Holborow v MacDonald Rudder (a firm)
[2001] WASCA 91
•28 MARCH 2001
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE FULL COURT (WA)
CITATION: HOLBOROW & ORS -v- MACDONALD RUDDER (A FIRM) [2001] WASCA 91
CORAM: ANDERSON J
STEYTLER J
HEARD: 6 MARCH 2001
DELIVERED : 28 MARCH 2001
FILE NO/S: FUL 105 of 2000
BETWEEN: VALERIE HOLBOROW
ROBERT BOONA
COLIN COSMOS
KEVIN COSMOS
JANICE COSMOS
MARY COSMOS
SUSAN MOWARIN
LINDA DELOWER
AUDREY COSMOS
DANNY COOPER
DORENE WESCOMBE
MARGARET BOONA
BARBARA SINCLAIR
GAIL SINCLAIR
DORRIE WALLY
Appellants (Plaintiffs)AND
MACDONALD RUDDER (A FIRM)
Respondent (Defendant)
Catchwords:
Practice and procedure - Solicitors - Account - Claim for - Solicitor and client relationship - Client claiming order for account - Preliminary questions to be tried - Rules of the Supreme Court O 45 r 1
Legislation:
Rules of the Supreme Court O 45 r 1
Result:
Appeal dismissed
Representation:
Counsel:
Appellants (Plaintiffs) : Mr N J Mullany
Respondent (Defendant) : Mr M J Buss QC & Mr P A Tottle
Solicitors:
Appellants (Plaintiffs) : Ilberys
Respondent (Defendant) : Tottle Christensen
Case(s) referred to in judgment(s):
Cullen v Steen [1932] St R Qd 192
Hutchings v Snowden (1897) 18 ALT 268
Le Mesurier v Connor (1926) 29 WALR 66
Makepeace v Rogers (1865) 34 LJ Ch 396
McKenzie v Beaver (1910) 12 WALR 45
Poole v The Perpetual Executors Trustee & Agency Co (WA) Ltd (1930) 32 WALR 96
R v McIlwraith, McEachern & Co Pty Ltd (1903) 6 WALR 32
Re Bowen [1882] 20 Ch D 538
Re Gyhon[1885] 29 Ch D 834
Re Van Laun, Ex parte Chatterton [1907] 2 KB 23
Case(s) also cited:
Adams v Bank of New South Wales [1984] 1 NSWLR 285
Burrows v Walls (1855) 43 ER 859
Christensen v Christensen [1954] QWN 37
Clarke v Earl of Ormonde (1821) 37 ER 791
Colin D Young Pty Ltd v Commercial and General Acceptance Ltd (1982) NSW Conv R 55-097
Garnham v Skipper (1885) 29 Ch D 566
Jefferys v Marshall (1870) 23 LT 548
London, Chatham and Dover Railway Co v South Eastern Railway Co [1892] 1 Ch 120
Maher v Maher [1961] Qd R 333
McLauchlan v Prince [2001] WASC 43
Ottley v Gilby (1845) 50 ER 237
Rapid Metal Developments (Australia) Pty Ltd v Rosato [1971] Qd R 82
Re Bosworth; Martin v Lamb (1889) 58 LJ Ch NS 432
Re Fairbairn (dec’d) [1967] VR 633
Re Lake; ex parte Dyer [1901] 1 KB 710
Re Simersall; Blackwell v Bray (1992) 35 FCR 584
Re Whitehouse [1982] Qd R 196
Sharer v Wallace [1950] 2 All ER 463
Springett v Dashwood (1860) 66 ER 218
Tindall v Powell (1858) 6 WR 850
White v Lady Lincoln (1803) 8 Ves 363
Wroe v Seed (1863) 66 ER 773
JUDGMENT OF THE COURT: This is an appeal from the refusal of Wheeler J to direct the taking of accounts on a summons taken out by the appellants (plaintiffs) under O 45 r 1 which provides:
"(1)Where the statement of claim claims an account or involves the taking of an account the plaintiff may, at any time after the defendant has entered an appearance, or after the time limited for appearing, apply for an order under this Rule.
(2)An application under this Rule must be made by summons and must, unless the Court otherwise directs, be supported by affidavit or other evidence.
(3)On the hearing of the application, the Court may, unless satisfied by the defendant by affidavit or otherwise that there is some preliminary question to be tried, order that an account be taken and may also order that any amount certified on taking the account to be due to either party be paid to him within a time specified in the order."
The statement of claim here claims an account, the relevant paragraphs of the statement of claim being:
"2.The Defendant is a firm of Legal Practitioners within the meaning of the Legal Practitioners Act1893.
3.Between 1996 and 30 August 1999, the Plaintiffs' [sic] retained the Defendant in relation to the Federal Court Proceedings and all related matters.
4.Between 1996 and 30 August 1999 the Defendant received divers money and benefits on behalf of the Plaintiff (the 'Trust Property').
Particulars
The Defendant received payment of approximately $1,800,000 and other benefits including, but without limitation, Frequent Flyer Points. Further particulars of the monies and benefits received are the subject of the account sought herein.
…
10.Despite requests and demands and in breach of its duty set out in paragraph 9 above, the Defendant has failed and/or refused to:
(a)Account for all Trust Property received by it;
…
AND THE PLAINTIFFS CLAIM:
(1)An account of all Trust Property received by the Defendant on behalf of the Plaintiffs.
… "
Other claims are made in the statement of claim, including claims of breach of duty and non‑compliance with provisions of the Legal Practitioners Act concerning the keeping and maintaining of accounts and the production to clients of accounting records.
In the summons before Wheeler J, the appellants sought orders that:
"1.The Defendant account to the Plaintiffs for all trust property received by the Defendant on behalf of the Plaintiffs.
2.Discovery in aid of such account.
3.Payment by the Defendant to the Plaintiffs of all sums found to be due on the taking of such account.
… "
It is not in dispute that the relationship of solicitor‑client existed between the parties as pleaded in par 3 of the statement of claim, nor is it in dispute that the respondent received money on behalf of the appellants and expended or applied those moneys purportedly on behalf of the appellants. Under these circumstances, it is clear that the respondent is an accounting party. Quite apart from the statutory obligations in the Legal Practitioners Act regarding the keeping and rendering of accounts by solicitors, the solicitor‑client relationship is a fiduciary relationship (Re Van Laun, Ex parte Chatterton [1907] 2 KB 23 at 29) and it is the duty of a person acting in a fiduciary capacity to keep and to render true and proper accounts of his transactions: Makepeace v Rogers (1865) 34 LJ Ch 396; Le Mesurier v Connor (1926) 29 WALR 66; Fridman, "Law of Agency" (4th ed) 137, 206; "Bowstead on Agency" (15th ed) 192; Bullen & Leake and Jacobs, "Precedents of Pleadings" (12th ed) 183.
Where the defendant is clearly an accounting party, and where it is clear that if the action went to trial the account asked for must be ordered, the plaintiff may apply under O 45 r 1 for a summary order for an account. The making of the order is discretionary. In our opinion, in refusing to make the order in this case, her Honour did not improperly exercise her discretion. There are two main reasons for this.
In the first place, a material fact which must be pleaded and proved in a cause of action for an account is that the defendant has not rendered proper accounts: Bullen and Leake and Jacobs (supra) page 183. It is a defence to an action for an account that true and proper accounts have been rendered: Bullen and Leake and Jacobs (supra) page 915 and Form 580 at page 916. It appears from the affidavit material in this case that, over time, a large volume of information was provided by the respondent to the appellants on request, including what appears to be a full and detailed statement of the trust account administered by the respondent in which there would appear to be recorded moneys received by them on behalf of the appellants and moneys paid out of the trust account. There is a question whether what the respondent has provided to the appellants amounted to a sufficient accounting. Her Honour actually expressed the opinion that it did, at least on the evidence as it then stood. Whether that is or is not correct, the point is that O 45 provides a summary remedy. If it appears on the return of the summons that there is a dispute as to whether the plaintiff is entitled to a decree for the taking of accounts, it is inappropriate to make a summary order: Cullen v Steen [1932] St R Qd 192 at 197; Hutchings v Snowden (1897) 18 ALT 268. And generally, on the point that O 45 provides a summary remedy only, see also: R v McIlwraith, McEachern & Co Pty Ltd (1903) 6 WALR 32; McKenzie v Beaver (1910) 12 WALR 45; Poole v The Perpetual Executors Trustee & Agency Co (WA) Ltd (1930) 32 WALR 96.
That there is in this case a real dispute on the question whether the respondent has fully and properly accounted to the appellants appears not only from her Honour's reasons, but also from the submissions made to this Court on behalf of the appellants themselves. In par 3 of the appellants' written submissions there is a submission in the following terms:
"The central inquiry raised by this appeal is: has the respondent discharged its obligations owed as a trustee to the Appellants to provide to them a full account of all monies received and disbursements paid including the sources and bases of all receipts and payments?"
That seems to us to be nothing less than an acknowledgment that there is an issue to be tried.
Mr Mullany, on behalf of the appellants, went to considerable trouble to try to persuade us that Wheeler J erred in concluding that there had been a full and sufficient accounting. In the view we take of the way in which applications under O 45 are to be approached, we do not need to decide whether her Honour was right or wrong. As soon as it appears that there is an arguable case that the accounting party has already accounted, the Court cannot fail to be satisfied that there is, in terms of O 45 r 1(3) "some preliminary question to be tried".
Secondly, the real dispute between the parties appears in large measure to arise out of the appellants' dissatisfaction with the charges made by the respondent for the professional services rendered by it and the disbursements incurred.
From time to time large amounts of money were transferred out of the respondent's trust account to its general account in payment of professional fees and disbursements. These transfers were made after detailed bills of costs were rendered. It is clear that the appellants now wish to challenge these bills of costs and the appellants seem to be under the impression that they may do so in the taking of accounts ordered pursuant to O 45. There are some 91 bills, comprising about 300 pages of detail. Counsel for the appellants took us to some of the bills of costs and pointed to what appear to be discrepancies in the bills and instances of double charging. There is correspondence to which we were referred which shows that the appellants dispute the respondent's entitlement to charge at the level reflected in the bills and dispute the respondent's authority to incur disbursements shown in the bills. In their written submissions, the appellants assert, for example, that certain fees paid to a Queen's Counsel were unauthorised (see par 17(8)). That is tantamount to an allegation of breach of duty. One of the matters in dispute on the question of the respondent's entitlement to charge the level of fees shown in their bills is whether there was an agreement between the appellants and the respondent under s 59(1) of the Legal Practitioners Act.
These are plainly not points which merely arise in the taking of accounts. They raise preliminary questions which should be disposed of before the taking of accounts.
We were informed, and it seems not to be in dispute, that the appellants have set in train proceedings to have the bills of costs taxed pursuant to the provisions of the Legal Practitioners Act. At the very least, it seems to us that until the bills of costs have been taxed, or otherwise resolved, the basis on which the respondent must account to the appellants cannot be known.
There is another matter concerning the appellants' application to have an account taken not only of "divers money" received by the respondent, but also "benefits". See statement of claim par 4. It would appear from the particulars set out in that paragraph and from her Honour's judgment at par 21 that the "benefits" for which an accounting is now sought include (as her Honour put it) "benefits which may have been received by way of loyalty or reward incentive programmes such as Frequent Flyer … ". If, and to the extent that, the appellants require an account to be taken of such benefits, the accounts so taken would appear to be special accounts, the right to which depends on the appellants establishing a case at the hearing that the respondent received such benefits in circumstances obliging it to account to the appellants in respect of those benefits. It is established that special accounts will not be ordered under O 45, the right to which depends on the plaintiffs establishing a case at the hearing: Re Gyhon[1885] 29 Ch D 834; Re Bowen [1882] 20 Ch D 538.
We would dismiss this appeal.