________________ _____ FITZGERALD P. DAVIES J.A. WILLIAMS J. ____________________________________________________________ _____ Judgment delivered 12/08/1994 REASONS FOR JUDGMENT - THE COURT ____________________________________________________________ _____ APPEAL DISMISSED. ____________________________________________________________ _____ CATCHWORDS: LEGAL PRACTITIONERS - AGREEMENT FOR COSTS - Respondent performed legal work for appellant and related entities - appellant entered deed of guarantee acknowledging amounts due and payable and guaranteeing payment - failure to pay - respondent issued plaint against appellant - deed of compromise entered between the parties - whether deed of compromise was an agreement "respecting the amount and manner of payment for ... fees, charges, or disbursements ...". S. 3 Solicitors Act 1891 Counsel: Mr L. Bowden for the Appellant Mr. R.N. Chesterman Q.C. with him Mr D.A. Savage for the Respondent -- 7 of 8 -- 8 Solicitors: Thomson King for the Appellant Hunt and Hunt for the Respondent Date(s) of Hearing: 21 July 1994 -- 8 of 8 --