the Law Society of the Australian Capital Territory v Charles Filgate Giles [1986] ACTSC 45 (5 June 1986)

SUPREME COURT OF THE ACT

THE LAW SOCIETY OF THE AUSTRALIAN CAPITAL TERRITORY v. CHARLES FILGATE GILES
S.C. No. 435 of 1986
Legal Practitioners - Summary Judgment

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Gallop J.(1)

CATCHWORDS

Legal Practitioners - action by Law Society for recovery of fees of examiners and receivers - recovery "as a debt".

Summary judgment - sufficiency of evidence.

Words and phrases - "as a debt"

Legal Practitioners Ordinance 1970, ss.66 and 105

The Nominal Defendant v. Kirin (unreported ex tempore judgment of the Supreme Court of the A.C.T., S.C. No. 344 of 1981, delivered 25 November 1981)

Suburban Homes Pty Ltd v. Ward (1928) VLR 267

Joseph Terry Pty Ltd v. T & G Fire and General Insurance Co. Ltd (1973) VR 458

Australia and New Zealand Bank v. Maile & Others (1965) QWN 28.

Spain v. The Union Steamship Company of New Zealand Limited [1923] HCA 21; (1923) 32 CLR 138.

Alexander v. Ajax Insurance Co. Ltd (1956) VLR 436

The Nominal Defendant & Another v. Bagot's Executor and Trustee Company Ltd (1971) SASR 346.

Nominal Defendant v. Morgan Cars Pty Ltd (1974) 3 ALR 73

The Nominal Defendant v. Butler (1976) 1 NSWLR 546.

HEARING

CANBERRA
5:6:1986

ORDER

Except in one respect, the evidence in support of the application for summary judgment is sufficient.

DECISION

This is an application by the Law Society of the Australian Capital Territory for summary judgment against the defendant in respect of its claim for the sum of $15,396.06 plus interest as pleaded in the Statement of Claim which accompanied the Writ of Summons issued on 14 March 1986. The defendant has entered an appearance to the Writ of Summons. The application for summary judgment instituted by Notice of Motion dated 23 April 1986 ultimately came on for hearing in the Motions List on Friday, 23 May 1986. The Statement of Claim is in the following terms:

1. The plaintiff is a body corporate entitled to sue

in its corporate name.

2. The defendant was at all material times a
barrister and solicitor practising on his own
account as a solicitor in the Australian Capital
Territory.

3. On the 20th day of June 1983 the Law Society
appointed Bruce Glanville, a registered company
auditor within the meaning of the Companies Act,
1981, to examine the records of trust moneys kept
by the defendant in respect of the period from the
1st day of April 1982 until the 20th day of June
1983.

4. The said Bruce Glanville made an examination of
the said records as a result of which an order was
on the 1st day of March 1985 made against the
defendant under Part V of the Legal Practitioners
Ordinance, 1970.

5. The costs of the examination were $1,650.00 and
were paid by the plaintiff out of the Fidelity
Fund established pursuant to Part VIII of the said
Ordinance.

6. On the 21st day of May 1984 the Law Society
appointed Jean Sayer, a registered company auditor
within the meaning of the Companies Act 1981, to
examine the records of trust moneys kept by the
defendant in respect of the period from the 1st
day of April 1982 until the 21st day of May 1984.

7. The said Jean Sayer made an examination of the
said records as a result of which an order was
made against the solicitor under Part V of the
said Ordinance.

8. The costs of the said examination were $7,060.40
and were paid by the plaintiff out of the Fidelity
Fund aforesaid.

9. On the 4th day of October 1984 this Honourable
Court by Order appointed David William Sistrom and
David Alexander Anthony Robb to be receivers of
the trust property of the defendant.

10. The plaintiff paid to the said receivers out of
the said Fidelity Fund the sum of $6,685.66 by way
of fees and disbursements pursuant to the
provisions of Section 105 of the said Ordinance.

AND the plaintiff claims:-

10 August 1983 - fees paid to
Messrs Duesburys in respect of
Bruce Glanville $1,650.00

19 April 1984 - fees paid to Jean Sayer 531.60

23 January 1985 - fees paid to Jean Sayer 6,528.80

14 June 1985 - fees paid to Messrs
Coopers and Lybrand in respect of
Messrs Sistrom and Robb 6,685.66

$15,396.06

In addition the plaintiff claims interest pursuant to
the provisions of Section 53A of the Australian Capital
Territory Supreme Court Act, 1933 at such rate as the
Court thinks fit or in lieu thereof a lump sum.
AND the plaintiff claims such sum as may be allowed on
taxation for costs.
If the amount claimed is paid to the plaintiff or his
solicitor within eight days, further proceedings will be
stayed.

2. It is apparent that the proceedings are by way of specially indorsed Writ pursuant to 0.4, r.5 as is appropriate for recovery of a debt in money payable by the defendant arising under any law where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty.

3. The plaintiff moves on the affidavit of David Clement Darold Harper sworn 18 April 1986 wherein Mr Harper deposes to the fact that he is the Secretary of the Law Society of the Australian Capital Territory, the plaintiff in the action, and that Bruce Glanville Williams referred to in para.3 of the Statement of Claim was at the time of his appointment and remains a registered company auditor within the meaning of the Companies Act 1981. He further deposes to the fact that Jean Sayer referred to in para.6 of the Statement of Claim is and was at the time of her appointment a registered company auditor within the meaning of the Companies Act 1981, that otherwise the facts alleged in the Statement of Claim are within the deponent's knowledge true and that in his belief there is no defence to the action. There is also a reference to the fact that moneys forming part of the Fidelity Fund referred to in paras.5, 8 and 10 of the Statement of Claim have been invested by the plaintiff at interest during the period since 10 August 1985 at an average rate of interest in excess of fifteen per centum per annum.

4. The plaintiff's claim to the total sum of $15,396.06 is brought pursuant to the provisions of ss.66 and 105 of the Legal Practitioners Ordinance 1970 ("the Ordinance"). Section 66 reads:

"66.(1) The Law Society may, at any time, appoint
a person to examine the records of trust moneys kept by
a solicitor or by two or more solicitors practising in
partnership in respect of a period specified by the Law
Society.

(2) A person shall not be appointed under the
last preceding sub-section unless he is a registered
company auditor within the meaning of the Companies
Ordinance 1962-1969.

(3) A person who makes an examination under this
section shall furnish to the Law Society a report of
the examination and, in particular, shall state in the
report -

(a) whether or not, in his opinion, the records
of the solicitor have been kept in such a
manner as to enable him to examine them
conveniently and properly;

(b) whether or not, in his opinion, there is any
loss of deficiency of trust moneys;

(c) whether or not, in his opinion, there has
been any failure to pay or account for trust
moneys;

(d) whether or not, in his opinion, there has
been any failure to comply with any provision
of this Part.

(4) The costs of an examination under this
section shall be paid by the Law Society out of the
Fidelity Fund.

(5) Where as a result of an examination of
records under this section -

(a) a solicitor is convicted of an offence
against this Ordinance or any other law in
force in the Territory; or

(b) an order is made against a solicitor under
Part V,

the Law Society may recover the costs of the
examination from that solicitor as a debt due to the
Society and any amount so recovered shall be paid into
the Fidelity Fund."

Section 105 reads:

"105.(1) A receiver appointed under this Part
shall be paid by the Law Society such fees as are
agreed or, in default of agreement, as the Court, on
the application of the Law Society, determines.

(2) The fees payable to the receiver and his
disbursements are payable out of the Fidelity Fund.

(3) The amount of the fees and disbursements paid
by the Law Society in pursuance of this section are
recoverable as a debt due to the Law Society from the
solicitor, or from the solicitors, in respect of whose
trust property the receiver was appointed.

(4) Where an amount is recoverable under the last
preceding sub-section from two or more persons, the
liability of those persons is joint and several.

(5) An amount recovered under sub-section (3) of
this section shall be paid into the Fidelity Fund."

5. Counsel for the defendant did not show cause why summary judgment should not be entered by filing an answering affidavit, but chose to make submissions relating to the sufficiency of the material in support of the application. First, it was submitted that the material was defective in that no supporting documents were produced in relation to the plaintiff's respective claims. It was submitted that, in so far as para.3 of the Statement of Claim alleges that Bruce Glanville was appointed to examine the records of trust moneys kept by the defendant, no evidence of Mr Glanville's appointment as an examiner was produced. As to para.5, it was submitted that no document evidencing payment of the costs of the examination had been produced and that there was no evidence of the reasonableness of the sum of $1,650.00 paid by the plaintiff out of the Fidelity Fund. The same submissions were made in relation to paras.6, 7 and 8 of the Statement of Claim.

6. Next, it was submitted that, so far as the operation of s.66(5) is concerned, there was no evidence that as a result of an examination of records under s.66 an order had been made against the solicitor under Part V of the Ordinance.

7. The defendant's submissions raised some fundamental matters relating to the recovery of costs of an examination of the records of trust moneys kept by a solicitor and the amount of fees and disbursements paid to a receiver. The Law Society is given a statutory right to recover the costs of an examination of trust records under s.66(5) where, as a result of an examination of the records of trust moneys kept by a solicitor, the solicitor has been convicted of an offence against the Ordinance or any other law in force in the Territory or an order has been made against the solicitor under Part V of the Ordinance. Part V relates to discipline and orders may be made by the Disciplinary Committee of the Law Society under s.36 or by this court under ss.41 and 42B.

8. The affidavit evidence establishes that as a result of an examination of records under s.66 an order was made on 1 March 1986 against the defendant under Part V (paras.4 and 7 of the affidavit). The question is whether that evidence sufficiently verifies the plaintiff's cause of action and the amount claimed.

9. The Law Society is also given a statutory right to recover the amount of the fees and disbursements paid by it to a receiver appointed under Part IX. The appointment of a receiver is provided by s.93. The affidavit evidence establishes that on 4 October 1984 this court appointed receivers. However, under s.105(1) a receiver appointed under Part IX is to be paid by the Law Society such fees as are agreed or, in default of agreement, as the court, on the application of the Law Society, determines. The affidavit evidence establishes that the Law Society paid to the receivers the sum of $6,685.66 by way of fees and disbursements. There is no evidence whether the amount of those fees and disbursements was agreed or whether, in default of agreement, this court determined the fees. The evidence establishes that the fees were paid out of the Fidelity Fund pursuant to s.105(a) but whether the fees were agreed or determined by this court, they would have been payable out of the Fidelity Fund anyhow. In my view, the evidence is to that extent insufficient. The point was not taken by counsel for the defendant. I shall return to this aspect of the evidence.

10. In amplification of his submission of insufficiency of evidence, counsel for the defendant argued that to allow judgment to proceed on the state of the evidence would not accord with an analogous situation where a third party insurer seeks to recover from an uninsured driver damages paid to an injured plaintiff as a result of that uninsured driver's negligence. He argued that in such cases the question of reasonableness of the settlement arises in the recovery action. No authority was cited by counsel.

11. In the Australian Capital Territory the circumstances in which an authorised insurer may recover from the driver and what amounts are provided by s.63 of the Motor Traffic Ordinance 1936, which is the means by which the ultimate liability is adjusted. No question of unreasonableness, except as to the costs of the authorised insurer, arises in any recovery action. The wording of s.63 of the Motor Traffic Ordinance and s.66(5) of the Legal Practitioners Ordinance are entirely different. In my view no analogy between the two forms of recovery exists and, in the absence of authority, I reject the submission.

12. There is, however, some analogy between recovery action by the Law Society under the Ordinance and recovery action by the Nominal Defendant under s.87 of the Motor Traffic Ordinance 1936. Section 87 provides that any amount paid by the Nominal Defendant in satisfaction of a claim made or judgment recovered against him, may be recovered by the Nominal Defendant as a debt from the person who was the owner of the motor vehicle at the relevant time, or the driver or both, subject to certain conditions. Such recovery action is entirely analogous to the present action as both are actions for recovery of money as a debt. In The Nominal Defendant v. Kirin (unreported ex tempore judgment in SC No. 344 of 1981, delivered 25 November 1981), Blackburn C.J. rejected an argument that the Nominal Defendant had to prove and could only recover the damages flowing from the negligence of the uninsured driver. He held that the Nominal Defendant's claim was a claim in debt and gave leave to the Nominal Defendant to proceed to judgment under 0.15. I respectfully agree with the former Chief Justice's approach. An action for debt does not embrace an inquiry into the same facts as gave rise to the calculation of the damages paid by the Nominal Defendant to the injured plaintiff. For the purposes of recovery under s.87 of the Motor Traffic Ordinance, the damages have been transformed by s.87 into a liquidated sum.

13. Counsel for the defendant also referred to Suburban Homes Pty Ltd v. Ward (1928) VLR 267; Joseph Terry Pty Ltd v. T & G Fire and General Insurance Co. Ltd (1973) VR 458; and Australia and New Zealand Bank v. Maile & Others (1965) QWN 28. Suburban Homes Pty Ltd v. Ward was an application for summary judgment for a sum alleged to be interest due under written agreements comprising a contract of sale and a novation. The affidavit in support stated merely that the defendant was justly and truly indebted to the plaintiff, the particulars of claim appearing by the indorsement on the Writ. The documents were not exhibited. Lowe J. held that without the documents being produced the deponent was unable to swear to the facts verifying the cause of action and refused the application.

14. A similar situation arose in Joseph Terry Pty Ltd v. T & G Fire and General Insurance Co. Ltd. This was an action for the recovery of insurance premiums. The affidavit in support of a submission for final judgment referred to insurance policies on the basis of which a reassessment of premiums payable by the defendant had been made but those policies were not exhibited to the affidavit. A Full Court held that the affidavit did not state expressly or show by implication that the deponent could swear to the truth of all the necessary facts from his own knowledge and that the documents relied upon should have been produced and verified. Accordingly, the affidavit in support of the submission was defective and the application was dismissed. It is to be noted that the cause of action in that case involved reassessment of premiums based upon wage expenditure. The claim therefore was not a simple one.

15. In Australia and New Zealand Bank v. Maile & Others the plaintiff sought to recover a sum of money from the defendant as guarantor under a deed of guarantee. The deed of guarantee was not exhibited by the affidavit in support of the application for summary judgment. Wanstall J., as he then was, following Suburban Homes Pty Ltd v. Ward, held that the cause of action was not sufficiently verified.

16. All those cases involved actions based upon documents. As stated earlier, this action is one for the recovery of moneys due as debts pursuant to statutory causes of action. In my opinion the distinction is a real one and I derive no assistance for the purposes of this case from the cases referred to by counsel for the defendant.

17. There are a number of authorities dealing with the expression "debt or liquidated demand" as used in 0.4, r.5(a). In Odgers, Pleading and Practice (12th Edition, 1939, pp.47-48, the phrase is defined in the following terms:

"Whenever the amount to which the plaintiff is entitled
(if he is entitled to anything) can be ascertained by
calculation or fixed by any scale of charges or other
positive data, it is said to be liquidated or 'made
clear'. But an action in which the amount to be
recovered depends upon all the circumstances of the
case, and no one can say positively beforehand whether
the plaintiff will recover a farthing, or 40 shillings
or 100 pounds, is an action for unliquidated damages."

That definition was approved by Knox CJ and Starke J. in Spain v. The Union Steamship Company of New Zealand Limited [1923] HCA 21; (1923) 32 CLR 138 at 142.

18. In Alexander v. Ajax Insurance Co. Ltd (1956) VLR 436, Sholl J. reviewed some of the definitions of the phrase "debt or liquidated demand" and concluded that the best statement which can be attempted of the expression is that it covered any claim:

"(a) for which the action of debt would lie;

(b) for which an indebitatus (or 'common') count would
lie - including those cases formerly covered by
the quantum meruit or quantum valebat counts,
notwithstanding that the only agreement implied
between the parties in such cases was for payment
at a 'reasonable rate';

(c) for which covenant, or special assumpsit, would
lie, provided that the claim was for a specific
amount, not involving in the calculation thereof
elements the selection whereof was dependent on
the opinion of a jury."

19. A restatement of the history of the action of debt is unnecessary for the purposes of the present case. (For a comprehensive discussion of the subject see Holsworth, History of English Law, Vol. III pp.416-504 and VIII pp.148.) It is sufficient to observe that the action of debt originally had the character of a recuperatory rather than a contractual remedy. Originally, it was closely akin and indeed hardly distinguishable from the action of detinue in which the plaintiff alleged that the defendant was unjustly detaining from him some chattel to which the plaintiff was entitled. So in debt the gist of the action was that the defendant was detaining a sum of money which was really the plaintiff's property. The action of debt was for several reasons an inconvenient action. One reason was that the plaintiff must be prepared to prove the exact amount of the debt. If he could not prove that the exact sum which he claimed was due he lost his action and great particularity was required in his declaration (Holsworth, supra, at p.423). Another reason and perhaps the greatest of all its defects lay in the fact that by it claims for unliquidated damages for the breach of executory contracts could not be enforced.

20. That legislation providing a statutory right to recovery of money as a debt precludes an inquiry into the calculation of the debt has, so far as my researches go, never been doubted. A good example is to be found in The Nominal Defendant and Another v. Bagot's Executor and Trustee Company Ltd (1971) SASR 346. That was another case involving the recovery by the Nominal Defendant from an uninsured owner of the amount of a judgment and costs paid to an injured person. At first instance Bright J. referred to s.32 of the Motor Vehicles (Third Party Insurance) Act 1942-63 (NSW) as conferring upon the Nominal Defendant a new statutory right and not one giving rise to an action in tort. The decision was reversed by a majority on an appeal but not on that point. Bray CJ in his dissenting judgment affirmed that the claim by the Nominal Defendant is not an action in tort, nor is it a cause of action claiming damages in respect of personal injuries. He described it as a quasi-contractual action for an indemnity.

21. On appeal before the High Court ((1970) [1971] HCA 42; 125 CLR 179) the Full Court held that the section does authorise the recovery of what was paid by the Nominal Defendant in the circumstances stated "as a debt". It is in that character, viz; as a debt, that what has been paid by the Nominal Defendant is recoverable (per Barwick CJ, Menzies, Windeyer and Walsh JJ at p.182). At p.184, McTiernan J., in a separate judgment, said that the words "as a debt" operate to equate any amount which is within the words of the sub-section to a debt in the full sense of the word. For this reason such an amount is recoverable by action against the estate of a "person" to which the sub-section is expressed to refer.

22. It is clear from The Nominal Defendant v. Bagot's Executor and Trustee Co. Ltd, that the liability imposed by s.32 of the Motor Vehicles (Third Party Insurance) Act applies whether the person against whom the action is brought is alive or dead and from Nominal Defendant v. Morgan Cars Pty Ltd (1974) 3 ALR 73 that the section relates to payments made by the Nominal Defendant in discharge of a liability incurred by him whether under s.15(2) or s.31 of that Act. Hence in recovery cases, although certain definitions are provided, if the plaintiff is entitled to a judgment against the owner or driver of an uninsured motor vehicle or both it is in the sum paid by the Nominal Defendant under the third party legislation. See, for instance, The Nominal Defendant v. Butler (1976) 1 NSWLR 546.

23. For these reasons the defendant's submissions regarding the insufficiency of the evidence to support an order for summary judgment are rejected.

24. I return to the deficiency in the evidence concerning the sum of $6,685.66 paid by way of fees and disbursements to the receivers. I shall hear counsel on any application for leave to supplement the evidence so as to cure the defect and any cause which the defendant may wish to show as to why judgment should not be entered.