Tejani v Gerrard [1999] NSWSC 939

New South Wales Supreme Court CITATION : Tejani v Gerrard [1999] NSWSC 939 CURRENT JURISDICTION : Equity Division FILE NUMBER(S) : 4779/97 HEARING DATE(S) : 13 September 1999 JUDGMENT DATE : 16 September 1999

Sikkina Tejani (P1) PARTIES : Manoochehr Samali (P2) Serge Gerrard (D) JUDGMENT OF : Acting Master Berecry

COUNSEL : Mr. P. Beale (P) Mr. G. C. Lindsay S.C. and Mr. I. E. Davidson (for third party John Joseph Gilles) SOLICITORS : McGrath Dicembre & Co (P) Giles Payne & Co (D) CATCHWORDS : Costs indemnity basis; Personal liability of solicitor; Part 52A rule 43; Costs improperly incurred. DECISION : See paragraph 15

SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

ACTING MASTER BERECRY

Thursday, 16 September 1999

4779/97 SIKKINA TEJANI & ANOR -v- SERGE GERRARD JUDGMENT

1 ACTING MASTER: On 3 December 1998 a notice of motion by the defendant was filed in Court before Mr Justice Windeyer. Paragraph 3 of the notice of motion sought the following: 3. That the orders of this honourable Court made on 27 October 1998 be varied by the addition of the following order: Notwithstanding orders number 1 and 2 above, if the partners of the firm Giles, Payne and Co receive after 2 December 1998 any funds from the defendant which are necessary to pay into the Court for the purpose of prosecuting Appeal No. 40195/98 then the consent of the plaintiffs shall not be required for the partners of Giles, Payne and Co to pay these funds into Court. 2 The notice of motion was supported by an affidavit sworn on 3 December 1998 by Joseph John Gilles who, at that time, was a solicitor for the defendant. 3 On 7 December 1998 Mr Justice Austin handed down a decision on the notice of motion. The motion was dismissed. The question of costs was stood over. Costs were stood over because of the lack of time to allow cross-examination of Mr Gilles and his affidavit of 4 December 1998. It would appear that the defendant sought to withdraw the motion. However, that course of action was refused and the motion was dismissed. 4 His Honour's judgment sets out the history of this litigation. For the purpose of the costs application, the history is relevant from 20 October 1998. 5 An application was brought by the plaintiffs seeking a Mareva injunction against the defendant and the defendant's solicitor. Undertakings were given before Mr Justice Bryson on that occasion. On 27 October 1998 the matter was before Mr Justice Cohen. His Honour noted that, as an undertaking had been given to Mr Justice Bryson, there was an assumption that the solicitors held some funds on behalf of the client. However, in the absence of any evidence his Honour went on to say that he could not come to a conclusion on that matter and, in his opinion, there may or there may not be moneys held in the trust account. His Honour then granted the injunction restraining the defendant and the partners of the firm Giles, Payne and Co from taking any steps to reduce the balance of any funds held by that firm below $74,344 except with the consent of the plaintiffs. 6 The notice of motion before Mr Justice Windeyer on 3 December 1998 was not disposed of on that day. His Honour was not inclined to proceed with the application in the absence of any evidence concerning the amount of money that was held in the solicitor's trust account. The matter was stood over to 4 December and his Honour expressed the view that no order should be made as sought unless an affidavit was filed by a partner of Giles, Payne and Co giving details of the amount held in trust by them as at the 27 October 1998 and confirming that the amount still remains held by them and there have been no payments in or out of that trust account held for the defendants since 27 October 1998 or, if there have been, details of those payments in or out. 7 Subsequently, on 4 December 1998, an affidavit was sworn by Mr Gilles deposing to the current position of the trust account and the position of that account as at 27 October 1998. 8 At this point it is necessary to set out part of what happened in the Court of Appeal. On 2 November 1998 the Registrar of the Court of Appeal ordered the defendant to pay the Court the sum of $22,000 as security for costs of the appeal. He also stayed the leave to appeal until payment was made no later than 14 December 1998 and, further, that the security for costs provided after 4 December 1998 the response not required until January by the other side. I take it that, by response, that meant written submissions. 9 According to Mr Gilles affidavit of 3 December the following took place. The defendant had a telephone conversation with his solicitor in words to the following effect, "I wish to proceed urgently and expeditiously with the Court of Appeal matter. I will telegraphically transfer to your trust account the sum of $22,000 to pay to the Court of Appeal". Shortly before 12:00 noon on 2 December 1998, the solicitors for the plaintiff were notified that their consent would be required. That notification was by way of letter. It seems implicit in the letter that the $22,000 was an amount which was the subject of Mr Justice Cohen's orders of 27 October 1998, hence consent was required. 10 Shortly before 5:00pm on 2 December 1998 the solicitors for the plaintiff refused to release the funds. That refusal was contained in a letter drawing attention to the fact that the specific funds held in the trust account to the extent of $74,000 was subject to the Mareva injunction, and the costs on appeal was a different issue. At 9:00pm on 2 December the solicitor had another conversation with the defendant. The defendant said words to the effect, "I've been running from bank to bank to ensure that I get the money to you before 4 December. It has taken me nine hours to arrange it, but I have now telegraphically transferred to you the $22,000 which you need to put into the Court of Appeal. 11 On 3 December at approximately 9:00am the defendant's solicitor wrote again to the plaintiff's solicitor. In that letter he stated as follows, Perhaps we failed to make the arrangement abundantly clear. The $22,000, which we are seeking to have released from the trust account, is new money and in addition to any funds already there.