FEDERAL COURT OF AUSTRALIA

Woodgate v Keddie [2006] FCA 1728

CONTRACT – conditional fee agreement for legal services – client’s liability to pay costs and disbursements contingent on a “successful outcome” – work referable to trial and not to appeal – “successful outcome” in the contract was a verdict in District Court proceedings – client gave authority to pay costs and disbursements from damages awarded by District Court – client acknowledged that verdict could later be overturned and she might be liable to repay damages – verdict overturned on appeal – applicant seeks repayment of costs and disbursements from solicitors – moneys had and received – moneys disbursed pursuant to the authority prior to the appeal being filed – contract brought to an end by payment of costs and disbursements – relevance of subsequent conduct – no restitution as no mistake of fact or law established – payment voluntary – defence to claim for restitution – no unjust enrichment – solicitors changed their position and gave consideration for payment – application dismissed

Legal Profession Act 1987 (NSW)

Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 cited

Commissioner for Railways (NSW) v Cavanough (1935) 53 CLR 220 cited

Cox v Goldcrest Developments (NSW) Pty Ltd (2000) 50 NSWLR 76 cited

David Securities Pty Limited v Commonwealth Bank of Australia (1992) 175 CLR 353 discussed

Hookway v Racing Victoria Limited [2005] VSCA 310 cited

Independent Timber Importers (Aust) Pty Ltd v Mercantile Mutual Insurance (Australia) Ltd (2002) 12 ANZ Ins Cases 61-543 cited

Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 cited

Roxborough v Rothmans of Pall Mall Australia Limited (2001) 208 CLR 516 cited

Sportsvision Australia Pty Ltd v Tallglen Pty Ltd (1998) 44 NSWLR 103 cited

TCN Channel Nine Pty Ltd v Antoniadis (No 2) (1999) 48 NSWLR 381 cited

Wilde v Australian Trade Equipment Co Pty Ltd (1981) 145 CLR 590 cited

Winstonu Pty Ltd v Pitson [2001] FCA 541 cited

Carter JW and Harland DJ, Contract Law in Australia (4^th ed, Butterworths, 2002)

Mason K and Carter JW, Restitution Law in Australia (Butterworths, 1995)

GILES WOODGATE AS TRUSTEE OF THE ESTATE OF THE LATE MRS MARION MCGUINESS v RUSSELL W KEDDIE, TONY BARAKAT, SCOTT JOHN ROULSTONE AND ROBERT PAUL PINZONE TRADING AS KEDDIES SOLICITORS & ATTORNEYS

NSD 2551 OF 2005

BENNETT J

13 DECEMBER 2006

SYDNEY

THE COURT ORDERS THAT:

1.                  The application is dismissed.

2.                  The applicant is to pay the respondent’s costs. 

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     Mrs McGuiness retained the respondent solicitors (‘Keddies’) to act for her in a personal injuries action in the District Court of New South Wales against the Roads and Traffic Authority (‘RTA’).  The retainer was based on a conditional costs agreement (“no win, no fee”).  She obtained a verdict of approximately $600,000 in damages, stayed pending any appeal.  A condition of the stay was that Mrs McGuiness receive a part payment of $300,000.  Keddies received $270,000 of that amount into their trust account, which they disbursed with the authority of Mrs McGuiness.  The RTA later appealed to the Court of Appeal and was successful.  Mrs McGuiness’ estate (Mrs McGuiness having died) was ordered to repay the $300,000 but was unable to do so.  These proceedings are brought by the trustee of her estate, Mr Woodgate, for moneys had and received.  Mr Woodgate seeks an order that Keddies pay him $243,971.87, the moneys disbursed by Keddies in payment of their fees and third party expenses.

2                     It is not in dispute that, at the time that the moneys were paid to Keddies after the verdict in the District Court and before the appeal was filed or determined, Mrs McGuiness was obliged to pay those costs and disbursements and Keddies were entitled to the money.  Mrs McGuiness authorised the payment.  There is no suggestion that the transaction pursuant to that authorisation is void at the suit of Mr Woodgate or of any creditor.  Mr Woodgate submits, however, that Mrs McGuiness’ obligation to pay costs and disbursements ended when the District Court judgment was set aside.  On this basis, he submits that Keddies are now obliged to make repayment of the moneys disbursed.

3                     The RTA is not a party and these proceedings do not concern any claim by it for restitution of moneys paid pursuant to a verdict later set aside. 

The chronology

4                     The chronology of events which led to the matter coming before the Court is as follows:

·                    On 6 January 1995, a conditional fee agreement was executed between Mrs McGuiness and Keddies (‘the costs agreement’).  Mrs McGuiness also signed a “Disclosure Document” in respect of the legal services to be provided pursuant that agreement (‘the disclosure’). 

·                    On 3 December 1999, Goldring DCJ gave judgment in favour of Mrs McGuiness in the sum of $599,752.07 (McGuiness v Roads and Traffic Authority (Unreported, District Court of New South Wales, 3 December 1999)).  His Honour granted a stay of execution of the judgment on the condition that the RTA pay Mrs McGuiness $300,000 in part payment of the verdict moneys. 

·                    On 24 December 1999, a cheque for $270,000 was given to Keddies by the RTA.  That money was deposited in trust for the benefit of Mrs McGuiness.  Thirty-thousand dollars was also paid directly to Medicare by the RTA. 

·                    On 6 January 2000, Keddies issued a memorandum of costs and disbursements to Mrs McGuiness.  She signed an authority for Keddies to pay those costs and disbursements from the moneys held in trust (‘the authority’). 

·                    On 7 January 2000, Mrs McGuiness signed a document titled “Acknowledgment” (‘the acknowledgment’).  Her signature was witnessed by her husband.  On the same day, Keddies paid Mrs McGuiness $26,000 in verdict monies and transferred its profit costs ($145,455) to its office account. 

·                    Further funds were disbursed from Keddies’ trust account over the next few days.  On 10 January 2000, $29,194.17 was transferred to the Keddies office account in payment of disbursements it had previously paid and $62,337.78 was drawn to pay third parties, predominantly to counsel.  A further payment was made on 11 January 2000 of $2,016.00 to Mr Kiernan for an engineers report. 

·                    On 17 January 2000, a notice of appeal was filed by the RTA.

·                    On 31 January 2000, an appearance and notice of cross-appeal were filed. 

·                    On 14 June 2001, Mrs McGuiness passed away. 

·                    On or about 11 July 2001, a new conditional fee agreement was entered into by Mr McGuiness, as administrator  of Mrs McGuiness’ estate, and Keddies (‘the second conditional costs agreement’).

·                    On 4 November 2002, the appeal was allowed (Roads and Traffic Authority v McGuiness (2003) Aust Torts Reports 81-688).

·                    On 24 March 2005, Mr Woodgate was appointed trustee of Mrs McGuiness’ estate. 

·                    On 2 June 2005, a letter of demand was sent from Mr Woodgate to Keddies seeking repayment in the amount of $242,198.79.

5                     The costs agreement draws a distinction between certain types of disbursements.  Medical report and court filing fees are treated differently to profit costs and other disbursements and it is convenient for me to deal with them separately.  The questions that therefore arise are:

(1)               Are Keddies liable to repay the moneys received and applied to their profit costs and other disbursements?

(2)               Are Keddies obliged to repay the medical report and court filing fees?

6                     Keddies’ liability to repay depends on:

·                    the construction of the costs agreement;

·                    the effect of the disclosure;

·                    the relevance of the authority;

·                    the relevance, construction and effect of the acknowledgment;

·                    the relevance of the second conditional fee agreement. 

Are Keddies liable to repay the moneys received and applied to their profit costs and other disbursements?

The costs agreement

7                     The most significant features of the costs agreement are as follows:

·                    The agreement contained a description of “the Work” to be carried out by Keddies.  The description is of work referable to first instance proceedings and not referable to an appeal (clause 1).

·                    Clause 2 provided: ‘For the purposes of clauses 3 and 4, the successful outcome of the Work undertaken is when we obtain an award or a verdict in your favour or a settlement in your favour’.  Clause 3 provided ‘[w]e will charge you, subject to the successful outcome of the Work’, the professional fees set out in that clause.

·                    A premium was to be charged upon the successful outcome of the work (clause 4).  Section 187(3) of the Legal Profession Act 1987 (NSW) (‘the Act’), then in force, permitted Keddies, by the costs agreement, to add 25% to their charges and expenses, conditional on the successful outcome of the work.

·                    Expenses which Mrs McGuiness was obliged to pay and moneys paid on her behalf which she had agreed to pay were to be billed separately and as they were incurred.  Otherwise, a bill was to be presented after completion of the work (clause 5).

·                    Mrs McGuiness’ costs liability under the costs agreement was independent of any order requiring the RTA to pay costs.  Mrs McGuiness’ liability to pay the RTA’s costs was additional to her liability in respect of those costs payable under the costs agreement (clause 9). 

The disclosure

8                     The disclosure was provided pursuant to s 175 of the Act on the same day that Mrs McGuiness entered into the costs agreement.  Relevantly, it disclosed the billing arrangements as follows: 

‘1.        We will not charge you for the work that we have done on your behalf unless your matter has been successful.  By this we mean that an award or a verdict is entered in your favour or we achieve a settlement in your favour.  Because we will only charge you on the successful completion of the matter we will charge a premium of 25% of all of our costs and disbursements, the payment of which is conditional upon the successful completion of the work.

2.         We will however incur expenses on your behalf which we will ask you to pay for.  These are as follows:

            (a)        Medical report fees as and when they are incurred.

            (b)        Filing fees for the court.

Any disbursements we pay on your behalf or which remains unpaid as at the completion of the matter will become part of the disbursements for which we will charge a 25% premium on the successful completion of the matter.’

9                     Clause 3 of the disclosure stated that at ‘the successful completion of the matter we will send you a bill of costs’,payable within 30 days or interest would accrue.  The schedule described ‘our charges’ for the work as including counsel’s fees.  It then added: ‘if you do not have a successful outcome in your matter, we will not charge you’ (emphasis in original).

The authority

10                  On 6 January 2000, Keddies presented Mrs McGuiness with the costs that they were claiming set out in a bill of costs.  The bill included profit costs and itemised disbursements to experts, counsel’s fees, searches and service fees, filing fees, medical reports, photocopying and travelling expenses.  At the end of the document there was a note that interest may be charged on unpaid costs after 30 days and an authority for her to sign.  The authority read: ‘[p]lease sign in the space below, to authorise payment of our costs and disbursements from [moneys] held on [or to be received into] trust’.  That endorsement was signed by Mrs McGuiness and dated 6 January 2000.  The $270,000 received from the RTA was paid into Keddies’ trust account and disbursed as directed from that account. 

The acknowledgment

11                  On 7 January 2000, Mrs McGuiness signed the acknowledgment.  This document relevantly:

·                    noted the receipt by Mrs McGuiness of part of the verdict moneys, $26,000 (that amount being the remainder of the $300,000 paid by the RTA after Keddies’ costs and disbursements were paid and $30,000 had been paid by the RTA to Medicare);

·                    noted that ‘[t]he RTA has paid to my solicitors $270,000’; 

·                    stated that she was aware that Keddies “have been paid” (emphasis added) costs and disbursements for their work to date by their bill of costs dated and approved by her on 6 January 2000;

·                    noted that Keddies were unaware whether there would be an appeal by the RTA;

·                    stated that, if there were an appeal, she was aware that she may possibly lose and thereby receive no damages or reduced damages;

·                    noted that if her damages were reduced or not awarded at all, she‘may be asked TO PAY BACK TO THE RTA the of (sic)[moneys] received ie. $300,000.00’;

·                    stated that she understood that she may not be financially capable of paying these moneys back to the RTA should she be asked;

·                    noted that if an appeal were lodged and the damages were confirmed, she would be due to receive the balance of her damages, that is $300,000, plus costs which ‘may total $150,000 to $250,000’.

12                  It is not clear whether Keddies transferred moneys from the trust account to its office account before or after the acknowledgment was executed.  Keddies’ trust account ledger simply shows that its profit costs were transferred to the office account on 7 January 2000.  The acknowledgment made no provision for any undertaking or commitment from Keddies to repay the amounts being disbursed from the interim payment from the RTA.

Consideration

13                  Some matters are not in dispute.  The parties agree that the question for the Court is the proper construction of the costs agreement.  A broad appreciation of the terms one might expect of a “no win, no fee” agreement is not relevant.  Similarly, while the solicitor and client relationship between Keddies and Mrs McGuiness might be said to sit uneasily with certain aspects of this case, no impropriety is suggested. 

14                  There is also no dispute that a 25% uplift was charged by Keddies on their profit costs but not on any disbursements.  Of those disbursements, one barrister had agreed to a fee conditional on the outcome. 

15                  The parties agree that a recipient of moneys under a judgment is entitled to receive moneys and retain them while the judgment is in force and not stayed.  The successful appellant, here the RTA, is entitled in principle to recover from Mrs McGuiness all moneys paid under a judgment that has been set aside (TCN Channel Nine Pty Ltd v Antoniadis (No 2) (1999) 48 NSWLR 381 at [4]).

16                  Payment was authorised by Mrs McGuiness in accordance with the costs agreement.  Mr Woodgate accepts that, at the time of payment to Keddies, Mrs McGuiness was contractually bound to pay the costs and disbursements.  Keddies were obliged to make the payments to the third parties.  The RTA could not have obtained a refund from Keddies after it succeeded on appeal whether the costs agreement was conditional or unconditional. 

17                  Mr Woodgate contends, however, that Mrs McGuiness’ obligations were avoided after the successful appeal by the RTA.  He emphasises that, had there been a verdict for the RTA in the District Court, Mrs McGuiness would not have been liable to pay either the costs or disbursements and that Mrs McGuiness had no contractual relationship with third parties and no obligation to pay them.  That obligation, it is said, was held by Keddies.

The construction of the costs agreement

18                  The costs agreement relevantly provided that a ‘successful outcome’ was when there was an ‘award or verdict’ in Mrs McGuiness’ favour (clause 2).  A 25% premium was payable conditional upon the ‘successful outcome of the Work’ (clause 4).  The disclosure provided that there would be no charge unless the matter has been successful, that is, resulted in an award or verdict in Mrs McGuiness’ favour.  Mr Woodgate’s position is straightforward.  He submits that there has been no successful outcome; the proceedings have resulted in a verdict for the RTA and not for Mrs McGuiness; Keddies are not entitled to have been paid.  Mr Woodgate further contends that, as all of the documents were drafted by Keddies, any ambiguity should be construed against them.

19                  The entitlement of Keddies to their costs depends upon the meaning to be given to “successful outcome” and “verdict” as used in the costs agreement.  Mr Woodgate says that there is no verdict where the appeal was successful and that a “verdict” in the costs agreement should be construed as a verdict that withstands appeal.  Further, he submits, once the District Court verdict was set aside, there was no “successful outcome”.

20                  Mr Woodgate also relies on the fact that Keddies received the 25% uplift, which was payable under the Act only when fees are subject to a contingency (s 187).  He submits that it would be improper now to construe the costs agreement as, in effect, an ordinary, unconditional costs agreement in circumstances where the contingency uplift was charged.

21                  These submissions, however, mischaracterise what occurred.  The costs agreement was conditional.  It was conditional on the outcome in the District Court.  The costs agreement was required by the Act to set out the circumstances which constituted a “successful outcome” (s 186(4)).  It did so in clause 2, where it relevantly stated ‘the successful outcome of the Work undertaken is when we obtain…a verdict in your favour’.  There is no reference to “appeal” or “final” in clause 2.  “The Work” by reference to which the “successful outcome” relates, is described in detail in clause 1.  It is clear from that description that “the Work” covered by the costs agreement was trial work and not work for an appeal.  In context, the “verdict” which constituted a “successful outcome” was a verdict in the proceedings to which “the Work” related: the District Court proceedings. 

22                  Keddies characterises Mr Woodgate’s contentions as to the costs agreement as a submission that a term should be implied into the costs agreement that the moneys would be refunded if the verdict were set aside on appeal.  Mr Woodgate rejected the assertion that his case relies on any implied term and the Court did not have the benefit of substantive submissions on this point.  While an implied term requiring moneys to be repaid if a verdict were set aside is capable of clear expression and would arguably be reasonable and equitable in circumstances where a verdict in the District Court might later be overturned, it has not been established by Mr Woodgate that the remaining criteria for an implied term are satisfied (Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 347). 

Relevance of conduct subsequent to the costs agreement

23                  If, contrary to my findings above, it were to be concluded that there was ambiguity in the construction of the costs agreement, Keddies points to the subsequent conduct of the parties to resolve any such ambiguity.  As a general rule, the subsequent conduct of parties to a contract is not relevant to the construction of its terms (Carter JW and Harland DJ, Contract Law in Australia (4^th ed, Butterworths, 2002) at [712]; Sportsvision Australia Pty Ltd v Tallglen Pty Ltd (1998) 44 NSWLR 103 at 114–116; Cox v Goldcrest Developments (NSW) Pty Ltd (2000) 50 NSWLR 76 at [12]).  Evidence of such conduct may, however, establish that the parties varied the terms of the contract by reaching further agreement (Winstonu Pty Ltd v Pitson [2001] FCA 541 at [24] per Stone J, with whom Beaumont and Gyles JJ agreed).  It may also assist in identifying the subject matter with which the contract deals (Sportsvision at 114; Independent Timber Importers (Aust) Pty Ltd v Mercantile Mutual Insurance (Australia) Ltd (2002) 12 ANZ Ins Cases 61-543 at [17]). 

The Acknowledgement and the Authority

24                  Keddies contend that the acknowledgment, the events of 6 and 7 January 2000 and the unconditional direction to pay the moneys, are indicative of a variation of the conditional costs agreement.  They concede that, to effect a variation, there must have been a subsequent contract and accept that the acknowledgment is not itself a contract.  Keddies submit, however, that a ‘variation by conduct’ is established on the basis of the matters of fact recorded in the acknowledgement.

25                  Keddies further point to s 61 of the Act and the obligation to pay trust moneys in accordance with their client’s direction, as constituted by the authority.  They also submit that the authority gave rise to an estoppel which would preclude the late Mrs McGuiness and her trustee in bankruptcy from seeking to recover the moneys paid.  Mr Woodgate submits that a variation can only occur if the acknowledgment is itself a contract or agreement for which there is consideration; he says that here there is no promise and no consideration.  Mr Woodgate stresses that the acknowledgment was not contractual in nature and was entirely for the benefit of Keddies.  He points out that a variation to the costs agreement cannot be implied and must be in writing (s 184(4) of the Act).

26                  Mr Woodgate submits that, if the acknowledgment were executed after payment or at least after payment was authorised by the authority, it cannot be relied on by Keddies and does not affect, in any way, what occurred the day before.  He further submits that it was simply an acknowledgment that the costs agreement had been acted upon. 

27                  In my view, neither the acknowledgment nor the authority, taken alone or in conjunction with “the events of 6 and 7 January” constitute a variation of the costs agreement.  Keddies has not established that there was a further contract between Mrs McGuiness and Keddies to vary the costs agreement.  The acknowledgment and the authority are, however, each consistent with my finding that the subject matter of the costs agreement was the District Court proceedings.

The second conditional costs agreement

28                  The second conditional costs agreement was made for the appeal between Mr McGuiness as administrator of Mrs McGuiness’ estate and the RTA.  This was in the context that Mrs McGuiness had already authorised payment to Keddies.  It was also the case that she had died.  There was no evidence that the second costs agreement was executed because of Mrs McGuiness’ death.  She had acknowledged that Keddies had been paid pursuant to the costs agreement and that it was possible that the RTA would appeal, in which case Mrs McGuiness would have to repay the verdict moneys received, which would include the moneys paid to Keddies, and pay the costs of the appeal.  If the “verdict” or “outcome” in clause 2 of the costs agreement did refer to a verdict that withstood an appeal, in my view that agreement was varied upon the execution of the further conditional costs agreement to apply only to the stage of the District Court verdict, whether set aside on appeal or not.

Conclusion

29                  The terms of the costs agreement make it clear that the “successful outcome” upon which Mrs McGuiness’ liability to pay costs was conditional was a “verdict” in her favour in the District Court.  No need arises to consider the subsequent conduct of the parties in reaching that conclusion.  In any event, such conduct is consistent with the subject matter of the costs agreement, being the work done for the District Court proceedings, the outcome of those proceedings and the verdict in the District Court. 

The consequence of the appeal

30                  Fundamental to Mr Woodgate’s case is the submission that, once the appeal was successful, there was never a judgment or verdict in favour of Mrs McGuiness.  It was avoided ab initio.  Even if Keddies were entitled to payment after the verdict in the District Court, he maintains that they lost that entitlement after the appeal and must refund all of the money.  The verdict was, he says, a condition precedent to Keddies’ entitlement to payment which “disappeared” when the Court of Appeal handed down its decision. 

31                  Reversal on appeal generally annuls a judgment ab initio.  However, a person may act under the authority of a judgment until reversed and such action is not avoided or invalid or unlawful (Antoniadis; Commissioner for Railways (NSW) v Cavanough (1935) 53 CLR 220 at 227; Wilde v Australian Trade Equipment Co Pty Ltd (1981) 145 CLR 590 at 603).  Whether ‘what has been done can be undone will depend upon the availability of appropriate remedies, to bring about the appropriate relief’ (Wilde at 603).  A change of position, made in good faith, is available as a defence against a claim for restitution (Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548).

32                  If the moneys were paid out by Mrs McGuiness under the mistaken belief that she was under a legal obligation to pay them or that Keddies were legally entitled to payment, those moneys might be recoverable by her or her estate.  However, there is no evidence of a mistake of fact or law on the part of Mrs McGuiness.  There is evidence, in the acknowledgement, that Keddies were not paid out under a mistaken belief that there would be no appeal.

33                  Even if there were a mistake, if Keddies had adversely changed their position in reliance on the payment and honestly believed that they were entitled to receive and retain the moneys, they submit they have a defence to the claim (David Securities Pty Limited v Commonwealth Bank of Australia (1992) 175 CLR 353).  In the present case, it is not suggested that Keddies had other than an honest belief in their entitlement to payment.  Keddies submit that, following David Securities, restitution at the hands of Mrs McGuiness, or her trustee, is unavailable. 

34                  Keddies rely on the payment made pursuant to the authority as follows:

(1)               They have changed their position between the verdict in the District Court and the allowance of the appeal. 

(2)               That change in position was in reliance on the authority. 

(3)               They acted in reliance on the authority and acted to their detriment in satisfying third party expenses without a right of recovery.  They also acted in reliance on the authority in disbursing their own profit costs. 

(4)               It would be inequitable in all the circumstances to require restitution.  Those circumstances include the absence of any demand or assertion of obligation to repay by Mrs McGuiness or the estate prior to the demand by the trustee and the absence of any allegation of want of good faith on the part of Keddies.

35                  In David Securities the High Court said that the fact that a payment has been caused by a mistake is sufficient to give rise to a prima facie obligation on the part of the recipient to make restitution (at 379).  The recipient has a defence if he or she can show that an order for restitution is unjust.  One example is a change of position by acting to the recipient’s detriment on the faith of the receipt of the moneys (at 385). 

36                  Mr Woodgate submits that this is not a “mistake of fact or law” case.  He says it is a simple case of moneys had and received because the condition precedent under the contract did not exist once the verdict was set aside.  This ignores the fact that a person may, as noted, act under the authority of a judgment until reversed.  By the time the appeal was lodged, let alone determined, the moneys held in trust had been disbursed by Keddies pursuant to the authority (cf Roxborough v Rothmans of Pall Mall Australia Limited (2001) 208 CLR 516). 

37                  In my view, Mrs McGuiness was not labouring under a mistake when she authorised the payment to Keddies.  She acknowledged that there may be an appeal and that she may be unsuccessful and may be required to repay the moneys (cf Hookway v Racing Victoria Limited [2005] VSCA 310 at [45]).  Her payment was a voluntary payment.  The consequence of that payment was that the costs agreement was brought to an end.  The condition precedent under the contract did exist at that time. 

38                  Mason K and Carter JW (Restitution Law in Australia (Butterworths, 1995) at [415]) discuss the situation where a person pays to another moneys apparently due under a contract where the person:

‘(1)      has a conscious but mistaken understanding of the payer’s legal obligation to pay or the payee’s legal right to receive the money;

 (2)      intends to settle a claim honestly made by the payee; or

(3)      knows the money is not due or has no belief one way or the other on the matter, but is willing to pay because of the relationship with the payee or some anticipated benefit.’

39                  It is conceded that Mrs McGuiness had a legal obligation to pay and Keddies a right to receive the moneys after the District Court verdict and before the appeal was filed.  There is no direct evidence of her belief at the relevant time and the onus is on her trustee to establish the nature of her intent if he wishes to claim restitution.  The mere fact that Keddies required payment to be made does not, of itself, warrant the drawing of the required inference (David Securities at 368).  Accordingly, category (1) does not apply.  In light of the acknowledgment by Mrs McGuiness that an appeal was possible and that she might be ordered to repay the monies, absent further evidence, category (2) or (3) applies.  For the reasons discussed in David Securities and as discussed by Mason and Carter at [415], the payment was voluntary and Mr Woodgate can not recover the moneys on behalf of the estate.

Are Keddies obliged to repay the medical report fees and filing fees?

40                  As I have noted, clause 5 of the costs agreement drew a distinction between certain types of disbursements.  The effect of the clause was to provide that:

·                    Mrs McGuiness was obliged in any event to pay expenses listed in clause 3(b).  Those expenses were set out in clause 3(i) and (ii), the letter “(b)” having been omitted due to an apparent typographical error, and were medical report fees and court filing fees. 

·                    apart from the expenses in 3(b), ‘all other charges and expenses which are payable only on the successful outcome of the Work will be given to you after completion of the Work’. 

41                  Mr Woodgate submits that despite clause 5, Keddies are liable to reimburse moneys paid out for clause 3(i) and 3(ii).  It is fair to say, however, that this is not the mainstay of his submissions. 

42                  Clause 3 of the costs agreement distinguishes charges and expenses incurred ‘which we will ask you to pay’.  I am satisfied that the provision for expenses incurred on Mrs McGuiness’ behalf was, in effect, a separate clause or sub-clause to the provision for costs in clause 3(a) and was not intended to be subject to a “successful outcome”.  The conditional aspects of the costs agreement did not apply to the disbursements referred to in clause 3 (i) and (ii), which included medical report fees and court filing fees.  Mrs McGuiness was obliged by clause 5 to pay those in any event. 

43                  That result accords with the disclosure.  The disclosure provided that Mrs McGuiness was obliged to make payment for incurred ‘expenses on your behalf which we will ask you to pay for’.  Those expenses were again listed as medical report fees and filing fees (clause 2(a) and (b)).  That obligation was not subject to any contingency.  There was an acknowledgment that Mrs McGuiness was obliged to pay them.

44                  It follows that Keddies are not obliged to repay moneys disbursed by way of medical report and court filing fees.

Conclusion

45                  Mrs McGuiness’ liability to pay profit costs and other disbursements pursuant to the costs agreement was triggered by a “successful outcome”.  That “successful outcome” was a verdict in her favour in the District Court.  It is true that the District Court verdict was later overturned.  However, Mrs McGuiness discharged her liability under the contract voluntarily before any appeal had been filed.  Once the moneys were paid voluntarily in circumstances where Keddies were entitled to receive them, the contract between Keddies and Mrs McGuiness was discharged and brought to an end.  There was no express or implied term that Keddies were obliged to repay any moneys paid to them under the contract.  There was no unjust enrichment where the work had been done and the costs incurred.  In the absence of evidence of any mistaken belief on the part of Mrs McGuiness, no question of payment under a mistake of fact or law arises.  To the contrary, the acknowledgment stated that Mrs McGuiness was aware of the appeal and the possible obligation to repay to the RTA the moneys received from it. 

46                  Keddies were entitled to receive the moneys at the time that they received and disbursed them.  They acted on the faith of that payment to them and the authority and acknowledgment signed by Mrs McGuiness and distributed the moneys.  The moneys were disbursed by Keddies pursuant to the authority before an appeal had been filed. 

47                  Even if that money was paid by Mrs McGuiness under a misapprehension as to her obligation to pay at that time or under the mistaken belief that the moneys would be returned if an appeal were successful and even though the verdict was set aside, Keddies are not obliged to refund the moneys to Mrs McGuiness’ estate.  They paid out the moneys in accordance with their client’s direction and, accordingly, changed their position (David Securities at 385).

48                  Medical report and court filing fees were not subject to any contingency.  Mrs McGuiness was liable to pay those costs in any event. 

49                  Mr Woodgate has not established any legal basis for the estate’s entitlement to repayment.  The application should be dismissed with costs.

Associate:

Dated:         13 December 2006