Grey v Zaratell Pty Ltd as Trustee for C and a Family Trust

[2004] WASC 37

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   GREY & ORS -v- ZARATELL PTY LTD As Trustee for C AND A FAMILY TRUST & ORS [2004] WASC 37

CORAM:   PULLIN J

HEARD:   4 MARCH 2004

DELIVERED          :   11 MARCH 2004

FILE NO/S:   CIV 1763 of 2002

BETWEEN:   BRIAN ALBERT JOHNSTON GREY

OLGA THERESE ANNE GREY
ELLA WHITEMAN BARNETT
DOROTHY MARGARET PEAD
JONELLE INVESTMENTS PTY LTD (ACN 077 269 535)
MARGARET RAE SPRY
Plaintiffs

AND

ZARATELL PTY LTD As Trustee for C AND A FAMILY TRUST (ACN 009 110 407)
First Defendant

CARMELLO FRANCESCO RACCUIA
ANITA RACCUIA
ZARATELL PTY LTD (ACN 009 110 407)
Second Defendants

LINA DIFRANCO
Third Defendant

JOHN ROBERT DIPERNA
Fourth Defendant
 

Catchwords:

Practice and procedure - Springing order - Extension of time - Solicitor's lien - Conditional order for delivery of file - Turns on own facts

Legislation:

Nil

Result:

Order for delivery of papers on conditions
Extension of time for compliance with springing order

Category:    B

Representation:

Counsel:

Plaintiffs:     Mr P A Tottle

First Defendant             :     Mr B W Duckham

Second Defendants       :     Mr B W Duckham

Third Defendant           :     Mr B W Duckham

Fourth Defendant          :     No appearance

Interested person           :     Mr K Staffa

Solicitors:

Plaintiffs:     Tottle Partners

First Defendant             :     B W Duckham & Co

Second Defendants       :     B W Duckham & Co

Third Defendant           :     B W Duckham & Co

Fourth Defendant          :     No appearance

Interested person           :     Staffa Lawyers

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

FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268

Gamlen Chemical Co (UK) Ltd v Rochem Ltd [1980] 1 All ER 1049

Melville v East End Holdings Inc [2003] WASCA 133

Case(s) also cited:

Jankowski v Mastoris (1995) 7 BPR 14,589

1. PULLIN J:  This is an application by the first, second and third defendants for orders that:

   "1.The firm of Kevin Staffa, Lawyer be directed to deliver to Messrs B W Duckham & Co. all papers held by it in respect to the within proceedings.

   2.The time for compliance with the Order made the 20th January 2004 be extended to 28 days after delivery of the papers referred to in [the order above]."

2. The order made 20 January 2004 was a springing order.  It required that unless within 28 days of service of the order, the first, second and third defendants filed witness statements upon which they intended to rely at the hearing of this matter or filed a notice stating that they did not intend to reply on any witness statements, their defences and counterclaims be struck out and the plaintiffs have leave to apply for judgment.

3. The order was served on 22 January 2004.  No witness statements were filed and no notice was filed by the first, second or third defendants stating that they did not intend to rely on any witness statements.

4. An order has now been extracted, providing that the amended defence and counterclaim of the first and second defendants have been struck out for non‑compliance with the 20 January 2004 order, and that the defence of the third defendant has also been struck out for the same reason.  Notwithstanding those events, it is not in dispute that pursuant to O 3 r 5, a discretion is conferred upon the court to extend time for compliance with the order made on 20 January 2004, even though the application for extension is made after the expiration of the relevant period: see FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 and Melville v East End Holdings Inc [2003] WASCA 133 at [16] and [17].

5. The history of this matter is as follows.

6. Proceedings were commenced by the plaintiffs by the issue of a writ on 5 June 2002.  The statement of claim indorsed on the writ reveals that the first defendant was the registered proprietor of a property and that by mortgage dated 26 September 1997, the first defendant mortgaged the property to secure the principal sum of $600,000 which had been advanced to the first defendant.  Under the mortgage, the first defendant and the second defendants, as additional covenantors, covenanted to repay the principal sum at the time specified within the mortgage and to pay interest as specified in the mortgage.  The statement of claim alleges that in breach of the mortgage, the first and second defendants failed to pay certain of the  monthly instalments, that appropriate notice was given calling for payment of the outstanding balance of the principal sum and interest, and that there was a failure by the first and second defendants to pay the principal sum.  In breach of another covenant in the mortgage, it is alleged that the first defendant leased the property to the third defendant without obtaining the consent of the mortgagees.  The fourth defendant was named as a party because it lodged a caveat claiming an interest in the property as an equitable mortgagee, pursuant to an acknowledgement of debt between the fourth defendant and the first defendant, as registered proprietor.  Exercising the powers in the mortgage, the plaintiffs sold the land, with settlement due on 7 March 2002.  By reason of the failure of the fourth defendant to remove his caveat, settlement on that sale was not effected.  The plaintiffs claim relief that the first, second and third defendants give vacant possession of the property; that the first and second defendants pay the moneys due under the mortgage; and that the third and fourth defendants withdraw their caveat.

7. The fourth defendant has subsequently removed his caveat.

8. On 21 June 2002, the first defendant entered an appearance, but no appearances were entered by the second, third or fourth defendants.  As a result, at the end of October and early November, the plaintiffs filed summonses seeking judgment in default of appearances.  Appearances were then filed by the second, third and fourth defendants in early November 2002.

9. On 27 February 2002, there was an application for leave to amend the statement of claim, and a summons issued seeking summary judgment.  On 5 February 2003, the summary judgment application was dismissed.  Defences were then filed. 

10. The first defendant's defence consists mainly of admissions, denials, and non‑admissions.  In relation to only one of the alleged defaults, namely the leasing of the property without consent, an issue is raised that Mr Raccuia, on behalf of the first defendant, sought and obtained the oral consent of the plaintiffs, through their agents, to the granting of the lease of the property.  It is said that Mr Raccuia, by a letter dated 11 July 1999, confirmed that discussion.  In reliance on the alleged consent, it is pleaded that Zaratell Pty Ltd entered into the lease agreement with the third defendant in relation to the property.  It is pleaded that the plaintiffs are estopped from denying they consented to the lease being granted and that, as a result, the third defendant is entitled to possession of the property.  There is then an issue raised about the amount paid.  Some particulars are given, and they are said to be the best particulars the first defendant could give until discovery by the plaintiffs.  There is a counterclaim, which repeats the defence and seeks an account from the plaintiffs.  There is a defence and counterclaim in almost identical, if not identical, terms by the second defendants.  The third defendant has filed a defence, which consists of admissions, non‑admissions, and denials, and raises the same plea that consent was given to the lease, and the same plea that this was confirmed by letter of 11 July 1999.  She admits that demand has been made for her to give up possession, but she pleads that she is entitled to remain in possession of the land.  The defence of the fourth defendant consists entirely of admissions, denials, and non‑admissions. 

11. On 7 March 2003, the plaintiffs applied for entry into the Expedited List, on the basis that the issues as revealed by the pleadings were narrowly confined and that the plaintiffs were elderly, self‑funded retirees, and that one of the plaintiffs was seriously ill.  As a result, an order was made in March 2003 entering the action into the Expedited List.  On 14 July 2003, orders were made requiring the filing and service of witness statements and generally for preparation for trial.  On 21 October 2003, the plaintiffs' counsel reported to me that those directions had not been complied with.  An explanation was given that the plaintiffs were all elderly and that one of the plaintiffs had given instructions which may have led to her withdrawal from the action.  It was revealed at that hearing that further and better particulars which were to be supplied by the plaintiffs had not been supplied and that there had been negotiations between the parties.  The plaintiffs were obliged to pay the defendants' costs of that hearing.  On 4 November 2003, the orders which had been made on 14 July were, in effect, made again, with different dates for compliance.  At the same time, Mr Staffa, who was then on the record for the defendants, referred to an application that he had made to cease acting for the defendants.

12. On 20 November, Mr Staffa's application for an order declaring that he had ceased to act for the defendants came on for hearing.  There were two applications.  One had been filed on 20 February 2003, relating to the third and fourth defendants, but this had been adjourned and was brought back on for hearing on 20 November 2003.  The other application related to the other defendants.  Mr Staffa reported that he had, in fact, ceased to act.  Mr Staffa then withdrew .  I will refer to the detailed background to Mr Staffa ceasing to act later in these reasons. 

13. At a directions hearing on 20 November 2003, the plaintiffs reported that the further and better particulars of claim had, by then, been provided.  Orders were then made that the plaintiffs file their statements of evidence and identify documents to be tendered at trial.  The matter was otherwise adjourned to 2 December 2003 to see if new solicitors were being appointed to represent the defendants.  On 2 December 2003, there was no appearance by the defendants.  I made orders that the defendants serve their witness statements by 19 December 2003.

14. On 20 January 2004, the springing order was made, which I have set out above.  Mr Raccuia, the first‑named second defendant, appeared on this occasion.  He informed me that he had instructed Mr Duckham to act for him, and that he had tried to engage other solicitors over the Christmas break but had been unable to do so.  I explained to Mr Raccuia the effect of the springing order, and he appeared to understand.

15. Shortly before this hearing, on 16 and 18 January 2004, a written request had been made by the defendants to Mr Staffa, to deliver up his file. 

16. In an affidavit filed in support of the present application, Mr Raccuia said (contrary to what he had told me on 20 January 2004), that he instructed Mr Duckham to act on 24 January 2004.  He said that he instructed Mr Duckham to act and, even though he did not have "all" the papers", instructed him to make a settlement offer to the solicitors for the plaintiff.

17. On 21 January 2004, Mr Duckham wrote to the solicitors for the plaintiffs, stating that he did not yet have "all" papers, and a without prejudice offer was made to settle the matter.  The plaintiffs' solicitors asked for an extension of time to consider acceptance of the offer until 13 February 2004, and in the plaintiffs' solicitors' facsimile making that request, it was pointed out that the first, second and third defendants had been served with the springing orders.  Mr Duckham agreed to extend the time for acceptance of the offer until Monday 16 February 2004.  The offer was not accepted within that time.  In the one telephone conversation that took place between the solicitors concerning the extension of time to consider the offer which had been made by the defendants, no discussion was had about the springing order.  Mr Duckham did not make any inquiry about whether the plaintiffs would agree to extend time for compliance with the springing order, and no application was made by the defendants pursuant to the liberty to apply which was contained in the order of 20 January 2004.  There was no representation by the plaintiffs' solicitors that the springing order did not have to be complied with. 

18. A notice of appointment to act for the first, second and third defendants was not filed by B W Duckham & Co until 24 February 2004.

19. The defendants' application for an order for Mr Staffa to deliver up his file is relevant also to the application for extension of time in relation to the springing order, and I now turn to that history.

20. As I have mentioned, on 20 February 2003, Mr Staffa made an application seeking a declaration that he had ceased to act for the third and fourth defendants, but this was adjourned, brought back on for hearing, and orders eventually made, on 11 December 2003, that Mr Staffa cease to act for all defendants.  The material disclosed in Mr Staffa's affidavit filed in relation to this application, reveals a number of written communications between 21 March 2003 and November 2003, wherein Mr Staffa sought instructions from the defendants.  During that period, the defendants failed to provide Mr Staffa with instructions to enable him to conduct the litigation.  Furthermore, the defendants did not pay costs which they were obliged to pay under a costs agreement.  Mr Staffa is suing in the Local Court to recover those costs.  As against the first and second defendants, he commenced proceedings on 15 December 2003, claiming costs of $6,827.56.  At about the same time, he also commenced proceedings against the third defendant, claiming costs of $6,695.01.  There has been no suggestion from the defendants that those moneys are not owing, and no suggestion that the amount claimed is unreasonable.  Mr Staffa ceased to act because of the non‑payment of costs and the failure to provide instructions between March 2003 and November 2003.

21. On 23 February 2004, Mr Duckham wrote to Mr Staffa asking for his file, noting that Mr Staffa was refusing to deliver them on the basis of his lien.

22. Mr Staffa, in his letter of 25 February 2004, wrote to Mr Duckham and in his letter said:

    "[The defendants] have copies of all documents relating to the action other than the most recent documents.  These documents can be obtained from the Court file or from the plaintiffs' solicitors."

23. His letter also suggested that if the defendants provided security for the outstanding costs, and entered into a reasonable arrangement for paying off the fees, the matter could be resolved.  He also suggested that the defendants should pay the costs of photocopying the documents.  He asked Mr Duckham whether he agreed that this was reasonable.  Mr Duckham did not respond to those proposals, save to make the application which is now before me.

24. The defendants submit that Mr Staffa is obliged to hand over the files so as not to impede the conduct of the trial.  As was said by Templeman LJ in Gamlen Chemical Co (UK) Ltd v Rochem Ltd [1980] 1 All ER 1049 at 1058:

    "Where the solicitor has himself discharged his retainer, the court then will normally make a mandatory order obliging the original solicitor to hand over the client's papers to the new solicitor against an undertaking by the new solicitor to preserve the lien of the original solicitor."

25. The making of such an order is equitable in character.  As Templeman LJ said in Gamlen's case, in exceptional cases the court might impose terms where justice so required.

26. He then gave the example that if the papers are valueless after the litigation is ended, and if the client accepts that he is indebted to the original solicitor for an agreed sum and has no counterclaim or accepts that the solicitor has admittedly paid out reasonable and proper disbursements, the court might make an order which would only compel the original solicitor to hand over the papers to the new solicitor on the usual terms, preserving the lien, but providing that in the first place the client pays to the original solicitor a sum fixed by the court, representing the whole or part of the moneys admittedly due from the client to the original solicitor.

27. In this case, although Mr Staffa has discharged himself from the retainer, it is because of a serious failure on the part of the defendants to provide instructions, and a failure to pay the costs which are not in dispute and which are not said to be the subject of any counterclaim.  The defendants do not advance any evidence to suggest that they do not have the capacity to pay the costs.  The papers sought are papers relating to the litigation, and after the litigation is over they will have no value, and to make the usual order would, in effect, deprive Mr Staffa of his lien.

28. Furthermore, it is clear from the evidence before me, and not disputed by the defendants, that the defendants have most of the court documents.  This appears from Mr Staffa's facsimile dated 25 February 2004 to B W Duckham & Co, where he says:

    "I have no wish to prevent your clients from properly instructing you.  I do not believe they are precluded from doing so.  They have copies of all documents relating to the action other than the most recent documents.  These documents can be obtained from the court file or from the plaintiffs' solicitors."

29. The defendants have made no effort at all to explain what documents they hold and what they believe they are missing.  By the failure to give this explanation, they give every appearance of seeking to delay progress of the action rather than progress it.

30. I am prepared to make a conditional order that Mr Staffa provide his file, or the parts of the file which have to be supplied in order to provide the defendants and Mr Duckham with a full set of documents.  The condition is that:

    (a)Mr Staffa's undisputed costs be paid within 7 days, or

    (b)within the same time, an affidavit be filed revealing a basis for dispute about any part of the costs, the disputed sum be paid into court and held pending further order and the undisputed balance be paid to Mr Staffa.

31. As to the application to extend time to comply with a springing order, I will make an order extending time for compliance.  I will extend time for compliance for 21 days.  Both sets of parties have ignored time limits from time to time, and in the circumstances it would be unfair not to allow the first, second and third defendants further time.  An extension of 21 days is rather generous in view of a number of facts.  First, the present solicitors have been instructed since 24 January 2004.  Secondly, the issues are confined.  Based on the pleadings I have referred to above, the defendants, in the main, are putting the plaintiffs to proof of their case, save for the issues which positively raise issues on which the defendants will advance evidence.  Those pleaded issues rely on limited material facts.  Thirdly, I find that the defendants have most of the documents relating to the action.  Fourthly, the defendants' new solicitors have had since 24 January 2004 to inspect the court file to obtain copies of anything missing.  There is no evidence that such action has been taken.  Finally, there is no suggestion that any effort has been made by the current solicitors to obtain any documents from the plaintiffs, or indeed to do anything at all in preparation of the case for trial (even accepting that some documents may be missing).  It is not good enough for the present solicitors to say that they can do nothing at all because they lack a few documents.  If the defendants' solicitors had chosen to examine the court file, they would see that there are affidavits from the defendants, filed in relation to the summary judgment application, which set out the evidence in relation to the defences contended for by the defendants.  They could ask the defendants why they are defending.

1. In my view, it is appropriate that this matter come on for trial as soon as possible.  I will hear the parties about when the trial should be.  Counsel should attend the next hearing with diaries so that a date for trial can be identified.