Nan v Su and Co (A Firm)

[2007] WASC 164

NAN -v- SU & CO (A FIRM) [2007] WASC 164

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2007] WASC 164
Case No:	CIV:2410/2005	Heard:	29 JUNE 2007
Coram:	MASTER SANDERSON	Delivered:	30/07/07
No of pages:	5	Judgment Part:	1 of 1
Result:	Solicitor ordered to pay interest and costs
Category:	B
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Parties:	WING JING NAN SU & CO (A FIRM)
Catchwords:	Solicitor and client Solicitor handling funds when conflict of interest Turns on own facts
Legislation:	Nil
Case References:	Nil

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : NAN -v- SU & CO (A FIRM) [2007] WASC 164 CORAM : MASTER SANDERSON HEARD : 29 JUNE 2007 DELIVERED : 30 JULY 2007 FILE NO/S : CIV 2410 of 2005 BETWEEN : WING JING NAN

Plaintiff

AND

SU & CO (A FIRM)
Defendant

Catchwords:

Solicitor and client - Solicitor handling funds when conflict of interest - Turns on own facts

Legislation:

Nil

Result:

Solicitor ordered to pay interest and costs

(Page 2)

Category: B

Representation:

Counsel:

Plaintiff : Mr P G McGowan
Defendant : Mr N D C Dillon

Solicitors:

Plaintiff : Dibbs Abbott Stillman
Defendant : Su & Co

Case(s) referred to in judgment(s):

Nil

(Page 3)

1 MASTER SANDERSON: By an originating summons dated 2 December 2005, the plaintiff sought the following orders:

"1. An order that the defendant render to the plaintiff a proper statement of their trust account.

2. An order that the property more particularly described as $800,000 received by the defendant from Ricass Holdings (S) PTE Ltd on behalf of the plaintiff and deposited in the defendant's trust account, be vested in the plaintiff on the ground that the defendant as trustee has refused or neglected to transfer the property to the plaintiff who is absolutely entitled to it for 28 days after a request was made in writing to the defendant by the plaintiff.

3. An order that the defendant execute all such documents and do all things necessary to transfer the property to the plaintiff.

4. An order that the defendant pay the plaintiff interest on $800,000 from 9 February 2004 to the date of this Originating Summons.

5. An order that the defendant personally pay the plaintiff's costs of and incidental to this application on an indemnity basis."

2 Subsequent to the filing of the originating summons but before it was heard, the defendant issued an interpleader summons under O 17. That summons sought to have the $800,000, which it was common cause was held in the defendant's trust account, paid into court. It also sought the usual interpleader orders. On 4 April 2007, I made orders substantially in the form of orders 1 to 3 sought by the plaintiff in his originating summons. I adjourned the interpleader summons and I stood over for further consideration the orders sought in par 4 and par 5 of the plaintiff's originating summons.

3 After a number of false starts, the matter came back for argument on 29 June 2007. At the conclusion of the hearing, I indicated to the parties that I would make orders against the defendant substantially in terms of par 4 and par 5 of the originating summons. I indicated that I would publish reasons for that decision. These are those reasons.

(Page 4)

4 The relevant facts can be shortly stated. In 2003, Mr Su, the principal of the defendant, was instructed by a Mr Sheng in relation to a claim against a company known as Ricass Pty Ltd. It is Mr Su's case that some time after he commenced acting for Mr Sheng, he was introduced by Mr Sheng to the plaintiff. Thereafter Mr Su says he regarded himself as acting for both Mr Sheng and the plaintiff. The plaintiff disputes that Mr Su was ever acting for Mr Sheng and says that he was only ever acting for the plaintiff. For the purposes of the present application, that dispute can be put to one side. It can be accepted that Mr Su genuinely believed that he was acting for both the plaintiff and Mr Sheng.

5 On 14 January 2004, the Ricass action had settled and Mr Su received into his firm's trust account an amount of $800,000. On 9 February 2004, the plaintiff made demand for payment to him of the $800,000. Mr Su says that because he was instructed by both the plaintiff and Mr Sheng, he was uncertain as to which of the two men was entitled to all or any part of the funds. On 4 April 2007, I determined that the plaintiff was entitled to all of the money held by Mr Su. For present purposes, however, it can be assumed that Mr Su was genuinely uncertain as to whom he should pay the money.

6 The solution to Mr Su's problem was obvious. He could immediately have taken interpleader proceedings. In the end, I determined that interpleader proceedings were inappropriate and that the money belonged to the plaintiff. But that is beside the point. Accepting that Mr Su genuinely believed he was acting for two clients when those two clients were in conflict, he should forthwith have ceased to act for either and divested himself of the funds. The effect of taking interpleader proceedings, as counsel for the plaintiff said, would have "crystallised" the issue, protected Mr Su's position and have allowed the plaintiff to obtain the $800,000.

7 Instead, Mr Su did nothing. He does say that he attempted to mediate a settlement between the two gentlemen he still regarded as clients. With respect to Mr Su, that was a wholly inappropriate course to take. He had a conflict of interest. He should not have continued to act for either of his two clients. He should have withdrawn as soon as it became apparent that there was a conflict between the two men.

8 That really is the end of the matter. Mr Su filed an affidavit sworn 26 June 2007 which attempted to justify the way he had handled this matter. Accepting that he was well motivated, there can be no excuse for his retaining these funds in the circumstances of this case. In particular,

(Page 5)

there can be no excuse for simply holding the funds in a non-interest bearing trust account for more than three years.

9 The only variation that I will make to the orders sought by the plaintiff is to order that costs be taxed on an indemnity basis, rather than fixed.