LEGAL PRACTICE BOARD -v- LASHANSKY [No 2] [2009] WASC 78 (30 March 2009)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : LEGAL PRACTICE BOARD -v- LASHANSKY [No 2] [2009] WASC 78

Practice and procedure - Cross­undertaking in damages - Legal Practice Board removes files from solicitor's premises pursuant to orders obtained ex parte - Orders subsequently discharged with liberty to apply - Whether cross­undertaking can be required retrospectively using the liberty to apply - Scope of orders granting liberty to apply

Abigroup Ltd v Abignano [1992] FCA 567; (1992) 112 ALR 497

Australian Hardboards Ltd v Hudson Investment Group Ltd [2007] NSWCA 104

Cameron v Renouf [2008] WASC 60

Mansfield v Director of Public Prosecutions for Western Australia [2006] HCA 38; (2006) 226 CLR 486

National Australia Bank Ltd v Bond Brewing Holdings Ltd [1990] HCA 10; (1990) 169 CLR 271

National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] VicRp 31; [1991] 1 VR 386

1 TEMPLEMAN J: In a report dated 27 November 2000, the chairman of the Legal Practitioners Disciplinary Tribunal (the Tribunal) set out the Tribunal's determination of a number of references from the Legal Practitioners Complaints Committee in relation to Robert James Lashansky, the present applicant. The Tribunal proposed to make and transmit a report to the Full Court. Pending the determination of the court, the Tribunal suspended Mr Lashansky from legal practice under s 29A of the Legal Practitioners Act 1893 (WA).

2 On 29 November 2000, the Legal Practice Board (the Board) applied by originating motion to McKechnie J, ex parte, and without notice to Mr Lashansky, for orders freezing his trust and general office bank accounts. McKechnie J made orders in those terms on that day.

3 Also on that day, the Board exercised its powers under s 58D(1)(a) of the Legal Practitioners Act and appointed Peter Joseph Bogue, a certificated practitioner, to be the supervising solicitor of Mr Lashansky's practice.

4 On 13 December 2000, Mr Bogue and Ms Diane Howell, the Board's law complaints officer, effected a forcible entry into Mr Lashansky's premises in his absence. They removed Mr Lashansky's client files and personal papers.

5 On 25 May 2001, McKechnie J varied his original order so as to permit the balance of Mr Lashansky's trust account to be paid to Mr Bogue, as the supervising solicitor.

6 On 20 December 2001, Hasluck J made an order by consent, discharging the order made by McKechnie J and granting the parties liberty to apply.

7 On 20 July 2006, the High Court delivered its judgment in Mansfield v Director of Public Prosecutions for Western Australia [2006] HCA 38; (2006) 226 CLR 486. A majority of the court held that when this court makes a freezing order under s 43 of the Criminal Property Confiscation Act 2000 (WA), it has the power (although it is not under a duty) to require the Director of Public Prosecutions to provide an undertaking as to damages.

8 On 26 October 2006, Mr Lashansky commenced this application by chamber summons, under the liberty to apply contained in the order made by Hasluck J on 20 December 2001.

9 Mr Lashansky contends that because the High Court declared what must be taken to have been the pre-existing law when it delivered the judgment in Mansfield, it would have been open to McKechnie J to require the Board to provide an undertaking in damages on 29 November 2000.

10 Mr Lashansky contends further that the Board should now be required to provide an undertaking: and that the undertaking could be used as a means of obtaining redress for the losses he claims to have suffered as a result of activities of the supervising solicitor appointed by the Board consequent on the order made by McKechnie J.

11 On 23 January 2009, Mr Lashansky filed a minute of proposed directions under his chamber summons. He sought a direction that the Board show cause as to why it should have been excused from the requirement to file an undertaking in damages when it made its application to McKechnie J on 27 November 2000. Mr Lashansky then sought directions relating to the assessment of compensation he claims to be recoverable under an undertaking in damages.

12 On 2 February 2009, the Board filed submissions opposing Mr Lashansky's application on the ground that it should not have been brought under the liberty to apply.

13 On 4 February 2009, I made an order that the Board's contention outlined in its submissions of 2 February 2009 be adjourned for hearing to a special appointment. I ordered further that Mr Lashansky's application for orders in terms of the minute of proposed directions dated 23 January be adjourned for hearing to the same special appointment.

14 I therefore turn first to consider the Board's submissions.

15 The Board points out that in Mansfield, the High Court was not concerned with the general jurisdiction of this court, under the Supreme Court Act 1935 (WA), to grant injunctive relief ([46]). However, the majority held that the jurisdiction under the Criminal Property Confiscation Act to make freezing orders involved the protection of the prospective or contingent property rights of the State. It is in those circumstances that an undertaking in damages will usually be required as a condition of granting interlocutory relief. For example, in National Australia Bank Ltd v Bond Brewing Holdings Ltd [1990] HCA 10; (1990) 169 CLR 271, on which Mr Lashansky relies, the High Court held that an ex parte order appointing receivers and managers should not have been made without an undertaking in damages being offered or required.

16 The court so held, in the context of an application for special leave to appeal from the decision to the same effect of the Victorian Court of Appeal: National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] VicRp 31; [1991] 1 VR 386, 530. In the Court of Appeal, it was held that the National Australia Bank had not made out its case for the appointment of receivers and managers. The appointment was therefore set aside. Bond Brewing Holdings Ltd (and a related company, Bond Corporation Holdings Ltd) then made an application for damages to compensate them for the loss suffered as a result of the appointment of the receivers. However, each member of the Court of Appeal, after reviewing numerous authorities, held that in the absence of an undertaking, the court had no power to award any such damages: Kaye J (578); Murphy J (590); Brooking J (602 - 603).

17 In my view, it is significant that no submission was made to the court that an undertaking in damages should be required, retrospectively. The point is, that although in the ordinary course, a court will grant interlocutory relief conditional upon the application providing an undertaking in damages, the court does not order that an undertaking be given. An undertaking can only be volunteered. As Brooking J said:

Equity has its own means - an anticipatory one - of avoiding injustice, by refusing to grant an injunction or appoint a receiver by interim or interlocutory order except on terms. The applicant can take the order or leave it, but if he takes it he does so on terms which make clear, once recourse is had to the authorities, the extent to which he is at risk in relation to damages (602).

18 Brooking J went on to refer to the submission advanced on behalf of the Bond companies that courts of equity have an inherent power to award damages or compensation: and to the maxim that 'he who seeks equity must do it'.

19 Brooking J did not accept that submission. He said:

... this is not a principle which enables a horse that has bolted to be thrust back into the stable. The maxim is not a source of equitable rights except in the sense that a benefit may be conferred on the party invoking it as a condition of the grant of equitable relief. The maxim is discussed by Ashburner, Principles of Equity, 2nd ed, in a chapter entitled 'The Imposition of Equitable Terms'. The present respondents are not now seeking equity: they have obtained their equitable relief. If the maxim were to be applied on an appeal against an interlocutory injunction granted without the usual undertaking it would be by way of preserving the injunction on condition that its harshness was tempered by the undertaking, not by way of setting aside the injunction and imposing a liability in damages. There is no scope for the application of the maxim now. We have not been referred to any case in which it was used in circumstances at all resembling the present (603).

20 In my view, this approach is applicable in the present case, on the basis that an order made under s 58B(1) of the Legal Practitioners Act is interlocutory in nature. I assume that to be so, in Mr Lashansky's favour, because s 58B(2) provides that an order made under s 58B(1) may be revoked or varied on the application of the Board, the practitioner or any interested person. However, I express no concluded view on that point.

21 I therefore conclude that the decision in Mansfield does not assist Mr Lashansky. Accepting, without deciding, that McKechnie J could have required the Board to provide an undertaking in damages as a condition of making the order freezing Mr Lashansky's bank accounts, no such requirement could now be imposed on the Board. The order was made unconditionally, and has been dissolved by the order of Hasluck J on 20 December 2001.

22 That order, which was made by consent, is in the following terms:

1. The order herein made 29 November 2000 and as varied herein on 25 May 2001 by the Honourable Justice McKechnie in Chambers be dissolved.
2. There be liberty to apply.
3. The respondent [Mr Lashansky] pay the applicant's [Board's] costs of and incidental to this application to be taxed.

23 If I am wrong in concluding that the Board could not now be required to provide an undertaking in damages, there remains the question whether it is open to Mr Lashansky to make an application for that relief under the liberty to apply provision of the above order.

24 In Abigroup Ltd v Abignano [1992] FCA 567; (1992) 112 ALR 497, the Full Court of the Federal Court held:

The reservation of liberty to all parties to apply to a court is a provision directed essentially to questions of machinery which may arise from the implementation of a court's orders. They include cases where a court may need to supervise the enforcement of orders after they have been made ... Historically the reservation by the Court of Chancery of further consideration of a decree was intended to cover the circumstance where following the pronouncement of the decree (a final decree) a further hearing was necessary for the court to deal with some outstanding issue sometimes requiring taking further evidence and making further declarations or orders. But this did not detract from the initial orders as being final orders. Rather it was a mechanism designed by the Court of Chancery to obviate the necessity of a further suit being instituted to deal with matters that were essentialy [sic] consequential upon the making of the initial final decree (509 - 510).

25 In Cameron v Renouf [2008] WASC 60, Newnes J noted that in determining the ambit of a reservation of liberty to apply, it was necessary to have regard to the nature of the final orders made in the action. His Honour quoted from the decision of the Court of Appeal of New South Wales in Australian Hardboards Ltd v Hudson Investment Group Ltd [2007] NSWCA 104 that:

... what can be done under a reservation of liberty to apply depends on what needs to be done, in the particular case, to work out the particular orders that have been made. If an order is one the working out of which of its nature involves deciding complex questions, or questions that were not specifically raised at the time that the order was made, those questions can be raised and decided in the original suit pursuant to liberty to apply [56].

26 Clearly, there is nothing complex about the order made by consent on 20 December 2001, dissolving the order made by McKechnie J on 29 November 2000. Nothing further was required to give effect to that order: no working out was necessary.

27 In any event, Mr Lashansky does not assert that the loss and damage he claims to have suffered, flowed from the freezing of his bank accounts. His complaint is about the subsequent conduct of the Board and the supervising solicitor who, it is alleged, destroyed Mr Lashansky's liens by returning files to his clients and removed valuable personal papers which, he claims, have not been returned to him.

28 It follows, in my view, that even if it would have been appropriate for McKechnie J to require an undertaking in damages, and even if Mr Lashansky could now obtain a retrospective undertaking, and even if he could do so under the liberty to apply, such an undertaking would not provide a basis for obtaining the compensation he now seeks from the Board.

29 In any event, these matters are the subject of Mr Lashansky's action in CIV 1768 of 2004 against the Board and others (although Mr Bogue is not a party to that action).

30 For these reasons, I conclude that Mr Lashansky's application cannot succeed, and must therefore be dismissed.