Slipper v Berry Buddle Wilkins Lawyers

1. [1]

   HER HONOUR: By summons filed 2 December 2014, the plaintiff seeks firstly, an order, to the extent required, that leave to appeal be granted; secondly, that the order of his Honour Magistrate Pierce made on 4 November 2014, in which judgment was entered for the plaintiff, be set aside; and thirdly, that this appeal be allowed and that the verdict and judgment entered below be set aside.

2. [2]

   The plaintiff in this Court is Peter Slipper (“Mr Slipper”) who was the defendant in the Local Court proceedings. The defendant in this Court is Berry Buddle Wilkins Lawyers (“Berry Buddle Wilkins”) who was the plaintiff in the Local Court proceedings. For convenience, I shall refer to the parties by name.

3. [3]

   The parties handed up a court book containing the Local Court file (Ex A). Berry Buddle Wilkins relied on the affidavit of Luke Buddle dated 12 February 2015, which annexed their Local Court submissions, which by oversight had been omitted from the Court Book.

The appeal

1. [4]

   Section 39 of the Local Court Act 2007 (NSW) provides that a party who is dissatisfied with a judgment or order of the Local Court may appeal to the Supreme Court, but only on a question of law.

2. [5]

   Section 40(1) of the Local Court Act provides that a party who is dissatisfied with a judgment or order of the Local Court may appeal to the Supreme Court on a ground that involves a question of mixed law and fact, but only by leave of the Supreme Court.

3. [6]

   Section 41(1) of the Local Court Act provides that this Court may determine an appeal either (a) by varying the terms of the judgment or order, (b) by setting aside the judgment or order, (c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court’s directions, or (d) by dismissing the appeal.

4. [7]

   In Swain v Waverley Municipal Council [2005] HCA 4; (2005) 220 CLR 517, Gleeson CJ at [2] reiterated that in the common law system of civil justice, the trial process determines the issues between the parties. The system does not regard the trial as merely the first round in a contest destined to work its way through the judicial hierarchy until the litigants have exhausted either their resources or their possibilities of further appeal.

Whether leave to appeal should be granted

1. [8]

   In written submissions, counsel for Berry Buddle Wilkins argued that none of Mr Slipper’s grounds of appeal justify that leave be granted, because “something more than a contention that the judge at first instance was arguably in error is required”: see Disability Services Australia Limited v Gollop & SafeAs Australian Pty Ltd [2015] NSWSC 147, Wilson J at [41]). Usually leave is limited to those cases concerning matters that involve issues of principle, questions of general importance or injustices which are reasonably clear. Counsel further submitted that the relatively small amount of money involved in the proceedings compels, absent some significant issue of principle, that leave to appeal should be refused. However, I have taken a different view to that of Berry Buddle Wilkins.

2. [9]

   At the hearing before this Court, Berry Buddle Wilkins accepted that the grounds of appeal identified in 1 and 5 involve questions of law and therefore do not require leave.

3. [10]

   Berry Buddle Wilkins submitted that grounds 2, 3 and 4 involve mixed questions of law and fact and require leave to appeal. It submitted that:

4. [11]

   However, the construction of a contract is a question of law and so the appeal is as of right: Australian Broadcasting Commission v Australian Performing Right Association Ltd (1973) 129 CLR 99; (1973) 47 ALJR 526. In order to construe whether or not there was a variation to the contract for legal services, it is necessary to consider the surrounding factual circumstances. If the appeal involves mixed questions of fact and law, in construing the contract it is my view that leave ought to be granted and I do so.

The Local Court proceedings

1. [12]

   On 11 December 2013, Berry Buddle Wilkins filed its statement of claim in the Local Court proceedings seeking payment of $31,613.83 including interest and costs as at 11 December 2013, for legal services provided to and for the benefit of Mr Slipper. The legal services were provided to Mr Slipper between 12 December 2012 and 3 May 2013 (S/C [1]).

2. [13]

   On 26 February 2014, Mr Slipper filed a defence. He did not deny receiving the benefit of the legal services provided by Berry Buddle Wilkins or the quantum of the claim, but contended that there was a binding agreement whereby any payment for those services would be a deferred obligation. Berry Buddle Wilkins denied that there was any such arrangement.

3. [14]

   In the Local Court proceedings, it was not in dispute that Berry Buddle Wilkins was at all relevant times an incorporated firm providing and entitled to provide legal services in New South Wales. Mr Slipper was a former parliamentarian in the Parliament of the Commonwealth of Australia and had been involved in proceedings brought against him in the Federal Court of Australia by a former member of his staff, Mr James Ashby. During part of those Federal Court proceedings, Berry Buddle Wilkins acted as solicitors for Mr Slipper.

4. [15]

   In the Local Court, Berry Buddle Wilkins relied upon the affidavit of Mr Daniel Wilkins sworn 3 October 2014. Mr Wilkins was cross examined. Mr Simon Berry is the solicitor from Berry Buddle Wilkins who acted for Mr Slipper. He is no longer is employed by Berry Buddle Wilkins. Mr Berry relied on his affidavits sworn 14 March 2014 and 17 March 2014. Mr Berry was cross examined. Mr Slipper provided an affidavit sworn 22 October 2014, but did not attend Court so was not cross examined.

5. [16]

   On 10 July 2013, a deed was entered into by the Commonwealth of Australia (“the Act of Grace Payment Deed”). The Commonwealth agreed irrevocably to provide Mr Slipper with reimbursement for certain legal expenses incurred by him in various Federal Court proceedings, including the proceedings where Berry Buddle Wilkins provided legal services to Mr Slipper. It appears that the Commonwealth will reimburse Mr Slipper when the litigation involving him is finalised.

6. [17]

   The matters in dispute appeared to be limited to whether or not there was a binding arrangement entered into between the parties whereby Berry Buddle Wilkins would defer any claim for payment of its outstanding legal fees and expenses until such time as either the Federal Court proceedings were concluded and/or the Commonwealth of Australia honoured its obligations under the Act of Grace Payment Deed.

The costs agreement

1. [18]

   Both parties referred to part of the costs agreement dated 20 December 2012 between Berry Buddle Wilkins and Mr Slipper where it states:

2. [19]

   No notice of intention to terminate the agreement was given.

Witness statements and cross examination

1. [20]

   Mr Slipper’s version of events contained in his affidavit dated 22 October 2014. It is as follows:

2. [21]

   Mr Berry’s version is at [11] to [18] of his affidavit dated 14 March 2014. It reads:

3. [22]

   In cross examination Mr Berry gave the following evidence (T33.38-47; T34.28-38):

4. [23]

   Mr Wilkins in his affidavit dated 3 October 2014 gave his version of events. He stated that he had no knowledge of any variation of the costs agreement. However, he also stated that he had knowledge of Mr Slipper’s financial difficulties before he was accepted as a client. At [42] he said:

5. [24]

   In cross examination Mr Wilkins gave the following evidence (from T41 to T46):

The Magistrate’s decision

1. [25]

   In submissions, it appears that the main issue in dispute was whether any consideration was given (T48.5-10).

2. [26]

   The Magistrate’s decision is as follows (T51.27-48):

3. [27]

   The main reason the Magistrate decided Berry Buddle Wilkins should succeed was that the agreement was a gratuitous offer to wait. He was of the view that there could not be a binding variation to the contract as there was no consideration.

Grounds of appeal

1. [28]

   Mr Slipper appeals the decision of the Magistrate on the following five grounds.

2. [29]

   Since the Magistrate decided that any variation of the agreement was void for want of consideration (ground 3), I shall deal with it first followed by grounds 1, 2, 4 and 5 (“the construction of the variation”).

(3) Did the Magistrate err in finding that any variation of the agreement was void for want of consideration?

1. [30]

   It was common ground that when Berry Buddle Wilkins entered into a costs agreement with Mr Slipper, it was aware that Mr Slipper owed money to his former solicitor and the issue of Mr Slipper’s payment of legal fees to Berry Buddle Wilkins was of major concern.

2. [31]

   There is a conversation about deferral of payment of fees between Mr Berry on behalf of Berry Buddle Wilkins and Mr Slipper, which could amount to offer and acceptance of a variation. This conversation occurred after Mr Barry received a copy of the Act of Grace Payment Deed (in about early May 2013). Mr Berry said, “I am still getting a lot of pressure about the outstanding fees. It is OK though. I understand that you are impecunious and we will just have to wait until the Act of Grace payment kicks in. Are you OK with that?” Mr Slipper replied, “That would be great. Thank you.” ([17] and [18] Berry’s Aff, 14 March 2014). However, if no fresh consideration was given that agreement will merely constitute a gratuitous offer to wait.

3. [32]

   Mr Slipper submitted that the Magistrate erred in finding that there was no consideration. The solicitor for Mr Slipper argued that in paragraph 20 of Mr Slipper’s affidavit dated 22 October 2014, it explicitly states that the consideration given concerning any variation of the costs agreement was the Act of Grace Payment Deed guaranteeing payment proffered by the Commonwealth. Mr Slipper said that the obtaining of a deed poll concerning the Act of Grace Payment was naturally enough consideration in the way of some other means of profit or benefit. He also submitted that the rendering of further instructions and the opportunity to do work for which one will be paid fees by the Commonwealth on an ongoing basis is additional and further consideration.

4. [33]

   In support of his proposition that the Act of Grace Payment Deed was consideration, Mr Slipper relied upon Williams v Roffey Bros & Nicholls (Contractors) Ltd [1990] 1 All ER 512; [1990] 2 WLR 1153 at 1165:

5. [34]

   Mr Slipper also referred to Australian Woollen Mills v Commonwealth (1944) 69 CLR 476; [1945] ALR 16 as authority for the proposition that consideration may exist in the accruing of some right or interest or profit or other benefit.

6. [35]

   According to Mr Slipper, Mr Berry’s statement in answer to the question of an ongoing retainer that: “we can continue acting for you” ([18] Berry’s Aff, 27 October 2014) constituted acceptance of the consideration.

7. [36]

   Mr Slipper submitted that the finding that no fresh consideration had been provided was legally erroneous, because it assumes that the Act of Grace Payment Deed was not consideration and that Mr Berry’s above statement was not an acceptance of that consideration.

8. [37]

   Berry Buddle Wilkins submitted that in circumstances such as these, there is no consideration because a promise to perform an existing legal duty (to pay the legal fees) is not fresh consideration. Counsel for Berry Buddle Wilkins referred to the relevant section in J W Carter, Contract Law in Australia, (6th ed 2013, LexisNexis) at [6-41] where the learned author states:

9. [38]

   Further, Berry Buddle Wilkins submitted that there would be no consideration when a variation is exclusively for the benefit of one party, and that this is the case here because the law firm is not accruing any extra benefit by allowing Mr Slipper to defer payment until his Act of Grace Payment comes through. In support of this proposition, counsel for Berry Buddle Wilkins again referred to Contract Law in Australia at [7.26] which the learned author continues:

10. [39]

    Counsel for Berry Buddle Wilkins submitted that the contention of Mr Slipper that the Act of Grace Payment Deed was itself the consideration “makes no sense”. He said that the very conversations upon which Mr Slipper places reliance occurred after the Act of Grace Payment Deed and the benefits flowing from that instrument had already been received by Mr Slipper. Further, counsel for Berry Buddle Wilkins said that Mr Slipper was pursuing the Act of Grace Payment for other interests anyway (his own and to pay outstanding legal fees to Maurice Blackburn).

11. [40]

    Counsel for Berry Buddle Wilkins submitted that the second matter identified by Mr Slipper as consideration, the provision of further instructions to the solicitors, also failed to meet the test for consideration. He argued that the provision of instructions as consideration for a lawyer is an artificial submission. In addition, counsel for Berry Buddle Wilkins argued that an act of grace payment is not automatic and still requires the Commonwealth to assess and decide whether or not to pay. He submitted that even if there was going to be a payment, it would not be a “blank cheque”, a guaranteed payment of everything.

12. [41]

    Further, counsel for Berry Buddle Wilkins submitted that Mr Slipper’s reliance on Williams v Roffey is erroneous. He said in that case, and other similar cases, a variation may not require consideration where the contract is incomplete, and because of a doubt about the ability to complete (for example because of impecuniosity) there is a variation of an agreement, if it yields a practical benefit. Counsel for Berry Buddle Wilkins argued that these circumstances are distinguished from that case since the work had been completed and had been invoiced. He submitted that where work has been performed by one party, it is necessary to provide some form of further consideration for their benefit in order to make a binding variation, referring to Vanbergen v St Edmunds Properties Limited [1933] 2 KB 223.

13. [42]

    In SAS Realty Developments Pty Ltd v Kerr [2013] NSWCA 56 at [70] Ward JA said that: “Agricultural & Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 at [96] makes clear that fresh consideration is required to make valid an agreement varying another contractual agreement.”

14. [43]

    In my view, there does not appear to be any fresh consideration at all in these circumstances, there is a source of funds that will become available from which Mr Slipper can pay his legal fees. This is the duty Mr Slipper is already bound to perform.

15. [44]

    The general rule is that to perform an existing duty is not fresh consideration: Wigan v Edwards (1973) 1 ALR 497; (1973) 47 ALJR 586. When the promisee is already contractually bound to the promisor, the general rule is that performance of an existing contractual obligation will not be good consideration unless some additional benefit is conferred. I do not accept that the provision of further instructions with “the opportunity to do work for which you will be paid fees by the Commonwealth on an ongoing basis” is an additional benefit amounting to consideration.

16. [45]

    Nor do I consider Mr Slipper’s pursuing of the Act of Grace Payment to be an additional benefit. A benefit may exist if performance of the existing duty avoids problems that are associated with non-performance, as in Williams v Roffey. But here, the legal work has been performed and invoiced. Such a variation is for Mr Slipper’s convenience alone, and so in these circumstances, there is no consideration.

17. [46]

    In my view, the Magistrate was correct in deciding that the agreement was simply a “gratuitous offer to wait” that was not binding on the parties as there was no fresh consideration.

Construction of the variation agreement

1. [47]

   Since I have found there was no fresh consideration, and hence no variation, it is unnecessary to deal with grounds 1, 2, 4 and 5 of appeal, which concern the construction of the variation. Even if there was an agreement between Mr Berry of Berry Buddle Wilkins and Mr Slipper to defer payment, the Magistrate was correct in finding that there was no fresh consideration involved and consequently no valid variation.

2. [48]

   The result is that the appeal is dismissed. The decision of his Honour Magistrate Pierce made on 4 November 2014 is affirmed. The summons filed 2 December 2014 is dismissed.

3. [49]

   Costs are discretionary. Costs follow the event. The plaintiff is to pay the defendant’s costs on an ordinary basis as agreed or assessed.