Rashed v Perpetual Trustees Victoria Ltd
[2010] FCA 1046
FEDERAL COURT OF AUSTRALIA
Rashed v Perpetual Trustees Victoria Ltd [2010] FCA 1046
Citation: Rashed v Perpetual Trustees Victoria Ltd [2010] FCA 1046 Parties: RASMIA RASHED v PERPETUAL TRUSTEES VICTORIA LTD (ACN 004 027 258) and MATTHEW KILPATRICK File number: VID 414 of 2009 Judge: GRAY J Date of judgment: 31 August 2010 Catchwords: PRACTICE AND PROCEDURE – service – service by post – whether evidence that letter left in mail room of solicitor’s firm sufficient evidence of posting
PRACTICE AND PROCEDURE – solicitor – notice of ceasing to act – non-compliance with requirement to file affidavit as to giving of seven days’ notice to client – whether solicitor still on the record
COURTS AND JUDGES – judgment – terms of settlement – terms subject to condition precedent – release by another party – whether sufficient evidence that condition precedent satisfied
DEBTOR AND CREDITOR – payment – whether open to creditor to specify particular method of payment – whether non-payment proved by evidence of absence of payment by particular method entered – settlement of proceedings – failure to pay settlement sum into solicitor’s trust account – calculation of interest up to judgment
Legislation: Federal Court of Australia Act 1976 (Cth) s 51A
Federal Court Rules O 7 r 4A(1)(d), O 35 r 7A, O 7 r 4(1)(b), O 7 r 4(2), O 45 r 7(2), O 45 r 7(3)Date of hearing: 31 August 2010 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 19 Counsel for the applicant: Ms G Crafti Solicitor for the applicant: Holding Redlich Counsel for the first respondent: The first respondent did not appear Counsel for the second respondent: The second respondent did not appear
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 414 of 2009
BETWEEN: RASMIA RASHED
ApplicantAND: PERPETUAL TRUSTEES VICTORIA LTD (ACN 004 027 258)
First RespondentMATTHEW KILPATRICK
Second Respondent
JUDGE:
GRAY J
DATE OF ORDER:
31 AUGUST 2010
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.Judgment be entered for the applicant against the second respondent in the sum of $40,000 together with interest to the date of judgment in the sum of $326.03.
2.The second respondent pay the applicant’s costs of the notice of motion filed on 17 August 2010.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 414 of 2009
BETWEEN: RASMIA RASHED
ApplicantAND: PERPETUAL TRUSTEES VICTORIA LTD (ACN 004 027 258)
First RespondentMATTHEW KILPATRICK
Second Respondent
JUDGE:
GRAY J
DATE:
31 AUGUST 2010
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
By notice of motion filed on 17 August 2010, the applicant in this proceeding seeks judgment against the second respondent in the sum of $40,000, together with costs and other orders as appropriate, or ancillary or consequential to those orders. The proceeding was commenced by filing an application and an affidavit on 4 June 2009. The applicant claimed against the first respondent, a financier, and the second respondent, a mortgage broker, that she had been induced to enter into a mortgage loan in respect of her house, without proper understanding of what she was undertaking. She claimed to have very limited English and to have been prevailed upon by her son to mortgage her house for the benefit of that son.
There was some difficulty in ascertaining the whereabouts of the second respondent in order to serve him personally. The second respondent did eventually file a notice of appearance by a solicitor, and participated in the proceeding. The proceeding was referred to mediation and was settled, so that orders dealing with it by consent were made on 2 June 2010. The orders included the dismissal of the claim and a cross-claim by the first respondent against the second respondent, and no order as to costs.
As between the various parties, the proceeding was resolved by different agreements. Clause 1 of the agreement between the applicant and the second respondent required the second respondent to pay to the applicant the sum of $40,000 by 4.00 pm on 28 July 2010. The basis of the motion for judgment is cl 2 of the terms of settlement between the applicant and the second respondent which provides as follows:
If the Second Respondent fails to make the payment in full by the date set out in paragraph 1 above, the Applicant will be at liberty to enter judgment against the Second Respondent for such amount of the payment as remains outstanding plus the costs of the entry of the judgment and the Second Respondent hereby consents to the entry of the judgment upon the filing of an affidavit filed on behalf of the Applicant deposing to the default.
The first issue that has arisen in relation to the motion for judgment concerns the service of the notice of motion filed on 17 August 2010. On the same date as that notice of motion was filed, 17 August 2010, there was also filed a notice by the second respondent’s solicitor that he had ceased to act as solicitor for the second respondent from 16 August 2010. As a consequence, the applicant’s solicitors endeavoured to serve the notice of motion, the accompanying affidavit and the exhibits to that affidavit by post, directly on the second respondent.
It seems that such attempts at service may have been unnecessary. By O 45 r 7(2) of the Federal Court Rules (“the Federal Court Rules”), a solicitor is not to file or serve a notice of ceasing to act without leave of the Court unless, not less than seven days before doing so, the solicitor has served on the former client notice of intention to file and serve the notice of change. Subrule (3) of r 7 provides that a solicitor filing a notice of ceasing to act, except where the notice is filed with the leave of the Court, must file and serve with the notice an affidavit showing compliance with subr (2). No such affidavit was filed in the present case. There is therefore no evidence as to whether the second respondent’s solicitor did or did not give the requisite seven days notice before filing the notice that he had ceased to act in the proceeding for the second respondent. This is not a situation in which a presumption of regularity ought to be applied, because of the presence of subr (3) of r 7, which requires that evidence of compliance be filed. It is my understanding that the courts of the State of Victoria do not have a similar requirement for seven days’ notice before a solicitor ceases to act. A solicitor who did not consult the Federal Court Rules before ceasing to act for a client in a proceeding in this Court might well be unaware of the requirement to give seven days’ notice, and might file a notice of ceasing to act without complying with the requirements of r 7(2). For these reasons, I take the view that the second respondent’s solicitor remained on the record and that service therefore could have been effected on the second respondent by serving the documents on the solicitor.
The affidavit material relating to service is to be found in the affidavit of Kristin Clare Watkins affirmed on 18 August 2010. She deposes to having placed the documents in what she describes as an ordinary prepaid envelope, with a covering letter addressed to the second respondent at the address contained in the solicitor’s notice of ceasing to act, which may be taken to be the last known address of the second respondent. Ms Watkins then says that she placed the envelope in the mail room of the applicant’s solicitors on 18 August 2010 at approximately 4.45 pm. She says that, in the mail room, articles are stamped and placed into an Australia Post mailbag which is collected each day by a representative of Australia Post at approximately 5.10 pm.
This is the limit of the material, which falls short of being express evidence of actual postage. If it were necessary for the applicant to have proved effective service by post on the second respondent, then a question would arise as to the adequacy of this evidence to prove service. By O 7 r 3, in conjunction with O 7 r 4(1)(b) and (2) of the Federal Court Rules, service by post at the last known place of business or of abode of a person is permitted, in the case of a document that is not an originating process and which is not required to be served personally. This notice of motion is a notice of motion filed in the proceeding. It is therefore not an originating process. Service by post at the last known place of abode is therefore permitted by the combination of the rules to which I have referred.
Counsel for the applicant was unable to refer me to any provision of the Evidence Act, or any authority, that would enable me to rely on the course of business in the mail room of the solicitors for the applicant, and permit me to be satisfied that the document had in fact been posted.
In view of the fact that the second respondent’s solicitor remained on the record, and that service was also effected on him, it is unnecessary to determine whether reliance could be placed on the ordinary course of business in the mail room in order to establish postage. Ms Watkins entered the witness box and gave evidence that, in addition to attempting service by post on the second respondent, she had forwarded by facsimile transmission to the second respondent’s solicitor on 18 August 2010 a letter enclosing a copy of the notice of motion and a copy of the supporting affidavit and of the exhibits to that affidavit. Counsel for the applicant tendered the documents that were sent by facsimile transmission. The tender included the facsimile confirmation sheet in respect of that transmission. By O 7 r 4A(1)(d) of the Federal Court Rules, sending a copy of a document by facsimile transmission is a permitted method of serving a document on a solicitor where that solicitor’s address is the property address of a party to a proceeding in this Court. That is the case in the present proceeding. Service has therefore been effected. Any actual service by post on the second respondent that may have been effected served to give him additional notice of the fact that judgment was now sought against him.
In order to succeed in having judgment entered against the second respondent, it is necessary for the applicant to establish that the second respondent had an obligation to pay the money claimed and that he has not paid it.
As to the first of these facts, the material reveals that the terms of settlement, described as “Heads of Agreement”, between the applicant and the second respondent were expressed to be subject to a condition that is described as a condition precedent. That condition reads:
The attached Heads of Agreement have been signed by the secondnamed respondent subject to the firstnamed respondent fully releasing him from all claims (including costs) arising out of the transactions and matters the subject of these proceedings.
The material does not include any direct evidence of the giving of any such release by the first respondent to the second respondent. Instead, on 28 April 2010, the applicant’s solicitors sent to the second respondent’s solicitor a letter in the following terms:
We refer to your e-mail correspondence of 12 April 2010, copied to us, in which you advised that your client Matthew Kilpatrick had signed a Deed of Settlement with Perpetual Trustees Victoria Ltd (Perpetual) resolving the proceedings between them. Since your e-mail, we have been informed by Russell Kennedy that Perpetual has executed that Deed.
We take it then that the Heads of Agreement between our respective clients made on 28 January 2010, which was subject to Perpetual “fully releasing [Mr Kilpatrick] from all claims (including costs) arising out of the transactions and matters the subject of the proceedings”, is now unconditional and binding.
Please note that this understanding has been formed without having sighted the terms of the Deed between Mr Kilpatrick and Perpetual except to the extent that we are aware that the Deed is subject to a confidentiality clause which prevents disclosure to us and our client. Therefore, if our understanding that the Heads of Agreement is now binding is incorrect please advise us accordingly.
The affidavit evidence is that no advice was received from the second respondent’s solicitors that the heads of agreement had not become binding on the second respondent. At that time, there was no doubt that the solicitor was acting for the second respondent in the proceeding. The solicitor could have been expected to advise the applicant’s solicitors if in fact the condition precedent had not been satisfied. Accordingly, it is appropriate to take the solicitor’s silence on that question as an admission on the part of the second respondent that the condition precedent had been satisfied. I therefore proceed on the basis that the second respondent had an obligation under the heads of agreement to make the payment specified in cl 1 of them, on 28 July 2010.
There is evidence that the second respondent had failed to make such payment by one particular method. The solicitors for the applicant sent a letter to the second respondent’s solicitor, dated 4 August 2010, which read as follows:
Pursuant to clause 1 of the Heads of Agreement entered into between our respective clients on 28 January 2010, your client was required to pay our client the sum of $40,000 by 4pm on Wednesday 28 July 2010 in settlement of this matter. That payment has not been made.
If your client does not make payment of $40,000 into the Holding Redlich trust account by 4pm on 6 August 2010, our client will enter judgment against your client as provided for in clause 3 of the Heads of Agreement, without further notice to you.
The letter then contained the bank account details of the trust account of the applicant’s solicitors. The affidavit evidence discloses that a search of the trust account was made on 13 August 2010 and that it revealed that no payment had been received in the trust account from the second respondent. The deponent of the affidavit then swore as to his satisfaction that the second respondent had defaulted in making payment as required by the heads of agreement.
There is a question whether a creditor can specify a particular method of making a payment and establish non-payment by proving that no payment has been made by that particular method, or whether it is necessary to have evidence that no payment has been made at all. To eliminate this obstacle, counsel for the applicant called oral evidence on the hearing of the notice of motion. In part, this was evidence concerning the functioning of the trust account and the way in which solicitors in the firm concerned would be notified if any money came into that account, either for a particular purpose or in some manner that made it difficult to trace. I am satisfied that that did not happen, and that no payment was made to the applicant’s solicitors on behalf of the applicant. Counsel for the applicant also called a son of the applicant, who assists his mother by managing her financial affairs. According to his evidence, this son is sufficiently familiar with his mother’s financial affairs to be able to say that she has not received any payment by any other means from the second respondent. On this basis, I am satisfied that the second respondent has not made the payment he was required to make by cl 1 of the heads of agreement.
Counsel for the applicant also sought an order that the second respondent pay interest on the sum that is unpaid. By s 51A of the Federal Court of Australia Act 1976 (Cth) I am required upon such application, unless good cause is shown to the contrary, to order the payment of interest, either by one of two possible methods. No good cause is shown to the contrary. The relevant rate of interest is specified in O 35 r 7A of the Federal Court Rules. The default rate is the cash rate of interest set by the Reserve Bank of Australia from time to time, plus 4%. I am satisfied that the rate applicable in the period between 28 July 2010, when the obligation to pay crystallised, and the present date, calculated in accordance with O 35 r 7A is 8.5%. The calculation of interest on $40,000 at that rate gives rise to the sum of $326.03.
For these reasons, it is appropriate to order that judgment be entered for the applicant against the second respondent for the sum of $40,000 together with interest in the sum of $326.03 and to order that the second respondent pay the applicant’s costs of the motion.
The orders I make are as follows:
1.Judgment be entered for the applicant against the second respondent in the sum of $40,000 together with interest to the date of judgment in the sum of $326.03.
2.The second respondent pay the applicant’s costs of the notice of motion filed on 17 August 2010.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the reasons for judgment herein of the Honourable Justice Gray. Associate:
Dated: 24 September 2010
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