Vicki Jeanine Smith as administrator of the estate of Allan William Brown v Thompson
[2019] WASC 111
•4 APRIL 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: VICKI JEANINE SMITH as administrator of the estate of ALLAN WILLIAM BROWN -v- THOMPSON [2019] WASC 111
CORAM: ACTING MASTER WHITBY
HEARD: 14 MARCH 2019
DELIVERED : 4 APRIL 2019
FILE NO/S: CIV 1891 of 2018
BETWEEN: VICKI JEANINE SMITH as administrator of the estate of ALLAN WILLIAM BROWN
First Plaintiff
GARY MARSHALL CHIVERS as administrator of the estate of ALLAN WILLIAM BROWN
Second Plaintiff
AND
JARROD ROBERT THOMPSON
Defendant
Catchwords:
Practice and procedure - Solicitors - Account - Solicitor and client relationship - Client claiming order for account - Preliminary questions to be tried - Rules of the Supreme Court O 45 r 1 - Summary judgment, application for - Rules of the Supreme Court O 14 r 1
Legislation:
Limitation Act 2005 (WA), s 26
Rules of the Supreme Court 1971 (WA), O 14 r 1, O 45 r 1
Result:
Application granted
Category: B
Representation:
Counsel:
| First Plaintiff | : | Mr P D C Robinson |
| Second Plaintiff | : | Mr P D C Robinson |
| Defendant | : | Mr P van der Zanden |
Solicitors:
| First Plaintiff | : | Williams & Hughes |
| Second Plaintiff | : | Williams & Hughes |
| Defendant | : | Hotchkin Hanley |
Case(s) referred to in decision(s):
Hancock v Rinehart [2015] NSWSC 646; (2015) ACSR 207
Holborow v Macdonald Rudder (a firm) [2001] WASCA 91
Noonan v Martin (1987) 10 NSWLR 402
Perpetual Trustee Co Ltd v Gibson [2013] NSWSC 276
Torlonia v Wright [2016] NSWSC 1139
Wintawari Guruma Aboriginal Corp RNTBC v Stevens [2016] WASC 115
ACTING MASTER WHITBY:
By Minute of Amended Chamber Summons dated 13 December 2018, the plaintiffs seek the following orders:
1.An order pursuant to Order 45 Rule 1(3) of the Rules of the Supreme Court 1971 (WA) (RSC) for the taking of an account by the defendant by:
(a)accounting for all funds received by the defendant from Allan William Brown (the Deceased) and transactions made by the defendant on behalf of Mr Brown for the periods:
(i)15 April 2011 to 31 December 2016 during which the defendant was the solicitor and attorney for the Deceased; and
(ii)1 January 2017 to 3 August 2017 during which the defendant purported to act as the solicitor, attorney and/or executor of the estate of the Deceased;
(b)producing records and documentary evidence in support of the accounting referred to at paragraph 1(a) above including but not limited to the trust account ledger for Thompson Legal Pty Ltd (Thompson Legal) and itemised invoices for legal and attorney services rendered by the defendant and Thompson Legal to the Deceased.
2.An order pursuant to Order 45 Rule 1(3) RSC that the defendant pay to the plaintiffs forthwith all sums found to be due from the defendant to the plaintiffs on the taking of account.
4.The plaintiffs have leave to apply for summary judgment against the defendant pursuant to Order 14 Rule 1 RSC.
5.Judgment be entered for the plaintiffs against the defendant pursuant to Order 14 Rule 1 RSC in relation to the part of their claim in the action for the delivery up of the contents of the safe of the Deceased.
6.The defendant deliver up forthwith at his expense the contents of the Deceased's safe.
7.An order that the defendant pay the costs of this application.
Background
The plaintiffs rely on the following in support of their chamber summons;
(a)Affidavit of Vicki Jeanine Smith sworn 13 December 2018 (Smith Affidavit);
(b)Affidavit of Patrick Digby Charles Robinson sworn 20 February 2019 (Robinson Affidavit);
(c)Affidavit of Daniel Tassone sworn 26 February 2019 (First Tassone Affidavit);
(d)Affidavit of Daniel Tassone sworn 14 March 2019 (Second Tassone Affidavit);
(e)Outline of Submissions dated 27 February 2019; and
(f)Supplementary Submissions dated 25 March 2019.
The defendant relies upon the following in opposition to the Chamber Summons:
(a)Affidavit of Jarrod Robert Thompson sworn 31 January 2019 (First Thompson Affidavit);
(b)Affidavit of Jarrod Robert Thompson sworn 14 March 2019 (Second Thompson Affidavit);
(c)Outline of Submissions dated 8 March 2019; and
(d)Supplementary Submissions dated 20 March 2019.
The following facts are admitted on the pleadings:
(a)From 2010 the defendant was the solicitor for the Deceased and the sole director and shareholder of Thompson Legal.[1]
(b)On 27 September 2016 Thompson Legal was wound up. The defendant continued to act as the Deceased's solicitor.[2]
(c)Thompson Legal operated a trust account with the National Australia Bank and held trust monies on behalf of the Deceased.[3]
(d)The Deceased executed a trust account authority on 10 January 2013 in favour of Thompson Legal pursuant to which the Deceased acknowledged that Thompson Legal would account to him for all deposits and withdrawals of funds from its trust account or other accounts in which it held funds on the Deceased's behalf.[4]
(e)From 15 April 2011 until 31 December 2016 the defendant was the attorney for the Deceased pursuant to an enduring power of attorney dated 15 April 2011 (EPA).[5]
(f)Under the strict terms of the EPA, the defendant became attorney for the Deceased on 23 April 2011 when Beryl Drage died.[6]
(g)The Deceased died on 1 January 2017.[7]
(h)The plaintiffs were appointed administrators of the Deceased's estate on 3 August 2017.
(i)The defendant made two payments - $10,000 on 5 January 2017 and $10,000 on 28 February 2017 - from the Deceased's ANZ bank account to himself purportedly to discharge invoices for work performed in the period 24 September 2016 to 31 January 2017.[8]
[1] Plaintiffs' Statement of Claim dated 23 May 2018 (SOC) at par 2.1; Defence dated 19 July 2018 at par 2; Smith Affidavit at par 4.1.
[2] Smith Affidavit at par 4.4, 4.5.
[3] SOC at par 7; Defence at par 7; First Thompson Affidavit at par 13, annexures JRT-2 and JRT-4.
[4] First Thompson Affidavit annexure JRT-2.
[5] SOC and Defence at par 2; Smith Affidavit annexure VJS-2.
[6] First Thompson Affidavit at par 10.
[7] SOC par 6; Defence par 6
[8] Defence at par 7; Smith Affidavit at par 6 and annexure VJS-5; First Thompson Affidavit at par 19.
Legal principles
Order 45 r 1 RSC provides:
Summary order for account to be taken
(1)Where the statement of claim claims an account or involves the taking of an account the plaintiff may, at any time after the defendant has entered an appearance, or after the time limited for appearing, apply for an order under this rule.
(2)An application under this rule must be made by summons and must, unless the Court otherwise directs, be supported by affidavit or other evidence.
(3)On the hearing of the application, the Court may, unless satisfied by the defendant by affidavit or otherwise that there is some preliminary question to be tried, order that an account be taken and may also order that any amount certified on taking the account to be due to either party be paid to him within a time specified in the order.
The following principles with respect to an application under O 45 r 1 are well established:
7.1the plaintiff must prove that the defendant has not rendered proper accounts.[9]
7.2the plaintiff must prove that the defendant is an accounting party;
7.3the plaintiff must prove that it is entitled to some (uncertain) sum from the defendant.[10]
7.2a summary account is appropriate where the defendant is an accounting party and where it is clear that if the action went to trial the account would be ordered.[11]
[9] Wintawari Guruma Aboriginal Corp RNTBC v Stevens [2016] WASC 115 [4]; Holborow v Macdonald Rudder (a firm) [2001] WASCA 91 [7]; O 6 r 6 RSC
[10] Hancock v Rinehart [2015] NSWSC 646; (2015) ACSR 207 [338]; Wintawari Guruma Aboriginal Corp RNTBC v Stevens [5].
[11] Holborow v Macdonald Rudder (a firm) [6].
Has the Defendant rendered proper accounts?
Proper accounts must show individually, each receipt and payment, supported by vouchers, or oral evidence of disbursements in the absence of vouchers.[12]
[12] Hancock v Rinehart [353]; Torlonia v Wright [2016] NSWSC 1139 [23]
The plaintiffs plead in the SOC that the defendant has failed to render a true and full account of all transactions he made on behalf of the Deceased and failed to return to the plaintiffs property and funds owed to the plaintiffs (by reason of their being the administrator of the Deceased's estate).[13]
[13] SOC par 10.
The Defendant has not placed before the court any evidence to establish that proper accounts have been rendered.
Accordingly, I am satisfied that the jurisdictional basis for the order for an account is enlivened.
Is the defendant an accounting party?
In Holborow v MacDonald Rudder (A Firm), the Full Court of the Supreme Court stated that:
It is not in dispute that the relationship of solicitor-client existed between the parties as pleaded in par 3 of the statement of claim, nor is it in dispute that the respondent received money on behalf of the appellants and expended or applied those moneys purportedly on behalf of the appellants. Under those circumstances it is quite clear that the respondent is an accounting party. Quite apart from the statutory obligations in the Legal Practitioners Act regarding the keeping and rendering of accounts by solicitors, the solicitor client relationship is a fiduciary relationship (Re Van Laun, Ex parte Chatterton [1907] 2 KB 23 at 29) and it is the duty of the person acting in a fiduciary capacity to keep and to render true and proper accounts of his transaction: Makepeace v Rogers (1865) 34 LJ.[14]
[14] Holborow v MacDonald Rudder (A Firm) [5].
Counsel for the defendant submits that Thompson Legal, not the defendant, is the proper accounting party as it was Thompson Legal who operated the trust account for the Deceased.
Counsel for the plaintiffs referred the court to the case of Torlonia v Wright. Mr Wright was Ms Torlonia's commercial and financial adviser. Ms Torlonia was entitled to receive mining royalties and, upon Mr Wright's advice, a trust (Trust) was set up with a corporate trustee, Leccino Pty Ltd (Leccino). Mr Wright was the sole director, secretary and public officer of Leccino. Upon Mr Wright's advice, the mining royalties were paid to Leccino. Leccino, as trustee, under the practical control of Mr Wright, made payments from the Trust's bank accounts into which the mining royalties were deposited. All such payments were debited to Ms Torlonia's loan account. Ms Torlonia sought an order that Mr Wright account to her for the mining royalties received during the period 2004 to 2013.
Mr Wright resisted the order for an account sought by Ms Torlonia on the basis that, inter alia, he was not a trustee for Ms Torlonia in respect of the mining royalties and so he was not an accounting party. Mr Wright's position was that if Ms Torlonia was entitled to an account it was from Leccino and from him.[15]
[15] Torlonia v Wright [10].
Brereton J held that:
In my judgment, Ms Torlonia's reposing of trust and confidence in Mr Wright, her vulnerability arising from her overseas residence and limited understanding of commerce and finance, and her entrusting of her Australian affairs to him in such a manner as gave him practical control over them – in particular the … royalties – amply supports the conclusion that the relationship between them was a fiduciary one, and that – regardless of the corporate vehicles that might be interposed – he was obliged to deal with the … royalties in her interest and for her benefit. Though the royalties were banked into Leccino's bank accounts and treated as loans by Ms Torlonia to Leccino, in the context of the overarching fiduciary relationship this was but a device for the management by Mr Wright of her affairs, and the interposition of a corporate trustee controlled by him to receive her royalties does not relieve him of the obligation to account to her for the moneys the receipt and application of which he effectively controlled.[16]
[16] Torlonia v Wright [21].
His Honour found, after hearing all of the evidence, that Mr Wright was liable to Ms Torlonia as an accounting party and that his account was to extend to the transactions of an interposed corporate entity (Leccino) of which Mr Wright was the sole director and Ms Torlonia was the specified beneficiary.
Counsel for the defendant submits that had an application for a summary order for account had been before Brereton J in Torlonia v Wright, the application would have been dismissed.
In addition, counsel for the defendant says that the facts in this case are distinguishable from those in Torlonia v Wright because the relationship between Ms Torlonia and Mr Wright had preceded the establishment of Leccino and the Trust and those entities:
[W]ere merely vehicles in a structure created by and on [Mr Wright's] advice for the more effective management of her affairs… [20]
Counsel for the defendant submits that the Deceased engaged the defendant through Thompson Legal and as such, it is clear that Thompson Legal was not a corporate vehicle created for the purposes of managing the Deceased's affairs. Therefore, it is a triable issue as to whether, in all the circumstances, the defendant, as well as Thompson Legal, is liable to account for the transactions carried out by Thompson Legal.
In the circumstances, I am satisfied, given the defendant was the solicitor for the Deceased at all material times,[17] the defendant was in a fiduciary relationship with the Deceased. The defendant is clearly an accounting party.
[17] SOC par 2.2, Defence par 2.
It is no defence for the defendant to say invoices were rendered and the trust account was maintained by Thompson Legal. Thompson Legal is the vehicle through which the transactions were conducted. I do not consider that Torlonia v Wright is distinguishable on the basis that the corporate vehicles had been created after the relationship between the parties was already on foot.
In any event, the defendant also held the EPA for the Deceased. An attorney exercising a power of attorney owes fiduciary duties to his or her principal.[18] There is no dispute that the defendant held the power of attorney personally. Accordingly, the defendant is also an accounting party to the Deceased in his capacity as attorney.
[18] Perpetual Trustee Co Ltd v Gibson [2013] NSWSC 276 [15].
Are the Plaintiff's entitled to some (uncertain) sum from the Defendant?
The defendant had authority to access the Deceased's personal bank accounts pursuant to the EPA. The EPA terminated upon the Deceased's death on 1 January 2017.[19] The defendant made two payments - $10,000 on 5 January 2017 and $10,000 on 28 February 2017 - from the Deceased's ANZ bank account to himself purportedly to discharge invoices for work performed in the period 24 September 2016 to 31 January 2017.[20]
[19] Noonan v Martin (1987) 10 NSWLR 402, 407; G E Dal Pont, Law of Agency (3rd ed, 2014) at [25.19].
[20] Defence at par 7; Smith Affidavit at par 6 and annexure VJS-5; First Thompson Affidavit at par 19.
I am satisfied, based on the evidence before me that, on least two occasions, the defendant transferred funds to himself in circumstances where he does not appear to have had authority to do so. There is also evidence before me to the effect that the defendant has not produced trust ledgers showing how amounts deposited into Thompson Legal's trust account by, or on behalf of, the Deceased were applied.[21]
[21] Smith Affidavit annexure VJS-4, pp. 20, 25.
Without the taking of accounts, the plaintiffs are unable to ascertain the exact amount the defendant received from and expended on behalf of the Deceased. The plaintiffs are uncertain as to the amounts they are entitled to recover from the defendant.
Does the Defendant have an arguable defence?
In circumstances where the defendant has an arguable defence, it is not appropriate for a summary account to be ordered.
Counsel for the defendant submits that the current facts are distinguishable from those in Torloniav Wright and that therefore, the defendant is not the proper accounting party. I have considered these submissions at [12] ‑ [23] above. In my view, the defendant does not have an arguable defence on the basis that he is not the proper accounting party.
In any event, the defendant does not have an arguable defence to an order to account on the basis that he held the EPA for the deceased.
Counsel for the defendant also submits that the defendant has a defence pursuant to s 26 of the Limitation Act 2005 (WA) to the extent that the plaintiffs cannot make a claim for an account in respect of the period before 23 May 2012, being six years prior to the commencement of proceedings.
Counsel for the plaintiff submits that this defence is not available to the defendant because it has not been pleaded in the Defence.
In Torlonia v Wright, Mr Wright was granted leave to amend his defence, at the commencement of the trial, to plead that if he were liable to account, that liability was limited to the period of six years preceding the institution of proceedings.
In considering the limitation defence, Brereton J held:
[T]he fiduciary relationship is indistinguishable from that of trustee and beneficiary. Ms Torlonia's cause of action for an account arose from the moment that Mr Wright first managed on her behalf the receipt and application of the … royalties. It follows that Ms Torlonia is entitled to accounts only in respect of the period … six years before the proceedings were instituted.[22]
[22] Torlonia v Wright [54].
For the purposes of a summary judgment application, I am satisfied that the defendant is not limited to the matters he has pleaded in the Defence. It may be open to him to amend the Defence before trial.
The question for the court is whether there is an arguable defence open to the defendant on the basis of the limitation period. While not commenting on the merits of that defence, I find that it is an arguable defence and a summary order for an account by the defendant should not be made in respect of the period before 23 May 2012 (six years prior to the commencement of these proceedings).[23]
[23] Limitations Act 2005 (WA) s 26.
Application for summary judgment pursuant to Order 14 Rule 1
At the hearing of the application, counsel for the parties indicated to the court that there was consent to an order for the delivery up of the contents of the safe, subject to agreeing the terms of the order. The only issue that remained between the parties was whom should bear the cost of delivering the items to the plaintiffs from Queensland.
The plaintiffs plead relevantly that:
28.1on or about 6 May 2014 the defendant removed the contents from the Deceased's safe; and
28.2despite request the defendant has failed to return to the plaintiffs the Deceased's personal property including the contents of the safe.[24]
[24] SOC at pars 9 and 10.2.
The defendant admits he:
29.1'received the contents of [the Deceased's] safe …';[25]
29.2at the Deceased's funeral he had in his possession the contents of the Deceased's safe;[26] and
29.3remains in possession of the contents of the Deceased's safe.[27]
[25] Defence at par 9.
[26] Defence at par 10.2.
[27] First Tassone Affidavit at par 4.
It is not in dispute that the defendant took the contents of the Deceased's safe to Queensland before the Deceased died and at a time when he held an EPA for the Deceased. It is also not in dispute that the administrators are now entitled to possession of the Deceased's property.
The administrators of the Deceased's estate do not reside in Queensland. The defendant removed the personal effects of the Deceased to Queensland in circumstances where it would have been clear to him that those would have to be returned to Western Australia at some point in the future. In my view, it is the defendant responsibility to return the contents of the Deceased's safe to the administrators at his cost.
Summary
The defendant is required to provide an account to the plaintiffs for the period 23 May 2012 to 28 February 2017 and pay to the plaintiffs forthwith all sums found to be due from the defendant to the plaintiffs on the taking of account.
In addition, I order summary judgment in favour of the plaintiffs for the return of the contents of the Deceased's safe at the expense of the defendant.
I will hear the parties in relation to final orders and costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CB
Associate to the Principal Registrar4 APRIL 2019
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