New South Wales Supreme Court CITATION : Elder & Ors v Cameron & Anor [2007] NSWSC 743 HEARING DATE(S) : 09/07/07 JUDGMENT OF : Gzell J EX TEMPORE JUDGMENT DATE : 9 July 2007 DECISION : Evidence admitted. Judgment for plaintiffs against second defendant with costs. CATCHWORDS : EVIDENCE - Admissibility and Relevancy - Whether a defendant bound by solicitor's letters - Whether hearsay admissible as admissions with authority under the Evidence Act 1995, s 87(1) LEGISLATION CITED : Evidence Act 1995 Magripilis v Baird (1926) St R Qd 89 CASES CITED : CTM Nominees v Galba Pty Ltd (1982) 2 BPR 97147 Pianta v National Finance & Trustees Ltd (1964) 180 CLR 146 CIC Insurance Ltd v Bankstown Football Club Ltd (1995 1997) 187 CLR 384 Christopher Andrew Elder - First Plaintiff Maurice John McCarthy - Second Plaintiff Stuart Graeme Holden Tipple - Third Plaintiff Ranchmoore Pty Ltd - Fourth Plaintiff PARTIES : Bedizen Pty Ltd - Fifth Plaintiff Anthony Morton - Sixth Plaintiff Pamela Morton - Seventh Plaintiff Cameron Malcohm Bruce - First Defendant Tricia Mary Crane - Second Defendant FILE NUMBER(S) : SC 5702/06 COUNSEL : Mr P Menadue - Plaintiffs SOLICITORS : Penmans Solicitors - Plaintiffs Cameron & Myers Solicitors - First Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION GZELL J 9 JULY 2007 5702/06 CHRISTOPHER ANDREW ELDER & ORS v MALCOLM BRUCE CAMERON & ANOR EX TEMPORE JUDGMENT 1 Christopher Andrew Elder, the first plaintiff, was the solicitor for Ranchmoor Pty Ltd, the fourth plaintiff. 2 Maurice John McCarthy, the second plaintiff, was the solicitor for Bedizen Pty Ltd, the fifth plaintiff. 3 Stuart Graeme Holden Tipple, the third plaintiff, was the solicitor for Anthony John Morton and his wife Pamela Morton, the sixth and seventh plaintiffs. 4 Malcolm Bruce Cameron, the first defendant, was a partner of the law firm Cameron & Myers. They were the solicitors acting for Tricia Mary Crane, the second defendant. 5 Mr Cameron entered a submitting appearance. 6 Ms Crane entered an appearance in her own right giving as her address: 92 The Esplanade, Point Vernon, Hervey Bay, in Queensland. She has not appeared at this hearing. 7 On 30 May 2007, the solicitors for the plaintiffs wrote to Ms Crane at that address informing her of the hearing today. On 4 July 2007, a further letter was sent by express post to that address reminding her of today's hearing. 8 Ranchmoor, Bedizen and Mr and Mrs Morton alleged that they lent moneys to Ms Crane and the debts were secured against Miss Crane's property at 31 Woodland Road, Terrigal in New South Wales. Each lodged caveats over the property. 9 Ms Crane entered into a contract for sale of the property. Prior to settlement, Ranchmoor, Bedizen and Mr and Mrs Morton agreed with Ms Crane that the caveats be removed. On 15 March 2005, Mr Cameron wrote to Mr Tipple in these terms: "We look forward to hearing from you with your consent to our clients' ( sic) proposal. To reiterate, that proposal is: 1. that the settlement of the Contract for Sale be allowed to proceed; 2. the net proceeds available after payment of the payment of the mortgagee, Council rates and the Vendor's solicitors costs and disbursements on the sale of the property being set aside and held in an account in the joint names of the solicitors for the caveators and the Vendor pending agreement on distribution of those proceeds or Court order." 10 Subsequent to settlement on 24 March 2005, the net proceeds of sale were placed in a trust account of which Mr Elder, Mr McCarthy, Mr Tipple and Mr Cameron were the signatories. 11 On 1 May 2006, Matthew Myers, the other partner of Cameron & Myers, wrote to the solicitors for each of the other parties stating: "Our clients ( sic ) have agreed to allow a release of all money held on the following basis: 1. Sum of $4,586.54 be paid to Cameron & Myers. We note this is a reduced figure in relation to money owed by our clients (sic). 2. That the moneys be released for distribution between Ranchmoore (sic) Pty Limited, Bedizen Pty Limited and Morton. However such money be released on the basis that a release is given to our client's (sic) against any further claims. In this respect we confirm that our client still disputes indebtedness to Morton and any compromise between our client's creditors that see money given to Morton is done so on the basis that their claim is by that compromise accepted as a full discharge. Please forward to us a deed of release for execution by the parties." 12 There followed correspondence between the solicitors, first, in relation to the costs to be paid to Cameron & Myers and, secondly, in relation to the release that Ms Crane required as part of the proposed finalisation of the matter. 13 On 9 August 2006, Mr Myers wrote to Ms Crane stating that an agreement had been reached by the other parties that the moneys in the joint bank account would be divided equally after payment of Cameron & Myers' costs of $3,000.00. Mr Myers subsequently stated his firm's agreement to accept this lesser sum in a letter of 4 October 2006 to Mr McCarthy. It is set out later in these reasons. 14 Bedizon resisted the notion that it should grant a release to Ms Crane and the original deed of indemnity contained releases by Ranchmoor, Mr and Mrs Morton and Ms Crane. But on 28 September 2006, Mr McCarthy wrote to Cameron & Myers saying that his client had agreed to execute a deed of indemnity containing the release, and the deed of indemnity in final form containing a release of Ms Crane by Bedizen was drawn up by Mr Tipple. 15 The operative parts of the deed included cl 2 by which the parties agreed to instruct the trustees to do all things necessary to close the account and distribute its proceeds as to $3,000.00 to Cameron & Myers, the balance to be divided equally between Ranchmoor, Bedizen and Mr and Mrs Morton. 16 In cl 3 to cl 5, each of Ranchmoor, Bedizon and Mr and Mrs Morton acknowledged and agreed that upon the receipt of their entitlement in accordance with the deed they would release Ms Crane from any claim she might have in respect of moneys advanced to her up to and including the date of the deed. 17 In cl 6, Ms Crane acknowledged and agreed to release Ranchmoor, Bedizon and Mr and Mrs Morton from any claim they might have in respect of the moneys advanced to her and the payment of moneys in accordance with the deed up to and including the date of the deed. 18 A diary note from the file of Cameron & Myers was in evidence. It referred to client "Patricia" and stated: "Will do deal but wants a release from Bedizen. We to write to o/s", presumably the other side. The note appeared in the file immediately before a copy of the following letter. 19 On 4 October 2006, Mr Myers wrote to Mr McCarthy in these terms: "We thank you for your letter dated 28 September 2006. We confirm that our client will agree to a release of monies on the terms suggested by the parties upon your client executing the deed of release provided to you from Mr Tipple. The deed of course releases our client from any further liability. We confirm that we shall accept the reduced sum offered as a means of resolving this matter." 20 The deed of indemnity was executed by all parties except Ms Crane. She refused to execute it on the basis that she had other creditors and they should be treated equally. 21 On 25 October 2006, Mr Myers wrote to the solicitors for Ranchmoor and, amongst other things, said: "We impressed upon our client that a deal had been reached. Our client instructed us that we were not to release any funds and that she would consider her position and contact us again." 22 The evidence contains a deal of hearsay. But the Evidence Act 1995, s 81(1) provides that the hearsay rule does not apply to evidence of an admission. The diary note that preceded the letter of 4 October 2006 was evidence of an admission by Ms Crane that she agreed in the terms set out in that letter. That evidence established that Mr Myers had her actual authority to make the representations in that letter. 23 There is no such evidence of Ms Crane authorising the contents of the letter of 1 May 2006. And an admission is defined in the Dictionary to the Evidence Act 1995 so as to limit it to a previous representation made by a person who is or becomes a party to a proceeding. 24 The Evidence Act 1995, s 87 deals with third party representations that are to be attributed to a party to a proceeding for the purpose of the exception to the hearsay rule for admissions. Section 87(1), so far as is material for present purposes is in the following terms: "For the purpose of determining whether a previous representation made by a person is also taken to be an admission by a party, the court is to admit the representation if it is reasonably open to find that: (a) when the representation was made, the person had authority to make statements on behalf of the party in relation to the matter with respect to which the representation was made; or (b) when the representation was made, the person was an employee of the party, or had authority otherwise to act for the party, and the representation related to a matter within the scope of the person's employment or authority; or (c) …" 25 And earlier representations by Mr Myers are admissible if they tend to prove that he had authority to make statements on behalf of Ms Crane in relation to the matter in terms of the Evidence Act 1995, s 87(2)(a). 26 The correspondence from Cameron & Myers that preceded the letter of 1 May 2006 established that Mr Cameron and later Mr Myers had the authority of Ms Crane to make statements on her behalf in relation to the subject matter of these proceedings. The representations in the letter of 1 May 2006 are admissible as admissions against Ms Crane under the Evidence Act 1995, s 87(1) because it is reasonably open to find, and I do so, that as at 1 May 2006 Mr Myers had the authority to make the statements in the letter in relation to this matter on behalf of Ms Crane or that Mr Myers had authority to act for Ms Crane and the representations in the letter related to a matter within the scope of his authority. 27 I do not regard the statement in the letter of 25 October 2006 as falling within the Evidence Act 1995, s 87(1) and I exclude it from the evidence to be taken into account. If anything, Ms Crane's stance at that time was inconsistent with Mr Myers making any representation as to her past agreement. 28 In Magripilis v Baird (1926) St R Qd 89 a jury found that an agreement for lease had been made but the trial judge was of the view that there was no evidence to support the finding and entered judgment for the respondents. The Full Court of Queensland upheld the trial judge's decision. The High Court allowed an appeal. In the course of his judgment at 96, Isaacs J said of one of the respondents that a firm of solicitors had long been accredited by him as his legal agents and medium of communication in relation to the terms of the lease and that was sufficient to establish the authority of the solicitors to write a letter of offer conclusively, and at the very least in the absence of some clear explanation to the contrary. 29 In CTM Nominees v Galba Pty Ltd (1982) 2 BPR 97147, however, Needham J pointed out at 9591 that in Magripilis, Knox CJ had dissented and the other member of the court, Gavan-Duffy J, suggested that a new trial should be ordered. Needham J therefore dismissed Magripilis as authority for the proposition enunciated by Isaacs J. 30 It is unnecessary for me to resolve any apparent conflict between these two decisions because, in my view, the plaintiffs have established that Cameron & Myers had authority to write the letters in question. Mr Cameron and, later, Mr Myers acted for Ms Crane in relation to the funds held in trust. The diary note establishes that Mr Myers had her actual authority to write the letter of 4 October 2006 and there is no reason why the inference should not be drawn that the letter of 1 May 2006 was written with her actual authority. Her conduct in not demurring to her solicitor's prior correspondence when giving actual authority for the letter of 4 October 2006 forms the basis for the inference. 31 If I am wrong in that view, I am of the opinion that Mr Myers had the ostensible authority of Ms Crane to write the letters of 1 May 2006 and 4 October 2006. 32 While the mere fact that a person is a solicitor does not, of itself, confer the ostensible authority of a client to make contracts on the client's behalf (Pianta v National Finance & Trustees Ltd (1964) 180 CLR 146), it has always been regarded as within the ostensible authority of a solicitor or barrister to settle legal proceedings, once commenced, in which they are retained. 33 In CIC Insurance Ltd v Bankstown Football Club Ltd (1995) 8 ANZ Insurance Cases ¶61-232 at 75,555, Kirby P applied the principle to the retainer of solicitors in a controversial insurance claim, distinguishing the situation from the retainer of a solicitor to pursue non-litigious business where the nature and extent of the solicitor's authority is not so easily inferred to be so widely encompassing. 34 It is to be noted that CIC Insurance was reversed on appeal to the High Court (CIC Insurance Ltd v Bankstown Football Club Ltd (1995-1997) 187 CLR 384), but the discussion by Kirby P of ostensible authority was not mentioned. 35 In my view, there can be little doubt that the proper inference is that the solicitors to whom Mr Myers wrote had the distinct impression that Mr Myers had the necessary authority to write the letters in question. In my view if Mr Myers did not have the actual authority of Ms Crane to write the letters he did in her behalf, he had her ostensible authority to do so. 36 On the evidence, I am of the view that a contract was formed between Ranchmoor, Bedizen and Mr and Mrs Morton on the one hand and Ms Crane on the other. On Ms Crane's part, the contract was entered into by her solicitors. Ms Crane made an offer on 1 May 2006 that the funds be released to Ranchmoor, Bedizen and Mr and Mrs Morton in consideration for the payment of costs to her solicitors and her release by the other parties. She held Bedizen to that condition. She accepted a variation in the amount to be paid to her solicitors for costs. Her offer, as amended, was accepted by the other parties and they executed the deed of indemnity that set out their bargain. 37 In the alternative, on 4 October 2006, Ms Crane made an offer in the terms contained in the final deed of indemnity in consideration for the acceptance of those terms by Bedizen, Ranchmoor and Mr and Mrs Morton already having indicated their willingness to execute the document. Her offer was accepted by the execution of the deed by the other parties. 38 I make the following orders: (a) that, in accordance with the deed of indemnity signed by all parties other than the second defendant, being annexure CAE 4 to the affidavit of Christopher Andrew Elder sworn on 27 October 2006, the first defendant sign a withdrawal form for the payment of the money invested in the names of the first, second and third plaintiffs and the first defendant; (b) that in default of the first defendant signing the withdrawal form within 14 days, the Equity Registrar be empowered to sign it on his behalf; (c) that the second defendant pay the plaintiffs' costs of and incidental to these proceedings; (d) that there be no order as to costs against the first defendant; (e) that the orders be stayed for seven days within which time the second defendant has liberty to apply to set aside the orders; and (f) that the plaintiffs give the first and second defendants notice of these orders. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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