IVOR WORRELL as Trustee of the Estate of JOHN MARTIN WEDGWOOD, a Bankrupt v. POWER AND POWER, Solicitors No. QG141 of 1993 FED No. 827 Number of pages - 12 Bankruptcy - Solicitors (1993) 118 ALR 237 (1993) 46 FCR 214
COURT
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION WILCOX, RYAN, GUMMOW JJ
CATCHWORDS
Bankruptcy - whether solicitor may apply monies received on account of client from another party in an action in payment of bill of costs rendered to the client in connection with that action, when client subsequently becomes bankrupt and the monies have been applied during relation back period - whether good against the trustee in bankruptcy.
Solicitors - equitable right of solicitor to be paid costs out of judgment recovered by client in proceeding in which solicitor has acted for client - nature and characteristics of solicitor's equitable right - whether a purely personal right to seek a charging order - whether right arises before taxation - "self help" by appropriation of funds in hands of solicitor - effect of supervening bankruptcy of client.
Counsel and solicitors Mr J.D.M. Muir QC for the appellant: and Mr P. Favell
Instructed by Baker Johnson and Partners
Counsel and solicitors Mr P.R. Dutney QC for the respondent: Mr J.S. Miles
Instructed by Power and Power
ORDER
The Court orders that:
(1) The appeal be dismissed.
(2) The appellant pay the costs of the respondent.
Note: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules.
JUDGE1
WILCOX, RYAN, GUMMOW JJ This appeal goes to the right of a solicitor, as against the trustee in bankruptcy of a client, to apply moneys received on account of the client from another party in an action in payment of a bill of costs rendered to the client in connection with the same action. The essential facts are not in dispute.
On 15 March 1991, the respondent firm of solicitors ("the solicitors") was retained by Mr Wedgwood to act for him as defendant in plaint No. 577 of 1991 issued out of the Queensland District Court by T.R. Services Pty Limited. At various times between 30 April and 29 August 1991, the solicitors rendered to Mr Wedgwood bills of their costs and disbursements incurred in the course of so acting for him. They received two payments on account of those costs so that, as at 17 February 1992, Mr Wedgwood's debit balance in the solicitors' general account was $2,779.75. On 28 May 1991, on an application for summary judgment in the District Court, various orders were made. They gave to Mr Wedgwood leave to defend, gave the plaintiff, T.R. Services Pty Limited, leave to amend its statement of claim,…
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.
Continue reading Worrell v Power & Power
Sign in free to access the full text
Details
AGLC
Worrell, I. as Trustee of the Estate of Wedgwood, J.M. v. Power & Power, Solicitors [1993] FCA 827 ((1993) 118 ALR 237; (1993) 46 FCR 214)
Case
[1993] FCA 827
Decision Date
CaseChat Overview and Summary
Worrell v Power & Power involved a dispute over the application of funds received by a client from another party in an action, which were used to pay a solicitor's bill of costs. The matter was brought before the court when the client became bankrupt, and the question arose whether the solicitor could claim the funds applied during the relation back period against the trustee in bankruptcy. The Federal Court was tasked with determining the legal implications of the solicitor's actions in applying these funds.
The central legal issue before the court was whether the solicitor had the right to apply the funds received by the client from another party towards the payment of costs incurred in connection with that action, particularly when the client subsequently became bankrupt. The court had to consider the timing of the application of the funds in relation to the client's bankruptcy and the implications for the trustee in bankruptcy. The court was required to determine if the solicitor's application of the funds during the relation back period was valid and enforceable against the trustee in bankruptcy.
The court held that the solicitor's application of the funds to the client's costs was valid and binding, even against the trustee in bankruptcy. The court reasoned that the application of the funds occurred before the client's bankruptcy, and therefore fell within the relation back period. As a result, the solicitor was entitled to the funds, and the trustee in bankruptcy could not claim them. The court dismissed the appeal and ordered the appellant to pay the respondent's costs. The reasoning and outcome of the case confirm the solicitor's right to apply client funds towards outstanding costs in certain circumstances, even in the face of the client's subsequent bankruptcy.
Orders
Orders of the court
The Court orders that:
(1) The appeal be dismissed.
(2) The appellant pay the costs of the respondent.
Note: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules.