Re Ly Ty Tran Cao ex parte Dixon, T W F v Ly Ty Tran Cao & Ors Re Van Lam Cao Ex parte Dixon, T W F v Ly Ty Tran Cao & Ors
[1995] FCA 1167
•12 DECEMBER 1995
CATCHWORDS
LIEN - possession of Certificate of Title over which lien claimed - whether solicitor's lien destroyed when Certificate of Title came into possession of third party (trustee in Bankruptcy) pursuant to order of the court.
PRACTICE AND PROCEDURE - stay of order - whether stay can be extended after initial stay expired - factors relevant to grant of further stay after initial stay expired.
Federal Court Rules O 3 r 3
Pennington v Reliance Motor Works Limited [1923] 1 KB 127
Caldwell v Sumpters & Anor [1972] 1 Ch 478
Ex parte James; In re Condon (1874) 9 LR Ch App 609
RE: LY TY TRAN CAO; EX PARTE THOMAS WILLIAM FREDERICK DIXON v LY TY TRAN CAO & ORS
No. W423 of 1991
RE: VAN LAM CAO; EX PARTE THOMAS WILLIAM FREDERICK DIXON v LY TY TRAN CAO & ORS
No. W424 of 1991
Beazley J
12 December 1995
Sydney
IN THE FEDERAL COURT OF AUSTRALIA )
) No. W423 of 1991
NEW SOUTH WALES DISTRICT REGISTRY ) No. W424 of 1991
)
BANKRUPTCY DIVISION )
RE: LY TY TRAN CAO
Bankrupt
EX PARTE: THOMAS WILLIAM FREDERICK
DIXON
Applicant
LY TY TRAN CAO
First Respondent
THANH PHUONG CAO
Second Respondent
THANH PHU CAO
Third Respondent
GREGORY EUGENE SMITH
Fourth Respondent
ANDREWS MICHAEL PASTERNACKI
Fifth Respondent
AND:
RE: VAN LAM CAO
Bankrupt
EX PARTE: THOMAS WILLIAM FREDERICK
DIXON
Applicant
LY TY TRAN CAO
First Respondent
THANH PHUONG CAO
Second Respondent
THANH PHU CAO
Third Respondent
GREGORY EUGENE SMITH
Fourth Respondent
ANDREWS MICHAEL PASTERNACKI
Fifth Respondent
CORAM:BEAZLEY J
PLACE: SYDNEY
DATE: 12 December 1995
SHORT MINUTES OF ORDER
The Court orders:
That Order 4 made 28 July 1995 be stayed pending the determination of the appeal from the judgment of Beazley J dated 28 July 1995.
That the trustee pay the fourth and fifth respondents, costs of the hearing of paragraph 3 of the notice of motion filed 25 August 1995.
IN THE FEDERAL COURT OF AUSTRALIA )
) No. W423 of 1991
NEW SOUTH WALES DISTRICT REGISTRY ) No. W424 of 1991
)
BANKRUPTCY DIVISION )
RE: LY TY TRAN CAO
Bankrupt
EX PARTE: THOMAS WILLIAM FREDERICK
DIXON
Applicant
LY TY TRAN CAO
First Respondent
THANH PHUONG CAO
Second Respondent
THANH PHU CAO
Third Respondent
GREGORY EUGENE SMITH
Fourth Respondent
ANDREWS MICHAEL PASTERNACKI
Fifth Respondent
AND:
RE: VAN LAM CAO
Bankrupt
EX PARTE: THOMAS WILLIAM FREDERICK
DIXON
Applicant
LY TY TRAN CAO
First Respondent
THANH PHUONG CAO
Second Respondent
THANH PHU CAO
Third Respondent
GREGORY EUGENE SMITH
Fourth Respondent
ANDREWS MICHAEL PASTERNACKI
Fifth Respondent
CORAM:BEAZLEY J
PLACE: SYDNEY
DATE: 12 December 1995
REASONS FOR JUDGMENT
BEAZLEY J: On 28 July 1995, I dismissed an application by the fourth and fifth respondents in which they sought a declaration that they hold a retaining or solicitor's lien over the Certificate of Title for Folio Identifier 1/707753 (the Certificate of Title) in respect of the property known as 38A Mosely Street, Strathfield in the State of New South Wales (the lien application).
Prior to the determination of the lien application, the fourth and fifth respondents had lodged the Certificate of Title with a Registrar of the Court, to be held in escrow pending the outcome of their application. There is no dispute that the lodgement of the Certificate of Title in those circumstances did not discharge the lien, if in fact, such lien existed: Bolster v McCallum [1966] 2 NSWR 660 at 665.
At the time of making the order dismissing the lien application, I also ordered that the Registrar deliver up the Certificate of Title to the trustee. Upon the application of the fourth and fifth respondents and by consent, I stayed that order for 28 days. On 18 August 1995, the fourth and fifth respondents filed a notice of appeal from my decision on the lien application.
On 25 August 1995, a notice of motion was filed in which the fourth and fifth respondents sought the following order:
"3.That Order 4 made by Beazley J on 28th July 1995, being an Order that:
'The Registrar deliver up Folio Identifier 1/707753 to the Trustee after 28 days'
be stayed until such time as the Appeal in proceedings No. G632/1995 is determined."
and the third respondent sought an order:
"4.That O 3 made by Beazley J on 23rd June 1995, being an Order:
'That issue of the Writ of Possession aforesaid be postponed until 2nd September 1995'
be further postponed until such time as Appeal No. G632/1995 is determined."
I have made orders in relation to paragraph 4 of the notice of motion, postponing the issue of the writ of possession until a date to be fixed. The issue to be determined therefore, is whether to further stay the order made on 28 July 1995 that the Registrar deliver up the Certificate of Title.
The trustee has a simple response to the application for a further stay. He obtained possession of the Certificate of Title from the Registrar on 28 August 1995. He submitted therefore, that I should not make the order sought in the notice of motion as the lien, if any, was destroyed, either upon expiration of the stay or, at the latest, on 28 August, when the solicitor for the trustee took physical possession of the Certificate of Title from the Registrar. It is thus necessary to consider the circumstances whereby the trustee obtained possession of the Certificate of Title, to determine whether his possession now forestalls any order being made in terms of paragraph 3 of the notice of motion.
The notice of motion was allocated a return date of 30 August 1995. A draft of the notice of motion had been faxed to the trustee's solicitors at 5.10 pm on 24 August 1995. Upon receipt of the fax, Mr Freidman, solicitor for the trustee, attempted to contact both the respondents' counsel and the fourth respondent. He was not able to speak to either of them that afternoon.
On 25 August 1995, Mr Freidman spoke to counsel for the respondents. Counsel informed Mr Freidman that he had sought to have the notice of motion heard that day but had been informed that no judge was available to deal with the matter during normal court hours, but that a judge could be made available, if necessary, during the luncheon adjournment. Counsel asked Mr Freidman to obtain instructions as to whether the trustee would consent to the notice of motion being heard during the course of the following week upon the trustee giving an undertaking not to uplift the Certificate of Title. Mr Friedman informed counsel that order 3 as sought could be dealt with on the basis that the trustee uplift the Certificate of Title, and set aside an agreed sum from the proceeds of sale of the property to meet the amount of the lien and costs, in the event that the fourth and fifth respondents were successful on their appeal.
A short time thereafter, counsel advised Mr Freidman that this offer had been rejected by his clients. Mr Freidman then informed counsel that he would be seeking to uplift the Certificate of Title from the Registry at any time from 9.30 am on 28 August 1995. There is no evidence as to the time during which these telephone conversations were had. I infer, however, that the first conversation at least, was had prior to lunchtime on 25 August 1995.
The fourth respondent also telephoned Mr Freidman on 25 August 1995. Mr Freidman repeated the offer he had made to counsel. The fourth respondent advised Mr Freidman that the offer was rejected. Mr Freidman also informed the fourth respondent of his intention to uplift the Certificate of Title. There is no evidence as to the time at which this telephone conversation took place.
Another matter about which there is no evidence, but which is relevant to record, is that on 25 August 1995 many of the judges of the Court, including myself, were involved in a national conference of the Court. I consider that this is a matter of common knowledge of which the court should take cognisance: Evidence Act 1995 (Cth), s 144. I raised this matter with counsel during the course of the hearing.
The stay of the order that the Registrar deliver up the Certificate of Title expired at midnight on 25 August 1995. On 28 August 1995, the trustee's solicitor attended at the Registry of the Court and obtained possession of the Certificate of Title. The Certificate of Title has now been relodged with the Court, without prejudice to the trustee's right to claim that the lien, if any, came to an end when the Certificate of Title was uplifted by his solicitor, or earlier, upon expiration of the stay. However, counsel for the fourth and fifth respondents called in aid the provisions of O 3 r 3 of the Federal Court Rules, seeking an order that the stay be extended under that rule. Order 3 r 3 provides:
"(1)The Court or a Judge may by order extend or abridge any time fixed by the Rules or by any judgment or order.
(2)The Court or a Judge may extend time under sub-rule (1) either before or after the time expires and whether or not an application for the extension is made before the time expires."
However, O 3 r 3 only applies where a time limit has been appointed or fixed for an act to be done: Re Pilcher; Pilcher v Hinds (1879) 11 Ch D 905; Southern Motors Pty Ltd v Australian Guarantee Corp Ltd [1980] VR 187; FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 77 ALR 411 at 417-419. Accordingly, the rule does not assist the fourth and fifth respondents. However it is still necessary to determine whether the lien, if any, has been destroyed and if not, whether a stay should, in the circumstances, be ordered.
Whether the lien (if any) has been destroyed
It was submitted that it is essential to the existence of a lien that the person claiming it should have possession and the right of continued possession of the article over which the lien is claimed: Halsbury's Laws of England 4th Ed Vol 28 paragraph 523. In Pennington v Reliance Motor Works Limited [1923] 1 KB 127, McCardie J said at 129:
"Even if the defendants had at one time an enforceable lien against the plaintiff they lost it by voluntarily giving up possession."
However, the delivery of an article for a limited and specific purpose and with the intention of maintaining the lien, does not prevent possession from being continuous and therefore does not destroy any lien: Albermarle Supply Co Ltd v Hind & Co [1928] 1 KB 307.
In Caldwell v Sumpters & Anor [1972] 1 Ch 478, the plaintiff's former solicitors had voluntarily parted with the plaintiff's title deeds over which they claimed a lien by forwarding them to the plaintiff's new solicitors. They had done so under cover of a letter in the following terms:
"These deeds and documents are being sent to you on the understanding that you will hold them to our order, pending the payment of our fees..."
The plaintiff's new solicitors replied by thanking them for the deeds and advising them that they were unable to accede to the request to hold the deeds to the former solicitors' order. Salmon LJ held that the question turned entirely upon the true meaning and legal effect of the solicitor's letter. His Lordship held at 495-496:
"The crucial factor in this case is that [the solicitors], because of their lien, had the legal right to possession of the documents. The documents were being offered on the terms of the letter of January 15. The law does not, in my view, allow retention of the documents and repudiation of the terms upon which they are offered. This seems to me to be clear on principle. There is little authority on the point, possibly because it is so plain. What authority there is tends to support the view I have formed. There is certainly no authority the other way. The text books all proclaim that a lien is not lost by parting with physical possession if the circumstances show, as in the present case, that the lien is being expressly or impliedly reserved."
Stamp LJ agreed, stating at 497 that the lien would only be lost if the solicitors:
"...had delivered unqualified possession to the plaintiff's solicitors, and this they did not do. Having received the documents 'to hold them to our order', the possession of the plaintiff's solicitors became that of the solicitors who sent them and they could either hold them to the order of the solicitors who sent them or, if the plaintiffs would not have it so, send them back or say: 'come and fetch them'."
As I have said, the fourth and fifth respondents delivered up possession of the Certificate of Title to the Court in such a way as not to defeat their lien (if any). They have appealed from my decision of the 28 July 1995, thus making it apparent that they continue to assert that they have a lien. The purpose in their seeking a stay on 28 July 1995 was to preserve their position in relation to the lien pending their consideration of the reasons for judgment. Likewise, their purpose in filing this notice of motion was to preserve their lien, pending the appeal.
However, in my opinion, the lien was not destroyed, either by the expiration of the stay on 25 August, or by the trustee obtaining possession of the Certificate of Title on 28 August 1995. The fourth and fifth respondents only parted with possession of the Certificate of Title in the circumstances to which I have referred. They did so as a demonstration of good faith. By lodging an appeal from my decision on the lien application, they have indicated that they continue to claim the lien. The trustee only obtained possession of the Certificate of Title by order of the Court and not by any voluntary and unconditional parting with possession by the fourth and fifth respondents.
That then leaves the question whether, notwithstanding that O 3 r 3 has no application, I should order a stay of my order that the Registrar deliver up possession of the Certificate of Title to the trustee.
Neither party made any submissions as to the strength of the applicant's case on the appeal. I consider therefore that I should accept that the appeal is not pointless. However, there are a number of factors which tend against the exercise of my discretion to order a further stay. First, the fourth and fifth respondents did not make the application until the day on which the stay expired. As events turned out, there was a limited ability in the Court to hear the matter on that day. The only time in which a judge could have been available to hear the notice of motion was during the lunch hour on that day. There is no explanation why that opportunity was not availed of. It may have been because the parties were negotiating what should happen to the notice of motion. However, there is no direct evidence to that effect. Secondly, it is relevant to take into account the offer made by the trustee's solicitors to hold an amount in trust pending the determination of the appeal. Had that offer been accepted, it would have had the practical effect of achieving for the fourth and fifth respondents what they sought to achieve by asserting their lien. Thirdly, and most fundamentally, the Certificate of Title has only been relodged in the Registry as a sign of good faith by the trustee.
However, these factors have to be considered against the factors which point towards the ordering of a stay. In the first place, it has to be borne in mind that the Certificate of Title only came into the custody of the Registrar on the same basis as it has been relodged - namely as a sign of good faith by the fourth and fifth respondents. Secondly, the fourth and fifth respondents had already lodged their notice of appeal prior to the expiration of the stay. Thirdly, whilst there is no explanation why the application for the extension of the stay was not made earlier than the day upon which the stay expired, the reason for the difficulty which the fourth and fifth respondents had in having the application heard on that day is explained, in part, by the Court's administrative processes. These are important matters, but may not, of themselves, have been sufficient to cause me to exercise my discretion to grant a stay. However, the duty of a trustee in bankruptcy should also be considered. A trustee is an officer of the court with a duty to act impartially: see Ex parte James; In re Condon (1874) 9 LR Ch App 609; Caldwell v Sumpters per Megarry J (at first instance) at 486. That duty involves the trustee acting fairly and with due regard to the true interests of parties with an interest in a bankrupt's estate. Thus, in Ex parte James, it was held that a trustee ought to pay out moneys paid under a mistake of law, at a time when (arguably at least) only money paid under a mistake of fact was recoverable. As Sir W. M. James L.J. stated at 614:
"The Court, then, finding that he has in his hands money which in equity belongs to someone else, ought to set an example to the world by paying it to the person really entitled to it."
In this case, if the appeal succeeds, unless the trustee delivers up the Certificate of Title voluntarily, the fourth and fifth respondents will have to take action against the trustee to recover it, presumably in an action in detinue. If the trustee has, by that time, parted with the Certificate of Title, e.g. by delivering it to a purchaser of the property, the fourth and fifth respondents may have to sue in conversion or seek some other remedy. In my opinion, the prospect of further litigation in this matter is so undesirable, that such a possibility, considered in conjunction with the trustee's duty as an officer of the court to act impartially, leads to the conclusion that the Certificate of Title ought to remain in the possession of the Registrar so that the issue of the lien can be finally resolved by the Court. Accordingly, a further stay should be granted.
I certify that this and the preceding 11 pages
are a true copy of the Reasons for Judgment
of the Honourable Justice Beazley.
Associate:
Dated:12 December 1995
APPEARANCES
Counsel for the Applicant: Mr S T White
(Respondent on the Notice of Motion)
Solicitors for the Applicant: Maurice Freidman & Company
Counsel for the Respondents: Mr M P Podleska
(Applicants on the Notice of Motion)
Solicitors for the Respondents: Smith & Pasternacki
Dates of hearing: 19 September 1995; 26 October 1995
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