Doolan v Clarke and Kann (a Firm) [2008] QDC 30

DISTRICT COURT OF QUEENSLAND CITATION: Doolan v Clarke and Kann (a Firm) [2008] QDC 30 PARTIES: Doolan (Plaintiff) V Clarke and Kann (a Firm) (Defendant) FILE NO/S: Claim 2215/ 06 DIVISION: Civil Jurisdiction PROCEEDING: Claim ORIGINATING COURT: District Court- Brisbane DELIVERED ON: 29 February 2008 DELIVERED AT: Brisbane District Court HEARING DATE: 30-31 January 2008, 1 February 2008. JUDGE: FORDE, MW DCJ ORDER: 1. It is declared that a trust exists in respect of the sum of $40,166.25 held by or formerly held by the defendant as trustee with the plaintiff as beneficiary. 2. It is ordered that the defendant do pay to the plaintiff the sum of $40,166.25 together with interest from 14 September 1998 at the rate of 9 per cent per annum to date. 3. Liberty to apply in relation to costs. Such submissions to be forwarded to the associate within four (4) days of judgment. CATCHWORDS: Breach of trust- no dishonesty- conversion of trust funds by solicitor- authority to transfer funds from trust to general account in certain circumstances- defences of Limitation of Actions and Laches. Limitations of Actions Act 1974 ss 10, 27 Trusts Accounts Act 1973 (Qld) s 8 -- 1 of 30 -- 2 Legal Practitioners Act 1981 ss 5, 23, 28, 29, 30 Queensland Law Society Rules 1987 s 84 BP Refinery Westernport Pty Ltd v Shire of Hastings (1977) 180 CLR 266; applied Dearle v Hall (1823) 3 Russ 1; applied Edwards v Lowndes (1852) 1 E1 & B181; 118 ER 357; cited Henderson Corp Pty Ltd v Hewitt [2005] WASC 16; referred to Jackson v Creswick Middleton Solicitors [2000] QDC 46; applied Jennings v Credit Corporation Australia Pty Ltd [2000] NSWSC 210; referred to McNamara Business & Property Law v Kasmeridis and Anor [2007] SASC 90; distinguished Orr v Ford (1989) 167 CLR 316; applied Photo Production Ltd v Securicor Transport [1980] WLR 283; referred to R v Brown (1912) 14 CLR 17; cited Re Knapman (1881) 18 Ch D 300; referred to Re Morris Fletcher & Cross’ Bill of Costs [1997] 2 Qd R 288; applied Re: Walsh Halligan Douglas, Bill of Costs [1990] 1 Qd R 288; applied Robinson v Harkin [1896] 2 Ch 415; cited Roxborough v Rothmans of Pall Mall (2001) 208 CLR 516; referred to Space Investments Ltd v Canadian Imperial Bank of Commerce Trust Co (Bahamas) Ltd [1986] 1 WLR 1072; referred to Thomas v National Australia Bank (1936) 54 CLR 614; referred to Tito v Waddell (No 2) [1977] 1 Ch 106; applied COUNSEL: Morris, A QC, and Tucker, PD for the plaintiff Clothier, D for the defendant SOLICITORS: Hollingworth and Spencer Lawyers for the plaintiff Clarke Kann for the defendant -- 2 of 30 -- 3 Introduction [2] The defendant was the former solicitor for the plaintiff and his development company, Doolan Properties Pty Ltd1 . Doolan Properties was developing a shopping centre on land situate at the corner of Queens Road and South Pine Road, Everton Hills. The plaintiff had transferred his title to the land to Doolan Properties on or about 6 January 1995. At all material times in his dealings with the defendant, the plaintiff was acting for Doolan Properties. [3] The defendant received to its trust account pursuant to an authority from Doolan Properties2 an amount of $232,459.68 by way of compensation following a compulsory acquisition by the Pine Rivers Shire Council on 17 August 19953 . This amount was paid on 27 August 19984 subsequent to an appeal to the Land Appeal Court. The defendant had acted for Doolan Properties on the resumption issue and also had been involved in some leasing transactions relevant to the shopping centre and some other financial advice to other entities. [4] The defendant transferred the sum of $122,612.87 from its trust account to its general account in August 1998, it says reliant upon an authority being Exhibit 4. The plaintiff on behalf of Doolan Properties had executed an authority to allow monies to be so transferred. The plaintiff contends that the transfer of funds was done in breach of trust and seeks declaratory relief and the return of the monies. [5] Doolan Properties went into liquidation. By a Deed of Assignment dated 6 April 20055 , the liquidators assigned to the plaintiff “its right, title and interest in the rights of action and the shares” of Doolan Properties. The plaintiff relies upon that Deed to bring this action. No issue was raised by the defendant in this respect. Issues [6] Some of the principal issues are: (a) That the defendant’s right to render accounts was dependent upon certain “triggers” which did not occur. These are referred to in a 1 Doolan Properties. 2 Exhibit 1 p 130. 3 Exhibit 1 p 13. 4 Exhibit 1 p 144. -- 3 of 30 -- 4 letter dated 18 July 19956 . This is referred to as the Terms of Engagement Letter. (b) That the authority provided was referable only to the resumption issue not the leases or other advices and so the funds to that extent were transferred unlawfully. A secondary argument was that fees were charged for work carried out for Berrima Pty Ltd. (Berrima). Berrima was set up by the plaintiff and a Mr Brooks who owned a company called Landvest. That company and Doolan Properties became joint venturers in relation to the subject shopping centre. Berrima subsequently purchased the development. (c) The defendant was advised in August 1998 that the charges for its fees were excessive and that the funds could not thereafter be transferred as any authority was revoked7 . An argument was pursued that the defendant has acted dishonestly in proceeding to transfer the funds from the trust account. It was further contended that there was an absence of delivery of bills of costs in taxable form within the meaning of the law. (d) The defendant raises the defences of laches and that the action is statute barred as it was not commenced within six years of when the action arose8 . (e) There are also various arguments under the Legal Practitioners Act 19959 , the Trusts Account Act 1973 10 and the Queensland Law Society Rules 1987 11 . [7] The issues referred to are not exclusive. Other issues raised in argument and as peripheral to the above issues will be discussed. Background evidence [8] The plaintiff approached the defendant firm in about 1994. Mr Heilbronn, a member of the firm, had been recommended by a firm of valuers. The Pine Rivers 5 Exhibit 3; Ex 1 p 173. 6 Ex 1 p 5-6. 7 Ex 1 pp 147, 149, 150. 8 Limitation of Actions Act s 27. 9 ss 16, 23, 28, 29, 30, 36. 10 s 8(1)(c). -- 4 of 30 -- 5 Shire Council had indicated its intention to resume part of the property then owned by the plaintiff at Everton Hills. He sought the advice of Mr Heilbronn about the proposed resumption. Initially, the defendant forwarded a Billing Policy under cover of letter dated 18 May 199512 . The terms of the Billing Policy was unacceptable to the plaintiff as it contained a condition that the fees and outlays had to be paid within 30 days of the memorandum. He did not have the resources to pay those fees until Doolan Properties received compensation for the resumption. Subsequently, by letter dated 18 July 1995, a revised payment proposal was sent to the plaintiff13 . This was accepted by the plaintiff on 24 July 199514 together with the Trust Account Authority. [9] It was provided for in the Terms of Engagement Letter that certain triggers would allow the defendant to render its first account. The Letter provided as follows: We will not render our first account in the matter until the earlier to occur of:- 1. Your making a decision not to seek an advance against compensation. 2. An advance against compensation being made. 3. Your refusing to accept a reasonable offer for an advance against compensation. 4. Your settling the matter of compensation with the Pine Rivers Shire Council. As soon as one of those events occurs, all of our fees and disbursement then outstanding will be paid to us. If one of paragraphs 1, 2 or 3 above applies, the further fees incurred by us will be billed and paid to us when the matter is resolved either by negotiation or litigation. The latter seemed to apply only to accounts rendered after a trigger event. [10] An hourly rate was to be charged dependent upon whether a partner ($264.00 per hour), a solicitor ($198.00 per hour) or an assistant ($66.00-$132.00 per hour) was working on the file15 . As stated by the plaintiff, he had a good working relationship with Mr Heilbronn. Mr Heilbronn explained to the plaintiff how the process of 11 Rule 84. 12 Ex 1 pp 1-10. 13 Ex 1 p 5. 14 Ex 1 p 7. 15 Ex 1 p 5. -- 5 of 30 -- 6 resumptions usually went. He confirmed to the plaintiff that he would not have to pay unless one of the events provided for occurred. The parties did not provide for the contingency, which subsequently occurred, of a termination of the solicitor/client relationship before the finalisation of the resumption issue. [11] On 4 September 1995, the Pine Rivers Shire Council offered an advance against compensation in the sum of $85,680.00. This was an alternative offer to full and final settlement for a similar sum. Mr Heilbronn advised against accepting this sum hoping for a larger interim offer which never came. The plaintiff relied upon the advices of Mr Heilbronn in rejecting the initial offer. It would have made sense to accept that sum as far as Mr Heilbronn was concerned as it would have triggered condition 2 of the Letter of Engagement and given the plaintiff a fighting fund. It may be that Mr Heilbronn had the interests of his client in mind in rejecting the sum. In fact, an account was rendered on 30 August 1996 for the sum of $80,346.00 consisting mainly of 390 hours work amounting to $80,296.0016 . There were no details of what work was carried out except it related to “Queens Road Resumption – Advice”. The other accounts rendered related to leases and advices17 . There was some discussion between the plaintiff and Mr Heilbronn about the fixed prices for leases at $700.00. Mr Heilbronn contended that they would have to charge an hourly rate as the fixed sum was “not working”18 . There was no written agreement but acceptance on the part of the plaintiff19 . It should be noted that accounts rendered for the subject amount transferred by the defendant were sent in March, May and June 1998 20 . These were sent after termination of the retainer which occurred on 5 February 199821 . In the course of the trial, Mr Morris accepted that “as a theoretical possibility that on termination of the retainer without fault on the part of the defendant could be a basis for Clarke and Kann to transfer the funds in respect of the resumption fees.”22 He did not accept that the termination would validate bills rendered previously. [12] After the offer of advance compensation was rejected, Mr Terry McBride from the defendant firm acted in the Land Court proceedings on behalf of Doolan Properties. 16 Ex 1 p 36. 17 Ex 1 pp 22-23, 34-35, 37-53, 127-128. 18 Transcript 29.50. 19 T30.5. 20 Ex 6a, 6b and 7. 21 Ex 1 p 126. -- 6 of 30 -- 7 This did not stop the plaintiff from seeking funds from the Pine Rivers Shire Council pending the outcome of the Land Court proceedings23 . The plaintiff also approached the Mayor, Mrs Yvonne Chapman 24 . The plaintiff acted upon the advices of Mr Heilbronn in rejecting the initial offer 25 . Apart from the approach to Mrs Chapman for which no date is given, the plaintiff seems to have tried once more to get an advance by letter of 26 April 1996, sent to the solicitor for the Pine Rivers Shire Council26 . Thereafter a further letter was drafted by the plaintiff 27 but Mr Heilbronn opposed the idea of another request28 . That seemed to be the last attempt by the plaintiff to see an advance against compensation. The defendant now argues that he refused a reasonable offer and so triggered the right of the defendant to render an account for fees. The exercise of judgment by Mr Heilbronn in attempting to push for further funds was in retrospect erroneous. The defendant cannot now rely upon that as obviously Mr Heilbronn did not believe the offer to be reasonable. In any event, the plaintiff was acting on the advices of an experienced solicitor. In fact, in order to get funds, the plaintiff was negotiating with a Mr Peter Brooks from Landvest in order to raise money and sell half of Doolan Properties to it and form the new company, Berrima. The transfer of the property occurred on 24 October 1997. The defendant continued to do work relating to Berrima in relation to the leasing and development of the shopping centre at the request of the plaintiff. There was no written retainer in that respect29 . There was no separate authority for use of Doolan Properties funds by Berrima. The judgment of the Land Court in relation to the resumption issue was delivered on 24 December 199730 . As the judgment was less than expected, an appeal was lodged. Soon after, Mr Heilbronn and Mr McBride left the defendant firm. The plaintiff was eager not to have other people from the defendant firm take over as they would have to familiarise themselves and it would take time and money 31 . He elected to follow Mr Heilbronn and Mr McBride. Mr Gore QC who had acted previously in the Land Court could have been retained by the plaintiff to act in the appeal. That would have limited any 22 See also T175.15. 23 Ex 1 p 28. 24 T58.45-50. 25 T30.35-32.30. 26 Ex 1 p 28. 27 Ex 1 pp 29-32. 28 Ex 1 p 33. 29 T33.39-43. 30 Ex 1 pp 55-125. 31 T37.48-60. -- 7 of 30 -- 8 additional reading by solicitors employed by the defendant. As stated by Mr Kann, the defendant firm had the expertise and could have met the conditions of the plaintiff and not charged for new perusals and continued to act in the appeal proceedings. It seems that the retainer was terminated by the plaintiff without a resolution of the fees owing. It is clear that the termination was not the fault of the defendant. The subsequent litigation in the Land Appeal Court was finalised upon the payment of the sum of $232,459.68 by the Pine Rivers Shire Council to Doolan Properties in August 1998. [13] The plaintiff had received a letter dated 26 November 1997 from the defendant seeking to resolve the issue of fees. Mr Brooks from Landvest also attended that meeting. Mr Brooks offered $23,000.00 to settle the issue but that was rejected. Subsequently, Mr Kann refused to transfer the files to Messrs Heilbroon and McBride at Freehills unless the fees were paid32 . The plaintiff was seeking further details of the accounts. The plaintiff said that Mr Kann agreed to prepare an itemised account. Mr Kann did not recall such a conversation. He did agree to allow Freehills access to the files to prepare the appeal from the Land Court decision. There was various correspondence between the plaintiff and the defendant in August 199833 . Mr Kann did not in writing at least agree to provide an itemised account. In the event that any objection to the charges was not made in time by the plaintiff, the defendant was entitled to transfer funds if it had the appropriate authority to do so 34 . Plaintiff’s request/demand to hold $122,612.87 in Trust Account [14] The defendant argues that the Letter of Engagement together with the authority35 is a contractual binding document and that it cannot be varied unilaterally; that the Trust Account Authority is in plain terms and authorised the transfer of funds in satisfaction of fees and outlays in the resumption matter36 . Even if the accounts were rendered prematurely, it is argued that that did not render the accounts void or nugatory. The alternative argument is that the accounts rendered were given after 32 T36.10-30. 33 Ex 1 pp 141, 142, 147, 149, 150 and 151. 34 s 8(1)(c) Trust Accounts Act 1973 (Qld). 35 Ex 4. 36 Ex BB para 38. -- 8 of 30 -- 9 the termination of the retainer. It is further argued37 that the plaintiff waived any requirement as to the delivery date by not complaining until 1998. In view of the findings, it is not necessary to deal with the latter point or the question of estoppel. The plaintiff requested that they remain there until “a mutually satisfactory outcome” could be arrived at38 . There was no express revocation of the Trust Account Authority in any event. The plaintiff failed to agree to pay the memoranda of fees. He was in breach of the Letter of Arrangement. That did not mean the arrangement was not enforceable by the defendant39 . The plaintiff could not get around the provisions of s 8(1)(c) of the Trust Accounts Act by making demands out of time. The Act provided as follows: 8(1) A trustee shall not withdraw any moneys from a trust account except for the purpose of- (a) making a payment to the person entitled thereto or in accordance with the directions of that person; or (b) making a payment to himself or herself for professional costs, statutory duties and charges and other proper outlays which payment shall be supported by authorisation in writing by the person for or on whose behalf the moneys were received or are held; or (c) making a payment to himself or herself for professional costs statutory duties and charges and other proper outlays which payment shall be supported by authorisation in writing by the person for or on whose behalf the moneys were received or are held except in the following circumstances- (i) … (ii) where an untaxed bill of costs have been delivered to the client and at the expiration of 1 month after delivery no evidence exists of any objection by the client to the quantum thereof and the amount of the withdrawal does not exceed the amount at which the bill was delivered; The word “except” is underlined in bold for clarity. The defendant did not render a bill of costs in taxable form, it relies on the “authorisation in writing”. 37 ibid at para 38. 38 Ex 1 p 147; Ex 1 p 148, 150. 39 Photo Production Ltd v Securicor Transport (1980) 2 WLR 283 at 290. -- 9 of 30 -- 10 [15] It was argued that the Trust Account Authority is limited to the resumption work only. When one looks at the Letter of Engagement, it is probably true that the only work being considered by the parties then was the resumption by the Pine Rivers Shire Council. The Trust Account Authority accompanied that Letter with the acceptance by the plaintiff and both were dated 24 July 1995. As time went on no formal retainer was reduced to writing to cover non-resumption work. The plaintiff and Mr Heilbronn had a good working relationship and the nature of the work done developed to include leasing and some advice work. Therefore, it is open to find that the non-resumption work was not covered by the said Letter of Engagement and the accompanying Trust Account Authority. Mr Kann sought the advice of Mr Heilbronn before transferring the sum of $122,612.87 as to what was intended. Mr Heilbronn was not a member of the defendant firm at that point. Having consulted Mr Heilbronn and the Trust Account Authority Mr Kann transferred that sum to the general account. He was entitled to transfer the sum of $82,446.62 40 . One cannot be too critical of Mr Kann given the history of the parties. To suggest that the defendant was acting dishonestly as was done in argument, fails to appreciate the honest mistake of fact by Mr Kann who had acted reasonably but erroneously in transferring the whole of the monies held in trust. His rationale is explained in a letter of 28 August 199841 . In evidence 42 he stated: “I wasn’t involved in any of these matters personally. The only reference I had was the files were referred to me. I looked at the file, I took the view that the matter related to the shopping centre. There was only one transaction in which we were involved for one project in which we were involved for Mr Doolan, and that was his shopping centre and the attended matters relating to that. I spoke to Mr Heilbronn who was the party responsible for the matters”43 . Any conversation with Mr Heilbronn was hearsay. It could only be admitted as original evidence. No adverse inference is drawn because Mr Heilbronn was not called. The correspondence explains the reasoning. At that stage, Mr Heilbronn was not an agent for the defendant. 40 Ex 1 pp 36, 127 and 144 being $80,346.08 plus $2,100.54. The sum of $40,166.25 is referable to non- resumption work. 41 Ex 1 p 159. 42 T125.28. 43 T126.5. -- 10 of 30 -- 11 [16] The balance of the monies amounts to $40,166.25 and relates to the work done by the defendant on the leases or financial arrangements. The retainer for that work was never the subject of a written retainer. In the written submissions44 , it is argued that the defendant’s actions in transferring the money was justified. It was “supported by an authorisation in writing” in accordance with s 8(1)(c) of the Trust Accounts Act 1974. As is discussed in these reasons, any authority was confined to the resumption work. In argument, Mr Clothier for the defendant submitted that absent a client agreement, s 8 still applies. He went on to say that absent an authority contained in or associated with a client agreement a solicitor could render an account45 . The solicitor would have to wait a month after delivery of a bill of costs. It should also be added that the bill of costs referred to in s 8(c)(ii) should be construed as a bill of costs which would allow the client to decide on the details provided whether it should be accepted or challenged on taxation46 . That submission is only relevant to the $40,166.25. Section 8 requires an “authorisation in writing”. The situation exists that there was no such authorisation in relation to the non-resumption work. There was a concession by Mr Morris QC for the plaintiff that if there was termination of the client-solicitor relationship without fault on the part of the defendant, s 8 of the Trusts Act would apply at least to the resumption memoranda of fees to allow the defendant to transfer the funds to its general account47 . As has been discussed, there was no fault on the part of the defendant leading to a termination of the client-solicitor relationship. Nature of the Letter of Engagement [17] The defendant pleads that the Letter of Engagement constituted an agreement as defined by s 23 of the Legal Practitioners Act 1995. Section 23 provides as follows: 23. A solicitor may make an agreement in writing with his or her client respecting the amount and manner of payment for the whole or any part of any past or future service, fees, charges, or disbursements in respect of any business done or to be done by such solicitor in any capacity, either by a gross sum or by commission or percentage or by salary or 44 Ex BB para 62. 45 T157.28-34. 46 Re: Walsh Halligan Douglas, Bill of Costs [1990] 1 Qd R 288 at 294-5. 47 T175.8-30. -- 11 of 30 -- 12 otherwise, and either at the same or at a greater or at a less rate as or than the rate at which the solicitor would otherwise be entitled to be remunerated subject to the provisions and conditions in this division. A convenient summary of why this Act applies is to be found in the submission of the plaintiff48 . [18] The plaintiff seeks to set aside the “client agreement”49 on this basis that it was not fair and reasonable. The main points in the Reply of the plaintiff are: (a) There were no triggering events before 24 December 1997: even if this be true, the retainer was terminated and so the defendant was entitled to be paid. Thereafter, accounts rendered were given to the plaintiff. Even if the earlier accounts were premature in terms of the Letter of Engagement, the trigger thereafter was the termination of the retainer which both parties seemed to accept. The plaintiff was content to retain Messrs Heilbronn and McBride and the defendant was content to render final accounts and allow access to the files for the purposes of the appeal to the Land Court but sought payment of the outstanding fees. (b) The defendant was required to issue memoranda of fees and outlays in sufficient detail. The Letter of Engagement did not require a Bill in taxable form. It provided for an hourly rate in relation to the resumption issue. Once a memorandum was rendered, it was required to be paid within 14 days. If it was not paid, the defendant was able to withdraw the memorandum and deliver an itemised memorandum. This was to allow for a sum in excess of the original memorandum 50 . The following clause of the Letter of Engagement provided: Additional Authority 48 Exhibit AA p 23. 49 The second Further Amended Reply (the Reply) paragraph 3(f)(ii). 50 Ex 1 p 6 under heading “Payment of our memorandum”. -- 12 of 30 -- 13 The above arrangements have been agreed on the basis that any compensation which you receive is to be paid first into our trust account and that we are able to be authorised to transfer from that sum our fees then outstanding. To enable this to occur, we enclose an Authority directed to the Pine Rivers Shire Council to pay any amount of compensation or advance on compensation to our trust account. Apart from the Additional Authority there was also a Trust Account Authority51 . The Letter of Engagement had the heading “Queens Road Development – Proposed Resumption – Pine Rivers Council”. Having considered the nature of the Letter of Engagement, there is nothing in that letter which requires the defendant to render initially a detailed account in terms different to the accounts sent and referred to above. The Letter of Engagement was binding on the plaintiff. He may have received a more detailed account if he failed to pay within 14 days. However, the defendant reserved its right to do so and deliver an account with an increased amount owing. In the present case, absent an “authorisation in writing” the right to a more detailed account on the part of the plaintiff rests with s 8(1)(c)(ii) of the Trusts Account Act, or section 5 of the Legal Practitioners Act 1995. Section 11 of the Trusts Account Act provides that the Act does not affect a lien which a solicitor may have upon monies held in trust. The defendant purported to exercise such a lien. It does not authorise, however, such monies to be transferred to the general account. (c) The plaintiff seeks to have the court imply a term that the defendant ought to have rendered memoranda in sufficient detail to allow the plaintiff to discern the reasons for the charges: In order to imply a term, there is a requirement that it is necessary to do so to give the agreement some business efficacy52 . In the present case, that was not a necessary or reasonable requirement of the retainer. The Letter of Engagement provided for the exigency that if the plaintiff was not content with the detail provided, he could refuse to pay but he ran the risk of getting a larger account if it was not paid within 14 days of the delivery of the account. The plaintiff agreed to those terms as the defendant was in effect financing him until the compensation was 51 Ex 4. 52 BP Refinery Westernport Pty Limited v Shire of Hastings (1977) 180 CLR 266 at 286. -- 13 of 30 -- 14 received from the Pine Rivers Shire Council. It was something that the parties had put their minds to. However, they did not provide for the exigency of a termination of the retainer. An itemised account could be received by the plaintiff in accord with the Letter of Engagement, if the payment was not made within 14 days. As the parties had provided a procedure, at least relative to the resumption fees, it is not open to imply a term that an itemised account should have been provided at first instance. Even if the plaintiff had requested it, there was no legal obligation resting upon the defendant to provide same. The plaintiff or Doolan Properties had rights under s 29 of the Legal Practitioners Act to set aside the Letter of Arrangement. Also, under s 84 of the Queensland Law Society Rules, absent a relevant solicitor-client authority, the defendant was required to render a bill of costs in taxable form within a reasonable time after a request in writing. (d) The plaintiff pleads that the “Client Agreement” should be set aside under s 29 of the Legal Practioners Act as unfair and unreasonable. Section 28 of that Act seems to limit the jurisdiction of the District Court to agreements which do not exceed $100.00. The matter was not pursued in argument. As pointed out in the written submissions, s 29 has been repealed53 . Also, it would not seem to make sense to set aside an agreement which has been acted upon some years ago in that the funds were transferred pursuant to a Letter of Arrangement approved by the same Act. There is a time limitation under s 30(1) which required the application to set aside an agreement within 12 months of the payment of the bill. Finally, it was submitted that the Letter of Arrangement was not fair and reasonable. That letter reflected the impecunious position of the plaintiff at the time. He was more than content to put off payment subject to the trigger events and accept an hourly charge rate as stipulated. No evidence was led that the charges were unreasonable in all the circumstances. The plaintiff was a confident and impressive witness who would 53 Ex BB para 55. -- 14 of 30 -- 15 have had little difficulty understanding the arrangements with a solicitor. It should be mentioned in passing that a bill of a solicitor for an amount due under a s 23 agreement under the Legal Practitioners Act “shall not be subject to any taxation nor to the provisions of part 2” (s 36). Under s 28, the application to set aside the Letter of engagement could have been made to the Land Court. What was the “trigger” event? [19] The defendant contends54 that a trigger event within the meaning of the Letter of Engagement was the judgment in the Land Court proceedings on 24 December 1997. The Letter of Engagement provided that if the matter was “resolved either by negotiation or litigation” and if there was a trigger as provided for in 1, 2 or 3, then the defendant could render its account. As mentioned previously that clause of the Letter of Engagement seems to relate to further fees incurred after one of the “trigger events”. It might be said that the plaintiff had made a decision not to persist and seek an advance against compensation as at 1 May 1996 when he received the advice of Mr Heilbronn55 . In that event, it is open to find that a trigger occurred as at that date. Trigger 4 for some reason was not mentioned as consistently with negotiation, the matter could be settled. On a broad reading of the Letter of Engagement it could be said that trigger 1 had been invoked and litigation had resolved the matter subject of course to an appeal in which the defendant was not involved. In the submissions for the plaintiff56 , it seems to be conceded that the delivery of the Land Court decision on 24 December 1997 was a trigger. Those facts by themselves, it is open to find, were sufficient to justify a rendering of memoranda for fees and outlays pursuant to the Letter of Engagement either after 1 May 1996 or 24 December 1997. In fact accounts rendered were sent thereafter from March to June 1998. [20] Once the retainer was terminated, it rendered its accounts again57 . Of course, the Letter of Engagement allowed the plaintiff 14 days to pay and in the event of non payment, an itemised bill would then be delivered. Doonan Properties, which the 54 Ex BB para 32. 55 Ex 1 p 133. 56 Ex AA p 14. 57 Ex 6a, 6b and 7. -- 15 of 30 -- 16 plaintiff represented throughout, failed to pay. As mentioned, those accounts were rendered between March and June 1998. There was no formal request for a more detailed account until August 1998. There had been discussions about excessive charging related to the leases as early as December 1997 when Mr Brooks was involved. However, there was no demand made for an itemised account for either the resumption or lease work. The right of the defendant to transfer funds did “not prejudice its (the plaintiff’s) ability to later require the delivery of an itemised account, to seek a taxation of such an account or to obtain a refund of any payment”58 . There is some force in that argument. In that event, by failing to make a timely objection to the short form memoranda of fees, the plaintiff was precluded from a formal objection in August 1998, at least in so far as the authority to transfer funds to the Trust Account allowed and limited to the sum of $82,446.62. Section 23 Legal Practioners Act (LPA) 199559 [21] The plaintiff seeks to attack the Letter of Engagement on the basis that it does not comply with s 23 of the LPA. It is suggested that it is not specific enough. Also, it is submitted that there was a fiduciary obligation to explain its terms60 . In McNamara’s case, the court was concerned with deciding whether the client agreement was fair and reasonable. One aspect of that was that there had been a breach of fiduciary duty by the solicitor who failed to explain the terms of the retainer. The appeal was from a decision of the master to set aside the agreement on the basis that it was not fair and reasonable. An earlier decision by the master, upheld on appeal, was that the retainer was an agreement in accordance with s 42(6) of the Legal Practitioners Act 198161 . That section allows for an agreement to refer to an hourly or daily rate and also for the Supreme Court to set it aside or vary the agreement if a term is not fair and reasonable. There is no prayer for relief of that nature in this case in the Further Amended Statement of Claim. It is submitted that the District Court does not have jurisdiction. When one examines the terms of s 28 and s 30(1) of the LPA, it seems that a court having jurisdiction to examine and enforce client agreements may within 12 months after payment of the monies, if there are special circumstances, require the agreement to be reopened. It may order 58 Ex BB at para 44. 59 LPA. 60 McNamara Business & Property Law v Kasmeridis and Anor [2007] SASC 90. 61 (SA)[2005] SASC 269. -- 16 of 30 -- 17 the costs to be taxed. Under s 2862 where the amount payable under the agreement exceeds $100.00 the District Court seems to lack jurisdiction to examine or enforce client agreements. It seems that the Land Court may have had jurisdiction. In any event, the Supreme Court has inherent jurisdiction. It is too late now to allege a breach of fiduciary duty. [22] The arguments by the plaintiff63 do not detract from the rights of the defendant to transfer funds from their Trust Account to their General Account where they are referable to the resumption work. The plaintiff submits that the plaintiff had put the accounts in dispute, the plaintiff had proposed that the defendant hold the monies in their Trust Account, and that some $40,000.00 related to non-resumption work in respect of which there was no authority executed in favour of the defendant, and that the triggers had not occurred to entitle the defendant to issue memoranda of fees nor were they sufficiently detailed. The only issue which has not been dealt with relates to the $40,166.25 for the leases and financial advice. The leasing and financial advice accounts (non-resumption work) [23] The arguments to justify the transfer of those monies from Trust Account to General Account relevant to the non resumption work are somewhat thin. It is conceded that at most there was an oral agreement which originally provided that a set fee for leases would be charged. This was changed subsequently to an hourly rate. It is submitted that as the plaintiff had possession of a copy of the defendant’s Billing Policy that he would have understood the basis upon which he would be charged and accounts rendered. It is a fact that the plaintiff rejected that Policy and the specific Letter of Arrangement was arrived at for the reasons stated above. The defendant cannot rely on some implied agreement which was rejected. Therefore, the defendant is in a position that it has rendered accounts which are not itemised for the non-resumption work and based upon an oral agreement. It may have been in the plaintiff’s contemplation that those accounts would be paid out of the resumption proceeds. The difficulty for the defendant is that there was no written authority to do so. Once a dispute arose about excessive fees being charged, those accounts became problematical. It is not suggested that the defendant did not do the 62 LPA. 63 Ex AA p 13. -- 17 of 30 -- 18 work. The issue for determination is does the defendant have any basis for keeping the monies? [24] It is submitted by the plaintiff that the relevant legislation in relation to the memoranda of fees is the Legal Practitioners Act 199564 . Additionally, as is submitted, the Supreme Court retains an inherent jurisdiction over legal practitioners65 . It may order that a bill of costs in taxable form be presented and order for a taxation of any bill66 . A solicitor cannot commence or maintain any action or suit for the recovery of any fees until the expiration of one month after he or she has delivered to the client a bill of fees charges and disbursements67 . It is submitted that “bill of costs” means a proper account showing details of the fees, charges and disbursements which would allow a client to decide whether to exercise the right to submit the bill68 . This case dealt with the predecessor of s 5 of LPA viz. s 22 of the Costs Act 1867 (Qld). Section 5 provides that a solicitor shall not commence or maintain any action or suit for the recovery of fees until the expiration of one month after the bill of costs is delivered to the client. The bill of costs in that situation is a bill in taxable form. On the facts of this case, that requirement could only be capable of applying to the non-resumption fees as there was a Letter of Arrangement in place and trust authority for the memoranda of fees issued in respect of the resumption work. [25] It is not submitted by the defendant that the memoranda of fees rendered by the defendant was in a form which would allow a client to make such a decision and exercise the right to submit the bill for taxation. To meet that description, it would be necessary for the bill of costs to include details for each item of work undertaken, the charge levied in relation to each item of work and show how the total fee has been calculated69 . Absent a client agreement, as provided for under s 23 of the LPA, a solicitor cannot avoid providing a bill in taxable form. There are helpful submissions from the plaintiff’s counsel which touch upon the history of the 64 LPA; Ex AA at p 23- and the cases relied on at n.48. 65 Re: Morris Fletcher & Cross’ Bill of Costs [1997] 2 Qd R 288 at 294. 66 ibid. 233-234. 67 s 5 LPA. 68 Re: Walsh Halligan Douglas “Bill of Costs” [1990] 1 Qd R 288 at 294. 69 Jackson v Creswick Middleton Solicitors [2000] QDC 46 at [14]-[19]. -- 18 of 30 -- 19 legislation and the procedures required70 . The relevance of the legislation as referred to in those submissions was not disputed by the defendant. [26] Some of the submissions of the plaintiff refer to the obligation to provide full disclosure, the Supreme Court’s inherent jurisdiction to order bills in taxable form and the inability of a solicitor to claim fees where there is a failure to comply with statutory obligations. In the present case, the defendant is not claiming its fees. The plaintiff seeks declaratory relief in relation to trust monies and restitution of those monies. Also, the other matters referred to may be relevant to an application in the Supreme Court for the reasons mentioned above. Section 29 of the LPA relates to setting aside improper agreements, including a breach of fiduciary duty. There is no such relief sought in the present case. Section 28 seems to give the Supreme Court jurisdiction and s 30(1) provides a time limitation where an agreement is to be reopened after payment. [27] What is of more relevance is the submission that there was no written agreement in relation to the non-resumption work. Therefore, Part 2 of the Legal Practitioners Act applies which includes s 5 which required the defendant to provide a bill of costs in taxable form before seeking to recover payment from Doolan Properties. This was not done, relevantly for the non-resumption work. [28] Section 84 of the Queensland Law Society Rules provides: Duty to render costs 84(1) A practitioner shall within a reasonable time after being so requested in writing by a client render to the client a bill of costs covering all work for that client to which such request relates or for which he has not already rendered a bill of costs or been paid. 84(2) If such practitioner fails or neglects to render such bill of costs within one month after receiving such request or within such further period as the client in writing allows or as may in the circumstances be reasonable he shall if requested by the client forthwith pay to the client all moneys and if so requested shall deliver to the client all documents which he is holding on behalf of that client, notwithstanding that he might otherwise be entitled to a lien upon those moneys or documents for payment of his bill of costs. 70 Ex AA pp 22, 27-29. -- 19 of 30 -- 20 [29] Section 84(2) goes on to provide that if a solicitor fails to provide the bill of costs, the solicitor must pay to the client all monies held on behalf of the client on demand. In the present case, there was no such demand for an itemised bill until August 1998. It is submitted that this section provides a basis for implying a term that upon request from the plaintiff or Doolan Properties that it would deliver a bill of costs. It is the case that the section provides for a particular situation. At least in relation to the resumption work, the parties had a client agreement in terms of s 23 of the Legal Practitioners Act. Any request for an itemised bill can only relate to the non-resumptive work in view of the findings above. Such a taxable bill of costs has not been provided. The defendant suggests that it could exercise a lien over the funds. Rule 84 would suggest otherwise. Therefore, subject to the defences to be discussed, it is open to find that the plaintiff is entitled to its declaratory relief that a trust exists in his favour with respect to the sum of $40,166.25. For whom was the work done [30] It is clear from the evidence of the plaintiff that the defendant was at all material times dealing with him. The joint venture with Landvest as a partner to form Berrima is interesting but not determinative of the client relationship. It was the plaintiff acting for Doolan Properties which required the work to be done. Berrima may have received the benefit of some of the work, but the client was Doolan Properties71 . What arrangements were made between Landvest and Doolan Properties to pay for the work done for Berrima is academic to the present case. As stated by Mr Doolan, it was not determined during the development stage. He continued to give instructions to the defendant on behalf of Doolan Properties. He did not challenge the form of the memoranda of fees rendered to Doolan Properties. Limitation of Actions Act 1974 (the ‘Act’) Section 27 of the Act provides as follows: (1) A period of limitation prescribed by this Act shall not apply to an action by a beneficiary under a trust, being an action (a) in respect of a fraud or fraudulent breach of trust to which the trustee was a party or privy; 71 T83.83.32-41;89.10. -- 20 of 30 -- 21 (b) or to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use. (2) Subject to subsection (1), an action by a beneficiary to recover trust property or in respect of a breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of (6) years from the date on which the right of action accrued. Notwithstanding this subsection, the right of action shall be deemed not to have accrued to a beneficiary entitled to a future interest in the trust property until the interest fell into possession. [31] The defendant argues that the present proceedings are statute barred by virtue of s 27(2) of the Act which stipulates a six year limitation if s 27(1) does not apply. The proceedings, it is submitted, is for breach of trust and that such proceedings were commenced more than six years after the breach occurred. The total of the monies transferred amounted to $122,612.87. As has been found, the defendant was entitled to transfer the sum of $82,446.62. The defendant as trustee has converted the balance to its own use. Therefore, the amount of $40,166.25 is the sum subject to the present limitation argument. The argument offered by the plaintiff is that s 27(1)(b) applies to allow the plaintiff, a beneficiary under a trust, to sue without the limitation problem. The defendant counters and says that the plaintiff is not a beneficiary under a trust but an assignee from Doolan Properties suing for breach of trust. Certainly, a beneficiary under a trust is entitled to the proceeds of trust property or monies converted to the trustee’s own use. In Re; Sharpe (1906) 1 CR 79 the trustees were ordered to repay the excessive amounts for annuities deducted for themselves. The Limitations of Actions Act did not apply even though it was an innocent breach of trust and not dishonest. Section 27(1)(a) is not applicable as there is no finding of fraud or moral turpitude established against the defendant. In relation to s 27(1)(b), as submitted by the plaintiff’s counsel, under the general law the term “beneficiary” is a broad one. The plaintiff’s submissions72 quote from the leading text of Ashburner’s Principles of Equity73 the following passage: 72 Ex CC para 6. 73 2 nd ed., p 136. -- 21 of 30 -- 22 “Who are the cestuis qui trust under a trust – Cestuis que trust under a trust consist of (1) All persons taking directly under a trust; and (2) All persons taking by transfer, whether voluntarily or for value, from a cestui que trust.” [32] It is submitted by the plaintiff 74 that the case of Dearle v Hall75 is relevant. That case was concerned with successive dealings with an equitable interest. Doolan Properties had an equitable interest in the monies held in trust by the defendant. That interest was assigned to the plaintiff. A beneficiary under a trust can assign a beneficial interest in a trust. The rule in Dearle v Hall is concerned with priority of such assignments 76 . It applies to interests in settled funds or an equitable chose in action which includes an interest in a trust fund77 . It is submitted that priorities between assignees is predicated on assignees themselves becoming, for all purposes, cestui que trust or beneficiaries of the trust. The term ‘beneficiary’ is not defined in the Limitation of Actions Act. The term “trustee” in that Act is defined by the Trusts Act 1973. It included “implied, resulting, bare and constructive trusts”. It is submitted that the definition includes the relationship between a trustee and an assignee of a beneficial interest. A more detailed discussion of the nature of an assignment of a beneficial interest can be found in Comptroller of Stamps (Victoria) v Howard-Smith78 : A voluntary disposition of an equitable interest may take one of at least three forms. It may consist of an expression or indication of intention on the part of the donor that he shall hold the equitable interest vested in him upon trust for the persons intended to benefit. In that case he retains the title to the equitable interest, but constitutes himself trustee thereof, and, by his declaration, imposes upon himself an obligation to hold it for the benefit of others, namely the donees. In the second place, the disposition may consist of a significant expression to benefit the equitable interest vested in the donor, or some less interest carved out of it. In that case communication to the trustee or person in whom the legal title to the property is vested is 74 Ex BB para.7. 75 (1823) 3 Russ 1. 76 Snell’s Principles of Equity 27th ed. by Megarry and Baker p 63. 77 See the discussion in Meagher Gummow & Lehane’s “Equitable Doctrines and Remedies”, 4th ed. Meagher Heydon Leeming at 8-130; Osborn, P.G. “A Concise Law Dictionary”, 5th ed. for definitions of “assignment of chose in action” and “chose in action”. 78 (1936) 54 CLR 614 at 621-2. -- 22 of 30 -- 23 not required in order effectually to assign the equitable property. Notice to the trustee may be important to bind him to respect the assignment and in order to preserve his priorities. But it is not a condition precedent to the operation of the expression of intention then and there to set over the equitable interest, and perhaps, it should be communicated to someone who does not receive the communication under confidence or in the capacity only of an agent for the donor. In the third place, the intending donor, for whom property is held upon trust, may give to his trustee a direction requiring him thence- forth to hold the property upon trust for the intended donee. A beneficiary who is sui juris and entitled to an equitable interest corresponding to full legal interest in property vested in his trustee may require the transfer to him of the legal estate or interest. He may transfer the legal interest upon trust for others. Without going through these steps he may simply direct the existing trustee to hold the trust property upon trust for the new beneficiaries. He cannot without the trustees consent impose upon him new active duties. But he may substitute a new object, at any rate in the case of any passive trust. Accordingly, a voluntary disposition of an equitable interest may be effected by the communication to the trustee of a direction, intended to be binding on him, thenceforward to hold the trust property upon trust for the donee. [33] The Howard-Smith case was discussed in Thomas v National Australia Bank79 . This case discusses the question of the rights upon assignment of a debt and gives approval to the proposition stated in Comptroller of Stamps v Howard-Smith80 that notice to the trustee is not necessary to assign equitable property. It is relevant to preserve priorities between beneficiaries81 . An equitable assignee enforcing a debt exercises a contractual right against a debtor but the present case involves as assignment of an interest under a trust. The distinction was referred to in Jennings v Credit Corporation Australia Pty Ltd 82 . His Honour referred to Meagher Gummow and Lehane op cit 1984 ed at [686]. The distinction is important for present purposes. [34] A trustee under an existing trust may become liable as a debtor under the express authority of the terms of the trust83 . The learned authors refer to the case of Space 79 (1936) 54 CLR 614 at 621-2. 80 op cit. 81 Thomas v National Australia Bank [1999] QCA 525 at [23] per Pincus, JA; see also Purdon v Purdon [2007] NSWSC 141. 82 [2000] NSWSC 210 per Santow J at [56]. 83 Ford and Lee, “Principles of the Law of Trusts”, Vol. 1 Looseleaf Service, Thomson Law Book Co at [1440]. -- 23 of 30 -- 24 Investments Ltd v Canadian Imperial Bank of Commerce Trust Co (Bahamas) Ltd84 . The bank as trustee had misappropriated funds held in trust for beneficiaries. It was held that the trust monies became the property of the bank and could be used for the bank’s own purposes subject only to its obligation to administer the trust to apply a sum equal to the amount which ought to have been credited to the trust. This situation is to be contrasted to a solicitor’s trust account where such monies are specifically held for the client. Therefore, the trustee solicitor in that situation does not become a debtor. This is more so in the present case where the relief sought is a declaration in relation to the trust monies held by the defendant solicitors. It is not an action for monies had and received. The rights of the plaintiff under the trust arrangements had to be determined and equitable relief was sought. [35] Further support for that proposition is to be found in Roxborough v Rothmans of Pall Mall85 . In that case Gummow J stated the following proposition: With respect to express trusts it was settled by 1852, when Edwards v Lowndes86 was decided, that it was only at the stage when there remains nothing to the trustee to execute except the payment over of money to the beneficiary, or the trustee admits the debt, that an action for money had and received might lie at the suit of the beneficiary against the trustee; in other respects, in the courts of law the trustee was treated as the absolute owner and the beneficiary’s remedy was exclusively in a court of equity which might give effect to equitable set-offs and other equitable defences available to the trustees87 . That is the position in the present case. The plaintiff seeks declaratory relief in the first instance and the defendant relies upon the equitable defence of laches. The dispute was about the payment of monies to the use of the defendant for fees owing. A determination was required of the status of the funds. [36] There is one further proposition stated by Ford and Lee88 relevant to the present issue: On principle, if a beneficiary assigns her or his interest under the trust, the assignee takes an interest in trust assets, subject to the 84 [1986] 1 WLR 1072. 85 (2001) 208 CLR 516, referred to by Ford and Lee at [1440]. 86 (1852) 1 El & Bl 81 at 89; 118 ER 357 at 370. 87 per Gummow J at 541; see also R v Brown (1912) 14 CLR 17 at 25. 88 op cit at 14-1059. -- 24 of 30 -- 25 trustee’s charge unless the assignee has acquired legal title for value without notice89 . It was held in that case that the executor was entitled to set off the costs in the probate suit against the legacies, notwithstanding that the legatees had assigned or mortgaged their legacies and shares as next of kin if the assignors should succeed in an action to revoke probate. What is of interest in this case for present purposes is the following passage90 : Therefore, every person who takes an assignment of a legacy from a legatee, takes it subject to there not being assets to satisfy it, from different causes, it may be from loss incurred with reference to the estate, or from the estate not proving sufficient, or from its being exhausted, or having to be resorted to for the payment of the costs of administration. The assignee takes it subject to the risk, and it makes no difference for that purpose whether the executrix, who has the right to be paid for her expenses is an executrix and also residuary legatee. The assignment is necessarily so subject. There are other infirmities with reference to a person taking an assignment of a legacy; for instance, the infirmities of the legatee happening to be indebted to the estate and that even though the debt be barred by the Statute of Limitations. Neither the legatee nor any person claiming under the legatee can claim anything until the debt be satisfied. That is quite plain. The assignees therefore have taken in this case, unquestionably, whether they were parties to the proceedings in the Probate Court or not, subject to the risks in respect of the liabilities of the particular legacies assigned to them. It seems in that case that the Statute of Limitations did not affect the right of the executor to claim the monies from the assignees. Absent a trust situation, as a debt, it would otherwise be caught by the limitation period. Conversely, the limitation period should not apply to prevent an assignee claiming an interest in trust monies from a trustee where that assignee, the plaintiff, is entitled to assert the rights of the beneficiary, Doolan Properties, which it has been declared, had an interest in trust monies as at August 1998 and which monies were converted by the defendant. Section 27(1) (b) of the Limitations of Actions Act allows the assignee to avoid the six year limitation period imposed by s 27(2). 89 Re Knapman (1881) 18 Ch D 300. 90 ibid p 304. -- 25 of 30 -- 26 [37] The plaintiff as an assignee of an equitable interest is able to sue in his own name. No point has been taken in this case in relation to that proposition. It is open to find that the plaintiff is for the purposes of the assignment a beneficiary of the monies held in trust for the defendant. He stands in the shoes of Doolan Properties which assigned all of its rights and interest to him. This was not the creation of a new interest but the assignment of an existing beneficial interest in the trust monies91 . [38] It should be added that the defendant did not cite any authority to support its submission on this issue that the plaintiff was not a beneficiary in terms of s 27. It is accepted that upon Doolan Properties assigning its interest, the plaintiff became the beneficiary within the meaning of s 27(1) of the Limitation of Actions Act of the trust which was created when the defendant received the monies from the Pine Rivers Shire Council for the resumption compensation. For present purposes his right to recover is limited to $40,166.25. In that event, it is unnecessary to deal with the alternative submissions of counsel for the plaintiff that s 27(1)(a) is applicable in the present case because of dishonesty or unconscionability. In any event it is clear that there was no moral turpitude on the part of Mr Kann or the defendant. [39] There is an alternative view of the limitation period, although it was not argued. The deed of arrangement is dated 7 April 2005. It has been established that time did not run against Doolan Properties as a beneficiary under section 27(1)(b) as the defendant had converted the monies received by it to its own use. Any right of action, if the plaintiff is a mere assignee seeking monies for a debt to him would accrue to him as at 7 April 2005. Under section 10(1) of the Limitation of Actions Act, a six year limitation period would apply. It has been held in Robinson v Harkin92 that the equivalent of the Limitation of Actions Act did not commence to run against a trustee claiming contribution against a co trustee in respect of a liability incurred from loss occasioned to the trust estate by their joint default until the claim by the beneficiary had been established against one of them. It then became a debt claim and section 10 of the Limitation of Actions Act would apply. [40] Tito v Waddell93 was a case dealing with the English equivalent of section 27 of the Limitation of Actions Act (Qld). Megarry V-C made it clear 94 that section 27(1) and 91 See the discussion in Snell’s “Principles of Equity”, op cit at p 65. 92 [1896] 2 Ch 415 at 426. 93 (No 2) [1977] 1 Ch 106. -- 26 of 30 -- 27 (2) are “plainly confined to actions by a beneficiary ‘under a trust’”. Thus, if the finding that an assignee of the beneficial interest is a beneficiary for the purpose of section 27(1) is wrong, the alternative finding is that time did not commence to run for the plaintiff until 7 April 2005. The action was commenced on 28 July 2006. Laches [41] It is submitted that apart from any question of authority, the plaintiff has been guilty of unacceptable delay and the defendant has been prejudiced thereby. It is submitted that the proceedings should be dismissed on that account. Given the earlier findings, it is only necessary to deal with this aspect in so far as it relates to the non-resumption fees. If evidence is lost and it arises out of the delay, then the defence is made out 95 . The issue postulated by the joint judgment in Orr v Ford was not whether evidence may have been lost but whether evidence which may have cast a different complexion on the matter had been lost. The onus of proof is upon the defendant who raises the defence96 . The authority of Hewitt requires proof of unreasonable delay and further that it would be unjust in all the circumstances to grant the specific relief. The defendant seems to accept that it must show some prejudice97 . In effect, it could be said that the lost evidence would make it unjust to grant relief if the delay was the cause of the loss. [42] In the present case, the loss of the files relating to the leases and the financial advice, it is submitted, would make it impossible to render a bill in taxable form. Most of the lease work was a lump sum charge or later an hourly charge. The latter would probably relate to the financial advices as well. It is submitted by the defendant that all of its files have been destroyed together with its relevant accounting records98 . The consequence of this is that the defendant would be deprived of its fees for the non-resumption work. 94 ibid p 246. 95 Meagher Gummow and Lehane “Equity – Doctrine & Remedies”, 4th ed. by Meagher Heydon & Leeming at [36-020] citing Hughes v Schofield [1975] 1 NSWLR 8 and Crago v McIntyre [1976] 1 NSWLR 729 which was approved in the High Court in Orr v Ford (1989) 167 CLR 316 at 330 per Wilson, Toohey and Gaudron JJ. 96 Henderson Corp Pty Ltd v Hewitt [2005] WASC 165 at [71]-[72]. 97 Ex BB at para 72. 98 Ex BB at para 91. -- 27 of 30 -- 28 Evidence in relation to lost files on leases and financial advices (non-resumption work) and unreasonable delay. [43] The question of disputing the fees was raised in 1997. Mr Brook attended upon Mr Kann with the plaintiff. In a diary note dated 25 July 2002 99 Mr Kann commented that the question of the dispute about fees “will not go away”. Mr Kann kept the file himself. The liquidator of Doolan Properties made inquiry of the defendant as early as 30 October 2001 seeking copies of the accounts100 . It was not until 1998 that a detailed account was called for. This was after the receipt of the compensation funds from the Pine Rivers Shire Council. The present proceedings were commenced on 28 July 2006. [44] The plaintiff was made bankrupt on 2 June 1999. It was annulled on 6 April 2005. Until 10 June 1999, he was a director of Doolan Properties101 . The solicitor-client relationship was terminated in November 1997. Accounts rendered were sent between March and June 1998. The monies were received from the Pine Rivers Shire Council in August 1998. It was then that the plaintiff was seeking more detailed accounts. These were not forthcoming. It could be argued that by virtue of rule 84 of the Queensland Law Society Rules that the defendant was required to repay at least the non-resumption fees as it did not render a bill in taxable form as required. In retrospect, it should have done so. It did not matter that the defendant had a lien if it failed to comply with the request to provide a bill in taxable form. It certainly could not sue for its fees until one month expired after the delivery of a bill in taxable form102 . [45] The liquidator of the Doolan Properties was appointed on 10 June 1999 103 . The Deed of Assignment is dated 7 June 2005. On the face of it the delay appears to be unreasonable from the point of view of the defendant. From the plaintiff’s point of view he was the main player in a development by a company which went bad. Through the liquidator, the defendant was aware that the fees were an issue. However, it remains to be seen if the delay was a factor in the loss of the evidence. It seems that the leasing and financial advice files were destroyed by the defendant 99 Ex 1 p 170. 100 Ex 1 pp 163-164. 101 Further Amended Statement of Claim paragraph 1(a). 102 s 5 Legal Practitioners Act 1995. 103 Ex 1 p 160. -- 28 of 30 -- 29 in September 1999 pursuant to in house procedures. This occurred one year after the defendant was on notice of a claim and when in retrospect it was required to refund the non-resumption fees if it did not produce a bill in taxable form. Some of the evidence may have been recorded on the correspondence files. Mr Toigo, the managing partner of the defendant, agreed that once there had been a request from the liquidator about the trust account ledger and accounts in relation to the amount drawn across to the general account, then it ought have produced an instruction to preserve documents to avoid them being destroyed104 . One might also add that once the plaintiff sought detailed accounts in 1998, then a non-destruction direction ought to have been given105 . In fact the files were the subject of a destruction order on 1 September 1999106 . In relation to one lease of Cavanagh, the destruction order was September 2001107 . In relation to Water Garden Finance, the order was given in September 2003. [46] Therefore, it is not open to find that the conduct of the plaintiff caused unreasonable delay resulting in prejudice so as to establish the equitable defence of laches. The defendant has filed to discharge the onus of proof on this issue. Further, in all of the circumstances of this case it would be unfair to the plaintiff to invoke such a defence. His conduct can be contrasted to that in Orr v Ford 108 . The main witness had died. Deane J found that there was “gross laches” by allowing eight years delay whilst the health of the witness deteriorated. Relief [47] The defendant submits that an order for the delivery of a bill of costs sometime in the future would be futile as the relevant documents have been destroyed. This would not prevent an order for equitable relief. The defendant was in breach of the trust in respect of the non-resumption work for which there was no authority to transfer the sum of $40,166.25. The defendant succeeds in relation to the resumption fees to which it was entitled under the Letter of Arrangement and the Trust Account Authority. The defendant is not entitled to exercise a lien by virtue of rule 84 of the Law Society Rules. The plaintiff is entitled to the sum of $40,166.25. 104 T146.40-50; 149.1-5. 105 T147.40-42. 106 T145.38-43. 107 T.146.1-10. -- 29 of 30 -- 30 The plaintiff has tendered a schedule of interest rates for the relevant period. Given the circumstances under which the breach of trust arose, and the finding that any breach lacked moral turpitude, it has not been established that interest other than simple interest ought to be allowed. The period of time over which interest ought to be allowed is somewhat problematical. The defendant ought to have refunded the sum of $40,166.25, within one month of the request made on 14 September 1998 and so interest is allowed from 14 September 1998. Orders 1. It is declared that a trust exists in respect of the sum of $40,166.25 held by or formerly held by the defendant as trustee with the plaintiff as beneficiary. 2. It is ordered that the defendant do pay to the plaintiff the sum of $40,166.25 together with interest from 14 September 1998 at the rate of 9 per cent per annum to date. 3. Liberty to apply in writing in relation to costs. Such submissions to be forwarded to the associate within four (4) days of judgment. 108 op cit 346. -- 30 of 30 --