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Guiseppe Arbolino v Michael James Williams [2010] NSWSC 1111 (29 September 2010)

Last Updated: 1 October 2010

NEW SOUTH WALES SUPREME COURT

CITATION:
Guiseppe Arbolino v Michael James Williams [2010] NSWSC 1111


JURISDICTION:
Common Law

FILE NUMBER(S):
2009/324061

HEARING DATE(S):
16 September 2010

JUDGMENT DATE:
29 September 2010

PARTIES:
Guiseppe Arbolino (Plaintiff)
Michael James Williams (First Defendant)
Michael Anthony Nash (Second Defendant)
Dominic Karl Nash (Third Defendant)
Peter Charles Wotton (Fourth Defendant)
Her Honour Magistrate Elizabeth Ellis (Fifth Defendant)

JUDGMENT OF:
Harrison AsJ

LOWER COURT JURISDICTION:
Local Court

LOWER COURT FILE NUMBER(S):
413/2008

LOWER COURT JUDICIAL OFFICER:
Magistrate Elizabeth Ellis

LOWER COURT DATE OF DECISION:
1 December 2009


COUNSEL:
D Pullinger (Plaintiff)
R E Quickenden (First to Fourth Defendants)

SOLICITORS:
Richardson Legal ( Plaintiff)
Nash Allen Williams & Wotton (First to Fourth Defendants)


CATCHWORDS:
APPEAL - Local Court Magistrate - Whether there was an agreement for father to pay son's legal fees

LEGISLATION CITED:
Local Court Act 20078

CATEGORY:
Principal judgment

CASES CITED:
Allen v Kerr & Anor (1995) Aust Torts Reports 81-354
Australian Woollen Mills Pty Ltd v Commonwealth [1955] UKPCHCA 3; (1955) 93 CLR 546
Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139
Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647 Pacific Carriers Limited v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451
Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622
Carr v Neill  [1999] NSWSC 1263 
Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225
Empirnall Holdings Pty Ltd v Machon Paull (1988) 14 NSWLR 523
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95
GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631
Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235
Hendriks v McGeoch [2008] NSWCA 53; (2008) Aust Torts Reports 81-942
International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151
Kriketos v Livschitz [2009] NSWCA 96
Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353
Maxitherm Boilers Pty Ltd v Pacific Dunlop Insurances Pty Ltd [1998] 4 VR 559
Meates v Attorney-General [1983] NZLR 308 Vroon BV v Foster’s Brewing Group [1994] VicRp 53; [1994] 2 VR 32
Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154; (2007) Aust Contract R 90-263
RL & D Investments Pty Ltd v Bisby [2002] NSWSC 1082; (2002) 37 MVR 479
Sagacious Procurement Pty Limited v Symbion Health Limited [2009] HCA Trans 23
Sagacious Procurement Pty Ltd v Symbion Health Ltd (formerly Mayne Group Ltd) [2008] NSWCA 149
Sinclair, Scott & Co v Naughton [1929] HCA 34; (1929) 43 CLR 310
Swain v Waverley Municipal Council [2005] HCA 4; [2005] 220 CLR 517
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471
Von Hatzfeldt-Wildenburg v Alexander [1912] 1 Ch 284, 289

TEXTS CITED:


DECISION:
(1) The appeal is dismissed.
(2) The decision of her Honour Magistrate Elizabeth Ellis dated 1 December 2009 is affirmed.
(3) The summons filed 22 December 2009 is dismissed.
(4) The plaintiff is to pay the defendants costs as agreed or assessed.



JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

ASSOCIATE JUSTICE HARRISON

WEDNESDAY, 29 SEPTEMBER 2010

2009/00324061 GUISEPPE ARBOLINO v

MICHAEL JAMES WILLIAMS

JUDGMENT (Appeal decision of Local Court Magistrate

- whether there was an agreement for father to pay son’s legal fees)

1 HER HONOUR: The main issue raised in this appeal is whether there was an agreement between Guiseppe Arbolino (“Mr Arbolino”) and a firm of solicitors, Nash Allen Williams & Wotton (“the solicitors”) that Mr Arbolino would pay his son’s legal fees. On 1 December 2009, her Honour Magistrate Elizabeth Ellis ordered that Mr Arbolino pay the solicitors the sum of $17,043.56.

2 By summons filed 22 December 2009 Mr Arbolino seeks declarations that, firstly, the plaintiff did not guarantee the obligations of Antoni Arbolino to the solicitors by telephone conversation between Mr Arbolino and the third defendant (Mr Nash) on 8 July 2004; secondly, Mr Arbolino did not represent that he would guarantee the obligations of Antoni Arbolino (his son) to the solicitors by a telephone conversation between Mr Arbolino and the Mr Nash on 8 July 2004; thirdly, by letter dated 8 July 2004 from the solicitors to Mr and Mrs G and M Arbolino the solicitors proposed a guarantee acceptable to them and set out terms of a proposed agreement; fourthly, a guarantee in the terms set out in the letter was not agreed to by Mr Arbolino; and fifthly, a guarantee in the terms set out in the letter was not confirmed in writing or otherwise by Mr Arbolino. Mr Arbolino also seeks an order quashing the determination of the Magistrate made on 1 December 2009 at Wyong, holding that Mr Arbolino was liable to the solicitors in the Wyong Local Court Civil Claims proceedings file number 413/08, and an order quashing the judgment for Mr Arbolino in the Wyong Local Court Civil Claims proceedings.

3 The plaintiff is Mr Guiseppe Arbolino. The first defendant is Mr Michael James Williams. The second defendant is Mr Michael Anthony Nash. The third defendant is Mr Dominic Karl Nash. The fourth defendant is Mr Peter Charles Wotton. The first to the fourth defendants are a firm of solicitors (''the solicitors"). The fifth defendant in these proceedings is her Honour Magistrate Elizabeth Ellis. Mr Arbolino relied on the affidavit of Mr David Burgin sworn 12 April 2010.

The appeal

4 Submissions for Mr Arbolino state that the appeal was pursuant to s 73(1) of the Local Courts Act 1982. However, Local Courts Act 1982 has been repealed by the Local Court Act 2007, which commenced on 6 July 2009. Hence, that is now the Act that governs the present appeal but the provisions are similar, if not identical.

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

6 Section 40 of the Local Court Act provides that the onus lies with the plaintiff to demonstrate that there has been an error of law or that leave should be granted on a mixed question of law and fact. What is a question of law (as opposed to a question of fact) was considered in Allen v Kerr & Anor (1995) Aust Torts Reports 81-354; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156; Carr v Neill  [1999] NSWSC 1263  and RL & D Investments Pty Ltd v Bisby [2002] NSWSC 1082; (2002) 37 MVR 479.

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

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

Grounds of appeal

9 Mr Arbolino appeals the whole of the decision of Magistrate Ellis on the ground that the Magistrate made an error of law in finding that a contract of guarantee was formed by a telephone conversation on 8 July 2004 ("the telephone conversation") between Mr Arbolino and Mr Nash. It is submitted that if a conversation did take place on that date and there was an agreement at that time it was not the intention of the parties that such agreement would be a concluded guarantee agreement and it is submitted that the concluded guarantee agreement would not occur unless and until they executed a formal contract (or deed). Accordingly Magistrate Ellis did not apply the principles set out in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 (specifically the "third case" referred to in that judgment at page 10.34).

10 Mr Arbolino asserted that the third alternative referred to in Masters v Cameron should apply and it is convenient that I reproduce these principles here. Masters v Cameron has been helpfully summarised in Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235 where Young CJ in Eq (as he then was) stated at [55] to [59]:

55 As is well known, the High Court in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 at 360, said that cases of the present type may belong to one of three classes. The three classes set out were:

1. Where the parties have reached final agreement on the terms of their contract and agree to be immediately bound but wish to restate those terms in a fuller or more precise way in a formal document;

2. Where the parties have reached final agreement on all the terms and intend not to depart in any way from them but the performance of some part of the contract is made conditional on the execution of a formal contract;

3. Were the parties intend there not to be a concluded contract unless and until a formal document is executed.

56 The vital question is always what the parties intended by the words they have used. In a case where the parties have expressly or impliedly indicated that there will be a further agreement, it is a question of construction whether the execution of a further contract is a condition of the bargain or else is merely an expression of the desire of the parties as to how their transaction will be completed: Von Hatzfeldt-Wildenburg v Alexander [1912] 1 Ch 284, 289. Each case turns on its own facts.

57 In Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622, 628, MH McLelland J said:

"There is in reality a fourth class additional to the three mentioned in Masters v Cameron ... namely, '... one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms.' "

The words quoted derive from Sinclair, Scott & Co v Naughton [1929] HCA 34; (1929) 43 CLR 310 at 317.

58 McLelland J's decision was affirmed in this Court as GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631. The court there consisted of Kirby P, Glass and McHugh JJA. The lastmentioned gave the leading judgment with which the other two judges noted their agreement.

59 A page 634, McHugh JA said:

"The decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of surrounding circumstances ... . If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction.

Even when a document recording the terms of the parties' agreement specifically refers to the execution of a formal contract, the parties may be immediately bound."

11 Mr Arbolino submitted that he and his wife did not intend there to be a concluded contract unless the guarantee was signed and returned to the solicitors.

Background

12 In December 2003, Mr Arbolino's son, Antonio Arbolino (“Tony”) retained the solicitors to act for him in family law proceedings. Pursuant to Family Law Rules the solicitors provided Tony with a costs agreement and costs notice.

13 Between December 2003 and July 2004 the solicitors rendered tax invoices to Tony for work done pursuant to the retainer. As at 8 July 2009 Tony was in arrears as regards payment of the tax invoices rendered and the respondents advised Tony that they would cease to act for him.

14 At paragraphs 10, 13 and 15 of the amended statement of claim, the solicitors pleaded as follows:

“10. On 29 June 2004 Tony had failed to make any further payments in reduction of the then outstanding costs owing to the Plaintiffs.

...

13. On 8 July 2004 in consideration that the Plaintiff’s continue to act for Tony the Defendant agreed that he would:-

i. pay to the plaintiff’s that day the sum of $2,000.00 towards Tony’s outstanding legal costs;

ii. accept liability for any Barrister’s fees incurred in respect of the retainer;

iii. accept liability for Tony’s then outstanding costs of $880.00 owing in respect of Apprehended Domestic Violence proceedings heard in the Toronto Local Court on 7 January 2004;

iv. accept liability for Tony’s then outstanding costs of $880.00 owing in respect of [a matter] heard in the Wyong Local Court on 21 July 2004;

v. accept liability for Tony’s future costs incurred in respect of the retainer;

vi. pay outstanding accounts within 6 months of the rendering of a Tax Invoice; and

viii. make monthly payment of not less than one sixth (1/6) of outstanding accounts.

(the “defendants promise”)

...

15. On or about 2 November 2004 the Defendant paid a further sum of $2,000.00 in further part performance of the Defendant’s promise.”

15 The important evidence in relation to whether there a contract was formed is a telephone conversion that occurred on 8 July 2004 between Mr Arbolino and Mr Nash and the subsequent letter sent by Mr Nash.

The telephone conversation on 8 July 2004

16 Mr Nash’s version of the conversation that occurred between him and Mr Arbolino on 8 July 2004 is as follows:

Mr Arbolino: “We need you to keep representing Tony. I will guarantee payment of his costs if you keep representing him.”

Mr Nash: “If you are prepared to pay his outstanding costs to date and guarantee his future legal costs including disbursements and Barrister’s fees than I will be prepared to continue to act for Tony.”

Mr Arbolino: “I can pay $2000 today and I will pay the rest within 6 months.”

Mr Nash: “If you pay $2000 today and you promise to pay the balance of the costs including Barrister’s fees and the outstanding costs in relation to the criminal matter and you pay them within 6 months I will keep acting but I want you to make monthly instalments of not less than 1/6^th of the outstanding amount. Are you happy with that?”

Mr Arbolino: “Yes.”

17 Mr Arbolino initially denied that a telephone conversation occurred on 8 July 2004 but under cross examination conceded that a call he did have with Mr Nash concerning his son's matter may have occurred on that date [T17/11/09, p 48.48]. However, while under cross examination he conceded that the telephone conversation may have occurred on that date, and that Mr Nash asked him to guarantee Tony's costs, he maintained that at no time did he offer to, or agree to, guarantee his son's costs [T17/11/09, pp 48.50 - 49.4].

The 8 July 2004 letter

18 The letter dated 8 July 2004 by the solicitors was addressed to "Mr & Mrs G & M Arbolino". It relevantly reads:

“We refer to our telephone conversation today with Mr Arbolino and confirm your offer to guarantee Tony's legal fees to this firm.

We set out hereunder the terms upon which we are prepared to agree to in relation to such an arrangement and we would be pleased if you would confirm you agree with these conditions by signing the enclosed duplicate and returning it to us. Upon receipt of your confirmation that the terms are agreeable we will prepare a Deed for your execution.

TERMS OF GUARANTEE

Mr & Mrs Arbolino to pay current outstanding costs as follows:-

1. Account rendered 27 February 2004 $7,281.56

2. Mr Guiseppe Arbolino and Mrs Madalina Arbolino will be personally and principally responsible for all costs incurred by Nash Allen Williams & Wotton since 27 February 2004 including disbursements.

3. MR & Mrs Arbolino senior will pay all disbursements as and when they fall due including barrister's fees and service fees.

4. Our costs will be paid within six (6) months of the date on which the tax invoice is rendered.

5. Mr & Mrs Arbolino (senior) will make regular payments of not less than one sixth of any rendered tax invoice each month.

We look forward to hearing from you.”

19 Before the Magistrate it was common ground that this letter was never signed or returned to Mr Nash.

The Magistrate’s decision

20 On the issue of whether there was an agreement between Mr Nash and Mr Arbolino on 8 July 2004. The Magistrate stated:

“... I found Mr Nash to be a witness of truth. I found that not only were there contemporaneous notes as to general discussions but there was that verification of the discussion by letter of 8 July. True it is that it was referring to it needing to be signed off and a deed drawn up. It is because of the urgent nature of proceedings that I form the view that it is likely that that was lost in the paper driven work that is the daily grind of the family court. I also note that the defendant did not any time present any evidence supportive of his verbal denial that he was responsible for the fees. In fact his behaviour is to the contrary. Payments continued to have been made after that letter was sent and after Mr Arbolino said that he had declined to agree that he was a guarantor including those that have been put on the record of considerable amounts. I am of the opinion that the evidence is capable of giving rise to an enforceable agreement for payment by Guiseppe Arbolino to Dominic Nash...”

21 The Magistrate continued:

“For valuable consideration a surety promises a creditor that if the principle debtor does not do something the surety will make good the deficiency. That is in essence pointing to the basics any law student in contract knows, there has to be an offer, acceptance and consideration for there to be a binding contract. The offer was made by Mr Arbolino for him to guarantee the payments incurred by Tony Arbolino. That was accepted by Dominic Nash by his letter of 8 July. The consideration is that the work was to be continued that was prominent in Mr Arbolino's mind as being essential.

I am, therefore, of the opinion that there is a binding agreement sufficient for Mr Arbolino to be bound as guarantor as is contended by the plaintiff. Because I have made the finding that the guarantee is sufficient I do not turn my mind to the second limb of the plaintiff's claim.

22 At the hearing of this appeal, both parties referred to Kriketos v Livschitz [2009] NSWCA 96, where the Court of Appeal, per McColl JA (with whom Allsop P and Macfarlan JA agreed) restated the principles of relating to whether a contract is formed at [106] – [114]:

“106 It is trite law that there is no contract unless two parties mutually consent to be bound one to the other by one agreement. However, as Higgins J thought it necessary to add to that statement of the law, “it is one thing for two parties to settle what are to be the terms of an agreement, if it should be made; and quite another thing to make the agreement”: Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647 (at 650), approved on appeal per Griffith CJ (at 666); O’Connor J (at 671); Isaacs J (at 671).

107 Whether a contract has been formed, and the terms of any contractual arrangement, requires objective determination: Pacific Carriers Limited v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 (at [22]) per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 (at [40]) per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 (at [34]) per Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ; Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 (at [25]) per Gaudron, McHugh, Hayne and Callinan JJ.

108 The exercise of objective determination requires the court to consider the text of relevant documents, and also the surrounding circumstances known to participants, and the genesis, purpose and object of the transaction, but not the participants’ subjective beliefs: Pacific Carriers Limited (at [22]); Toll (at [40]); International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151 (at [8]) per Gleeson CJ; (at [53]) per Gummow, Hayne, Heydon, Crennan and Kiefel JJ; (at [127]) per Kirby J. The surrounding circumstances include the parties’ relationship to one another: Ermogenous (at [25]).

109 “[P]ost-contractual conduct is admissible on the question of whether a contract is formed”: Brambles (at [25]) per Heydon JA; see also Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154; (2007) Aust Contract R 90-263 (at [59]) per Campbell JA (Beazley JA agreeing); Sagacious Procurement Pty Ltd v Symbion Health Ltd (formerly Mayne Group Ltd) [2008] NSWCA 149 (at [99] ff) per Giles JA (Hodgson and Campbell JJA agreeing); special leave to appeal refused: Sagacious Procurement Pty Limited v Symbion Health Limited [2009] HCA Trans 23.

110 The conventional approach to the question whether a contract has been formed turns on determining whether there has been offer and acceptance, that is to say, a “clear indication by one party of a willingness to be bound on certain terms, accompanied by an unqualified assent to that offer communicated by the other party”: J Carter, E Peden, G Tolhurst, Contract Law in Australia, 5th ed (2007) LexisNexis Butterworths at [3-02]. Offer and acceptance analysis is “normal” and “conventional”: Brambles (at [74]). As McHugh JA (with whom Samuels JA agreed) said in Empirnall Holdings Pty Ltd v Machon Paull (1988) 14 NSWLR 523 (at 534): “The objective theory of contract requires an external manifestation of assent to an offer. Convenience, and especially commercial convenience, has given rise to the rule that the acceptance of the offer should be communicated to the offeror.”

111 The respondent accepts that the clear indications called for by the conventional approach cannot be identified in the three letters. In particular, he concedes that the only letter from Mr Roth, that of 2 May 2002, contains no words of acceptance. He relies, however, on the authorities which support the proposition that some, albeit limited, recognition has been given to finding a contract even though it is not easy to locate an offer and/or acceptance: Brambles (at [71], [74]) per Heydon JA. As Giles JA said in Hendriks v McGeoch [2008] NSWCA 53; (2008) Aust Torts Reports 81-942 (at [10]), “[a] contract need not be made by formal offer and acceptance, or by an overt course of negotiation [and] [e]ntry into a contract can be found in the conduct of the parties, in what they said and did towards each other.”

112 In Empirnall (at 534) McHugh JA observed “communication of acceptance is not always necessary”, giving as an example cases where the offeror will be bound if he dispenses with the need to communicate the acceptance of his offer: see Carlill v Carbolic Smoke Ball Co [1892] EWCA Civ 1; [1893] 1 QB 256 (at 269). There is no suggestion there had been any such dispensation in this case. It was necessary, therefore, on the respondent’s pleaded case, to identify from the letters some communication on the appellant’s part of his acceptance of an offer communicated to him by EML.

113 Even on what I might call the “non–conventional” approach, in order to conclude there is a binding contract, the exchange of the three letters must be seen to have constituted the parties’ mutual communication of their “respective assents to being legally bound by terms capable of having contractual effect”: Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 (at 627) per McLelland J (as his Honour then was); affirmed G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631; there must have been “final mutual assent”: Barrier Wharfs (at 660–661) per Higgins J; see also Brambles (at [71] - [81]) per Heydon JA.

114 The question whether such mutual assent was communicated turns on whether “viewed as a whole and objectively from the point of view of reasonable persons on both sides, the dealings show a concluded bargain”: Meates v Attorney-General [1983] NZLR 308 (at 377) per Cooke J, approved in Vroon BV v Foster’s Brewing Group [1994] VicRp 53; [1994] 2 VR 32 (at 82) per Ormiston J in a passage cited by Heydon JA with approval in Brambles (at [75]); see also Australian Woollen Mills Pty Ltd v Commonwealth [1955] UKPCHCA 3; (1955) 93 CLR 546 (at 555); Maxitherm Boilers Pty Ltd v Pacific Dunlop Insurances Pty Ltd [1998] 4 VR 559 (at 567) per Buchanan JA (Ormiston and Callaway JJA agreeing).”

(i) Whether there was a valid contract

23 Mr Arbolino submitted that there is no clear and unequivocal intention by him to be bound, nor is there any documentation or circumstance that makes it sufficiently clear that he offered or intended to be legally bound. Mr Arbolino referred to the first paragraph of the letter dated 8 July 2004, which makes reference to an "offer" (which is denied) made by him, however, it is clear from the letter that that offer (if it was made) was not accepted. The effect of second paragraph of the letter, and what follows is that the respondents were making a counter offer that required joint guarantors. It is further submitted that if the agreement, as counter offered by the respondents in the letter were acceptable to Mr and Mrs Arbolino, a formal document, being a deed, would be required.

24 Mr Arbolino also submitted that clearly it was the intention of the respondents that they required Mr and Mrs Arbolino to be joint guarantors. The letter is addressed to them jointly. The salutation is to them jointly. The terms of guarantee refers to them jointly. Both "G Arbolino" and "M Arbolino" were required to sign and return the duplicate letter.

25 Furthermore, Mr Arbolino submitted that after the letter had been sent to him and Mrs Arbolino, the solicitors withdrew from the family law proceedings by filing a notice of ceasing to act and then sending, on 13 July 2004, the sealed copy of that notice to Tony advising, "Once arrangements have been made in relation to our outstanding costs we confirm we should be pleased to receive further instructions from you".

26 The solicitors submitted that Mr Arbolino’s submissions have not addressed the claimed errors of law in the summons. The solicitors also submit that finding the telephone conversation on 8 July 2004 occurred as evidenced by Mr Nash is a finding of fact and cannot be challenged. Alternatively, the solicitors submitted that the Magistrate found the parties acted on Mr Arbolino’s promise on 8 July 2004 by making payments to the solicitors in accordance with that promise and the respondent performing the work for Tony on the basis of the promise.

27 The solicitors submitted that the Magistrate did not find that there was an agreement based solely on 8 July 2004 telephone conversation, although that was a central finding. The solicitors submitted that the Magistrate was bound to look at the whole of the evidence in determining whether an agreement had been reached not simply the terms of the letter of 8 July 2004.

28 Finally, the solicitors submitted that the facts in Masters v Cameron have no connection to the facts in this appeal. The solicitors submitted that reliance by Mr Arbolino on Masters v Cameron is misunderstood in this context.

29 The contents of letter dated 8 July 2004 are ambiguous. The first paragraph says, “and confirm your offer to guarantee Tony’s legal fees to this firm”. This sentence suggests the solicitors are accepting the offer made by Mr Arbolino in the earlier telephone conversation. However, the letter then continues, “We are prepared to agree to in relation to such arrangement and would be pleased if you would agree to these conditions by signing the enclosed duplicate to them.” The letter then states, “Upon receipt of your confirmation that these terms are agreeable we will prepare a Deed for you execution.” These sentences suggest that the solicitors are making a subsequent offer. In short, the contents of the letter are ambiguous.

30 Whether a contract has been formed and the terms of any contractual agreement requires objective determination. The exercise of objective determination required the magistrate to consider the text of the letter dated 8 July 2004 and the surrounding circumstances known to Mr Arbolino and Mr Nash, in particular the telephone call which took place also on 8 July 2004. The post-contractual conduct, namely Mr Arbolino making payments was also taken into account by the Magistrate when he was determining whether the contract was formed.

31 The Magistrate made a finding that the offer was made by Mr Arbolino for him to guarantee the payments incurred by his son Tony Arbolino. Mr Nash accepted that offer by his letter dated 8 July 2004. The consideration was that it was prominent in Mr Arbolino’s mind that the continued legal representation of his son in court proceedings was essential. It was of concern to him because he did not know the whereabouts of his grandchildren. His son also did not know of his children’s whereabouts (T43.4-16). It was open to the Magistrate to decide that a binding agreement was formed between Mr Arbolino and the solicitors on 8 July 2004. The agreement was not one that falls within category 3 in Masters v Cameron.

32 The Magistrate did not determine the negligent misrepresentation claim because she found in favour of the solicitors in relation to the contract claim. As the Magistrate did not err in law in deciding that there was a binding agreement, it is not necessary for this court to determine this issue.

33 There is no error of law. The appeal is dismissed. The decision of her Honour Magistrate Elizabeth Ellis dated 1 December 2009 is affirmed. The summons filed 22 December 2009 is dismissed.

34 Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant’s costs as agreed or assessed.

The Court orders:

(1) The appeal is dismissed.

(2) The decision of her Honour Magistrate Elizabeth Ellis dated 1 December 2009 is affirmed.

(3) The summons filed 22 December 2009 is dismissed.

(4) The plaintiff is to pay the defendants costs as agreed or assessed.

**********





LAST UPDATED:
1 October 2010