Hobart Savings Bank v Wong
[1989] TASSC 23
•23 March 1989
Serial No 16/1989
List “A”
CITATION: Hobart Savings Bank v Wong [1989] TASSC 23; A16/1989
PARTIES: HOBART SAVINGS BANK
v
WONG
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: M377/1988
DELIVERED ON: 23 March 1989
JUDGMENT OF: Crawford J
Judgment Number: A16/1989
Number of paragraphs: 29
Serial No 16/1989
List "A"
File No M377/1988
THE HOBART SAVINGS BANK v WONG
REASONS FOR JUDGMENT CRAWFORD J
23 March 1989
By originating application to a judge in chambers the applicant bank applied for an order that the respondent solicitor pay $7000 pursuant to an alleged undertaking given by the respondent to the applicant on 26 November 1987. The application has been made pursuant to a rule developed by English courts and incorporated into the Tasmanian Rules of the Supreme Court in O47 r8 in the following form:–
"8 — (1) An undertaking given to the Court or a judge or by a solicitor to any person to do any act (other than pay a sum of money to any person) or to abstain from doing an act may be enforced in the same manner as a judgment requiring a person to abstain from doing an act.
(2) In the case of non–performance of an undertaking to pay a sum of money to any person, the Court or a judge may make an order for payment of the money, which may be enforced in the manner prescribed by rule 3 of this Order."
The facts
The application was supported by an affidavit of Peter Douglas Crosswell, an assistant manager employed by the applicant at its branch at 109 Collins Street, Hobart. He was cross–examined. The respondent relied on four affidavits being of a solicitor, Robyn Bernadette Hopcroft who was cross–examined, Susan Mecklenburgh who was Mrs Hopcroft's secretary, the respondent and a Mr Kimber.
The alleged undertaking was in the following terms:–
"To: Wong, McDermott & White
Attention: Robyn Hopcroft
irrevocable order
I hereby authorise that monies received by you on my behalf by way of settlement proceeds be paid to the Savings Bank of Tasmania. I further declare that this is given for valuable consideration and is irrevocable unless the Bank in writing otherwise agrees.
Dated the 26th day of November 1987
(Signed) (Signature of Mrs J C Darcey)
I/We Wong McDermott & White (Clients solicitor or firm of Solicitors) agree to forward monies as requested.
(Signed) (Signature of the Respondent)
Principal/Partner"
The document was on an otherwise blank piece of paper. It was not addressed to the bank, nor was it on the bank's letterhead.
Mrs Darcey was a customer of the bank, and the step–sister of Mr Crosswell. She was also the client of Wong, McDermott and White. Mrs Hopcroft was a solicitor employed by the firm and had the carriage of two matters for Mrs Darcey, a common law damages claim against The Old Colonial Inn and a family law property matter.
It appears that shortly prior to 24 November 1987 Mrs Darcey approached Mr Crosswell and sought a $5000 loan from the bank, which she urgently needed to settle an outstanding account owing to American Express. She said that she was expecting to receive money shortly from her damages claim and that she would repay the proposed bank loan from the proceeds of the claim as soon as it was settled. She was already indebted to the bank for a personal loan and Mr Crosswell decided that he wanted more than Mrs Darcey's assurance of repayment. He telephoned the solicitors on 23 November and left a message for Mrs Hopcroft to telephone him.
At about the same time the firm obtained instructions from Mrs Darcey concerning an offer of $5000 which had been received, in respect of the damages claim, from an insurance company. The instructions were received by a clerk and were to the effect that a counter offer for $8000 should be made and the damages were to be paid into an account with the bank. Mrs Hopcroft spoke to Mr Crosswell by telephone and ascertained that Mrs Darcey was seeking the loan and that she was Mr Crosswell's step–sister. Having obtained Mrs Darcey's authority to talk to Mr Crosswell, Mrs Hopcroft telephoned him again. She advised him that the damages claim was being negotiated, an offer of $5000 having been rejected. She told him that out of the damages recovered there would have to be deducted special damages and the firm's costs, before the net proceeds would be available for distribution. She said that her instructions from Mrs Darcey were to release the net proceeds to the bank when the claim was settled. Mr Crosswell is unable to recall whether Mrs Hopcroft told him that over $2000 would be payable out of the damages for taxi fares, but he agrees that he was aware of this before the "irrevocable order" was signed.
Mr Crosswell told Mrs Hopcroft that he wanted to know how much the firm's costs would be and he also asked her to send him a letter confirming what she had told him. Thereupon she calculated the costs and sent a letter from the firm to the bank. It was dated 24 November 1987 and advised that a damages offer of $5000 had been received and a counter offer made for "$8000 inclusive of costs". The letter continued:–
"Mrs Darcey's instructions are that she would be prepared to pay this sum to the Savings Bank of Tasmania. She has been advised that she would remain liable for the cab account in the sum of $2,121.20 and our legal costs are in the vicinity of $900.00."
The letter did not indicate that the cab account and costs would first be deducted from the $8000, but the evidence of Mr Crosswell satisfies me that he knew that that was intended. He could therefore expect that if the damages claim was settled for $8000, the bank would receive a little under $5,000.
The evidence satisfies me that the applicant, The Hobart Savings Bank, is the same entity as The Savings Bank of Tasmania (being the term used in the "irrevocable order"), the latter being the proprietor of the former, which is a business name.
Mr Crosswell decided that the proposed loan of $5000 would be advanced provided that the bank followed its "usual practice" and could "secure the arrangement with an irrevocable order from the customer to his/her solicitors, which is then endorsed by a signed agreement from the solicitors to forward the monies to the Bank as requested." He did not communicate this to the firm, but he had the "irrevocable order" prepared and signed by Mrs Darcey, who on 26 November took it to the office of the firm and gave it to Mrs Hopcroft's secretary for Mrs Hopcroft to sign. As the latter was out of the office, the secretary took it to the respondent, Mr Wong, and asked him to sign it, which he did. The document was then returned to Mrs Darcey's possession and she delivered it to the bank. In the absence of evidence, the respondent not being cross–examined on his very short affidavit, I presume that he made no inquiries about the matter but simply signed the document because he was requested by the secretary to do so in the absence of Mrs Hopcroft. The applicant's case depends on the status to be attributed to the document so signed by Mr Wong, who in his affidavit described the approach from the secretary as a request that he "sign an authority". He went on to say that at "no time did I consider the authority signed by me conveying or constituting an 'Irrevocable Order'". Presumably he meant that by signing it, he did not consider that it was binding him to do anything. The form of the document is critical, not what he considered.
As a result the bank approved the loan and $5000 was advanced to Mrs Darcey on 1 December on terms inter alia providing for interest and expressing the loan to be for a term of two months, or less on demand being made for repayment.
Mrs Hopcroft knew nothing of the "irrevocable order". She did not know until 10 February 1988 that Mr Wong had signed such a document. A copy of it was not kept by the firm. She was not aware that the bank had wanted the firm to enter into some formal arrangement, although she knew that her client had instructed her to pay the net proceeds from the damages to the bank, and she had advised the bank that she had been so instructed. This advice could not be interpreted as an enforceable undertaking by the firm to do so. Indeed Mrs Hopcroft was not aware that the bank had approved the loan until a much later date. That date is not established by the evidence but it is not material.
On 11 December 1987 Mrs Darcey instructed the firm to settle the damages claim for $7000 inclusive of costs. On 18 December Mrs Darcey was told that the firm's costs amounted to $984.60. On 13 January 1988 Mrs Darcey executed a deed of release and gave telephoned instructions to the firm to pay out of the settlement money $2000, or such other amount as might be required to pay the Tasmanian Teachers Credit Union (TCU) for mortgage arrears, and $1250 to the bank. The TCU came into the matter in the following way. On 11 December 1987 solicitors for Mrs Darcey's husband in family law matters had said that the husband was prepared to transfer his interest in their matrimonial home, if the TCU would release him from liability under the mortgage. The TCU was prepared to do so if the mortgage arrears of $2000 were paid.
I accept Mrs Hopcroft's evidence that on 18 January she spoke to Mr Crosswell. She told him of the development in relation to the family law matter and the need for Mrs Darcey to pay $2000 to the TCU, following which she would be able to obtain a court order that Mr Darcey transfer to his wife his interest in the house. Mrs Hopcroft claims that she told Mr Crosswell that the $2000 would come out of the damages and that Mr Crosswell raised no objection. On the other hand Mr Crosswell, while accepting that he did have a conversation with Mrs Hopcroft at some time, and that he had been told about the need for $2000 to be paid to the TCU, disputed that he was told that it would come out of the damages. I think that the explanation for this dispute lies in the fact that Mrs Hopcroft was not aware of the existence of the "irrevocable order" and that Mr Crosswell believed that the firm was under some obligation to the bank to account to it for the net proceeds. She would therefore have had it in her mind that she would distribute the proceeds in accordance with her client's instructions. It would not have been as important to her, as it would have been to Mr Crosswell, that the net proceeds were going to be further reduced by $2000. I also suspect that because she knew of the family relationship between Mr Crosswell and Mrs Darcey, she would have expected that he would have had knowledge of what was going on. Further, she probably expected that with the transfer of the home to Mrs Darcey, the financial position of the latter would be improved, which would give the bank some confidence so far as payment was concerned. However I accept that he did not in fact understand from Mrs Hopcroft what was intended, and that he still expected to receive the damages amount less only the taxi fares amount and the legal costs. He therefore did not protest. During their conversation he told Mrs Hopcroft of the number of Mrs Darcey's bank account to enable her to pay the net proceeds into it. It is probable that he was told the damages sum would amount to $7000.
The taxi fares total in fact amounted to $2558.01 which was more than Mrs Hopcroft had expected. The legal costs finally amounted to $1004.20. With $2000 to be paid to the TCU, only $1437.79 was to remain for payment to the bank, which payment Mrs Hopcroft expected to make. However on 1 February all the proceeds were paid out by the firm with the $1437.79 going directly to Mrs Darcey and nothing going to the bank. When cross–examined about it Mrs Hopcroft said that she understood that on the day of distribution Mrs Darcey countermanded her previous instruction to pay the bank. This was not conveyed to her and no note was made on the file of the countermand. I can only presume that someone else at the firm received new instructions, or possibly someone else paid the $1437.79 direct to Mrs Darcey without instructions to do so.
By 10 or 11 February, Mr Crosswell was aware of what had occurred, but it was then too late for him to endeavour to undo what had been done. The bank sued Mrs Darcey and on 10 June 1988 obtained judgment for $9689.52 and $174 costs. The $9689.52 included the $5000 loan sum and, I was advised by counsel, a further $192.12 due in some way because of the loan. The matrimonial home was sold and I was advised, again by counsel, that on 9 November 1988 the firm paid to the bank, $5406.34 out of the proceeds of the sale, on behalf of Mrs Darcey. I was advised that the claim of the bank, based on the "irrevocable order" is for $3,437.79 made up as follows:–
Damages $7000.00
Less taxi fares account $2558.01
legal costs $1004.20 $3562.32
Amount claimed $3437.79
The law
As I said at the outset of this judgment, O47 r8 was incorporated into the rules of court following development by English courts of the liability of solicitors based on their undertakings. In the context of an argument that there was no consideration on the face of an undertaking, and that it was therefore void under the Statute of Frauds, Coleridge J in Re Hilliard (1845) 14 LJQB 225 said:–
"Against these cases no authority was cited, and the argument used was founded entirely on the fact of the contract being void; but it seems to me that the Court does not interfere against one of its own officers, merely with a view of enforcing in a more speedy and less expensive mode contracts in which actions might be brought, but does so with a view of securing honesty in the conduct of its officers in all such matters as they undertake to perform or see performed, when employed as such, or because they are such officers. This principle applies equally whether the undertaking be to appear, to accept declaration, or other proceeding in the course of the cause, or to pay the debt and costs. The interference is not so much between party and party to settle disputed rights, as criminally to punish misconduct or disobedience in its officers. In this view the objection relied on does not apply. I have no desire to restrain the jurisdiction of the Court as to the undertakings of its officers on any such ground as the present; they are very often most beneficially made for both parties in a cause, and there would be great injustice in allowing the attorney to get free from them, after the party has foregone the advantage, or paid the price which was the consideration of the undertaking; while on the other hand, there is no hardship on the attorney in enforcing them, for he is never compelled to enter into them; if he does, he should secure himself by an arrangement with his client, and he must be taken to know the legal consequences of his own act."
This statement was explained further by Hamilton J in United Mining and Finance Corporation Limited v Becher [1910] 2 KB 296 at p304:–
"That judgment (which has been frequently referred to since) shews, first, that it is not a mere question of a speedy, convenient, or inexpensive mode of trial. Vaughan Williams LJ in In re Marchant [1908] 1 KB 998 describes the procedure as 'what I may call an action commenced in this convenient way by an originating summons,' but I do not think that he intended or purported to decide that the question whether to resort to the disciplinary jurisdiction or to an action can be decided by mere reference to the speed of the summary jurisdiction or its convenience to one of the parties, if not to both, as compared with an action. The second point is that although Coleridge J places the jurisdiction in terms upon the ground that it is exercised with the view of securing honesty in the conduct of its officers, honesty in that regard is not meant by him to be purely a moral quality, but is, as is evident from the decision in In re Gee 23 D & L 997 and other cases, a term applicable to the proper and professional observation of undertakings professionally given. The conduct which is required of solicitors is to this extent perhaps raised to a higher standard than the conduct required of ordinary men, in that it is subject to the special control which a Court exercises over officers so that in certain cases they may be called upon summarily to perform their undertakings, even where the contention that they are not liable to perform them is entirely free from any taint of moral misconduct."
In England, the undertaking will be enforceable if it is a simple undertaking to pay money, provided always that it is given by the solicitor in his capacity as a solicitor; United Mining and Finance Corporation Limited v Becher at p306; Geoffrey Silver & Drake v Baines [1971] 1 All ER 473 per Lord Denning MR at p475 and Widgery LJ at p476. Further, if the undertaking is to take some action not involving the payment of money, and it transpires that the solicitor is unable to perform the undertaking, the court can order the payment of compensation by the solicitor; Udall v Capri Lighting Ltd [1987] 3 All ER 262.
Order 47 r.8 requires that there be "non–performance of an undertaking to pay a sum of money to any person". There should be implied a requirement that the undertaking must be given by the solicitor in his capacity as a solicitor, and not in some other capacity. This aspect does not cause a problem in this case, as there is no doubt that Mr Wong was acting in his capacity as a solicitor when he signed the "irrevocable order" at the request of Mrs Hopcroft's secretary.
The Shorter Oxford English Dictionary provides the meaning of "undertaking" as "a pledge, promise; a guarantee", and of "undertake" as "to give a formal promise or pledge; ... to give a pledge or promise; to become surety or make oneself answerable".
Both counsel referred to the meaning ascribed to "undertaking" in "The Professional Conduct of Solicitors", published by The Law Society, which is:–
"An undertaking is any unequivocal declaration of intention addressed to someone who reasonably places reliance on it and made by:
(a)a solicitor in the course of his practice, either personally or by a member of his staff; or
(b)a solicitor as 'solicitor' but not in the course of his practice;
whereby the solicitor (or in the case of a member of his staff, his employer) becomes personally bound."
For the purpose of this case I will accept that an undertaking is any of the following, that is a promise, a pledge, a guarantee or an unequivocal declaration of intention. It need not be supported by consideration.
The respondent's liability
The "irrevocable order" is in vague terms. Although entitled an "irrevocable order" it states its effect to be to "authorise" the firm to pay monies to the bank. The use of the word "authorise" is not consistent with the use of the word "order" in the heading. The reference to "monies received by you" suggest a reference to monies which had already been received by the firm, to monies which at that time were in the hands of the firm; whereas the bank intended that the words would refer to monies to be received in the future. The reference to "settlement proceeds" is not explained by the document. The bank intended the term to refer to the proceeds of an unreached settlement in an undetermined amount less a deduction for certain taxi fares and legal costs, but did not express the document in this way. The reference to "this" being "irrevocable" may possibly have been intended to give notice that an assignment of a chose in action had occurred, but I do not find that it helps me decide what, if anything, the respondent undertook to do.
Similarly, what Mr Wong signed is vague. It is not in terms addressed to the bank. It is not in clear terms an undertaking in the sense of a promise, pledge, guarantee or unequivocal declaration of intention. On the face of the document he did no more than "agree". Furthermore what he agreed to do was "to forward monies as requested" which must be taken to be a reference to the preceding part of the document which, as I have pointed out, is vague. To call it in the same document a "request" adds further to the mystery created by the earlier use of the words "order" and "authorise".
The document purports to be on the one hand a communication from Mrs Darcey to the firm and on the other hand, the firm's response to her. It was handed by her to the firm and, after being signed by the firm, it was handed back to her. There is no evidence that the firm was given to understand that the document came from the bank or was to be returned to the bank, nor that the firm should understand that by signing the document, it was entering into a binding obligation to the bank.
Whether or not that part of the document, which was signed by Mrs Darcey, constituted notice of a valid assignment of a chose in action was not argued by counsel, nor is it of any concern of mine in determining this application under O47 r8. I am only concerned with the question whether a solicitor, in his capacity as a solicitor, has given an undertaking to pay money and, if so, has failed to honour that undertaking.
My conclusion is that no enforceable undertaking was given by the firm to the bank to pay any money. What was signed by Mr Wong, when read in conjunction with what was signed by Mrs Darcey, is too vague and uncertain to be called an undertaking to pay a sum of money. Further, in the circumstances of the document being signed at the request of Mrs Darcey, with nothing on the face of it to suggest that what Mr Wong was signing was intended to be relied on by the bank, I am prevented from finding that, if there was an undertaking, it was given to the applicant bank.
I add that there was no evidence satisfying me that Mr Wong practised in the name of Wong, McDermott & White. If this was the only matter standing in the way of success with the application, I would almost certainly permit further evidence to be provided to establish it. However, because of the reasons I have given, the application will be dismissed in any event.
0
0
0