New South Wales Supreme Court CITATION : Guerinoni v Dennis Castino trading as Castino & Co Chartered Accountants [2008] NSWSC 175 HEARING DATE(S) : 03/03/08 JUDGMENT DATE : 3 March 2008 JURISDICTION : Equity Division JUDGMENT OF : Barrett J EX TEMPORE JUDGMENT DATE : 3 March 2008 DECISION : Interpleader relief refused CATCHWORDS : PROCEDURE - interpleader - need for competing claims to the same fund or property - where A makes specific claim to funds held in trust account by B - where C has money claim against D for unpaid price - where C alleges that the money held in B's trust account "comprises the purchase price" - no claim of C to the fund sufficient to warrant interpleading LEGISLATION CITED : Uniform Civil Procedure Rules 2005, Part 43. division 2, division 3, rules 43.1, 43.2, 43.7 CATEGORY : Procedural and other rulings Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1 CASES CITED : L J Hooker Ltd v Dominion Factors Pty Ltd [1962] NSWR 1031 Turner v Bladin [1951] HCA 13; (1951) 82 CLR 463 Watson v Park Royal (Caterers) Ltd [1961] 2 All ER 346 PARTIES : Edward Guerinoni - Plaintiff Dennis Castino t/as Castino & Co Chartered Accountants - Defendant FILE NUMBER(S) : SC 5729/07 COUNSEL : Ms P A Horvath - Plaintiff Mr L Gor - Defendant SOLICITORS : Bryan Gorman & Co - Plaintiff Yeldham Price O'Brien Lusk - Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BARRETT J MONDAY 3 MARCH 2008 5729/07 EDWARD GUERINONI v DENNIS CASTINO (T/AS CASTINO & CO) JUDGMENT 1 The plaintiff in this proceeding 5729/07 is Mr Guerinoni. He sues one defendant, Mr Castino, a chartered accountant in private practice. 2 Mr Guerinoni claims that Mr Castino holds a sum of $500,000 on trust for him, that sum having been deposited by Mr Guerinoni into Mr Castino's trust account on 19 September 2007 on trust solely for him. Mr Guerinoni also claims an order that Mr Castino pay him those moneys with any accrued interest. 3 There is another relevant proceeding pending, namely, 5805/07. In that case, which is later in time, QLD Holdings-1 Pty Ltd ("QLD") sues Collingwood Holdings Pty Ltd ("Collingwood") seeking specific performance of a contract for sale between QLD as vendor and Collingwood as purchaser in respect of shares in a company called Elliston for a price of $500,000. If that relief were, in due course, granted, Collingwood would be obliged to pay the price of $500,000 to QLD. 4 Mr Castino seeks to interplead and applies by notice of motion for an order under rule 43.7 of the Uniform Civil Procedure Rules 2005, being an order made both in this proceeding 5729/07 and in 5805/07 that he pay the sum of $500,000 into court. He also seeks an order that the proceedings 5729/07 be dismissed. That application is opposed by the plaintiff in 5729/07, Mr Guerinoni. 5 Rule 43.7, by virtue of its opening words, applies to any application under division 2 or division 3 of part 43 of the Rules. Division 3 is concerned with "Sheriff's interpleader" and is clearly irrelevant. Division 2, which contains only rule 43.2, is headed "Stakeholder's interpleader". The term "stakeholder" is defined in rule 43.1 as "a person (other than the sheriff) who is under a liability in respect of a debt or other personal property." Since Mr Castino makes no claim of his own to the $500,000 in his trust account, he is within this definition. 6 The most obvious case in which interpleader may be appropriate is where a person holding a fund of money or some other property asserts no claim of his own and is sued by two or more other persons, each of whom claims to be entitled to the fund or property. That, of course, is not the case here. Mr Castino is not sued in 5805/07. But interpleader may be appropriate even if one of the claims has not matured to the point of being advanced by way of initiation of court proceedings. 7 It is sufficient that the person concerned show, in the words of Edmund Davies J in Watson v Park Royal (Caterers) Ltd [1961] 2 All ER 346 at 352 that there is "a real foundation for an expectation that they would be sued." 8 Mr Castino says that, although he is not sued in 5805/07, this lesser requirement is satisfied. He cannot point to anything in the statement of claim in 5805/07 to justify that apprehension but he does point to a letter received by his solicitors in October 2007 from the solicitors for QLD, the plaintiff in that other proceeding. That letter was written before 5805/07 was commenced and refers to the dispute between QLD and Collingwood. The letter then says: "We understand that your client is holding $500,000, which comprises the purchase price. We are also advised that our client has demanded that these moneys be released to it and that its request has been refused. Under no circumstances are these funds to be released by your client to anyone other than our client without our client's prior written direction or a specific order of the court." 9 There is here, obviously enough, a suggestion or allegation that Mr Castino is holding in his trust account "$500,000 which comprises the purchase price." That is, it is no doubt alleged, the purchase price payable by Collingwood as purchaser to QLD as vendor under the contract for the sale of shares in Elliston. 10 I do not accept that this letter is evidence of a claim by QLD against Mr Castino which would warrant his interpleading. It is true that if QLD is successful in its action against Collingwood, Collingwood will be obliged to pay $500,000 to QLD. But there is nothing to indicate that the money in Mr Castino's trust account is or represents a specific fund to which QLD would then be entitled to resort. 11 Let it be assumed, contrary no doubt to the position Mr Guerinoni takes, that it is to Collingwood rather than to Mr Guerinoni that Mr Castino is bound to account in respect of the $500,000 in his trust account. That circumstance alone would be insufficient to give QLD a right to have the $500,000 applied in satisfaction of an obligation to pay that Collingwood may be adjudged to owe to QLD. 12 Assuming a right to specific performance is established, a vendor is entitled to an order that the defaulting purchaser pay the purchase moneys. The specific performance claim of the vendor is "merely to recover a sum of money": Turner v Bladin [1951] HCA 13; (1951) 82 CLR 463 at CLR 473. In the absence of something more, the vendor is not entitled to have, say, the money in the purchaser's top drawer or the money on fixed deposit in a nominated account with his bank. If a purchaser has put his solicitor in funds to complete and then defaults, the vendor may obtain, in a specific performance suit, an order that the price be paid by the purchaser. But in the ordinary course that vendor could obtain no order in respect of the specific funds held by the solicitor. 13 If an order that a sum of money be paid is not obeyed, some further step by way of attachment or the like is necessary before the person with the benefit of the order is able to resort for satisfaction to specific property of the person bound by the order. 14 Mr Gor, who appears for Mr Guerinoni, drew attention to the decision of Richardson J in L J Hooker Ltd v Dominion Factors Pty Ltd [1962] NSWR 1031. It is sufficient to quote the first sentence of the headnote, "Interpleader procedure is available to a defendant only where the court can, without hearing evidence, conclude that the same subject matter is claimed by two parties." 15 The problem here is that the court cannot at this point see that the $500,000 in Mr Castino's trust account is, in the relevant sense, claimed by two parties. References to "claimed" must, I think, be understood as references to something that goes beyond bald assertion and shows, even in the absence of evidence, a cogent or arguable basis for the existence of a legal claim. That is what is lacking here in relation to the supposed claim of QLD. 16 The defendant's notice of motion in 5729/07 is dismissed. [Counsel addressed on costs] 17 I order that the defendant pay the plaintiff's costs of the motion. The application by the plaintiff for an order that the costs be assessed and payable forthwith is refused. The circumstance where that may be appropriate are referred to in Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1. None of them appears to apply here. 18 I direct the proceedings be listed before the registrar for directions on 14 March 2008. ********** 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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