The Prothonotary v An application to pay unclaimed monies to NSW Treasury [2013] NSWSC 1962

Supreme Court New South Wales

Medium Neutral Citation: The Prothonotary v An application to pay unclaimed monies to NSW Treasury [2013] NSWSC 1962 Hearing dates: In chambers Decision date: 20 December 2013 Before: Black J Decision: Orders made for payment of specified amounts from the Supreme Court Trust Account to the Treasurer and to the Chief Commissioner of State Revenue for payment into the Consolidated Fund. Catchwords: EQUITY - trusts and trustees - application to the court for advice and authority - unclaimed monies - Registrar seeks direction from the Court under Uniform Civil Procedure Rules 2005 (NSW) r 41.10 in respect of unclaimed monies held in trust account of the Supreme Court of New South Wales - application of the Unclaimed Money Act 1995 (NSW) to unclaimed bail monies. Legislation Cited: - Bail Act 1978 (NSW) s 36 - Civil Procedure Act 2005 (NSW) s 14 - Public Trustee Act 1913 (NSW) s 36G(2) - Supreme Court Rules 1970 (NSW) Pt 50 r 6 - Trustee Act 1925 (NSW) - Uniform Civil Procedure Rules 2005 (NSW) rr 1.5, 41.7, 41.10, 41.10(3), 41.10(4), 41.10(5) - Unclaimed Money Act 1995 (NSW) ss 7, 8, 8(b), 8A Cases Cited: - O'Brien v Clyne (1985) 64 ALR 129 Category: Principal judgment Parties: File Number(s): 2013/382274

Judgment 1The Registrar seeks a direction from the Court under Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") r 41.10 in respect of certain unclaimed monies held in the trust account of the Supreme Court of New South Wales. The Registrar also seeks an order under the Unclaimed Money Act 1995 (NSW) in respect of other unclaimed monies held in that account. In this judgment delivered in chambers, I record my reasons for making the direction and order sought. Background 2The application is supported by an affidavit dated 16 December 2013 of Alexander Crouch, the Revenue and Trust Account Coordinator at the Supreme Court of New South Wales, whose role involves overseeing all day-to-day finance-related activities at the Court. Mr Crouch's evidence is that, as at May 2009, the Supreme Court of New South Wales held substantial funds in its trust account, which had been used for many years as a temporary holding account for settlement monies, monies paid into court as security for costs, bail amounts, and surplus funds deposited in accordance with Part IV of the Trustee Act 1925 (NSW). His evidence is that, in accordance with UCPR r 41.7, funds held in that account (with the exception of bail monies) were invested with the Public Trustee NSW, now the NSW Trustee & Guardian. Mr Crouch also notes that the trust account has not been used since the introduction of the JusticeLink system in December 2009, and that the investment of funds and their redemption, involving the return to the court of the funds with interest for payment to the relevant parties, is now managed centrally using the JusticeLink system in conjunction with the accounting processes of the NSW Department of Attorney General and Justice. 3Mr Crouch indicates that, in May 2009, the Audit Office of New South Wales recommended that the Court take steps to reconcile and itemise the outstanding trust funds. A project was then undertaken to examine all available financial records at the Court to seek to identify the origins of the money held in the Court's trust account. That project concluded in early November 2009 and determined that the total of the outstanding trust funds was $755,829.40. Mr Crouch's evidence is that the Court's inquiries identified three categories of outstanding amounts held in the Trust Account, namely interest that had accrued on funds held at the Public Trustee, as recorded on the Court's Access database program; other categories of unclaimed monies, including bail amounts, also recorded on the Court's Access database program; and older unclaimed monies recorded on court ledger cards, including capital and interest amounts. Mr Crouch notes that the majority of the itemised amounts discovered were interest, both in the first category noted above and recorded on the ledger cards. 4Mr Crouch draws attention to Part 50 rule 6 of the Supreme Court Rules 1970, as it existed prior to November 2003, which relevantly stated that: "(1) Where money is paid into Court as security for costs or as security on an appeal, or is paid into Court pursuant to Part 72A Division 2 (which relates to money paid into Court in an arbitration), interest on the money shall not be paid to any party. (2) Where money is paid into Court pursuant to an order, to abide the decision in the proceedings, interest on the money shall not be paid to any party unless the Court otherwise orders. (3) Subrule (1) and, subject to any order under subrule (2), subrule (2), do not apply to interest received by the registrar under section 36G (2) of the Public Trustee Act 1913." Mr Crouch's evidence is that the majority of the investments made by the Court were made under s 36G(2) of the Public Trustee Act 1913 (NSW) so that Pt 50 r 6(3) would not have prohibited the payment of interest to parties. However, his evidence is that it appears that interest was not paid to parties unless specifically ordered and was retained in the Supreme Court's trust account, presumably pending any application made by a party or parties for payment of the amount of any interest at a later date. 5Mr Crouch notes that the Supreme Court Rules were subsequently amended in November 2003 to allow for the payment of interest to parties without specific orders being made to this effect and that Part 50 rule 6 of the amended Rules stated that: "(1) This rule applies if money is paid into Court pursuant to an order, to abide the decision in the proceedings, and the money is invested under rule 5 or is paid to the Public Trustee as referred to in rule 6A. (2) The Court may, on application by a party or by its own motion, order the payment of interest to any party. (3) Despite subrule (2), if the Court makes an order that the whole of the money be paid to one or more parties and the order does not expressly provide for the payment (or non-payment) of any interest accruing on the money, any interest accruing on the money is to be paid to the party or parties. (4) The interest paid to a party under subrule (3) is to bear the same proportion to the total interest accruing on the total amount of money paid into Court as the money paid to the party bears to the total amount of money paid into Court, unless the Court orders otherwise. (5) In this rule: interest accruing on money means any interest accruing on the money as a result of its investment under rule 5 or payment to the Public Trustee under rule 6A." Mr Crouch's evidence is that the reconciliation of the Court's trust account indicated that the majority of the interest amounts had accumulated prior to that rule change in November 2003. 6Mr Crouch's evidence is that, following the reconciliation and itemisation of the outstanding trust funds, attempts were made to contact all the lodging parties and potential claimants to the monies by writing to them at their last known addresses, excluding amounts of less than $100. Two mail-outs of letters to potential claimants were undertaken, the first between November 2011 and January 2012, and a second between February and May 2012. The information used to identify claimants was sourced from the details contained on JusticeLink, the court's financial records (the Access database and ledger cards) and the Internet. The approach provided in Part 50 rule 6 of the Supreme Court Rules, following their amendment in 2003, was applied in that process so that, subject to receiving written confirmation from the parties, any interest retained for a matter was paid out to the recipient of the capital in accordance with the original orders; and, in cases involving multiple payments to separate parties, any interest paid was proportional to the capital amounts originally paid. An amount of $441,308.95 was disbursed to claimants as a result of that process, leaving an amount of $314,520.45 in the Court's trust account that remained unclaimed. Directions in respect of monies other than bail 7Rule 41.10 of the UCPR relevantly provides: "41.10 Unclaimed funds (cf SCR Part 50, rule 6B) (1) In this rule, unclaimed funds means funds that have been paid into court in relation to any matter, including any interest accruing on those funds, other than funds or interest that have been paid to the Treasurer pursuant to a direction under rule 41.9 (b), where: (a) judgment has been entered on the matter, and (b) the whole or any part of the funds or interest remains unclaimed after 6 years from either of the following: (i) the making of an order for the payment of the whole of the funds or interest (or any part that is unclaimed), (ii) if no such order is made, the date of the judgment. (2) Any matter in respect of which there are unclaimed funds must be referred to the court by the registrar for a direction under subrule (3). (3) The court may direct the registrar to pay the unclaimed funds to the Treasurer for payment into the Consolidated Fund. (4) On the application of a person entitled to unclaimed funds paid to the Treasurer under subrule (3), the court may direct the Treasurer to pay the funds into court for payment to the person so entitled. (5) If satisfied that a person's failure to make such an application was due to the fact that: (a) the person was then a person under legal incapacity, or (b) the unclaimed funds could not be dealt with until the happening of an event subsequent to the direction referred to in subrule (3), the court may also order the Treasurer to pay into court, for payment to the person, an amount equivalent to the interest (if any) that would have been payable had the unclaimed funds paid to the Treasurer been deposited funds during the period between the date of their payment to the Treasurer under subrule (3) and the date of their repayment by the Treasurer under subrule (4)." The prerequisites to a direction under this rule are, first, that judgment has been entered in each of the relevant matters and, second, the whole or any part of the monies must have been unclaimed after 6 years from the date of the relevant order for its payment or, if no such order is made, the date of the judgment. I am satisfied that these prerequisites are established in respect of the amounts held in the Court's trust account other than bail monies for the reasons set out below. 8The requirements of UCPR r 41.10 seem to me to be satisfied in respect of the first category of funds referred to in Annexure B to Mr Crouch's affidavit, which contains an itemised list of the funds retained by way of interest for nineteen cases totalling $37,509.44. Mr Crouch's evidence confirms that judgments were entered in all except one of the cases listed in this category, and that the funds have in each case been held in excess of 6 years from the date of the order for payment or the date of the judgment. In one case, no judgment or order was entered, where the case was resolved in related proceedings in the Local Court of New South Wales in March 2003 and orders were made by consent for, among other things, the release of the capital funds held by the Court. That case arguably does not, in terms, fall within the scope of UCPR 41.10(1). However, the Court may, under s 14 of the Civil Procedure Act 2005 (NSW), dispense with the requirement of the rules of court if satisfied that it is appropriate to do so in the particular case, and I am satisfied that it is appropriate to dispense with the requirement for entry of the judgment in that case so that it is treated in the same manner as other cases falling within this category for which interest has remained unclaimed for more than 6 years. 9The requirements of UCPR r 41.10 also seem to me to be satisfied for the civil matters contained in a second category of funds referred to in Annexure B to Mr Crouch's affidavit, comprising miscellaneous amounts held in relation to money paid into Court including under Part IV of the Trustee Act 1925 (NSW)) totalling $314,520.45. (I note that this second category also includes amounts paid in relation to bail where the amounts have not been claimed by the relevant surety totalling $32,000, which I will address separately below). Mr Crouch's evidence is that he has identified the date of judgment for all cases within the civil matters and the dates concerned are all in excess of 6 years prior to December 2013. 10The requirements of UCPR r 41.10 also seem to me to be satisfied for a third category of funds referred to in Annexure B to Mr Crouch's affidavit which provides an itemised list of the funds retained for Supreme Court cases recorded in the ledger cards to which I referred above, totalling $247,120.62. Mr Crouch's evidence in respect of this category is that the age of the relevant cases made it difficult to locate a final order or judgment date. However, the ledger cards had not been used for account keeping purposes since April 2002 and, as Mr Crouch points out, that is sufficient to allow an inference to be drawn that any outstanding amounts recorded on that category arose at least 11 years ago. Mr Crouch also notes, and I accept, that the fact that the majority of the remaining ledger card amounts are for interest only supports an inference that an order for the payment of the capital to the parties entitled to it was made at least 11 years ago. Mr Crouch's evidence is that the ledger card amounts also include nine cases where capital amounts are recorded as being retained. He located the final order or judgment date for three of those cases. The remaining six cases where capital is retained were greater than 20 years old and Mr Crouch's evidence is that little, if any, information could be obtained for them. In my view, given the age and lack of currency in these matters, an inference can readily be drawn that orders made disposing of them more than 6 years ago. Even if that were not the case, I would dispense with that requirement under UCPR r 41.10 pursuant to s 14 of the Civil Procedure Act, so that these monies were treated in a similar manner to the unclaimed monies held by the Court within this category. 11Where the prerequisites to a direction under UCPR r 41.10 are satisfied, UCPR r 41.10(3) confers a discretion on the Court whether to direct the Registrar to pay the unclaimed funds to the Treasurer for payment into the Consolidated Fund. It seems to me that several factors are relevant to the exercise of that discretion. First, there can be no useful purpose in the Court retaining monies that are unclaimed in its trust account indefinitely, where they can neither be put to the use of the claimant (who, by definition, has not claimed them for an extended period) or the use of the community. Second, UCPR r 41.10 itself confers protections on persons who have, but have not advanced, claims against those monies once they are a paid to the Consolidated Fund, namely the ability later to apply to the Court for a direction that the Treasurer pay them to the Court for payment to the person entitled to them (UCPR r 41.10(4)) and for an order for interest in the specified circumstances (UCPR r 41.10(5)). 12It seems to me that, having regard to the lack of utility in the Court retaining the funds in the relevant circumstances and the protections provided by UCPR r 41.10(4)-(5), the Court would ordinarily be inclined toward making that direction where the prerequisites for it are satisfied; it is apparent that attempts have been made to contact claimants who have either not made or not established their claims; and no countervailing consideration emerges. That is the case here and I consider that I should make the direction sought by the Registrar in respect of these categories. Bail amounts 13As I noted above, Mr Crouch's second category also includes unclaimed bails amounts totalling $32,000. Mr Crouch's evidence is that bail matters were connected to substantive criminal cases, most of which were heard in the Local Court of New South Wales. I do not consider that the Court has power to make an order in respect of bail monies under UCPR r 41.10. While the Registrar points out that Part 50 r 6B of the former Supreme Court Rules was in similar terms to UCPR r 41.10 and was not specifically limited to civil proceedings, the UCPR apply in respect of civil proceedings (UCPR r 1.5). For that reason, that rule does not apply to funds paid as security for bail in criminal proceedings. 14However, it seems to me that the Court has the power to make such an order in respect of the unclaimed bail monies under the Unclaimed Money Act 1995 (NSW). Sections 7-8 of the Unclaimed Money Act provide that: "7 Unclaimed money (1) For the purposes of this Act, money is unclaimed money if it is money of a kind referred to in section 8 that an enterprise holds in an account that has not been operated on for at least: (a) 6 years, or (b) such shorter period: (i) as may be prescribed by the regulations (being a period of not less than 2 years), or (ii) as may be approved, in relation to a particular enterprise, by the Chief Commissioner at the request of the enterprise (being a period of not less than 12 months). (2) The account may include: (a) money whose owner is not identifiable, and (b) money owned jointly or severally by 2 or more persons 8 Money that may constitute unclaimed money Money may be unclaimed money only if it is one of the following kinds: (a) money (including principal and interest, dividends, bonuses and profits) the recovery of which has been or may be barred by operation of law, (b) money on deposit, (c) share capital subscribed for a share in a body from which the capital subscribed may be withdrawn by the subscriber. 8A Enterprise must first make reasonable efforts to ensure owner is paid money (1) An enterprise that holds any money of a kind referred to in section 8 in an account referred to in section 7 (1) must make reasonable efforts: (a) to identify and locate the owner of the money, and (b) to ensure that the money is paid to the owner of the money. Maximum penalty: 50 penalty units. (2) Money held by an enterprise in an account is not unclaimed money (despite section 7) unless, after making reasonable efforts and after a reasonable period has passed, the enterprise is unable to ensure that the money is paid to the owner of the money. (3) This section does not apply in respect of any money that is not unclaimed money because of section 9." The Unclaimed Money Act in turn provides for payment of unclaimed monies to the Chief Commissioner of State Revenue for payment into the Consolidated Fund (Part 3) and for the Chief Commissioner to publish information in relation to such funds. 15The Registrar submits, and I accept, that the Court is an "enterprise" for the purposes of the Act. The relevant accounts include monies that are not identifiable for the purposes of s 7 of the Act. It seems to me that the bail monies are properly characterised as monies on deposit within the meaning of s 8(b) of the Unclaimed Monies Act. The term "deposit" is broadly defined in Black's Law Dictionary as "The act of giving money or other property to another who promises to preserve it or to use it and return it in kind." Section 36 of the Bail Act 1978 (NSW) in turn describes the process of paying money into the Court as 'deposit[ing] acceptable security', which may obviously enough include a deposit of money within the Court. In O'Brien v Clyne (1985) 64 ALR 129 at 131, Jackson J considered the nature of the accused's right of recovery of money paid as bail security and described a bail payment as a sum 'deposited as a security' to be held pending the performance of the relevant party's undertaking to appear; that, if that person complied with is or her bail undertaking or the condition as to security was dispensed with, there was no basis on which the money so deposited could be retained as against the depositor; and that: "...what appears clear is that the right to retain the money was for a limited purpose and thus for a limited duration and carried with it a correlative obligation to repay at the expiration of that period." These matters indicate that monies paid into Court under the Bail Act is properly characterised as a deposit with the Court, albeit its repayment is conditional upon the undertaking to appear being met or the condition as to security being dispensed with. Those monies therefore fall within s 8(b) of the Unclaimed Money Act. 16Mr Crouch's evidence is that, in order to establish whether the related criminal cases were more than six years old, he contacted JusticeLink Support and the Department of Attorney General and Justice's Information Services Branch (ISB) to determine whether access to Courtnet, the case management system used prior to JusticeLink, could be obtained for the purposes of his investigation. ISB staff then undertook a search to seek to identify records of processing for the relevant criminal cases in the Local Court but were able to provide that information for only 3 of the 25 cases in this category. The judgment in the Local Court for each of these 3 cases was given in excess of 6 years prior to December 2013. Mr Crouch's evidence is that, in respect of the remaining bail matters, all of the Supreme Court bail hearings occurred in excess of 6 years ago and all reasonable efforts to contact the parties eligible to claim the monies have been made. Section 8A of the Unclaimed Money Act requires that all reasonable efforts must have been made to ensure the owner is paid the money before the funds may be considered unclaimed monies for the purposes of the Act. I am satisfied that the efforts to which I refer above meet that requirement. In my view, these matters are sufficient to satisfy the requirements to make the necessary order under the Unclaimed Money Act. Inherent jurisdiction 17The Registrar also submits that, if there is any doubt in relation to whether any specific fund meets the criteria for the grant of an order on those bases, the Court also has power to make the relevant order in its inherent jurisdiction. It is not necessary to address that submission given that I have held that the Court should make that order on the bases set out above. Order 18Accordingly, I make the following order: The Court directs the Registrar to pay the amounts set out in the schedules annexed and marked "B" to the affidavit of Alexander Crouch dated 16 December 2013: (a) in respect of the amount of $282,520.45 relating to civil proceedings, to the Treasurer; and (b) in respect of the amount of $32,000 relating to monies received in respect of bails, to the Chief Commissioner of State Revenue, in each case for payment into the Consolidated Fund.