Kitto v Registrar of Titles
[2008] WASC 165
•2 JULY 2008
KITTO -v- REGISTRAR OF TITLES [2008] WASC 165
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2008] WASC 165 | |
| 08/08/2008 | |||
| Case No: | CIV:1755/2008 | 2 JULY 2008 | |
| Coram: | MARTIN CJ | 2/07/08 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | GRANTHAM ANGUS KITTO JOHNSON GREY KITTO REGISTRAR OF TITLES ALLREGAL ENTERPRISES PTY LTD (MORTGAGEE IN POSSESSION: PERPETUAL LTD) |
Catchwords: | Solicitor Charging lien Section 244 of the Legal Practice Act 2003 (WA) Property recovered or preserved Mortgage Caveat Claiming interest as chargee over land |
Legislation: | Legal Practice Act 2003 (WA), s 244 Legal Practitioners Act 1893 (WA), s 73 Rules of the Supreme Court 1971 (WA), O 12, O 62A Solicitors Act 1860 (UK), s 28 Transfer of Land Act 1893 (WA), s 138C |
Case References: | Ex parte Patience; Makinson v The Minister (1940) 40 SR (NSW) 96 Foxon v Gascoigne (1874) 9 ChApp 654 Greer v Young (1883) 24 ChD 545 Grogan v Orr [2001] NSWCA 114 Groom v Cheesewright [1895] 1 Ch 730 Michell Sillar McPhee (a firm) v First Industries Corp [2006] WASCA 24 Read v Dupper (1795) 6 TR 361; 101 ER 595 Ross v Buxton [1889] 42 ChD 190 Scholey v Peck (1893) 1 ChD 709 Till v Till (1974) 1 QB 558 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- JOHNSON GREY KITTO
Plaintiffs
AND
REGISTRAR OF TITLES
First Defendant
ALLREGAL ENTERPRISES PTY LTD (MORTGAGEE IN POSSESSION: PERPETUAL LTD)
Second Defendant
Catchwords:
Solicitor - Charging lien - Section 244 of the Legal Practice Act 2003 (WA) - Property recovered or preserved - Mortgage - Caveat - Claiming interest as chargee over land
(Page 2)
Legislation:
Legal Practice Act 2003 (WA), s 244
Legal Practitioners Act 1893 (WA), s 73
Rules of the Supreme Court 1971 (WA), O 12, O 62A
Solicitors Act 1860 (UK), s 28
Transfer of Land Act 1893 (WA), s 138C
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiffs : Mr J R Ludlow
First Defendant : Mr P D Quinlan
Second Defendant : Mr P D Quinlan
Solicitors:
Plaintiffs : Kitto & Kitto
First Defendant : Clayton Utz
Second Defendant : Clayton Utz
Case(s) referred to in judgment(s):
Ex parte Patience; Makinson v The Minister (1940) 40 SR (NSW) 96
Foxon v Gascoigne (1874) 9 ChApp 654
Greer v Young (1883) 24 ChD 545
Grogan v Orr [2001] NSWCA 114
Groom v Cheesewright [1895] 1 Ch 730
Michell Sillar McPhee (a firm) v First Industries Corp [2006] WASCA 24
Read v Dupper (1795) 6 TR 361; 101 ER 595
Ross v Buxton [1889] 42 ChD 190
Scholey v Peck (1893) 1 ChD 709
Till v Till (1974) 1 QB 558
(Page 3)
- MARTIN CJ:
(This judgment was delivered extemporaneously on 2 July 2008 and has been edited from the transcript.)
1 The plaintiffs who I shall describe as Kitto and Kitto seek orders under s 138C of the Transfer of Land Act 1893 (WA) extending the operation of a caveat which they have lodged, claiming an interest as chargee over the land the subject of certificate of title, Volume 1478, Folio 469. The registered proprietor of that land is Allregal Enterprises Pty Ltd (Allregal) which is the second defendant but who is represented in these proceedings by its mortgagee in possession, Perpetual Ltd (Perpetual). The first defendant is the Registrar of Titles.
2 The circumstances giving rise to the claim are set out in affidavits which have been filed in support of the application for extension of caveat. They establish that the charge is claimed pursuant to s 244 of the Legal Practice Act 2003 (WA) which provides:
244. Legal practitioner’s costs to be a first charge on the property recovered or preserved
(1) In every case in which a legal practitioner is employed to prosecute or defend any suit, matter or proceeding in a court, the practitioner -
(a) is entitled to a first charge upon the property recovered or preserved; and
(b) has a prior right to payment out of the property recovered or preserved for the taxed costs, charges and expenses as between practitioner and client of or in reference to the suit, matter or proceeding.
(2) The court before which the suit, matter or proceeding has been heard or is pending, or judge of the court in chambers, may make ex parte any order for taxation of, and for raising and paying the costs, charges and expenses referred to in subsection (1)(b) out of, the property as the court or judge thinks just and proper.
3 Section 244 of the Legal Practice Act is in broadly similar terms to s 73 of the Legal Practitioners Act 1893 (WA) and derives from legislation which has a much longer history, including provisions such as s 28 of the Solicitors Act 1860 (UK). I will return in due course to the view which I take of the proper meaning and effect of those legislative provisions.
(Page 4)
4 The circumstances in which the claim was made are set out in the affidavits. Those circumstances essentially derive from litigation which was under way between Perpetual and Allregal, and which preceded any involvement on the part of Kitto and Kitto.
5 Perpetual is the first mortgagee of the land, and prior to any involvement by Kitto and Kitto, had asserted that Allregal was in default under the mortgage. Perpetual further asserted that by reason of that default and notices which were served consequent upon the default, it was entitled to possession of the land. The relief sought by Perpetual in the proceedings was an order that vacant possession of the land be delivered, but Perpetual's claim was advanced on the basis that it had a pre-existing right to possession by reason of the terms of the mortgage between Allregal and Perpetual. Perpetual sought the intervention of the court in aid of the enforcement of that right.
6 That litigation was commenced in 1997. It had a tortuous history which included a point in time at which Allregal was not represented by any firm of solicitors and therefore under O 12 r 1(2) of the Rules of the Supreme Court 1971 (WA) could not take any step or action in the proceedings.
7 In a case management direction made by a Registrar on 1 September 2006, there was a direction that another firm of lawyers had ceased to be solicitors for Allregal. On the same date there was an order that unless by 25 September 2006 solicitors appeared on behalf of Allregal, Allregal's defence be struck out and Perpetual have leave to apply under O 62A of the Rules of the Supreme Court for leave to enter judgment in default of appearance.
8 Certain steps were taken to challenge those orders which were of no avail. On 1 December 2006 Mr Waugh, said to be a representative of Allregal, signed a retainer with Kitto and Kitto to enable Kitto and Kitto to go on the court record and enter an appearance on behalf of Allregal. However, at around the same time, Perpetual applied for leave to enter default judgment against Allregal because no solicitors had appeared by the date specified in the previous order of the Registrar.
9 On 12 December 2006, the same Registrar entered default judgment in the action, requiring Allregal to deliver up vacant possession of the land by 21 January 2007. The reason that date was ordered is said to have been to enable Allregal time to apply for an order setting aside the default judgment.
(Page 5)
10 On 22 January 2007 Kitto and Kitto entered an appearance on behalf of Allregal and on the same day applied for an order setting aside the default judgment. That application was opposed but was nevertheless successful, and on 27 March 2007 Master Sanderson made an order setting aside the default judgment and granting Allregal leave to file and serve an amended defence. An amended defence and counterclaim was filed by Kitto and Kitto on behalf of Allregal.
11 However, during 2007 there was a disagreement between Allregal and Kitto and Kitto with respect to the manner in which the defence and counterclaim should be prosecuted. As a result, Kitto and Kitto sought leave to withdraw. On 27 June 2007 I granted Kitto and Kitto leave to withdraw as solicitors for Allregal.
12 On 21 December 2007, Perpetual's claim was tried before me. I gave judgment ordering Allregal to deliver up vacant possession to Perpetual. In the meantime, Kitto and Kitto had lodged the caveat the subject of this application. The caveat claims an interest as a chargee with first priority over the entirety of the land the subject of the certificate of title to which I have referred. It is clear from submissions that have been made to me this morning that Kitto and Kitto assert that they are entitled to be paid an amount equal to their fees as and by way of priority in respect of any proceeds of sale, including proceeds that might be obtained by Perpetual exercising its power of sale as mortgagee. The interest claimed as caveator is an absolute interest in the sense that any dealing that is not subject to the interest claimed is said to be forbidden.
13 Returning to the statutory provision under which the caveatable interest is claimed (s 244 of the Legal Practice Act), the history of that provision is conveniently charted in the decision of the Court of Appeal in Michell Sillar McPhee (a firm) v First Industries Corp [2006] WASCA 24. In that case, the nature and character of such statutory provisions is conveniently described by reference to a number of the previous authorities. I would extract from that decision a reference to a decision of the UK Court of Appeal, Greer v Young (1883) 24 ChD 545. In that case Bowen LJ referred to the English provision which is the predecessor of s 244 of the Legal Practice Act in terms which drew an analogy between that provision and a salvage section. Bowen LJ described the function of the section in these terms (at 556):
It appears clear to me that it is a salvage section. The solicitor is treated as a salvor who has recovered or preserved something in a time of danger by his work and labour. Into whatever hands it may fall it is charged with the salvage.
(Page 6)
14 In Scholey v Peck(1893) 1 ChD 709 at 711, the relevant English provision was described by Romer J in these terms:
The 28th section of the Act is very general in its terms. It authorizes a charge not on the mere interest of the Plaintiff, but on all property recovered in the action, whether for the Plaintiff only, or for him in connection with others. It is not necessary that the property charged should belong to same person as employed by the solicitor; but it must be by reason of the employment that the property is preserved.
15 Steytler P in Michell Sillar McPhee refers to the meaning of the words 'recovered or preserved' by reference to English authority, including the decisions in Till v Till (1974) 1 QB 558 and Foxon v Gascoigne (1874) 9 ChApp 654, 657. At [19], His Honour cited with approval the following passage from Foxon v Gascoigne:
[I]t means that where the Plaintiff claims property, and establishes a right to the ownership of the property in some shape or other, there the property has been recovered; that where a Defendant's right to the ownership of property is disputed, and that right has been vindicated by the proceedings, there the property has been preserved. … recovery and preservation are correlative terms, … they both relate to the ownership of the property.
16 Steytler P went on to refer to the question of causation and at [20] observed:
The third issue upon which I propose to comment is that of causation. Because the property must have been recovered or preserved by the efforts of the solicitor (even though the Western Australia Act, unlike that in England, does not expressly spell out the recovery or preservation must have been 'through the instrumentality of' the solicitor), there must, self-evidently, be a causal connection between the recovery or preservation of the property and the work performed by the solicitor -
- citing Groom v Cheesewright [1895] 1 Ch 730 at [732] and Greer v Young at [552].
17 There are other references to the character of the solicitor's lien in respect of property preserved or recovered in the decision of the New South Wales Court of Appeal in Grogan v Orr [2001] NSWCA 114. The decision is not concerned with a statutory right such as that created by s 244 of the Legal Practice Act but, rather, with the solicitor's common law right of lien. However, the principles enunciated in Grogan v Orr appear to me to be equally applicable to the statutory right which applies in this State. Sheller JA refers to the common law right at [57] and in particular the description of that right by Jordan CJ in Ex parte Patience; Makinson v The Minister (1940) 40 SR (NSW) 96:
(Page 7)
- A solicitor has no lien for his costs over any property which has not come into his possession. If, however, as a result of legal proceedings in which the solicitor has acted for the client, the client obtains a judgment or award or compromise for the payment of money, although the solicitor acquires no common law title to his client's right to receive the money or to any part of that right, he acquires a right to have his costs paid out of the money, which is analogous to the right which would be created by an equitable assignment of a corresponding part of the money by the client to the solicitor.
- In Grogan v Orr, Sheller JA observes (at [58]):
At 101 Jordan CJ pointed out that the solicitor has always been treated as possessing equitable rights in a judgment independently of any declaration of those rights, and the court's assistance is invoked not to create the rights but to enforce them.
The principle by which this application is to be decided was settled long ago, namely that the parties should not run away with the fruits of the cause without satisfying the legal demands of his attorney, by whose industry, and in many instances at whose expense, those fruits are obtained.
19 In Grogan v Orr,Powell JA emphasised that a critical factor in any case in which a solicitor claims an entitlement to a proprietary interest by reason of the work done, is an assessment of the causal connection between the property said to have been recovered or preserved and the actions of the solicitor. Powell JA was not satisfied on the facts of the case that there was in fact a requisite causal connection between the actions of the solicitor and the propriety interest over which the solicitor claimed a charge.
20 Applying those principles to the facts of this case, it seems to me that the most critical inquiry for the purposes of ascertaining whether Kitto and Kitto have a sufficiently arguable case to justify extension of the caveat is to inquire as to precisely what is the property said to have been preserved or recovered by reason of their actions as solicitors.
21 Assessment of that question must first address the legal position before Kitto and Kitto were retained and then look at any consequential changes in the rights and obligations of the parties as a consequence of the
(Page 8)
- work undertaken by Kitto and Kitto. The situation at the time Kitto and Kitto were retained was that Allregal was the registered proprietor of the land. That has not changed. Allregal remains the registered proprietor of the land and has at all times had an equity of redemption by reason of its rights as mortgagor. So, there has been no material change at any point in relation to Allregal's entitlements as registered proprietor of the land or as mortgagor, to the equity of redemption which each mortgagor possesses and enjoys.
22 What was put in issue by the litigation was the validity of the mortgage. The defence and counterclaim that was filed by Kitto and Kitto on behalf of Allregal challenged the validity and enforceability of the mortgage. However, that challenge never succeeded and the mortgage has now been found by a court to have been always valid and enforceable. Therefore, it is not possible to say that there are any actions on the part of Kitto and Kitto that had any effect of recovering or preserving property by reason of a determination of the court to the effect that the mortgage was in some sense either invalid or not enforceable.
23 Nor did the actions of Kitto and Kitto have any effect upon Perpetual's legal right to possession. Perpetual asserted that it had a legal right to possession of the land by reason of Allregal's default in 1997 and the notices that were served at or about that time by reason of Allregal's default. What Perpetual sought by the proceedings was the assistance of the court and the officers of the court in exercising that right to possession.
24 The actions taken by Kitto and Kitto resulted in the setting aside of a default judgment which, had it remained in force, would have meant that the officers of the court (namely, the sheriff) would have provided assistance to Perpetual in enforcing its asserted right to possession of the land. The actions of the solicitors were effective in preventing Perpetual from obtaining the assistance of the officers of the court in taking physical possession at that time. That, however, is as much as it can be said that the actions of the solicitors achieved anything of relevance to s 244 of the Legal Practice Act.
25 The next question is whether the actions of the solicitors have preserved or recovered property within the meaning s 244 of the Legal Practice Act by reason of the setting aside of the default judgment which meant that the sheriff was not available to assist Perpetual to exercise its asserted right to possession. I do not think it is fairly arguable that the setting aside of the default judgment gave rise to any preservation or
(Page 9)
- recovery of property within the meaning of s 244 of the Legal Practice Act. Perpetual's rights before and after the setting aside of the default judgment to possession were precisely the same. They were neither stronger nor weaker than they were prior to the setting aside of the default judgment which was, after all, only an interlocutory decision.
26 If I am wrong in that and it can be said, contrary to my view, that the actions of Kitto and Kitto resulted in Allregal recovering a right to possession of the property, that is the most that could possibly be said to be property recovered or preserved by reason of the actions of Kitto and Kitto - that is, the right to physical possession which Allregal enjoyed between the setting aside of the default judgment in March 2007 and the entry of final judgment in December 2007.
27 That right of physical possession (if indeed there was such a right) is not the interest over which Kitto and Kitto claim a right of charge. They claim a right of charge over the entirety of the land and of all the proceeds of any sale of the land. I do not think it fairly arguable that any action on the part of Kitto and Kitto recovered or preserved the land or any right corresponding to a right relating to the proceeds of sale of the land. At their absolute highest, the actions of Kitto and Kitto meant that Allregal remained in possession for about nine months or, more correctly, that Allregal was not vulnerable to being evicted from possession by officers of the court for a period of nine months.
28 While it might be arguable that the solicitors enjoy a charge over what might be said to have been that right or value, that is not the interest which they claim under the caveat. They claim a quite different interest and, of course, it is the fact that any right or possession, if it can be properly characterised as such on the part of Allregal, has now gone.
29 For these reasons, there is no fairly arguable claim supporting the interest claimed by Kitto and Kitto by their caveat and their claim to extend the operation of that caveat must be dismissed.
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