Clifford v Rumsley - [2017] WADC 134

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: CLIFFORD -v- RUMSLEY [2017] WADC 134

CORAM: DEPUTY REGISTRAR HEWITT

HEARD: 5 OCTOBER 2017

DELIVERED : 12 OCTOBER 2017

FILE NO/S: BUN CIV 4 of 2017

BETWEEN: PHILIP GEORGE CLIFFORD
First plaintiff
SHERAZ PTY LTD
Second plaintiff
AND
ALAN PHILLIP RUMSLEY
Defendant

Catchwords:

Practice and procedure - Allegation of conflict of interest - Order for transfer of proceedings to Perth Registry - Security for costs

Legislation:

Corporations Act 2001 s 1335
District Court Act 1969 s 69 - s 72
Legal Profession Act 2008 s 289(1), s 291

Result:

Application for transfer adjourned sine die
Security for costs ordered

Representation:

Counsel:

First plaintiff                 :     In person
Second plaintiff            :     In person
Defendant:     In person

Solicitors:

First plaintiff                 :     Not applicable
Second plaintiff            :     Not applicable
Defendant:     Not applicable

Case(s) referred to in judgment(s):

Laundry Coin–Wash Nominees Pty Ltd v Dunlop Olympic Ltd (1985) ATPR 40‑584

DEPUTY REGISTRAR HEWITT: This action was commenced in the Bunbury Registry on 16 March 2017. The action concerns a claim by the first plaintiff, who is a barrister, and the second plaintiff, a company with which he is associated, for fees for work undertaken on instructions from the defendant who is a solicitor. The situation is somewhat unusual and it is perhaps most clearly described by quoting the first paragraph of the statement of claim which is in the following terms:
The First Applicant, Philip George Clifford ('Mr Clifford'), is a barrister providing legal services to solicitors and renders accounts for those services in his name or in the name of a related company Sheraz Pty Ltd ACN 009 134 016 ('Sheraz').
By way of further background, the first plaintiff was until recently an undischarged bankrupt, being released from his bankruptcy earlier this year.
The application to which this decision relates is that filed by the defendant on 25 May 2017. That application seeks, firstly, that the matter be transferred to the Perth Registry and, secondly, that the plaintiffs give security for the defendant's costs. Various other ancillary orders are sought. Those I have mentioned are the matters with which it is necessary for me to deal.
In addition to the orders which have been set out in the chamber summons, the defendant has also complained that there is conflict of interest between the plaintiffs with which I should deal.
In dealing with that application, I have the following comments to make:
1.The chamber summons was filed in May 2017 and no mention of this aspect of the matter was made.
2.Although the defendant has pointed me to various comments made by members of the Supreme Court in other proceedings, those proceedings were not on all fours with the present proceedings and the extent to which the comments are relevant to the present proceedings is not clear to me.
3.Were I to make any order as the defendant wishes me to, that order would have to be in the nature of an injunction and I have no power to grant such an injunction.
4.I am unable to perceive a conflict of interest between the plaintiffs and it is to be noted that although it disapproved of the first plaintiff's behaviour in the proceedings before it, the Supreme Court in fact allowed the first plaintiff to represent the company Sheraz.
5.The regulation of the legal profession is a matter vested in the Supreme Court of Western Australia and this court has no jurisdiction or authority to make orders of the kind which the defendant seeks and I am unable to see how the fact that Mr Clifford is a party to the present proceedings would invest me with such authority.
It follows from these reasons that I am not prepared to countenance the conflict aspect of the matter which was argued before me and were it to have been properly before me in the form of a chamber summons, I would have dismissed it.
The next matter concerns the application for a transfer of the proceedings from the Bunbury Registry to the Perth Registry. Consideration of that aspect of the application involves consideration of s 69 ‑ s 72 of the District Court Act 1969. Those sections are as follows:
69.Where action to be commenced
(1)The Court has jurisdiction throughout the State.
(2)An action shall be commenced in the Court sitting at the place nearest to where —
(a)the defendant or one of 2 or more defendants, as the case may be, resides or carries on business;
(b)the cause of action or claim arose either wholly or in some material part; or
(c)a debt or sum of money is made payable under an engagement or promise in writing given by the defendant.
70.     Defendant may object to where action commenced
(1)If a person served with a writ of summons in an action fails to duly file a defence or fails to file together with the defence a notice that he claims that the action was not commenced in the Court sitting at the place prescribed in accordance with section 69, the action shall be deemed to have commenced in the Court at the place so prescribed.
(2)Where a notice referred to in subsection (1) is so filed, a District Court judge may upon application in chambers determine whether the action was commenced as prescribed in that subsection.
(3)On the hearing of the application the District Court judge may make such order as he thinks fit.
Part VI — Remitting and transferring actions and matters
71.     Transfer to different place
Where an action or matter is commenced in the Court sitting at a place that should have been commenced in the Court sitting at another place, the Court or a District Court judge may order its removal to be tried or heard by the Court sitting at that other place, or may so order that the action or matter be tried or heard in the Court sitting at the place in which it has been commenced.
72.     Judge may change venue
Where a District Court judge is satisfied that an action which is listed to be heard in the Court sitting at a place can be more conveniently or fairly tried in the Court sitting at another place, he may order, on such terms and conditions as he thinks fit, the action to be sent for trial to the Court sitting at that other place.
It is common ground that the defendant did not file a notice that he claimed the action was not commenced in the court sitting at the place prescribed in accordance with s 69. That being the case, the Act provides that the action shall be deemed to be commenced in the court at the place so prescribed. The application by the defendant seeks that I make a ruling contrary to the provisions of the Act. I am not prepared to do so. When the matter comes to trial it may be possible for the action to be transferred to the Perth Registry, but that is a matter for a later date and a judge. Whilst I find that the application of the defendant in this respect lacks merit, I do not intend to dismiss it since it may well be that the defendant might apply to a judge at a later stage for the place of trial to be in Perth rather than Bunbury. There may be much convenience in such a transfer but as matters stand, given the fact that this action is entirely an electronic file and attendances by way of video offer no particular problem, I think it matters little in which registry the action was commenced and I see no impediment to the conduct of the action by the fact that it was commenced in the Bunbury Registry.
The final matter which requires consideration is the application by the defendant for security for costs. There are two aspects to that application, although there is some overlap between them. Rule 25 is relevant to both plaintiffs and, additionally, s 1335 of the Corporations Law is relevant to the application insofar as it relates to the second plaintiff. It has long been established that mere poverty is not a basis for ordering security for costs unless it is accompanied by other factors which persuade the court that security should be given. In the present case, the main thrust of the argument relates to the fact that Mr Clifford was until recently a bankrupt and that a large portion of the debts which led to his bankruptcy were costs which he was liable to pay in proceedings in the Federal Court.
Mr Clifford has sworn an affidavit setting out details of assets of which he is the owner and which he values at something in excess of $50,000.
There was some attack made by the defendant on these valuations and it is clear that they cannot be regarded as anything more than estimates. Nonetheless, I accept that the assets exist and they have a value.
Sheraz Pty Ltd is a company which is a trustee under the terms of a discretionary trust and as trustee is the registered proprietor of real property which, although it cannot be valued exactly, is probably worth in the vicinity of $2 million and subject to a potential encumbrance of about $750,000.
I shall consider the claim for security against the company in the light of s 1335 of the Corporations Law. That section provides where it is shown on credible testimony that the company is unlikely to be able to pay the defendant's costs in the event that its action is unsuccessful, I may make an order for security for costs. It is to be noted that the matter is discretionary. The test provides a trigger but does not determine an outcome.
The relevant consideration in the present case is the fact that the company is a trustee under the terms of a deed of trust the details of which are not known to me because it has not been produced in evidence. What I do know is that the company appears to own nothing in its own right and everything it holds is as a trustee. I am also aware of the fact that trust deeds often limit the capacity of a trustee to exercise an indemnity against the trust property and frequently provide for the replacement of a trustee with another and in doing so snuff out any right of the original trustee to indemnify itself from trust funds. Furthermore, the existence of the trust relationship places considerable obstacles to execution and may by itself be a sufficient reason for requiring security. An authority which establishes this proposition is Laundry Coin–Wash Nominees Pty Ltd v Dunlop Olympic Ltd (1985) ATPR 40‑584, a judgment of the Federal Court of Australia delivered on 28 June 1985 by his Honour Smithers J.
On my analysis, therefore, it is open to me to order the second plaintiff to provide security for the costs of the action. A matter which is of importance in deciding whether security should be provided is an analysis of the strength of the case. In that regard, I hark back to the first paragraph of the statement of claim which I have earlier quoted. A matter of particular concern to me are the provisions of the Legal Profession Act 2008 which in div 7 deals with the issue of recovery of costs by legal practitioners. Section 289(1) provides:
Legal costs cannot be recovered unless bill has been given
(1)A law practice must not commence 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 in accordance with sections 290 and 291.
And s 291 provide as follows:
Notification of client's rights
(1)A bill must include or be accompanied by a written statement setting out —
(a)the following avenues that are open to the client in the event of a dispute in relation to legal costs —
(i)costs assessment under Division 8;
(ii)the setting aside of a costs agreement under section 288;
(iii)making a complaint under Part 13;
and
(b)any time limits that apply to the taking of any action referred to in paragraph (a).
(2)Subsection (1) does not apply in relation to a sophisticated client.
(3)A law practice is taken to have complied with the requirement to disclose the details referred to in subsection (1) if it provides a written statement in or to the effect of a form prescribed by the regulations for the purposes of this subsection.
(4)A form prescribed for the purposes of subsection (3) may, instead of itself containing details of the kind referred to in that subsection, refer to publicly accessible sources of information (such as an internet website) from which those details can be obtained.
(5)The regulations may require the Board to develop a statement of the relevant details and to revise it as necessary to keep it up to date.
To the extent that I have an indication of the form of bills which were delivered by the plaintiffs to the defendant, it appears at page 55 of the first plaintiff's affidavit sworn on 21 September 2017. I have a number of difficulties with the form of the accounts. The first difficulty is it was rendered by an entity other than a legal practitioner claiming payment for work performed of a legal nature. My second concern is that a bill needs to be signed on behalf of a law practice and, since the second plaintiff is not a law practice, it is difficult to understand how the requirement for a signature could have been achieved.
Given that the defendant is an Australian legal practitioner, he is by definition a sophisticated client and as a consequence the provisions of s 291 are not applicable.
My concerns about the strength of the plaintiffs' case, in essence, focus on par 1 of the statement of claim. To repeat, that paragraph is the following terms:
The First Applicant, Philip George Clifford ('Mr Clifford'), is a barrister providing legal services to solicitors and renders accounts for those services in his name or in the name of a related company Sheraz Pty Ltd ACN 009 134 016 ('Sheraz').
Breaking the paragraph down, the allegation is that in some manner the second plaintiff is entitled to sue for accounts rendered by the first plaintiff but in the name of the second plaintiff. I struggle to understand the concept and have concerns about the strength of the case. Because of these concerns, I am inclined to think that security for costs should be ordered. In making the orders which I propose, I wish to make it clear that I do not accept the calculations which appear in par 50 of the defendant's affidavit dated 24 May 2017 as being appropriate. The figures are, in my opinion, plucked from thin air and have little evidentiary value. The order that I propose to make is that the second plaintiff give security for both plaintiffs by way of payment into court in the sum of $20,000 and that the defendant be at liberty to apply for further security upon the matter being ready to proceed to a listing conference.