Victorian solicitors’ conduct rules say at r. 18.5

‘A practitioner must not, outside an ex parte application or a hearing of which the opponent has had proper notice, communicate in the opponent’s absence with the court concerning any matter of substance in connection with current proceedings unless:

1. the court has first communicated with the practitioner in such a way as to require the practitioner to respond to the court; or

2. the opponent has consented beforehand to the practitioner communicating with the court in a specific manner notified to the opponent by the practitioner.’

I know of at least one complaint to the Legal Services Commissioner against a Victorian barrister for filing supplementary submissions after the close of argument which was found made out but not prosecuted.  The appropriate response, in the event that this increasingly common wrong is perpetrated against your client is to write and request consent to a reply, and in default of an appropriately timely consent, apply for the relisting of the matter to complain in open court.

The rule was recently reiterated by the Full Federal Court in Comcare v John Holland Rail Pty Ltd (No 3) [2011] FCA 164, albeit from the perspective of what a judge should and should not do:

‘The rule is that a judge should not receive any communication from anyone concerning a case that the judge is to decide, made with a view to influencing the conduct or outcome of the case.  See, for example, Re JRL; Ex parte CJL (1986) 161 CLR 342 (“Re JRL”) at 346 (Gibbs CJ) and 350 (Mason J), both citing Kanda v Government of Malaya [1962] AC 322 at 337 and Reg. v Magistrates’ Court at Lilydale; Ex parte Ciccone [1973] VR 122 at 127.  In this context, communications made by one party without the knowledge of the other are governed by the principle that a judge should disqualify himself from hearing a matter where a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the issues in the case: Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 (“Ebner”) at 344; British American Tobacco Australia Services Ltd v Laurie (2011) 273 ALR 429; [2011] HCA 2 (“British American v Laurie”) at 464-5, [139]-[140]; Re JRL at 351.  This is the apprehension of bias principle.’

See also R v Fisher (2009) 22 VR 343 at [37] to [41] (VSCA).

‘Rule 63.29 of the [Victorian Supreme Court rules] provides that:

On a taxation on a party and party basis all costs necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed shall be allowed.

Authorities on r 63.29 (and cognate provisions) make it clear that costs of a party allowable as between party and party are not necessarily limited to work done once the proceeding is commenced because the basis for the allowance is whether the costs were “necessary or proper”.[2]  Legal costs incurred for work undertaken in reasonable anticipation of litigation in principle can be allowable[3] although the simple fact that the costs were so incurred does not mean that they will be allowable on taxation.[4] Such costs must be shown to have been “necessary or proper for the attainment of justice” and the satisfaction of that test requires some real relationship between the work done and the subject matter of the litigation, once commenced.[5]  Whether that can be shown will be fact specific to the particular case. As Professor G E Dal Pont wrote in the Law of Costs:

Drawing the line between what is, and what is not, allowable on taxation in respect of pre-proceedings costs, is not capable of precise determination simply by statements of principle; the matter remains based in the discretion of the taxing officer dependant upon the particular facts of each case.[6]

Moreover, whether the Court has the power under r 62.02 of the SCR or s 1335 of the Act to order security for such costs is a separate question to whether pre-commencement costs may be allowable on a taxation.

…

Quite plainly, pre-commencement costs incurred in anticipation of litigation could not be recovered under r 63.29 (and cognate provisions) unless a proceeding was actually instituted and an award of party/party costs made by the Court. A party could not obtain security for pre-commencement costs unless there was a proceeding. But if proceedings are initiated, an award of party/party costs made in that proceeding will include pre-commencement costs that satisfy the “necessary or proper” test in r 63.29 of the SCR (and cognate provisions) as such costs fall within the scope of costs allowable under taxation.[14]

The tribunal ordered that the application to set aside the default judgment was to succeed or fail depending on whether the lawyers filed an affidavit verifying compliance with chapter 3 of Part 3.4 of the Legal Profession Act 2007 (Qld), the part which deals with costs disclosure defaults.  I can only imagine that there are very many clients against whom lawyers have entered default judgments who are likely to be able to have them set aside as irregular, even years after the event, though the Queensland tribunal cases might be distinguished on the basis of the need to establish for jurisdictional reasons that what was being sued for was a debt or liquidated demand.  The member relied on a previous decision of the same tribunal (Morales v Murray Lyons Solicitors (a firm) [2010] QCATA 87) where the Deputy President, Judge Kingham agreed with the reasons of Member Mandikos, who said:

‘[30] The only other basis upon which Mr Morales might argue that there was an irregularity in the entry of the default decision – such that it should now be set aside – relates to QCAT’s jurisdiction. In City Pacific Limited (in liq) & Anor v Ballandean Investments P/L [2010] QCA 113 at [27] “City Pacific”, her Honour Justice Holmes, citing earlier authority, restated the principle that:

“A judgment entered in favour of a party who has no entitlement to it is irregular.”

[31] Thus, if QCAT did not have jurisdiction to hear this dispute relating to payment of legal fees in the first instance, that would be an irregularity, sufficient to justify setting aside the default.

[32] As this is a matter involving the payment of legal fees, regard must be had to the Legal Profession Act 2007 (Qld) (“LP Act”), in particular Chapter 3, Part 3.4 “Costs disclosure and assessment”. Section 319(1)(a) provides that legal costs are recoverable under a compliant costs agreement. In this matter, there is a written client agreement, drafted pursuant to s48 of the Queensland Law Society Act 1952 (as it applied at the time).[12]

[33] There are further provisions contained within the LP Act, relating to the recovery of legal costs, which must be complied with before a law practice commences proceedings to recover legal costs. Section 329 of the LP Act provides that:

Legal costs can not be recovered unless bill has been served

(1) A law practice must not start legal proceedings to recover legal costs from a person until at least 30 days after the law practice has given a bill to the person under sections 330 and 331 or under provisions of a corresponding law that correspond to sections 330 and 331.

(2) A court of competent jurisdiction may make an order authorising a law practice to start legal proceedings against a person sooner if satisfied the person is about to leave this jurisdiction.

(3) A court of competent jurisdiction before which any proceedings are brought in contravention of subsection (1) must stay those proceedings on the application of a party or on its own initiative.

(4) This section applies whether or not the legal costs are the subject of a costs agreement.

[34] It is my view that, if a firm does not properly serve a bill to the client in accordance with s329 of the LP Act, in the form required by Chapter 3, Part 3.4 of the LP Act, that the firm does not have an entitlement to commence proceedings to recover legal costs as a debt or liquidated demand in QCAT. Any orders made in proceedings that had been commenced without having complied with the LP Act would be irregular, and set aside in accordance with the reasons espoused in City Pacific.

[35] Minimally, a Minor Civil Dispute Application filed by a law firm in QCAT, seeking to recover legal fees as a debt or liquidated demand, will need to annex the following material:

A solicitor’s affidavit annexing:

1. Any applicable costs agreement, or the relevant scale of costs, or the basis for calculation of fair and reasonable costs (s319 LP Act);
2. Evidence indicating that a legal costs bill has been served, and that at least 30 days have passed (s329 LP Act);
3. A copy of the legal costs bill, which complies with s330 of the LP Act; and
4. Evidence indicating that a “Notification of client’s rights” has been served (s331 LP Act).

…

[37] On the evidence before QCAT, it is unclear whether ML Solicitors have complied with the provisions of the LP Act before commencing the application that led to the default decision. It may be that these matters have inadvertently been omitted from ML Solicitors’ material, as the nexus between recovery of legal fees in QCAT and the LP Act has not yet been traversed in a QCAT decision.’

The Tribunal in Morales gave the lawyers an opportunity to hang onto their default judgment by filing an affidavit attesting to compliance with chapter 3 of Part 3.4

When I think of fixed fees, I tend to think of them in very simple terms: ‘I will do your case for $100,000, including disbursements and counsel’s fees.’  There is a tendency to think of the $100,000 as a cap, but in a simple agreement like this, the lawyer will get the fee if the other side dies and the cause of action dies with him, or the other side settles a few days into the retainer, or the client stumbles across a smoking gun which renders their prospects of victory at nil.  Galling as paying anyone $550 per hour for a job which may go on and on and on may be, paying someone $100,000 for next to nothing must be even more galling.  Of course value pricing retainers may be very sophisticated, and I am guilty of myopia.

There is also, I think, a tendency to think of fixed fees as giving certainty at the outset in a way unique to this method of charging.  In Victoria (and, I think, everywhere else in Australia), solicitors must by law estimate at or near the start of a matter its total costs — their fees, witness fees to be charged as disbursements, counsel’s fees, and other disbursements such as trial and transcript fees — or, if that is not practicable a range of the possible total costs. So clients should be entitled to be placed into the same position as the solicitor in terms of knowledge of how much their matter will cost, with the advantage of fixed fee being no more than the apportioning to the client the risk of the matter turning out to be simpler than the price justifies and to the solicitor the risk of it being more complex.

Because of the poverty of solicitors’ compliance with the obligation to give a good faith considered estimate of total costs at the outset (and the almost complete non-enforcement of the obligation), fixed fees represent a great improvement to clients who fix them in their interests.  But at least some of that improvement could be achieved by fixing the current system by enforcing the requirement for good faith carefully considered estimates of total costs, rather than moving to fixed fees.  Quite a bit more could be achieved by introducing penalties for solicitors who exceed estimated total fees without justification.  More again by stamping out fraud.  And I suspect that the very real practical advantage of fixed fees begins to diminish somewhat as soon as the fixed fee becomes a series of fixed fees, and subject to scopes of work such that disputes over variations assume all the difficulties of construction law, except that one party will be a lawyer who will not have to engage lawyers to have the dispute on his behalf.  Especially is that so in the case of the ad hoc user of legal services who have no commercial relationship with the lawyers within which to negotiate.

I have this anxiety that what fixed fees are really about is allowing lawyers to sell their learning (aka ‘intellectual capital’) for fees much greater than usual rates would allow for the time involved in solving the client’s problem, or advising or representing them.  This is where ‘value’ comes in, I worry: where the value of the lawyer’s services to the client exceeds the product of the lawyer’s time multiplied by usual fees, the client should be charged more to reflect the value to the client of the services.

And I think I have a problem with the entrepreneurial professional. No doubt some people think I am an entrepeneurial professional, what with my blog and all, but from time to time prospective clients inform me of their problem, I send them a seminar paper that covers what they know, and they get what they want with a few minutes of my time at no fee.  More often, I provide advice for a few hundred dollars which a non-expert charging on time would be likely to charge substantially more for.  I think of this as the upside of time based billing, a manifestation of the proposition of the profession as a public service.  I want to make a good living, but if I can assist without spending too much time, then I feel some sort of duty to do so.  Of course there is nothing about time billing which makes it inherently favourable to giving away your intellectual capital.  Value pricers can be kind too.  But I just get the impression that value pricing as a mindset will tell lawyers that they must charge a premium whenever a good chunk of their ‘intellectual capital’ is let loose.

The current system of lawyers charging for their costs doesn’t work very well for those responsible for paying them.  There are two problems:

• First, many lawyers charge too much.  This explains to a large degree why we are not very well liked.  I doubt that value pricing is going to do much to change this.  It’s not like lawyers are going to say ‘As this does not represent a very big problem for you, we won’t charge you as much as we usually do.’  (I suppose that where clients and lawyers enter into a costs agreement in respect of all work by a client for a year, the firm may structure itself so as to have a division doing the low-end work for less than they would otherwise in order to attract the high end work.  And in those retainers simple enough to justify a true fixed fee, the ability to shop around may bring the price of legal services in those areas down, in a way which the mandatory estimate of total fees required by law does not, since it is often not provided with any accuracy or in good faith.) The exponents of value pricing are forever going on about how the move to value pricing enhanced profitability.  It is talked about in terms of the tax expert who dreams up a solution to a client’s problems in the shower, rings the client, and says ‘I have an idea which will save you $1 million a year. I’ll sell it to you for $22,000.’
• Secondly, clients get dragged into transactions and disputes without understanding how much it’s going to cost them in legal fees.  It is this problem that the regulation of legal costs in practice exclusively addresses, and is the problem to which, as I understand it, the value pricers propose the solution.  There is already a very strong protection available to clients and others who have to pay legal fees.  First, they can obtain taxation by the Costs Court, almost always at the lawyer’s considerable expense: clients need only (a) reduce the solicitor’s bill by one-sixth in order to have their costs paid by the lawyer (and there are a hell of a lot of bills which slicing a sixth off would be just the entree), or (b) demonstrate some non-compliance with the regime which requires lawyers to disclose information about their costs in advance, including how much ‘the matter’ is going to cost in terms of solicitors’ fees, barristers’ fees, and other disbursements.  Very few solicitors manage to comply to the letter with the costs disclosure regime, with the extraordinary further result that the client need not pay the fees until there has been a taxation of them by the Supreme Court, and the solicitors may not sue for them pending the outcome.  In the taxation, the solicitor is penalised by a percentage — regularly 15%, and up to 50% in relatively bad cases — for their disclosure default.  Second, in cases of serious disclosure defaults, the Costs Court can ignore the costs agreement in conducting the taxation, and tax the fees against the government promulgated court scales.  And if the costs agreements are unfair for some other reason, the cient can apply t0 VCAT and have them set aside.  Unlike just about any other contract, VCAT can set aside a contract entered into by a fair process but which is thought to be unreasonable in its terms.  Thirdly, in cases where legal fees are $25,000 or less, and there is a dispute about all or some of them, clients can lodge a costs dispute with the Legal Services Commissioner who will provide free mediation, including a free opinion from a costs lawyer often enough, and if that fails clients can refer the dispute to VCAT for an alternative version of a taxation.

But for some reason, clients do not often exploit these tools available to them, so that the system so weighted towards the client on paper, may be declared a failure in practice.  In a submission to the government the members of the now-abolished Legal Profession Tribunal once expressed their surprise at the paucity of applications to set aside costs agreements.  I do not really know why it is so.  Costs law remains somewhat arcane.  It is surprising that there is no annotated Legal Profession Act 2004. Lawyers expert in lawyer-client costs disputes are comparatively rare.  Many costs lawyers are good at party-party disputes but not so good at lawyer-client disputes, being much more mainstream commercial disputes outside of the traditional purview of costs law.  In part this is a reflection of the fact that prior to the Legal Practice Act 1996 there were comparatively few time costed retainers, while between 1996 and 2006 the law did not allow for taxations of costs agreements providing for hourly rates.

As noted, severe disadvantages accrue to solicitors who do not accurately make disclosure about their costs at the outset, but exceeding the originally estimated total fees for the matter does not necessarily result in disadvantage to the solicitor so long as they conscientiously re-estimate the fees as things change, and as soon as they realise their original estimate was too optimistic.  There should be a whole jurisprudence around how good an estimate of the total costs needs to be before it can be considered a compliant disclosure, but the law in that regard is hopelessly undeveloped. The only case I know is Casey v Quabba [2005] QSC 356, where the statement ‘it is estimated the possible range of fees and costs recoverable will be between nil and $250,000 (approximately)’ did not satisfy the NSW correlate of s. 3.4.9(1)(c) as not being a ‘genuine attempt to inform the client as required by the [correlate provision].’

So the client in the real world ought to be delighted by a proposition that lawyers will fix their fee in advance.   And I do believe the hype about the benefits of value pricing for employee solicitors.  One of the things I have most enjoyed about coming to the Bar is being able to price my own services.  Barristers agree lump sum fees more than solicitors — often one gets a brief to appear on an application, and agrees a fee which is marked on the front of the brief for preparation and the appearance, however long it takes.  Once I have done so, I am much happier about spending as long as it takes to do a good job, unshackled from the anxiety about over-charging the client for excessive research.  Writing hourly fees for many young lawyers in medium sized firms is demoralising:

• young lawyers do not actually believe they are worth the rates they are charged out at (because they’re not), and feel bad that their clients have to pay so much for their services;
• they see their clients getting dragged into transactions and disputes they can’t afford or wouldn’t have got into had they known how much it was going to cost;
• they see disputes being resolved as the result of inability to pay fees rather than any normative adjudication by the justice system, or a compromise properly informed by the likely range of outcomes of such an adjudication;
• they get a tiny fraction of the fees for themselves, so they feel exploited by their already unduly wealthy partner bosses;
• but unless they keep charging their clients liberally (fraudulently in some cases), what pay they do receive is at risk; and
• they receive inadequate training, and end up charging their clients for their own education.

I can imagine that a firm operating on a value pricing model could be a great relief for young lawyers, assuming that a greater collegiality is fostered by the new model, and much more resources put into systematising practice, training lawyers, sharing and storing knowledge, and that activities are appropriately rewarded in a new remuneration model, though I am sure that there are a whole new set of tensions and problems which would reveal themselves, particularly in those firms which jump on the bandwagon, as opposed to the brave pioneers experimenting with this model of practice at the moment, embracing it with all the passion necessary in such a scenario.

But getting back to clients.  In theory, lawyers are already obliged to give good faith estimates of the cost of the entire matter — costs to the end of a trial in a litigation matter, and so should know, to the extent that the lawyer acting in good faith can tell, what they’re up for on a worst case scenario.  If things change so as to make them more complicated, or time consuming, then it is going to cost more.  But if a quick settlement is reached, then they’re going to cost a great deal less.  What’s the lawyer going to do in such a situation? Price a bunch of litigation retainers on the basis of the average cost of each one, take the benefits from those which take less time than average and wear the losses of those which take more time than average?  I don’t see it happening, except in sophisticated outfits.  It would have the result that:

• Lawyers would have a financial interest in looking for the quickest settlement possible.  Indeed, lawyers who charge on an hourly basis sometimes tell me that where they use their contacts and relationships with the players in their field to negotiate a resolution by a couple of telephone calls which it would take a less-connected plodder months to achieve, they should be remunerated at a rate approaching the plodder’s fees.

• Clients would have less incentive to do likewise, because they can force their lawyers to forge on, leaving no rock unturned (or no avenue of frustration of the counterparty unavailed of), until what the client considers to be the ultimate negotiating position.  Anyone who has done a reasonable amount of pro bono work knows of the difficulty in obtaining appropriate compromise when the client faces no financial cost in forging ever onwards in their crusade to justice.

So of course there is going to be a system of staged fixed fee retainers.  Lawyers may agree to do the first few stages for relatively little, effectively as loss leaders for the meaty subsequent stages.  And in negotiating the fees for the later stages, the clients will be effectively locked in.  Corporations with in-house counsel familiar with litigation will be able to negotiate appropriate fees, but others may not.  All sorts of variations are possible, and the market may create sophisticated models in time where super-profits and super-losses compared with time based costing are prevented by caps on the minimum and maximum fees chargeable over the course of the matter.  But in a simple arrangement providing for staged fix fee retainers, at least the client who has entered an hourly rates costs agreement has certainty of price in one sense from the outset of the matter: the lawyers will do the job until its end at rates the client is prepared to pay.  What is to stop a lawyer from saying that she will do discovery only for a fee which is considerably greater than it would in fact cost at the firm’s normal hourly rates?

And what if the lawyer does not perform? How will the fees be treated upon termination by the client mid-retainer?  Is it a repudiation of the agreement so that the client has to pay the contract price?  What if, pre-retainer, the lawyer has parted with all the intellectual capital justifying the fixed fee, and setting up the architecture of the matter, so that what remains is just application which any schmuck can do?  What if the converse is true?  All that has been done so far by the lawyers is preparatory schmuck work, so that the really difficult decisions, the expertise required to answer which justify the fee, has not even started.  All this would need to be carefully articulated in the retainer.

But it is always easier to perceive problems in change, and difficult to see the problems which inhere in the status quo.  Despite my anxieties, I support value pricing and fixed fees.  I just don’t want anyone to get too starry eyed about them.

Here is what McClelland CJ at CL said:

574.  The second issue … is concerned with the Crown Prosecutor’s invitation to the jury to consider a list of fifty questions which the prosecutor told the jury were “the salient questions in order to decide the outcome of the case.” The fundamental submission was that by adopting this approach to his address the prosecutor committed the error discussed in R v Rugari [2001] NSWCCA 64; (2001) 122 A Crim R 1 at [57].

575. The examination by an appellate court of whether a miscarriage of justice occurred was considered in Libke v The Queen [2007] HCA 30; (2007) 230 CLR 559. At [83], Hayne J considered whether submissions made by the Crown Prosecutor were “comments that suggested (whether directly or indirectly by appealing to prejudice or passion) that the jury should follow some impermissible path of reasoning”: see R v DDR (1999) 99 A Crim R 327 at 340-343; [1998] 3 VR 580.
576. At the time of the trial, the duties of a Crown prosecutor were set out in Rules 62-65 (now rules 82-85) of the New South Wales Barristers’ Rules . The Barristers’ Rules then in force were made by the Bar Council under s 702 of the Legal Profession Act 2004 and were binding on legal practitioners by virtue of s 711 of that Act. Rules 62-65 were as follows:
     

     “Prosecutor’s Duties

     62. A prosecutor must fairly assist the court to arrive at the truth, must seek impartially to have the whole of the relevant evidence placed intelligibly before the court, and must seek to assist the court with adequate submissions of law to enable the law properly to be applied to the facts.

     63. A prosecutor must not press the prosecution’s case for a conviction beyond a full and firm presentation of that case.

     64. A prosecutor must not, by language or other conduct, seek to inflame or bias the court against the accused.

     65. A prosecutor must not argue any proposition of fact or law which the prosecutor does not believe on reasonable grounds to be capable of contributing to a finding of guilt and also to carry weight.”

577. Section 13 of the Director of Public Prosecutions Act 1986 empowers the Director to furnish guidelines to Crown prosecutors in respect of the prosecution of offences. Section 15(2) further provides that prosecutors to whom the Director has furnished guidelines are obligated to comply with those guidelines. The current Guidelines were in force at the time of the applicant’s trial, and the Barristers’ Rules set out above were incorporated into Appendix B to the Guidelines. Relevantly, Guideline 2 sets out the “Role and Duties of the Prosecutor” as follows:
     

     “A prosecutor is a “minister of justice”. The prosecutor’s principal role is to assist the court to arrive at the truth and to do justice between the community and the accused according to law and the dictates of fairness.

     A prosecutor is not entitled to act as if representing private interests in litigation. A prosecutor represents the community and not any individual or sectional interest. A prosecutor acts independently, yet in the general public interest. The “public interest” is to be understood in that context as an historical continuum: acknowledging debts to previous generations and obligations to future generations.

     In carrying out that function:

     ‘it behoves him – Neither to indict, nor on trial to speak for conviction except upon credible evidence of guilt; nor to do even a little wrong for the sake of expediency, or to pique any person or please any power; not to be either gullible or suspicious, intolerant or over-pliant: in the firm and abiding mind to do right to all manner of people, to seek justice with care, understanding and good countenance.’

     (per RR Kidston QC, former Senior Crown Prosecutor of New South Wales, in “The Office of Crown Prosecutor (More Particularly in New South Wales)”, (1958) 32 ALJ 148).

     It is a specialised and demanding role, the features of which need to be clearly recognised and understood. It is a role that is not easily assimilated by all legal practitioners schooled in an adversarial environment. It is essential that it be carried out with the confidence of the community in whose name it is performed.

     ‘It cannot be over-emphasised that the purpose of a criminal prosecution is not to obtain a conviction; it is to lay before a jury what the Crown considers to be credible evidence relevant to what is alleged to be a crime. Counsel have a duty to see that all available legal proof of the facts is presented: it should be done firmly and pressed to its legitimate strength, but it must also be done fairly. The role of the prosecutor excludes any notion of winning or losing; his function is a matter of public duty than which in civil life there can be none charged with greater personal responsibility. It is to be efficiently performed with an ingrained sense of the dignity, the seriousness and the justness of judicial proceedings.’

     (per Rand J in the Supreme Court of Canada in Boucher v The Queen (1954) 110 CCC 263 at p 270).

     In this State that role must be discharged in the environment of an adversarial approach to litigation. The observance of those canons of conduct is not incompatible with the adoption of an advocate’s role. The advocacy must be conducted, however, temperately and with restraint.

     The prosecutor represents the community generally at the trial of an accused person.

     ‘Prosecuting counsel in a criminal trial represents the State. The accused, the court and the community are entitled to expect that, in performing his function of presenting the case against an accused, he will act with fairness and detachment and always with the objectives of establishing the whole truth in accordance with the procedures and standards which the law requires to be observed and of helping to ensure that the accused’s trial is a fair one.’

     (per Deane J in Whitehorn v The Queen (1983) 152 CLR 657 at pp 663-664).

     Nevertheless, there will be occasions when the prosecutor will be entitled firmly and vigorously to urge the prosecution’s view about a particular issue and to test, and if necessary to attack, that advanced on behalf of an accused person or evidence adduced by the defence. Adversarial tactics may need to be employed in one trial that may be out of place in another. A criminal trial is an accusatorial, adversarial procedure and the prosecutor will seek by all proper means provided by that process to secure the conviction of the perpetrator of the crime charged.”

578. The duty to present a case fairly, completely and with fairness to the accused was emphasised in Livermore v The Queen [2006] NSWCCA 334; (2006) 67 NSWLR 659 at [24] where this Court cited with approval the dicta in McCullough v The Queen (1982) 6 A Crim R 274; [1982] Tas R 43 at 57:
     

     “[It is] quite impermissible [for a Crown Prosecutor] to embark upon a course of conduct calculated to persuade the jury to a point of view by the introduction of factors of prejudice or emotion. If such a situation should develop and there is a real risk that the conduct complained of may have tipped the balance against the accused then an appellate court will not hesitate to follow the safe course and order a new trial.”

579. In Livermore at [31] this Court held that a number of features of a Crown address, either alone or in combination, might require censure by an appellate court. These include:
     

     “(i) A submission to the jury based upon material which is not in evidence.
     (ii) Intemperate or inflammatory comments, tending to arouse prejudice or emotion in the jury.
     (iii) Comments which belittle or ridicule any part of the accused’s case.
     (iv) Impugning the credit of a Crown witness, where the witness was not afforded the opportunity of responding to an attack upon credit.
     (v) Conveying to the jury the Crown Prosecutor’s own opinion.”

580. Additionally, where submissions are made that contain matters which the appellant is asked to explain, the onus of proof is inappropriately reversed: Rugari at [57].
581. When it is submitted that a trial has miscarried by reason of the prosecutor’s address, it is necessary to consider the whole of that address. Each case will depend on its particular circumstances: Causevic v The Queen [2008] NSWCCA 238; 190 A Crim R 416 at [6] (McClellan CJ at CL; Barr and Price JJ agreeing).

…

632. A Crown prosecutor has a role of great significance in ensuring that an accused person receives a fair trial. That role has been discussed most recently in Livermore at [24]-[30] . It is appropriate to repeat what the court said on that occasion:
     

     “The Role of the Crown Prosecutor and the Limits of Trial Advocacy

     24 This Court recently had occasion to repeat those aspects of the decision in R v McCullough (1982) 6 A Crim R 274 (at 285), touching upon the duties of a Crown Prosecutor, in KNP v Regina [2006] NSWCCA 213 at [32]. McCullough has also been referred to, with approval, in the course of this Court’s decisions in R v Joseph Attallah [2005] NSWCCA 277, R v Liristis (2004) 146 A Crim R 547 at 563ff and R v Rugari (2001) 122 A Crim R 1 at 10. For present purposes, it is necessary to set out the following aspects of the dicta in McCullough :-

     It cannot be too often made plain that the business of counsel for the Crown is fairly and impartially to exhibit all the facts to the jury. …However, it should also be said that the observance of those canons of conduct is not incompatible with the adoption of an advocate’s role. Counsel for the Crown is obliged to put the Crown case to the jury and, when appropriate, he is entitled to firmly and vigorously urge the Crown view about a particular issue and to test and, if necessary, to attack that advanced on behalf of the accused. But he must always do so temperately and with restraint , bearing constantly in mind that his primary function is to aid in the attainment of justice, not the securing of convictions. As the New Zealand Court of Appeal said in Roulston … ‘it has always been recognised that prosecuting counsel must never strain for a conviction, still less adopt tactics that involve an appeal to prejudice or amount to an intemperate or emotional attack upon the accused.’

     The feel and atmosphere of one trial may make it reasonable and even necessary for tactics to be employed that would seem out of place and disproportionate to the circumstances of another. Nevertheless, it is wrong for Crown counsel to become so much the advocate that he is fighting for a conviction and quite impermissible to embark upon a course of conduct calculated to persuade a jury to a point of view by the introduction of factors of prejudice or emotion. If such a situation should develop and there is a real risk that the conduct complained of may have tipped the balance against the accused then an appellate court will not hesitate to follow the safe course and order a new trial (emphasis added).

     25 A seminal statement of the responsibilities of a Crown Prosecutor in a criminal trial appears in Whitehorn v The Queen (1983) 152 CLR 657 at 663-664 per Deane J:-

     Prosecuting counsel in a criminal trial represents the State. The accused, the court and the community are entitled to expect that, in performing his function of presenting the case against an accused, he will act with fairness and detachment and always with the objectives of establishing the whole truth in accordance with the procedures and standards which the law requires to be observed and of helping to ensure that the accused trial is a fair one. The consequence of a failure to observe the standards of fairness to be expected of the Crown may be insignificant in the context of an overall trial. Where that is so, departure from those standards, however regrettable, will not warrant the interference of an appellate court with a conviction. On occasion however, the consequences of such a failure may so affect or permeate a trial as to warrant the conclusion that the accused has actually been denied his fundamental right to a fair trial. As a general proposition, that will, of itself, mean that there has been a serious miscarriage of justice with a consequence that any conviction of the accused should be quashed and, where appropriate, a new trial ordered. (Italics not in original)

     26 In R v Callaghan (1993) 70 A Crim R 350 at 356, the Queensland Court of Appeal held that it was not appropriate that Crown Prosecutors use the dignity of their office to tell a jury something that is not in evidence and that counsel’s role is to make submissions, not express personal opinions or enter the fray as a contestant.

     27 In R v Kennedy (2000) 118 A Crim R 34 at 41; [2000] NSWCCA 487, Studdert J, with whom Heydon JA and James J agreed, found submissions by the Crown Prosecutor, which were critical of a Crown witness who was not sought to be declared unfavourable, improper. It was held that the submissions may well have influenced the jury to reject evidence that the witness gave which was favourable to the accused’s case and which impacted on the credibility of the complainant. This was said to be a “serious irregularity” resulting in a miscarriage of justice.

     28 In Rugari , Carruthers AJ, with whom Spigelman CJ and Sperling J agreed, explored a number of breaches by the Crown Prosecutor of the “reasonable restraints” imposed upon him. In particular, an expression by the Crown Prosecutor of his own view of the quality of the evidence was said to be inappropriate. There were other inappropriate comments, which when taken together, gave rise to the prospect that in convicting the accused, the jury was “actuated, partly at least, by the inappropriate and prejudicial remarks made by the Crown Prosecutor” (at 12).

     29 In Liristis , the description by the Crown Prosecutor of the accused’s evidence as “pathetic” and comments in the course of the Crown’s address which included his own reaction to the evidence given by the accused were said not to exhibit the fairness and detachment which a Crown Prosecutor is expected to have, in accordance with Deane J’s statement in Whitehorn.

     30 Similarly, in KNP , the introduction in the closing address of the Crown Prosecutor’s personal thoughts was said to be “a gross breach of his duty to present the Crown case in an impartial and fair manner. By imposing his own view on the jury there was a risk that they might believe that they were required to decide whether the prosecutor was correct in his personal views rather than assessing for themselves whether the evidence proved the Crown case.” (per McClellan CJ at CL at [53]).”

633. In GDD at [55], Grove J said:
     

     “[T]here must remain a risk that a jury would consider a Crown Prosecutor a figure of public authority and whose expressed personal opinions were therefore of particular weight and reliable. It is to avoid that risk that the law requires counsel to make submissions based upon the evidence and proscribes the expressions of personal opinion.”

634. When a prosecutor fails to comply with the required standards of fairness an accused person may be denied a fair trial. Whitehorn v The Queen [1983] HCA 42; (1983) 152 CLR 657 at 663-4. See also Cittadini v The Queen [2009] NSWCCA 302 at [99]-[101] (McClellan CJ at CL, Fullerton and Schmidt JJ agreeing); Causevic at [4], (2008) 190 A Crim R 416 at 418 [4] (McClellan CJ at CL, Barr and Price JJ agreeing); GDD at [21], [44]. I am satisfied that this occurred in the present case.’

‘In Re Veron; Ex parte Law Society (NSW) [1966] 84 WN (Pt 1) (NSW) 136, the practitioner was struck off following findings of some 65 instances of overcharging clients in respect of personal injury actions. The overcharging was found to be deliberate and there were related charges proved against the practitioner involving dishonesty or fraud in respect to the practitioner’s dealings with his clients and their money.

The court noted that the charges were not only grossly excessive, but were also arbitrary when compared with the work actually done.

Practitioners were also struck off in the decisions in Veghelyi v The Law Society of New South Wales (Unreported, Supreme Court of New South Wales Court of Appeal, 6 October 1995) (Veghelyi) and New South Wales Bar Association v Amor-Smith [2003] NSWADT 239 (Amor-Smith). In Veghelyi, the practitioner was found guilty of grossly overcharging in 11 matters. He was also found guilty of wilful breaches of the Legal Profession Act 1898 (NSW) concerning the handling of client monies, including the payment of costs from trusts without authority. In Amor-Smith, the overcharging related to a single retainer, but involved charges which the Tribunal found to have been nearly five times a reasonable and fair amount for the services provided. The practitioner had aggressively pursued recovery of his fees notwithstanding his appreciation of the excessive nature of the charges.

In Re A Legal Practitioner of the Supreme Court of Western Australia (Unreported, WASC, Library No 970032, 12 February 1997) (BC9700434), the Full Court suspended a Practitioner for five years following findings of six separate instances of overcharging in respect of personal injuries matters. The disciplinary Tribunal, which had transmitted a report to the Full Bench, had concluded that the overcharging had arisen from the system of practice adopted by the practitioner over a long period of time and that the practitioner had been substantially motivated by self-interest. The Full Court noted a history of prior complaints about the practitioner.

In NSW Bar Association v Evatt [1968] 117 CLR 177, a barrister was found to have knowingly assisted and facilitated a systemic course of action by two solicitors (including Mr Veron, the subject of proceedings referred to above). Mr Evatt was found to have knowingly shared in the proceeds of the extortionate charges by charging and being paid excessive fees, and the High Court concluded that the findings demonstrated the practitioner was unfit to be a barrister and ordered that he be disbarred.

In Law Society of Australian Capital Territory and Roche [2002] ACTSC 104, the practitioners were found guilty of systemic overcharging of personal injuries clients through the use of a standard form costs agreement that imposed a standard hourly rate for all fee earners, regardless of whether or not they were legally qualified, standard charges for disbursements, and entitled the practitioners to charge an uplift of up to 30% of their professional fees for ‘care, skill and consideration’. The solicitors’ conduct was described as ‘extortionate’ [67] and as ‘an exercise in calculated greed’ [89]. A period of 18 months suspension from practice was imposed. The Court regarded as a significant mitigatory factor that the practitioners offered to (and were subsequently ordered) to make substantial payment to establish a compensation for the benefit of their clients who had entered into the standard costs agreement.

Those decisions demonstrate the very serious view taken by the courts or other disciplinary authorities in relation to significant overcharging by legal practitioners.

A decision in which suspension was not ordered is NSW Bar Association v Meakes [2006] NSWCA 340. The disciplinary Tribunal in that matter had imposed a public reprimand, having concluded that the practitioner was guilty of gross overcharging by charging a client in excess of 66% more than a reasonable fee and had characterised that conduct as unsatisfactory professional conduct. The Court of Appeal disagreed with that characterisation, and concluded that the gross overcharging amounted to professional misconduct. Tobias JA said at [85] that ‘At its highest, the respondent’s conduct was dishonest; at its lowest, it was highly irresponsible’. The Court of Appeal declined, however, to alter the penalty imposed by the Tribunal given that six and a half years had passed since the conduct occurred, the finding of professional misconduct would seriously reflect on the practitioner’s reputation, a refund had been made to the client, and the practitioner would pay the costs of the appeal.’

Our foremost indigenous enthusiast for the same philosophy, John Chisholm, is quite the disciple, and is helping to publicise Baker’s ‘Firms of the Future’ forums which will feature value pricing heavily, but will predict other aspects of best firm practice.  At this point in my journey towards understanding what Baker’s on about, it is easier to point to what value pricing is not.  As the mission statement suggests, it is not recording time on timesheets and then arriving at a charge by reference to the hourly rates of the fee earners.  It is agreeing a price for the work at the start, and it involves moving away from arriving at that price principally by reference to the time it is going to take.  Baker is speaking for a day in Melbourne on 5 March 2012 — I’ll be going, briefs permitting — and conducting a half day masterclass at the MCG the following day. (Hobart = 2nd, Brisbane = 12th, Sydney = 15th).  To go, you have to pay $1,628, or $935 for just the talk or $880 for just the masterclass, but if you’re not completely satisfied, you can ask for a refund of the difference between what you paid and what you think it was worth, a version of value pricing I suppose.

So: if you’re one of several clients your lawyer has in relation to one matter, and you want to limit your liability to your fair share of the costs, you should stipulate for ‘several liability’, and if you’re a lawyer, and want to be able to recover all of the costs from each client, you should stipulate for ‘joint and several liability’.  And if you’re one of a number of clients against whom a lawyer is seeking to recover fees, wherever the written costs agreement is silent on the question, then so long as you believe that it was not actually agreed between you, albeit by implication rather than express communication, you should not agree to pay anything more than your fair share, which might be 50% if the work benefitted each of the clients equally (as where husband and wife conduct litigation over jointly owned matrimonial property) but which might be quite different from the other client’s/s’ faire share, as in this case.

Two things occur to me.  First, in a joint retainer, one client may well be an associated third party payer vis-a-vis the lawyer in respect of that client’s promise to pay the other client’s fair share of the lawyer’s fees.  I cannot immediately think of how this might affect the solicitor-client relation, but no doubt it might.  Secondly, in a regime such as that under the Legal Profession Acts where costs agreements must be written or evidenced in writing, all the major terms of the agreement are required to fulfil that requirement.  This case was decided by reference to the law of the one state which does not have a Legal Profession Act (South Australia).  A lawyer seeking to rely on an implied term (and therefore one very likely not evidenced in writing) might have difficulty in establishing such a term by virtue of the writing requirements.

What the Supreme Court of South Australia’s Justice Kourakis said on this subject is set out below:

20. In the resulting trust action, the work of Mr Starke and Mr Stevens was performed for the benefit of Alfred Yard.  The personal interests of Trevor and Gladys Yard were not advanced by those proceedings.  Indeed, the claims made by Alfred Yard were against their interests as shareholders.  It was not in their personal financial interests to accept responsibility for Alfred Yard’s costs either directly or indirectly through Yardoo, which would in turn diminish the value of their shareholdings.  I accept that indirectly, Alfred Yard’s claim might have benefited them but that ultimately depended on how Alfred Yard dealt with the property and, in particular, on how he exercised his testamentary power.  The outcome of the contest between Alfred and Judith Yard, as to the beneficial ownership of the properties, was of no real moment to Yardoo.  Indeed, in one sense Yardoo’s financial interest, like all of the shareholders other than Alfred Yard, lay in the defeat of Alfred’s claim.
21. Plainly enough, Mr Starke was retained by both Yardoo and Alfred Yard.  Indeed, he was also retained by Trevor and Gladys Yard.  So much can be implied from the very filing of appearances on their behalf.  I also find that the requests of Alfred and Trevor Yard, that Mr Starke take all reasonable steps to exclude the property held by Yardoo from the matrimonial pool, entailed a retainer of Mr Starke by Yardoo, through its directors, to advise on all reasonable steps which Yardoo could take to effect that purpose.  However, the engagement of Mr Starke by both Yardoo and Alfred Yard, in itself, carried with it only an obligation to pay for that part of the work performed to advance their respective interests.  A separate engagement of the same legal practitioner by two parties in the same litigation does not, of itself, make each of them liable for the costs of the other.  It requires the costs to be apportioned between them.
22. The question is whether it can be inferred that Yardoo not only retained Mr Starke, but also agreed to accept joint and several liability to pay for all of the work performed for itself and for Alfred Yard, and indeed Trevor and Gladys Yard.
23. A lawyer who acts on instructions for a party on the record is presumed, unless there is express agreement to the contrary, to be entitled to look to that party for the costs of so acting.[1]  However, that presumption does not, of itself, operate to make that party responsible for the costs of other parties who have retained the same legal practitioner in the same matter.

    ---

    [1]    G E Dal Pont,  Law of Costs (LexisNexis Butterworths, 2^nd ed, 2009) Ch 2 [2.14]; Hudgson v Endrust (Australia) Pty Ltd (1986) 11 FCR 152; Bolton v Stange [2001] WASCA 34 at [7] – [8].

    ---

24. There is support in the texts Dal Pont “Law of Costs” and “Quick on Costs” for the proposition that there is a presumption that retainers with multiple clients are separate and not joint.[2]  Both texts rely on the authority of Burridge v Bellew[3] (Burridge).  In Burridge, a solicitor brought an action to recover all of his costs against just one of the several parties for whom he had acted in Chancery proceedings.  The solicitor pleaded that he had expressly agreed with the defendant, that the defendant would pay the legal fees of all of his clients.  The defendant argued, quite to the contrary, that he had expressly agreed with the solicitor that he would not be liable at all for any of the fees.  The defendant did not plead, in the alternative, that, if he was liable, he was liable only for his proper proportion of the costs.  A verdict was brought in against the defendant, thereby rejecting his defence that the pleaded, exonerating, agreement had been made.  It was held that it was not open to the defendant, having failed to plead in the alternative that he was obliged to pay only for work done on his behalf, to claim on the subsequent taxation that only the fees attributable to that work should be admitted.  The judgments of the Court of Exchequer emphasise the difference between joint and several retainers but give no indication that one is to be presumed over the other.  The point in Burridge was that the defendant had not challenged the plaintiff’s pleading that the retainer was a joint and several one.  Amphlett B observed:
    

    …[t]he mere fact that the several defendants appeared by the same solicitor, that they join in putting in the same answer, join in the same affidavits, and attend joint consultations, would not, to my mind, amount to evidence that there was any joint retainer, particularly in cases where the retainers are separate, because it often occurs in Chancery that there are a number of defendants, some having a large interest, some a very small interest, and some, like trustees, having no interest at all in the case.  The expense would be enormous if each of those parties were to appear separately by solicitors and counsel.  Therefore they appear together, join in the same pleadings and in the same affidavits, attend at the same consultations, and so a vast expense is saved; but no person in the position of a trustee would ever dream of doing that if he were to be held jointly liable for the costs of a suit in which he had no personal interest.  Therefore it is that the taxing master looks at the bill and sees with what proportion of the costs the particular defendant ought to be charged.[4]     

    ---

    [2]    G E Dal Pont, Law of Costs (LexisNexis Butterworths, 2nd ed, 2009) Ch 2 [2.18]; Thomson Reuters, Quick on Costs (December 2011) Legal Online [3.1040] <http://legalonline.thomson.com.au>.

    [3]    (1875) 32 LT 807.

    [4]    Burridge v Bellew (1875) 32 LT 807 at [813] –[814].

    ---

25. I understand the decision in Burridge, and the above observations, to simply reflect the onus of proof.  Amphlett B did no more than emphasise the evidential point, that circumstances like the filing of joint defences and joint consultations, are not sufficient to prove a joint retainer.  The position is that a solicitor who seeks to recover his fees from one party, on the basis of that party’s contractual liability for to pay the fees of all of the other parties for whom the solicitor has acted, must prove that such an agreement was made.
26. In Beaumont v Senior & Bull[5]  Lord Alverston CJ explained:
    

    But in the absence of any agreement between the two defendants as to how the costs of the defence were to be born, it is clear, on the authority of the cases to which we have been referred, that each of the two defendants is liable to their solicitor for half the costs of the defence, and that will be the amount of costs which the plaintiff will have to pay the successful defendant.

    ---

    [5]    (1903) 1 KB 282.

    ---

27. Much of the early correspondence of Mr Starke is directed to Alfred Yard.  From at least October 2003 some correspondence was addressed to Alfred Yard and Yardoo.  In particular, on 22 October 2003 a letter addressed to both Alfred Yard and Yardoo, set out the likely future trial costs and requested payments of outstanding accounts.  On 14 June 2004, a letter addressed to Alfred Yard, Trevor Yard and Yardoo responded to concerns expressed by Trevor Yard about the escalating legal costs.  However, Mr Starke’s accounts were generally directed to Alfred Yard alone.  Mr Starke testified that he did not pay any particular attention to the addressee of the accounts.  I accept that the accounts were probably directed to Alfred Yard as a matter of administrative convenience and do not show, and could not reasonably have been regarded as showing, that Alfred Yard had undertaken the sole responsibility to pay the fees of Mr Starke for all of the work which he performed for the Yardoo Parties.
28. The mere fact that Yardoo engaged the same solicitor whom Alfred Yard had engaged, is not reason enough to find that it had accepted joint and several liability for all of the fees charged by the solicitor, Mr Starke.  Plainly enough, it was the object of Alfred and Trevor Yard to take all steps which could properly be taken to limit the extent of Judith Yard’s corporate, partnership and matrimonial entitlements.  As Alfred and Trevor Yard were the directing minds of Yardoo at the time, it can be taken that it was also Yardoo’s purpose.  However, that circumstance does not provide a sufficient objective basis on which to conclude that Yardoo contractually bound itself to pay all of the costs incurred in achieving that purpose.  It is equally open to conclude that each of the parties undertook a liability to pay a proportionate share of the costs of pursuing their, admittedly common, purpose.
29. There were good reasons for Yardoo not to undertake a joint liability to pay all of Mr Starke’s fees while the oppression action was on foot.  It was after all not in the interest of Judith Yard, who was still a shareholder, that Yardoo burden itself with that liability.  Moreover, Trevor and Gladys Yard were also shareholders and directors.  In the absence of any express discussion about the extent to which Yardoo would be liable for the costs incurred for the benefit of Alfred Yard in the resulting trust action, it is difficult to infer Trevor and Gladys Yard’s assent to Yardoo undertaking that liability.  After all, if Alfred Yard failed, as he ultimately did, to make good his claim to a resulting trust, such an agreement would reduce the value of their equity in Yardoo.  Trevor and Gladys Yard were also Mr Starke’s clients.  Mr Starke was probably duty bound not to make an agreement with Yardoo which bound it to pay all of Alfred Yard’s costs, without first explaining the consequences of that agreement to his clients Trevor and Gladys Yard.  The legal relationships to which I have just referred form the context in which the conduct of the parties must be examined to determine whether, viewed objectively, the agreement alleged by Mr Starke was made.
30. The circumstances on which Mr Starke relies are, by and large, similar circumstances to those which Amphlett B, in Burridge, considered were not enough to prove a joint retainer.
31. I am not satisfied that there is a sufficient basis upon which to find an agreement that Yardoo would pay Alfred Yard’s costs.  Alfred Yard remains liable for his proportion of Mr Starke’s fees.  The quantification of the liability of the only defendants to this action, Alfred Yard and Yardoo, will require an apportionment between all of Mr Starke’s clients.  I expect that very few, if any, costs will be allocated to Gladys Yard but a significant proportion may fall on Trevor Yard.
32. There is an element of unreality about the point taken as to Yardoo’s limited liability for Mr Starke’s fees.  To the extent that Alfred Yard remains a shareholder of Yardoo, the assets of Yardoo will at least indirectly remain available to satisfy the costs payable by him.  Hopefully, an arrangement will be reached consensually between Mr Starke and the Yards which will avoid the pain staking and costly exercise of apportioning costs between the parties.  The apportionment exercise is likely to be expensive in itself, and will be a cost which will ultimately be borne by the defendants.

     

Accord and satisfaction is a litigation estoppel.  It serves a similar function to res judicata where the original dispute is quelled by contractual agreement (i.e. a ‘settlement’) rather than by judicial determination. It is what stops a party who settles a pre-litigious dispute from suing on it, and, depending on how the proceeding is disposed of (withdrawn, discontinued, struck out, dismissed, judgment for one party), may also be what stops a party to litigation who settles it from re-instituting it (res judicata flowing from the Court’s orders disposing of the proceeding is the other possibility).

Helpfully, the NSW Court of Appeal recently drew the authorities on accord and satisfaction together in El-Mir v Risk [2005] NSWCA 215 and provided a cute little restatement of the law, which is reproduced below.  There seems to be little authority on accord and satisfaction preventing taxation where disputes in relation to the quantification of liability for legal fees are settled before the institution of taxation proceedings. Certainly, the US Court of Appeals for the Third Circuit had no difficulty with the application of accord and satisfaction as a bar to taxation: Michael J Benenson Associates, Inc v Orthopedic Network of New Jersey 2002 U.S. App. LEXIS 23559; 54 Fed. Appx. 33, and the Federal Court seems to have assumed the possibility in Amos v Monsour Pty Ltd (formerly Monsour Legal Costs Pty Ltd) [2010] FCA 741, but in neither case was the question argued. Does anyone know of any other useful authorities?

Now, that re-statement of the law, from Justice of Appeal McColl’s judgment, with which Justices of Appeal Ipp and Handley agreed:

‘[48] The “essence of accord and satisfaction ‘is the acceptance by the plaintiff of something in place of his cause of action’, … the accord is the agreement or consent to accept the satisfaction … upon provision of the satisfaction, there is a discharge which extinguishes the cause of action”: Federal Commissioner of Taxation v Orica Ltd [1998] HCA 33; (1998) 194 CLR 500 per Gummow J at [116] citing Dixon J in McDermott v Black at 183-185; see also British Russian Gazette & Trade Outlook Ltd v Associated Newspapers Ltd [1933] 2 KB 616 at 643 per Scrutton LJ. In Thompson v Australian Capital Television Pty Ltd [1996] HCA 38; (1996) 186 CLR 574 at 610, Gummow J emphasised that accord and satisfaction “requires acceptance of something in place of the full remedy to which the recipient is entitled” (emphasis added).

[49] Where there is an agreement to accept a promise in satisfaction of the cause of action, “the original cause of action is discharged from the date when the promise is made”: McDermott v Black per Starke J (at 176); Dixon J (at 183-185); see also British Russian Gazette & Trade Outlook Ltd v Associated Newspapers Ltd (at 644) per Scrutton LJ.

[50] The consequences of the discharge of the original cause of action by accord and satisfaction were explained by Phillips JA (with whom Winneke P and Charles JA agreed) in Osborn & Bernotti t/as G04 Productions v McDermott t/as RA McDermott & Co & Karmine Pty Ltd [1998] 3 VR 1 at 8, in a passage referred to with apparent approval by Gummow and Hayne JJ in Baxter v Obacelo Pty Ltd [2001] HCA 66; (2001) 205 CLR 635 at [56]. Phillips JA said:

Where there is an accord and satisfaction, the agreement for compromise may be enforced, and indeed only that agreement may be enforced, because ex hypothesi the previous cause of action has gone; it has been “satisfied” by the making of the new agreement constituted by abandonment of the earlier cause of action in return for the promise of other benefit.
(emphasis added)

[51] In other words, the role of an accord is to replace the former contract with a new one (eodem modo quo oritur, eodem modo dissolvitur): Professor Brian Coote, “Common Forms, Consideration and Contract Doctrine” (1999) 14 Journal of Contract Law 116 at 123. Accord and satisfaction provides the means whereby a cause of action which a plaintiff has can be rendered unenforceable: Illawong Village Pty Ltd v State Bank of New South Wales [2004] NSWSC 18, at [262] – [263] per Campbell J.

[52] If the promisor fails to perform the promise, the promisee’s only remedy is to sue for breach of the promise. There cannot be a return to the original obligation or claim: see Anson’s Law of Contract, 27th ed at 492; see also Koutsourais v Metledge & Associates [2004] NSWCA 313 at [49] – [51] per Bryson JA (Hodgson JA, with whom Beazley JA concurred, agreed (at [7]) with Bryson JA’s consideration of the issue of accord and satisfaction, although disagreeing with his Honour’s ultimate conclusion).

[53] If a party to the accord and satisfaction sought to revert to the original cause of action the accord could be pleaded, at least in equity, as having operated as a release – as Dixon J explained in McDermott v Black (at 186-187, footnote added):

At law, “the only case in which a covenant or promise not to sue is held to be pleadable as a bar, or to operate as a suspension and by consequence a release or extinguishment of the right of action, is where the covenant or promise not to sue is general, not to sue at any time. In such cases, in order to avoid circuity of action, the covenants may be pleaded in bar as a release … for the reason assigned, that the damages to be recovered in an action for suing contrary to the covenant would be equal to the debt … or sum to be recovered in the action agreed to be forborne” (per Parke B, Ford v Beech (1848) 11 QB 852, at p 871 [116 ER 693 at p 700]).

But equity did not follow the law in its refusal to give effect to the agreement of the parties. At law an accord and satisfaction was not pleaded in bar of an action upon a specialty but in equity the debt was treated as discharged, and, before the Judicature Act, the creditor was restrained from proceeding at law for its enforcement.

See also McDermott v Black (at 176) per Starke J.

[54] The question whether there has been an accord and satisfaction is one of fact”: Day v Mclea (1889) 22 QBD 610 at 613 per Lord Esher MR; Bagnall v National Tobacco Corp of Australia Ltd (1934) 34 SR (NSW) 421 at 427, per Jordan CJ; see also Neuchatel Ashphalte Co Ltd v Barnett [1957] 1 WLR 356. It turns upon determining the parties’ intentions, which may be discerned from the terms of any document said to constitute all or part of the agreement or in the surrounding circumstances: Ballantyne v Phillott [1961] HCA 17; (1961) 105 CLR 379 at 398 per Menzies J.

[55] While it is a question of fact whether there has been accord and satisfaction, a reference to some cases which have considered that issue assist in determining whether there is an arguable case of accord and satisfaction here.

[56] In McDermott v Black, a purchaser claimed to have been induced to enter into a contract of sale of shares by fraudulent misrepresentations made by the vendor. Prior to the date of completion, the purchaser by letter complained of the misrepresentations, but in a later letter he withdrew all allegations imputing anything improper to the vendor conditionally upon the vendor granting him an extension of time to complete the contract. This extension of time was granted. The High Court (Latham CJ dissenting) held that the withdrawal of the allegations in consideration of an extension of time for completion was not too vague to constitute a contract of accord and satisfaction: see Starke J (at 175-176); Dixon J (at 183-186). Latham CJ was of the view (at 172) that “the agreement to withdraw the allegations and the actual withdrawal of the allegations did not amount to or imply any promise … never to rely upon the allegations as a cause of action”. Dixon J said (at 185-186):

The “withdrawal of all allegations imputing anything improper to” the defendant conditionally upon the latter’s agreeing to three-weeks’ further time for payment of the balance of purchase money clearly amounts to an election to affirm the contract. It does, I think, imply a promise not to revive the allegations. … The untechnical and inexact expression, “withdraw allegations”, no doubt causes some difficulty. But it must be borne in mind that the purpose was to settle or compromise a very definite dispute … The withdrawal of the allegations of improper conduct meant, in my opinion, that he would make no claim based upon misrepresentation but would accept the promise of further time instead … But I think that, consistently with principle, the agreement to withdraw in consideration of a grant of time can be regarded as an accord and satisfaction.

[57] In Ballantyne v Phillott (at 384) Dixon CJ observed that “[a] question of accord and satisfaction is seldom easy”. As much can be seen from that case which considered whether an accord and satisfaction could be inferred from a statutory declaration which stated that “any action or proceeding in any court heretofore commenced by the said (respondent) against the said (appellant) shall be discontinued and that such action or proceeding shall not again be commenced by or on behalf of the said (respondent) against the said (appellant)”, that “the said (respondent) waives all and any rights or claims whatsoever which he has or may have had against the said (appellant) by virtue of such action or proceeding or otherwise howsoever” and that “the said (appellant) has no right or claim against the said (respondent) in respect of or arising out of any such action or otherwise howsoever”. The High Court was divided on whether that amounted to accord and satisfaction.

[58] Menzies and Windeyer JJ held that it was not an accord and satisfaction because there was no consideration for the respondent’s agreement to discontinue the proceedings. Although Menzies J was satisfied (at 397) that if it could be found that the parties were “‘composing their differences’ … by each promising to give up claims against the other, it would not matter that the language used is not promissory in order for an accord to be found” he concluded (at 398) that the appellant’s acknowledgment that no right or claim existed was inconsistent with the implication of a promise as “[i]t is the denial, not a withdrawal, of any claim and does not in the known circumstances amount to consideration”.

[59] Dixon CJ held (at 390) that the appellant’s statement “that she had no right or claim” against the respondent amounted to consideration for the appellant’s promise, even though it was not a “claim which a judge would enforce”. According to his Honour, it should “be deemed enough” as “[i]t is a result that accords with their mutual intentions and I think that it is authorized by this peculiar branch of law”.

[60] The appellants rely upon Allied Marine Transport Ltd v Vale Do Rio Doce Navegacao SA (at 933) where Goff LJ, who delivered the judgment of the Court, said:

It was against the background of those facts that the judge had to consider whether there had been a mutual abandonment of the reference to arbitration, or alternatively whether the owners could invoke the principle of equitable estoppel. In considering the first of those questions, he first of all drew attention to the fact that a distinction must be drawn between abandonment of the reference, with the claimant’s cause of action, if any, remaining intact, and abandonment of both the reference and the cause of action. However, he rejected the possibility that the parties could in this case have agreed to abandon the reference alone, while leaving the claim intact, or that there was any representation to that effect. With this conclusion we agree. We recognise, of course, that there may be circumstances in which, for some special reason, parties may agree to abandon a reference while leaving the claim intact – for example, if they decide to bring an arbitration to an end so that the matter can be resumed before different arbitrators, or before the court. But if parties simply agree to bring a reference to arbitration to an end – to drop hands, so to speak-the ordinary inference must be that they intend that the relevant claim, or claims, should also go. There is nothing in the present case to suggest that there should be any departure from that ordinary inference.
(emphasis added)

[61] Goff LJ also observed (at 933) that:
The owners’ abandonment of the reference, with all that this implies, including an abandonment of any right to obtain a declaratory award or to ask for an order for costs, would constitute good consideration for the abandonment of the charterers’ claim as well as their abandonment of the reference.

[62] Allied Marine Transport Ltd v Vale Do Rio Doce Navegacao SA was not a case of accord and satisfaction, but, rather, one which considered whether a claim required to be submitted to arbitration could, by prolonged inactivity of the parties, be discharged by abandonment. However it is a useful illustration of the inference which may be drawn from the parties’ agreement, in this case, to discontinue the arbitration.

[63] Melbourne Money Pty Ltd v Bryant (1994) ASC 56-275 (Supreme Court of Victoria Appeal Division, 12 August 1994, BC9401196), upon which the respondent relied in support of his argument that the 1997 Settlement amounted to a withdrawal and discontinuance in the sense referred to in rules of court, concerned the effect of consent orders made in the Victorian Credit Tribunal which recorded that:
1.    The Application against Jayan Seetal is withdrawn.
2.    By consent (a) The Applicant is released from all liability to the Respondent pursuant to the loan contract dated 14th February 1986 and the mortgage dated 13th August 1986. (b) The Applicant releases the Respondent from all liability pursuant to the loan contract dated 14th February 1986 and the mortgage dated 13th August 1986. (c) No order for costs.

[64] The appellant argued in Melbourne Money Pty Ltd v Bryant that this compromise precluded the respondent from bringing a second application before the Credit Tribunal. It relied upon Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589. The facts are complex and do not require repetition. While Ormiston J (with whom Tadgell and Smith JJ agreed) inclined to the belief that the parties did not intend that there should be a consent order permitting the respondent to withdraw her application or that that was the manner in which the first application was to be terminated, he also concluded (BC9401196 at 31) that even if that had been the parties’ intention, that would not have barred the respondent’s rights to reopen the second transaction. He reached this conclusion by applying the proposition that the effect of a withdrawal or discontinuance of proceedings “shall not be a defence to a subsequent proceeding for the same, or substantially the same, cause of action”: see Kronprinz, Owners of the Cargo of v Owners of the Kronprinz (The Ardandhu) (1887) 12 App Cas 256 and Spencer Bower and Turner: Res Judicata (2nd ed), para 34-para 40. He observed that:

In essence, if a party wishes to have matters disposed of finally with no orders made against that party, it should seek and obtain a dismissal, whether by consent or otherwise. If all that occurs is that the other party seeking to make a claim is allowed, by consent of the other party, to discontinue its proceeding or withdraw any part of its proceeding, then the matter is not res judicata or capable of giving rise to an issue estoppel and it may be raised a second time in further proceedings.

[65] The question of accord and satisfaction was not considered in Melbourne Money Pty Ltd v Bryant. That case illustrates one interpretation which may be given to the effect of withdrawing proceedings. However, the question is ultimately to be resolved by a consideration of the parties’ intention in the circumstances of each case.

[66] In this case, in my view, there is an available inference that the parties’ intention was to walk away from the arbitration and any claims they had against each other. For the purposes of determining whether the appellants have an arguable case of accord and satisfaction reference may be made to the solicitors’ subsequent correspondence and Mr Snelgrove’s 1999 affidavit. Subsequent conduct cannot be used as an aid to the construction of the 1997 Settlement (see Magill v National Australia Bank Ltd [2001] NSWCA 221; (2001) Aust Contract R 90-131 at [50] – [53]). However evidence restricted to the factual background known to the parties at or before the date of the contract, including evidence of the “genesis” and objectively of the “aim” of the transaction, is admissible: see Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337 at 348 per Mason J.’