Jacqueline Homes Pty Ltd (in liq) & Anor v Junkeer & Anor
[2007] VSC 569
•28 November 2007
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL & EQUITY DIVISION
CORPORATIONS LIST
No. 9807 of 2006
| JACQUELINE HOMES PTY LTD (In liquidation) (ACN 006 589 715) and JAMES PATRICK DOWNEY as Liquidator of JACQUELINE HOMES PTY LTD (In liquidation) (ACN 006 589 715) | Corporation Plaintiffs |
| v | |
| IGNATIUS GERALD JUNKEER and WARREN GAVIN JUNKEER | Defendants |
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JUDGE: | ROBSON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 28 November 2007 | |
DATE OF JUDGMENT: | 28 November 2007 | |
CASE MAY BE CITED AS: | Jacqueline Homes Pty Ltd v Junkeer | |
MEDIUM NEUTRAL CITATION: | [2007] VSC 569 | |
PRACTICE & PROCEDURE – Application for an adjournment - File retained by former solicitors.
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APPEARANCES: | Counsel | Solicitors |
| For the plaintiffs | Mr R Randall | Logie-Smith Lanyon |
| For the defendants | Mr GJ Parncutt | Comlaw |
HIS HONOUR:
I have before me an application by the defendants, Ignatius Junkeer and Warren Junkeer, to vacate the order fixing the trial of this matter for hearing on Monday, 3 December.
On 5 October 2007, by consent the matter was fixed for hearing with an estimate of four to six days. On 23 October 2007, the matter was listed for directions and an application was made by the defendants to vacate the trial date. I directed at that stage that I would not entertain such an application unless it was supported by affidavit material, in view of the late date of the application. That affidavit material has now been provided.
Without the benefit of reading the primary documents, I understand the position to be as follows. The plaintiffs’ proceeding against the defendants is in general terms one for insolvent trading, seeking to recover from the defendants some $600,000 plus interest. The first plaintiff is in liquidation and I have been informed from the Bar table that the plaintiff company owes unsecured creditors some $1.2 million. I am also informed that this is the last substantive step the second plaintiff the liquidator has to take before completing his duties by payment of a dividend to the creditors.
When the proceedings began, the plaintiffs obtained a Mareva injunction to prevent the distribution of moneys belonging to the defendants which primarily came from the sale of a property in Hawthorn. Orders were made that they be held, pending the hearing determination of the proceedings, in the trust account of the solicitors for the defendants, Belleli King and Associates. As I understand the matter without looking at the papers, there was a provision that those moneys could be used to meet the reasonable costs of the defendants in defending this litigation.
The proceedings were commenced on 17 November 2006 and has proceeded at a reasonable pace, with affidavits being filed and so forth until it was ready for trial. On 5 October 2007, as I mentioned earlier, by consent the matter was set down for hearing next Monday.
Prior to that order, however, the plaintiffs had complained that the solicitors for the defendants were deducting more than reasonable costs as they were entitled to under the Mareva order, and that the complaint was formalised in proceedings. The proceedings at one stage got before Hargrave J, who referred the matter to the Taxing Master, and said that if the allegations were correct it may raise issues of contempt of court.
The defendants, and in particular Mr Ignatius Junkeer, say that until he was sitting in court observing those proceedings he did not realise there was a suggestion that his solicitors were overcharging him in the defence of this proceeding. Mr Junkeer's affidavit sets out in considerable detail the steps he thereafter took to obtain a proper accounting from his solicitors of their fees to ensure they had only deducted proper amounts from the moneys which are held on trust for the defendants. The affidavit material discloses, and it is not challenged, that Mr Junkeer did not receive a satisfactory explanation for his request and still has not had proper accounting for the costs that have been deducted. I repeat again, it is alleged by the plaintiffs that these costs are excessive and are in breach of the Mareva injunction court order.
Mr Junkeer also complains in his affidavit that he was not satisfied with the competence of his former solicitors. It appears, however, that his primary consideration for changing solicitors was the allegations against his solicitors of overcharging and the refusal or failure by his solicitors to properly account to him for the fees they deducted. As a consequence, Mr Junkeer and his son, the defendants to this proceeding, changed solicitors and a notice of change of solicitors was filed on 2 November 2007.
After the change of solicitors, Mr Junkeer and his son attempted to obtain the files relating to their defence from their former solicitor. But their former solicitors claimed a lien over that file despite the allegation of overcharging being made against them by the plaintiffs and the requests by the defendants for a proper accounting. The grounds upon which the defendants seek to vacate the trial date is that they are prejudiced by not having available to them their files.
In the meantime, and in conformity with the court's directions, the plaintiffs have filed the court book. The court book contains the documents that the plaintiffs intend to rely upon, but it also contains the documents that the defendants would be relying on as indicated by their points of defence, by their affidavit of documents and by their affidavits. Mr Junkeer refers to the omission of some documents such as the expert’s report and some bank statements, and some cheque butts. He also refers to the fact that the papers include six volumes of a brief to counsel, Mr Parncutt, who the plaintiffs have established in their own affidavit has appeared throughout the matter, drawn the defence and held lengthy conferences with his clients. Mr Parncutt informed me from the Bar table, and I accept without the need for formal evidence, that the brief is littered with his notes and stickers and such like in preparation for the trial.
The defendants seek, by their application, to adjourn the hearing until they recover their files. I will read Paragraph 32 of Mr Junkeer’s affidavit:
“I respectfully request this honourable court to vacate the trial date of the proceeding and allow a timetable that would permit my new lawyers to properly take over this matter in an orderly fashion. They still do not have the file from the former solicitor to allow them to prepare for trial. This creates considerable prejudice, and I was unaware at the time of the change of solicitors that the former solicitor would or could retain my file which includes the brief to counsel containing the documents necessary at the time to conduct the defence of this matter.”
The affidavit material is deficient, in that it does not inform the court how long it will take to obtain the file nor what steps would be needed to be taken to obtain the files. I have been informed from the bar table that proceedings can be taken under the Supreme Court Act and the defendants would be prepared to undertake to the court that they will make such an application forthwith.
Mr Randall, in his submission, properly said that this was primarily a matter of balancing the prejudice to either parties. The prejudice to the plaintiffs, he pointed out, was considerable. First of all the plaintiffs are carrying out their statutory duty in liquidating the plaintiff company, and that duty includes seeking to keep costs at a minimum. They have prepared for trial, which involved, no doubt, solicitors and counsel incurring considerable fees in working the matter up, and we all know that, despite the best intentions, any adjournment will result in considerable cost in the matter being worked up again.
In addition, as I mentioned previously, there are some $1.2 million owed to unsecured creditors, and this action for some $650,000 is most significant in the possible repayment to creditors if this action be successful.
Mr Randall pointed out, and I thought with considerable merit, that the expert’s report could be obtained by other means, and it is obvious that the expert would have retained a copy. I agree that that can be obtained. He referred to the fact that the documents such as cheque butts and so forth could be produced on subpoena and that the sort of documents referred to by the defendants are not ones which would prejudice them in the conduct of the trial.
I accept from the affidavit material that the defendants changed solicitors because of the alleged misconduct by their solicitors. That allegation, in this case, is supported by the plaintiffs. It appears to me that it would be unfortunate if the defendants were prejudiced in the conduct of their own defence in the proceedings by the conduct of an officer of this court
The main matter which concerns me is the fact that the solicitor retains counsel’s brief. I am told and I accept, and I am sure Mr Randall accepts, that the brief would contain indexes, documents in chronological order, notes and tabs and so forth. I accept what Mr Randall says, that most of that could probably be repeated from the court book. No doubt the court book has got documents in chronological order and so forth so I accept what Mr Randall says. However, I still have a concern that counsel’s notes and tags and underlining and so forth, which we all know are very important in the preparation of a case, would be denied to the defendants. As I said, they have been denied to the defendants through no fault of their own at this stage. The allegation by the defendants and the plaintiffs is that the former solicitors were overcharging.
On the other hand, I am concerned by the fact that the defendants, at this stage, have not taken any steps to recover their file other than make demands. As Mr Randall pointed out, the change of solicitors took place on 2 November 2007, some three plus weeks ago, and nothing has been formally done about recovering the file.
But for the state of this list and the fact that we are coming up against the Christmas holidays, I think the course of action to follow would be quite clear. I think I would have, and I may still do, required an undertaking for proceedings to be taken for the recovery of the file. I would have then adjourned this matter for a very brief time to await the outcome of those proceedings and then I would have made sure that the matter was then heard shortly thereafter.
That course of action is not open to me. The trial fixed for next week was to be the last substantive matter that I was to hear this year before breaking for the court vacation. Therefore, that course of conduct which I would have wished to have followed is not open to me. The best I can do in fixing a trial date before me is not until Wednesday 27 February 2008, because unfortunately I have commitments in the beginning of February after vacation.
What I propose to order is that if and upon the defendants giving an undertaking that they will issue proceedings in the Supreme Court of Victoria for the recovery of their files relating to this matter within two days, then upon that undertaking being given I will vacate the hearing date and I will refix the matter for 27 February 2008.
I am going to reserve the costs for the following reasons. If it turns out the file is wrongly withheld, I may entertain an application for an order that the previous solicitors pay the costs. I wish to hear what happens on the application for the file. It may be that I may order that the defendants pay them, because they are seeking an indulgence.
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