Devon Marshall Constructions Pty Ltd v Kingscliff Nominee Mortgages Pty Ltd (in liq) [1999] NSWSC 255

New South Wales Supreme Court CITATION : Devon Marshall Constructions Pty Ltd v Kingscliff Nominee Mortgages Pty Ltd (in liq) [1999] NSWSC 255 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 1481/99 HEARING DATE(S) : 26 March 1999 JUDGMENT DATE : 26 March 1999

Devon Marshall Constructions Pty Ltd (P) PARTIES : Kingscliff Nominee Mortgages Pty Ltd (In Liq) (D1) Jean Sayer (D2) Marion Grace Kirby & 28 Ors (D3) JUDGMENT OF : Hamilton J

J B Simpkins (P) COUNSEL : I G Harrison SC (D2) No appearance (D1, D3) Corrs Chambers Westgarth (P) SOLICITORS : Blake Dawson Waldron (D1, D3) Murphy & Moloney (D2) CATCHWORDS : PROFESSIONS AND TRADES [99] - Lawyers - Accounts and trust money - Appointment of receivers - "Property of solicitor" - Whether "property of solicitor" includes property of solicitor's nominee company. ACTS CITED : Legal Profession Act 1987 ss 92(1), 112 Legal Profession Regulation 1994 reg 57(1)(c) DECISION : Interlocutory injunction granted.

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THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

HAMILTON J

FRIDAY, 26 MARCH 1999

1481/99 DEVON MARSHALL CONSTRUCTIONS PTY LTD v KINGSCLIFF NOMINEE MORTGAGES PTY LTD (In Liq)

JUDGMENT

HIS HONOUR: 1 Injunctive relief is sought by Devon Marshall Constructions Pty Ltd against Jean Sayer, the second defendant in these proceedings. The plaintiff is a builder which seeks to exercise a right of indemnity against trust funds in the hands of the trustee of a mortgage. The circumstances are such that it has a prima facie case for such a right of indemnity and has a case for interlocutory relief freezing the proceeds of the mortgage until the substantive questions can be determined. Objection to this course is taken on behalf of the second defendant, who is the receiver of a solicitor's practice, appointed as such by an order made in the Common Law Division of this Court under the provisions of s 92 of the Legal Profession Act 1987 ("the LPA"). There is no dispute between the plaintiff and the second defendant that the mortgagee company was a solicitor's nominee company maintained by the solicitor within the meaning of reg 57(1)(c) of the Legal Profession Regulation 1994. That is a regulation which limits the manner in which what are known as contributory mortgages may be arranged by solicitors. 2 Miss Sayer's case is that property of such a nominee company is property of the solicitor within the meaning of s 92(1) of the LPA and consequently of the order made in this case against the solicitor in the Common Law Division. That proposition is controverted by Mr Simpkins, of counsel for the plaintiff. Furthermore, s 112 of the LPA provides that the receivable property of a solicitor is not liable to be taken in execution of an order or process of any court. Mr Harrison, of senior counsel for the second defendant, submits that this renders any injunction pointless. The injunction itself, he concedes, is not within the terms of s 112 but the only purpose of the injunction is, in effect, to hold the funds so that they may ultimately be taken in some way which must amount to execution of an order or process within s 112, and the injunction therefore ought not be granted. Counsel are not able to cite any authority as to the meaning of the expression "property of a solicitor" within the meaning of s 92(1) or as to the ambit of s 112 of the LPA. 3 I do not think that it is self-evident either that the proceeds of this mortgage are "property of a solicitor" in the relevant sense, nor that there can be no point in an injunction being granted by reason of the existence of s 112. There is no reason of convenience that can be put before me as to why the funds should not be frozen for a short time. Their expenditure would, however, be inconvenient from the plaintiff's point of view if the funds were, before the substantive proceedings could be determined, disbursed by the receiver and ceased to be available, if it is found that the plaintiff has a subrogated right over them. In those circumstances, the usual undertaking as to damages being offered, I propose to grant injunctive relief. At the request of Mr Harrison I shall reserve liberty to apply to discharge or vary the injunction on three days notice. It may be that the three defendants also have an interest in the subject matter but they are not present today. I reserve a similar liberty to them to exercise if they be so minded. In my view, and it is not dissented from by either counsel for the plaintiff or for the second defendant, the appropriate order for costs is that the costs of this interlocutory application be the plaintiff's costs in the proceedings. 4 Upon the plaintiff by its counsel giving to the Court the usual undertaking as to damages: 1 Order 7 in the summons until further order. 2 I reserve to the second defendant and the third defendant leave to apply to discharge or vary the injunction on three days notice. 3 I order that the costs of the application for interlocutory injunction be the plaintiff's costs in the proceedings. 4 I direct that the second defendant file and serve all affidavits on which she intends to rely on or before 16 April 1999. 5 I stand the summons over to 19 April 1999 at 9.30 am before the Registrar. …oOo…