McClelland v Perpetual Trustee Co. Ltd - [2010] QCA 281

SUPREME COURT OF QUEENSLAND

CITATION:

McClelland & Anor v Perpetual Trustee Co. Ltd [2010] QCA 281

PARTIES:

PERPETUAL TRUSTEE COMPANY LIMITED
ABN 42 000 002 007
(plaintiff/respondent)
DARREN JOHN COWLEY
(first defendant/not a party to the appeal)
KYLIE JANE COWLEY
(second defendant/not a party to the appeal)
v
DOUGLAS LAING MCCLELLAND
(first appellant)
PLATINUM LAWYERS
(second appellant)

FILE NO/S:

Appeal No 3665 of 2010
SC No 1257 of 2009

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

15 October 2010

DELIVERED AT:

Brisbane

HEARING DATE:

31 August 2010

JUDGES:

Holmes and White JJA and Mullins J
Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDERS:

1.    Appeal allowed;

2.    The order for indemnity costs is set aside;

3.    The respondent, Perpetual Trustee Company Ltd, is ordered to pay the appellants’ costs of this appeal

CATCHWORDS:

PROCEDURE – COSTS – APPEALS AS TO COSTS – WRONG EXERCISE OF DISCRETION – where respondent was the mortgagee of the defendants’ property – where respondent obtained default judgment against the defendants for recovery of possession of the mortgaged property – where appellants retained by the first and second defendants – where defendants swore that mortgage repayments had properly been made – where, on the strength of bank statement provided by the first defendant, the first appellant swore that the repayments had been made – where appellants successful in setting aside the default judgment – where success on the application to set aside the default judgment based on bank statements which had been falsified – where the learned primary judge found that, by a specified date, any reasonable solicitor in the first appellant’s position would have realised his clients were not telling the truth and that the statements had been falsified – where the learned primary judge found that, having discovered the falsification, the first appellant had a duty to seek authority from his clients to remedy the falsification or withdraw his services in the event that such authority was not forthcoming – where the learned primary judge found that, having discovered the falsification, the first appellant had a duty to remedy his misleading sworn statement – where the learned primary judge ordered that the appellants pay the respondent’s costs as incurred from the specified date, on an indemnity basis – whether the first appellant breached his duty of frankness to the court – whether any breaches committed by the first appellant were causative of the further expenses incurred by the respondent

Legal Profession (Solicitors) Rule 2007 (Qld), r 14.2, r 15.1

Emanuel Management Pty Ltd (in liq) v Fosters Brewing Group Ltd [2004] 2 Qd R 11; [2003] QCA 516, cited
Harley v McDonald [2001] 2 AC 678; [2001] UKPC 18, cited
Myers v Elman [1940] AC 282, cited
Steindl Nominees Pty Ltd v Laghaifar [2003] 2 Qd R 683; [2003] QCA 157, cited

COUNSEL:

T J Bradley for the appellants
D…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] QCA 281
Decision Date: 15 October 2010

CaseChat Overview and Summary

In this case, the appellants, legal representatives for the defendants, appealed against a costs order made by the primary judge. The respondent, Perpetual Trustee Company Ltd, had obtained a default judgment against the defendants for the recovery of possession of mortgaged property. The appellants were retained to set aside the default judgment, which they did successfully, but this was based on bank statements that were later found to be falsified. The primary judge found that the appellants should have realised the falsification and acted accordingly. The judge also found that the appellants breached their duty of frankness to the court and ordered them to pay the respondent's costs from a specified date on an indemnity basis. The appellants appealed against this order.

The legal issues in this case revolved around the conduct of the appellants in relation to the falsified bank statements. The court had to determine whether the appellants breached their duty of frankness to the court and whether any such breach was causative of the further expenses incurred by the respondent. The court also had to consider whether the primary judge exercised his discretion correctly in ordering the appellants to pay the respondent's costs on an indemnity basis.

The court found that the primary judge erred in his exercise of discretion when ordering the appellants to pay the respondent's costs on an indemnity basis. The court held that the appellants' conduct, while in breach of their duty of frankness to the court, was not causative of the further expenses incurred by the respondent. The court held that the primary judge should have considered whether the respondent's costs were reasonably incurred and whether they were necessary to bring the appeal to a conclusion. The court also held that the primary judge should have considered whether the appellants had any mitigating factors that could have reduced the amount of costs awarded.

The appeal was allowed, and the order for indemnity costs was set aside. The respondent was ordered to pay the appellants' costs of this appeal. The court emphasised the importance of the duty of frankness to the court and the need for legal representatives to act with integrity and honesty. The court also highlighted the need for primary judges to exercise their discretion carefully when ordering costs on an indemnity basis.

Orders

Orders of the court

1. Appeal allowed;

2. The order for indemnity costs is set aside;

3. The respondent, Perpetual Trustee Company Ltd, is ordered to pay the appellants’ costs of this appeal

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	McClelland & Anor v Perpetual Trustee Co. Ltd [2010] QCA 281
PARTIES:	PERPETUAL TRUSTEE COMPANY LIMITED ABN 42 000 002 007 (plaintiff/respondent) DARREN JOHN COWLEY (first defendant/not a party to the appeal) KYLIE JANE COWLEY (second defendant/not a party to the appeal) v DOUGLAS LAING MCCLELLAND (first appellant) PLATINUM LAWYERS (second appellant)
FILE NO/S:	Appeal No 3665 of 2010 SC No 1257 of 2009
DIVISION:	Court of Appeal
PROCEEDING:	General Civil Appeal
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	15 October 2010
DELIVERED AT:	Brisbane
HEARING DATE:	31 August 2010
JUDGES:	Holmes and White JJA and Mullins J Separate reasons for judgment of each member of the Court, each concurring as to the orders made
ORDERS:	1. Appeal allowed; 2. The order for indemnity costs is set aside; 3. The respondent, Perpetual Trustee Company Ltd, is ordered to pay the appellants’ costs of this appeal
CATCHWORDS:	PROCEDURE – COSTS – APPEALS AS TO COSTS – WRONG EXERCISE OF DISCRETION – where respondent was the mortgagee of the defendants’ property – where respondent obtained default judgment against the defendants for recovery of possession of the mortgaged property – where appellants retained by the first and second defendants – where defendants swore that mortgage repayments had properly been made – where, on the strength of bank statement provided by the first defendant, the first appellant swore that the repayments had been made – where appellants successful in setting aside the default judgment – where success on the application to set aside the default judgment based on bank statements which had been falsified – where the learned primary judge found that, by a specified date, any reasonable solicitor in the first appellant’s position would have realised his clients were not telling the truth and that the statements had been falsified – where the learned primary judge found that, having discovered the falsification, the first appellant had a duty to seek authority from his clients to remedy the falsification or withdraw his services in the event that such authority was not forthcoming – where the learned primary judge found that, having discovered the falsification, the first appellant had a duty to remedy his misleading sworn statement – where the learned primary judge ordered that the appellants pay the respondent’s costs as incurred from the specified date, on an indemnity basis – whether the first appellant breached his duty of frankness to the court – whether any breaches committed by the first appellant were causative of the further expenses incurred by the respondent Legal Profession (Solicitors) Rule 2007 (Qld), r 14.2, r 15.1 Emanuel Management Pty Ltd (in liq) v Fosters Brewing Group Ltd [2004] 2 Qd R 11; [2003] QCA 516, cited Harley v McDonald [2001] 2 AC 678; [2001] UKPC 18, cited Myers v Elman [1940] AC 282, cited Steindl Nominees Pty Ltd v Laghaifar [2003] 2 Qd R 683; [2003] QCA 157, cited
COUNSEL:	T J Bradley for the appellants D…