Australian Receivables Ltd v Tekitu Pty Ltd

Judgment 1HER HONOUR : Before me for hearing on 31 January 2012 was an application brought by a solicitor, Mr Rodd Peters (trading as Rodd Peters Lawyers), for declaratory and other relief in relation to moneys now held in Court but that were formerly held by him (in the circumstances set out below) in a controlled moneys account. The application follows the determination of proceedings heard by me in June last year involving former clients of Mr Peters (they being the defendants in those proceedings). 2The principal proceedings concerned disputes arising out of the implementation of the arrangements by which the first defendant (Tekitu) sold a debt collection business to the plaintiff (Australian Receivables). After the sale, there were disputes between the parties, on the one hand, as to amounts claimed by Tekitu to be payable to it (as part of the purchase price under the sale agreement and for reimbursement of business expenses said to have been incurred by it on behalf of Australian Receivables during a period in which Tekitu was carrying out functions in respect of the business in effect on Australian Receivables' behalf) and, on the other hand, as to claims by Australian Receivables that moneys required to be remitted to it under the terms of the Sale of Business Agreement had been wrongly retained in Tekitu's bank accounts (referred to as the retained moneys claim) and for damages for alleged breaches of various warranties given by Tekitu in that agreement. 3At the time of the commencement of the proceedings in December 2007, and indeed from about October 2007, Tekitu and its directors/shareholders (Mr and Mrs Smith) were represented by Mr Peters. (I leave aside for the moment the issue raised on the current application as to whether that retainer was a joint and several retainer by the respective defendants or a separate retainer by the company on the one hand and by Mr & Mrs Smith on the other.) That retainer was terminated in mid 2009 (for reasons attributed by Mr Peters to a breakdown in the relationship with his clients) and thereafter the Tekitu parties had new legal representation (Malcolm Johns Legal Pty Ltd). In the course of the handover of the defendants' legal files in relation to the litigation, it appears that there was a dispute as to unpaid fees claimed by Mr Peters. That dispute was resolved in May 2010 with the entry by the Tekitu parties and both their former and new solicitors into a File Transfer Deed (the terms of which I will consider in due course). 4The hearing took place, as noted above, in June 2011. On 31 October 2011, I published my reasons for judgment. I made no orders at that time but, rather, stood the matter over to permit the parties an opportunity to confirm or correct the calculation of the amounts owing following the findings I had made in relation to the issues in dispute (and to address the question of costs). The matter then came back before me for argument on 16 November 2011, following which I published my reasons in relation to those matters and made final orders on 23 November 2011. 5What later emerged (but had not been foreshadowed either during the main proceedings or at the time the final orders were made) was a claim by Mr Peters to a lien or charge over the moneys then still held in his firm's controlled moneys account, that lien or charge being said to secure the payment of his outstanding legal fees. (In fairness to Mr Peters, it seems that he had not earlier been appraised by his former clients or their new solicitors of the date of the hearing or of the fact that final orders were being made in November in which a payment of moneys out of the controlled moneys account was to be sought.) 6When a dispute arose as to Mr Peters' claim to retain a portion of the moneys in the controlled moneys account for his fees, an application was made by Tekitu (by notice of motion dated 15 December 2011) for orders for the payment out of the controlled moneys account in accordance with the orders I had made in November on the determination of its (and the Smiths') disputes with Australian Receivables. Mr Peters then filed a Notice of Motion dated 16 December 2011, seeking a stay of the order I had made on 23 November 2011 in respect of the payment of moneys out of the controlled moneys account. 7Those motions were listed before me in December last year and on that occasion I made certain directions to facilitate the payment out of the controlled moneys account to Australian Receivables of the moneys that I had earlier ordered be paid to it (in respect of which I had found a constructive trust in its favour) and for the payment to Tekitu of the balance of the funds in the controlled moneys account less an amount referable to the fees claimed by Mr Peters. (Mr Peters' costs, as itemised in a Bill of Costs served in November 2010 have not been assessed or agreed and Mr Peters claims that the time for assessment of that bill of costs has long since expired.) The balance of the funds in the controlled moneys account was then paid into Court pending the hearing of the present application by Mr Peters. I made that order in light of the apparent difficulty that had been encountered by the Tekitu parties in obtaining a response from Mr Peters on matters relating to the controlled moneys account (Mr Peters now residing overseas). 8As a result of the above, at the hearing on 31 January 2012 the substantive application was that brought by Mr Peters, by Notice of Motion dated 22 December 2011, for declaratory and other relief in relation to the claimed lien or equitable charge over the moneys now held in Court to secure moneys referable to his fees (and interest thereon). Issues 9Mr Peters claims an entitlement to the moneys held in Court in a variety of ways (asserting variously a lien, charge or trust over those moneys; alternatively relying on certain provisions of the File Transfer Deed). In particular, he seeks a declaration that he holds a lien over Tekitu's entitlement to the funds formerly held in his controlled moneys account (and now held in Court) (the Funds) in respect of unpaid costs, interest and the costs of enforcement of his claim for costs (to which I will refer collectively as the Costs Claim). Further or in the alternative, he seeks a declaration that he holds an equitable charge over the Funds that secures the Costs Claim or that the Funds are held on and subject to a trust in his favour to the extent of the Costs Claim. Consequential relief is sought pursuant to the making of any or all of the said declarations for the payment out of the moneys held in Court to Mr Peters (order 4). Relief is also sought (further or in the alternative to the preceding claims) by way of a claim for specific performance of the File Transfer Deed entered into between the Tekitu defendants and Mr Peters and/or for the payment by Mr and Mrs Smith of an amount equal to the difference between the Claim and any payment made to Mr Peters from the Funds plus interest. 10The issues to be determined on the present application are therefore: whether Mr Peters has either a lien or an equitable charge over the Funds; whether the Funds are impressed with a trust in his favour; whether the defendants should be ordered to authorise or agree to the payment out of Court of the Funds, in effect to order the performance by them of obligations under the File Transfer Deed or to give effect to an irrevocable authority acknowledged under that deed for the payment of moneys in the litigation to be made to their new solicitors and held by them for payment of their former solicitor's costs; and whether Mr and Mrs Smith are liable to pay the difference between the amount claimed by Mr Peters and any amount paid to him from the Funds. Summary 11For the reasons set out below, I am of the view that Mr Peters has an equitable "fruits of the action" lien over the funds presently held in Court to secure the payment of his costs of acting for the Tekitu parties in the proceedings; that this lien prevails over the statutory lien of Tekitu's administrator and that it is not unconscionable for Mr Peters to assert it in the present case; that the retainer of Mr Peters was a joint and several retainer by the three Tekitu parties and, there having been no application within the requisite time for assessment of his November Bill of Costs, the appropriate order is for the payment out of Court to Mr Peters of the amount of Mr Peters' claimed costs and interest thereon (together with the costs of enforcement of his lien) with any balance remaining to be payable to Tekitu. 12I consider that the provisions of the File Transfer Deed did create an equitable charge over the funds the subject of orders for the payment out to Tekitu in the principal litigation but that such a charge was registrable as a book debt (at least insofar as it secured the claim for repayment of business expenses incurred by Tekitu) and is thus void as against the deed administrator for non-registration. However, I consider that it cannot be inferred from the grant of that equitable charge that there was no intention of the parties to rely upon the equitable lien (since the File Transfer Deed by which the charge was created expressly preserved those rights). Therefore, my conclusion in relation to the equitable charge does not affect the conclusion reached above in relation to the solicitor's fruits of the action lien. 13Had the issue arisen for determination, I would not have held that the funds in Court were presently impressed with a trust in Mr Peters' favour. Nor would I have held that the Tekitu parties should be ordered to authorise or agree to the payment out of Court of the said funds (where such an order would relate to funds of Tekitu that are now subject to the Deed of Company Arrangement). 14Had I found otherwise in relation to the solicitor's lien, I would nevertheless not have found that Mr and Mrs Smith were presently liable under the provisions of clause 5 of the File Transfer Deed to pay to Mr Peters the difference between the amount claimed by Mr Peters for his Costs Claim and any amount actually recoverable by him (on that hypothesis, nil) from the funds presently held in Court, for the reason that under clause 5 the obligation is expressed to arise only if the judgment (on completion of the matter; ie, the principal judgment) is less than the sum claimed and that is not the case here. Mr and Mrs Smith would, however, be liable in debt for the full amount of the costs claimed pursuant to the costs agreements entered into by them (jointly with Tekitu) and Mr Peters. Background facts 15The circumstances in which the moneys came to be held in Mr Peters' account were briefly explained in my earlier reasons but I repeat the salient facts here. 16When the proceedings were first commenced in 2007, Australian Receivables had sought interlocutory relief in relation to the preservation of funds held by Tekitu which it claimed were held on trust for it. Mr Peters had been retained in about October 2007 to act in relation to the disputes. He was the solicitor initially on the record for the defendants (Tekitu and Mr & Mrs Smith) in the proceedings and remained so at the time that the undertakings were given to the Court by the defendants that led to the payment on 6 November 2007 of the sum of $330,000 into Mr Peters' trust account. That sum was then transferred to a controlled moneys account held by him and to which a further sum of $1,314 was subsequently added on 15 November 2007. The amount so paid into the controlled moneys account represented the balance of moneys that had been withdrawn by Tekitu's directors from Tekitu's trading account in October 2007 and over which Australian Receivables maintained its retained moneys claim. 17Some moneys were withdrawn from the controlled moneys account (pursuant to orders made by Brereton J on 6 December 2007 varying the terms on which the controlled moneys were held) between December 2007 and August 2008, such that by the time of the August hearing, there remained a sum of $224,607.72 held in Mr Peters' controlled moneys account. 18Australian Receivables contended (and, in respect of the bulk of the funds in the controlled moneys account, I held) that the moneys in this account were impressed with a trust in its favour. Tekitu denied this and contended that the moneys in question represented no more than security for any adverse judgment in these proceedings. 19On 20 August 2009, a Notice of Intention to File Notice of Ceasing to Act dated 14 August 2009 was filed by Mr Peters in these proceedings, followed by the filing of a Notice of Ceasing to Act on 11 September that year. (I note that this was some 16 months after the date at which Mr Peters, in his 6 January 2012 affidavit on the present application, says his retainer was terminated and that he ceased to act in the proceedings. However, it seems to me from the Notice referred to above and from the items contained in the narrative of the November 2010 Bill of Costs that Mr Peters' recollection must be incorrect on this point and that he continued to be retained and to act on the matter through to at least June 2009 and did not formally cease to act as the defendants' solicitor in the proceedings until September 2009 as noted in the Notice of Ceasing to Act.) Mr Johns filed a Notice of Appointment of Solicitor on 17 September 2009. 20It seems that a dispute then arose as to unpaid fees claimed by Mr Peters and he exercised a lien over the files. There may have been a question as to whether such a lien could be maintained in the face of ongoing litigation (there being a suggestion that the court may order the documents to be produced whenever their production is necessary to the interests of justice - Bolster v McCallum (1966) 85 W.N. (Pt 1) (N.S.W.) 281), though I note that the "interests of justice" need to be balanced against the competing proposition that a court will protect the lien unless it is shown to be unfounded ( Hammerstone Pty Ltd v Lewis [1994] 2 Qd R 267). Drummond J, in In the Matter of an Application by Weedman (Federal Court of Australia, 17 December 1996, Unreported), considered that: Where it is the client who has terminated the retainer otherwise than for the solicitor's misconduct, I doubt whether there is any residual discretion in the court to order that the former client shall have access to the documents, in the face of the lien, even where the denial of access to the documents may leave the client facing what truly be regarded as catastrophic disruption to his litigation. Such a discretion could, in my opinion, only be justified on the basis that the interests of justice may require such an order to be made in some cases. But it is difficult to see why the court should disregard the interests of its own officers and leave without payment for what is justly due to them because insistence on the lien would deprive the former client of material essential to the conduct of his case, where that situation has been brought by the client discharging the solicitor without any good reason. 21In any event, agreement was reached in or about May 2010 (and recorded in the File Transfer Deed to which each of the Tekitu parties and their former and new solicitors was a party) as to the basis on which Mr Peters agreed to transfer his files in relation to the litigation to the solicitor then acting for the Tekitu parties (Mr Johns of Malcolm Johns Legal). 22The copy of the File Transfer Deed which was admitted into evidence was unsigned (and did not indicate the date in May 2010 on which it was signed). It also bore no indication that it had been stamped. Having regard to s 304 of the Duties Act 1997 (NSW) (which renders inadmissible in evidence an unstamped document on which duty is payable unless either the duty is paid or an undertaking is given by the person tendering the document to submit the document for duty), an undertaking was proffered on behalf of Mr Peters to submit the instrument to the Commissioner, for stamping as necessary. (Any relief to be granted to Mr Peters on the present application should in my view be subject to evidence of compliance with that undertaking.) 23Reliance was placed by Senior Counsel for Mr Peters, Mr Aldridge SC, on a number of provisions of the File Transfer Deed and I summarise (or in some cases set out) those provisions below. The term "Clients" was defined in the Deed as meaning Tekitu and Mr and Mrs Smith. 24Recital B made clear the purpose of the Deed, as follows: The purpose of this Deed is to secure payment to the Former Solicitors [Mr Peters] of any unpaid costs, being the total of professional costs, disbursements, Counsel's fees, charges and other expenses ("the Costs") subject to the Clients' statutory right to assessment. 25Recital C referred to the agreement of Mr Peters, in accordance with the Deed, to release the Clients' files, folders and original documents in relation to the Supreme Court proceedings, expressly "preserving any rights over any moneys paid or payable by the Clients". 26Clause 3A contained an acknowledgement that nothing in the Deed affected Mr Peters' rights to enforce any costs agreement or otherwise to recover the Costs Claim (including to take any such steps prior to completion of the proceedings in which he had been formerly retained). 27Clause 4 provided as follows: In the event that at the time of completion of the Matter the Costs or any portion thereof remains unpaid then the Present Solicitors shall pay, within 28 days of the receipt by them and availability of cleared funds of the Clients, the Costs and the interest (where applicable) to the Former Solicitors on completion of the matter. If the statutory right to the assessment has been exercised by the Clients and the assessment has not been completed, or the Former Solicitors have applied for assessment as required under Section 317(1) of the LPA 2004 and assessment has not been completed, the Present Solicitors (if there are sufficient funds for this purpose) shall retain in trust money equal to the sum claimed by the Former Solicitors in the Bill of Costs and release the balance to the Clients. 28Thus, the obligation of Malcolm Johns Legal under clause 4 to pay any moneys to Mr Peters was an obligation arising only after completion of the proceedings and then only if there were any costs remaining unpaid (which has transpired to be the case) and if there was at that time (or is thereafter) the receipt by Malcolm Johns Legal "and availability" (presumably meaning the ability to deal with the funds in the hands of that firm) of "cleared funds". In other words, the clause in its terms specified the time at which and events on which an obligation for payment of the costs and interest by Malcolm Johns Legal was to arise. (Until the events triggering clause 4 have arisen, there is no obligation on Malcolm Johns Legal under the terms of the deed to pay any amount to Mr Peters.) Pausing there, clause 4 can be readily characterised as a clause marking the availability of cleared funds as the event upon which payments will be made without expressly charging those cleared funds with the payment itself (to adopt the language employed in Jackson v Richards [2005] NSWSC 630 and Halsted (Bankrupt) v Official Trustee in Bankruptcy [2011] FCA 1242, to which I will later refer). 29The second half of clause 4 in its terms imposed on Malcolm Johns Legal an obligation (if there were sufficient funds held by the firm for that purpose) to retain, in trust, money equal to the sum claimed in the November Bill of Costs if the statutory right of assessment had been exercised by the clients or if Mr Peters had applied for a costs assessment (neither of which events has as yet transpired). 30Clause 5 provided as follows: In the event that at the time of completion of the Matter the Costs or any portion thereof remains unpaid and any verdict, settlement, judgment or award on completion of the matter is in a sum less than the total amount of the amount of the Costs and there (if applicable) payable by the Clients (subject to the Client's statutory right to assessment) under this Deed, the Clients will personally pay the Former Solicitors the difference between the monies recovered and the actual amount of Costs and interest payable to the Former Solicitors. 31Clause 5 is therefore predicated both on costs remaining unpaid on the completion of the matter (as is here the case) and the judgment being in a sum less than the total amount of the costs (and interest) payable to Mr Peters. The latter condition is not satisfied in this case insofar as the costs judgment in favour of Tekitu exceeds the costs claimed by Mr Peters. Therefore, there is at present obligation no obligation triggered on the part of the Clients under the terms of that clause. Relevantly, however, clause 5 clearly assumes that if a favourable judgment is obtained that will be applied in payment of the Costs Claim, since it requires regard to be had to the difference for which the Tekitu parties (including Mr and Mrs Smith) are to be personally liable. (Read with clause 4, therefore, it seems to me to disclose an intention to charge funds received by Malcolm Jones Legal consequent upon a judgment in favour of Tekitu with the payment of Mr Peters' costs - a matter I deal with when considering whether an equitable charge was created on the execution of the File Transfer Deed.) 32In relation to costs and disbursements incurred after the date of the File Transfer Deed, clause 6 provided: The Present Solicitors and the Clients jointly and severally indemnify the Former Solicitors as and from the date of this Deed from and against all claims for third party disbursements incurred as and from the date of this Deed for or on behalf of the Client and, without limiting the generality thereof, counsels' fees and experts' fees. 33Clause 6A contained a warranty and agreement that the Clients (the Tekitu parties) had signed an irrevocable authority directing payment to Mr Peters of all moneys due to the Clients, including costs, and that they had authorised Malcolm Johns Legal to retain all such moneys to the extent necessary to meet the Costs Claim. 34Clause 7 contained a number of further warranties and agreements by the Tekitu parties, on which reliance is placed by Mr Peters, including in clause 7.1 that the Clients will not charge or encumber the proceeds of the litigation without the consent of both sets of solicitors; in clause 7.2, that Mr Peters' "lien over the files and any monies paid or payable to the Clients is not discharged by entering into this Deed"; and in clause 7.4, that the Clients and Malcolm Johns Legal "are obliged to do all things reasonably necessary to ensure that the Costs of the Former Solicitors are paid or secured to the satisfaction of the Present Solicitors". (Insofar as this clause is expressed as a warranty and agreement by the Tekitu parties, and not a warranty or agreement by Malcolm Johns Legal, strictly speaking it imposes no obligation on that firm as such. However, it is to be noted that Malcolm Johns Legal is a party to the File Transfer Deed and thus was at all relevant times on notice of the fact that its clients had given a warranty as to the obligations of Malcolm Johns Legal in relation to the subject matter of clause 7.4. Thus, an interesting issue as to the parties' respective rights and obligations would arise if Malcolm Johns Legal were now to deny receipt of an authority binding it, vis a vis the Tekitu parties, to disburse funds as contemplated by the File Transfer Deed.) 35On 9 September 2010, voluntary administrators were appointed to Tekitu pursuant to s 436A of the Corporations Act 2001 (Cth). Subsequently, pursuant to a resolution passed at the second meeting of creditors on 6 October 2010, a Deed of Company Arrangement was executed on 27 October 2010. That Deed made provision for the creation of an Administration Fund into which an amount of $50,000 was to be paid within 8 weeks from the date of execution of the Deed, as well as 20% of the amount recovered by Tekitu in the Supreme Court proceedings brought against it by Australian Receivables after deducting the company's reasonable costs incurred in those proceedings. (Leave to continue the proceedings against the company under administration was granted in June last year.) 36Also on 27 October 2010, Mr and Mrs Smith entered into a Deed of Guarantee under which they guaranteed the due and punctual payment by the company of all moneys owing under the Deed of Company Arrangement as well as indemnifying the deed administrators for all losses and costs incurred by them acting as administrators or deed administrators. (The administrators' costs are thus secured by the guarantee of Mr and Mrs Smith and I note that there was some evidence in the principal proceedings as to their asset position. Further, there has already been a payment out to Tekitu's administrators of moneys from the controlled moneys account.) 37On 30 November 2010, Mr Peters issued a bill of costs addressed to the Tekitu parties, claiming the sum of $74,487.20 (including GST) by way of outstanding fees. The Bill of Costs noted that it was issued pursuant to the Legal Profession Act 2004 (NSW) and Legal Profession Regulation 2005 (NSW) and drew to the addressees' attention their ability to apply to have any part of the costs claimed assessed; such application to be made within 60 days. The Bill of Costs was addressed to each of Mr & Mrs Smith and Tekitu. Annexed to the Bill of Costs were copies of costs disclosure letters dated 1 November 2007, 20 November 2007 and 15 January 2009. (The Bill of Costs also refers to a fee disclosure letter of about 21 February 2008.) 38It does not seem to be disputed that no application for assessment of the costs claimed in this Bill of Costs was made by the Tekitu parties and that the time to make such an application has expired. Counsel for Malcolm Johns Legal and the Tekitu parties, Mr Hyde, contends, however, that the November Bill of Costs was not valid insofar as it was addressed to the Tekitu parties jointly and did not separately allocate to each the costs incurred by that individual or entity or the proportionate share of any liability jointly incurred by them. 39Also annexed to the Bill of Costs were copies of the letters under cover of which costs invoices were sent or status reports provided by Mr Peters' firm, those being variously addressed to Mr & Mrs Smith, Mr & Mrs Smith and Tekitu, or to Tekitu (marked to the attention of Mr Smith or Mr & Mrs Smith). However, there is nothing to suggest that the various ways in which the invoices (or the covering letters with which they were sent) were addressed was related to the particular work for which the respective invoices were rendered. It seems more likely to be a function of the fact that Mr and Mrs Smith were the principals of Tekitu. (It is therefore difficult to draw any conclusion from the manner in which the costs invoices were issued as to the nature of the retainer, joint or otherwise.) 40At the principal hearing, Australian Receivables contended (inter alia) that it was entitled to the whole of the moneys held in the controlled moneys account. It also contended that any amount ultimately found to be owing to Tekitu in relation to the purchase price for the business (after any adjustments were taken into account) was to be set off against the amounts claimed by Australian Receivables. (Australian Receivables contended that it should be found that no amount was in fact due to Tekitu once such a set-off was taken into account.) 41For the reasons set out in my October judgment, I held, relevantly, that Australian Receivables was able to trace into the moneys held in the controlled moneys account to recover that portion of those moneys that I found was impressed with a trust in its favour. I further held that the shortfall of Australian Receivables' retained moneys claim should be set-off against the amounts for which Australian Receivables was liable to Tekitu on its cross-claim. 42The orders that I made in November 2011 (which had the result, after the tracing and setting-off therein contemplated that there was a balance remaining in the controlled moneys account payable to Tekitu on its cross-claim) included the following declarations: that the sum of $567,084.73 that had been held in Tekitu's bank trading account (the retained moneys) after 9 January 2007 was held by it on constructive trust for Australian Receivables; that Tekitu was liable to account to Australian Receivables for that sum; and that Australian Receivables was entitled to trace the sum of $170,030.12 into Mr Peters' controlled moneys account (and that that amount was held on constructive trust for Australian Receivables). 43I gave judgment in favour of Tekitu on its cross claim in the sum of $331,708.39 for loss occasioned by Australian Receivables' breaches of contract. (The judgment for Tekitu on the cross-claim thus exceeded the sum claimed for Mr Peters' costs - a matter relevant when considering the operation of clause 5 of the File Transfer Deed.) 44As part of the final orders made in the principal proceedings (finalised largely by agreement between the parties having regard to the findings I had made) I declared that the respective liabilities (of Australian Receivables to Tekitu, in the sum of $331,708.39, and of Tekitu, in respect of the shortfall in the retained moneys of $389,300.13) be off-set against each other. As a result, I declared (order 7) and made a consequential order (order 8) that Australian Receivables was entitled to the sum of $57,591.74 out of the controlled moneys account (being the difference between $389,300.13 and $331,708.39), together with 25% of the interest accrued in the controlled moneys account, and declared (order 9) that the constructive trust over part of the moneys then remaining in the controlled moneys account (the sum of $112,438.98, that being $170,030.12 less $57,591.74) was extinguished. 45By order 10, I ordered that the sum of $112,348.98 held in the controlled moneys account (formerly the subject of the constructive trust) be paid to Tekitu (as part of the amount the subject of order 11 to which I refer below) in satisfaction of the amounts owing to it by Australian Receivables in accordance with the judgment on the cross claim and taking into account the mutual set-offs provided for in the orders. By order 11, I declared that Tekitu was entitled to the balance of the moneys in the controlled moneys account (after payment out of the amount provided for in order 8) being $167,015.98 and to 75% of the interest accrued in the controlled moneys account and by order 12 (that being the order that Mr Peters last year sought to have stayed) I ordered that Tekitu be paid the sum of $167,015.98 from the controlled moneys account, together with 75% of the interest accrued in the controlled moneys account forthwith. (The amounts so ordered to be paid in favour of Tekitu thus also exceeded the amount claimed by Mr Peters for his outstanding costs.) 46Following the making of those orders, by letter dated 28 November 2011, Malcolm Johns Legal wrote to Mr Peters informing him of the orders that had been made. It was at this stage that a dispute arose as to the claim by Mr Peters to a lien or charge (or other interest) over the funds held in the controlled moneys account at least to the extent of his unpaid costs and interest thereon. 47Pursuant to directions I made on 16 December 2011, the sum of $95,000 was paid into Court from the controlled moneys account pending the making of the present application and the balance disbursed to Australian Receivables and Tekitu respectively. In making the orders for the payment into Court of the moneys the subject of the disputed lien or charge, I acceded to the submission by Counsel for the Tekitu parties (now appearing for Malcolm Johns Legal Pty Ltd), Mr Hyde, that this was warranted in light of difficulties that had been encountered in obtaining instructions from Mr Peters' firm in relation to the controlled moneys fund now that Mr Peters resides out of the jurisdiction. In so doing, I did not intend to alter any evidentiary onus there might be in relation to claims made on the moneys in the controlled moneys fund, though it is submitted by Mr Hyde that this is the effect of the payment into Court of those moneys. 48Mr Hyde submits that, insofar as prayer 4 of the notice of motion seeks payment out of Court of moneys now held in Court, the onus is on the Mr Peters to establish not only an entitlement to or a beneficial interest in the fund paid into Court but also that other potential claimants to the fund (such as the administrator claiming under his statutory lien for the costs of the administration) do not have valid claims (or claims that have priority) against the fund. 49Reference was made in that regard to the summary of the applicable principles on a claim for payment of moneys out of Court in Commonwealth Bank of Australia v The Estate of the Late Mahmoud Slieman [2010] NSWSC 661. There, Slattery J, at [8] to [10], said that: An applicant under UCPR r 55.11 must establish three matters to justify an order for the payment of money out of Court. The first is to identify the person who is primarily entitled to any funds paid into Court and the basis of that entitlement. It is fundamental that the person be identified from the best evidence available, so that the Court can be sure that the person has been given appropriate notice of the application and can if necessary contest it The second matter that needs to be proved by a claimant is that he or she is not merely an unsecured creditor against the person primarily entitled to the fund but is a person who has an beneficial interest in the very fund that has been paid into Court. The same evidence that demonstrates a person's primary entitlement to the funds in Court often establishes this second matter. Thirdly, it is necessary for an applicant to identify the other potential claimants to the fund in Court and to prove that those persons were notified of its claim. Those persons may consent to the claim. Alternatively, the applicant may prove that those persons either do not have valid claims against the fund or that their claims do not have priority over the applicant's claims. 50With the above background in mind, I consider the issues that have been raised on the present application. (i) Equitable lien ('fruits of the action lien') 51The lien that is said to have arisen is that commonly referred to as the "fruits of the action" lien. 52In Ex Parte Patience; Makinson v Minister (1940) 40 SR (NSW) 96 at 100-101, Jordan CJ gave the classic exposition of a solicitor's equitable right to have his or costs and disbursements paid from money recovered for his or her client: A solicitor has no lien for his costs over any property which has not come into his possession. If, however, as the result of legal proceedings in which the solicitor has acted for the client, the client obtains a judgment or award or compromise for the payment of money, although the solicitor acquires no common law title to his client's right to receive the money or to any part of that right, he acquires a right to have his costs paid out of the money, which is analogous to the right which would be created by an equitable assignment of a corresponding part of the money by the client to the solicitor. That is to say, the solicitor has an equitable right to be paid his costs out of the money; and if he gives notice of his right to the person who is liable to pay it, only the solicitor and not the client can give a good discharge to that person for an amount of the money equivalent to the solicitor's costs: Welsh v Hole 1 Doug 238. If the person liable to pay refuses, after notice, to pay the costs of the solicitor, the solicitor may obtain a rule of Court directing that the amount of his costs be paid to him and not to the client; and payment by the judgment debtor to the client after notice of the solicitor's claim is no answer to an application for such a rule: Read v Dupper 6 TR 361; Ormerod v Tate 1 East 464; Ross v Buxton 42 Ch D 190. Further, if the client and a judgment debtor make a collusive arrangement for the purpose of defeating the solicitor's right, the Court will enforce that right against the judgment debtor notwithstanding the arrangement and notwithstanding that no notice of the solicitor's claim had been given to the judgment debtor prior to the arrangement: Ross v Buxton . 53More recently, in Firth v Centrelink [2002] NSWSC 564; (2002) 55 NSWLR 451, Campbell J (as his Honour then was) considered the nature of a solicitor's lien over money recovered for the solicitor's client and helpfully set out the following propositions at [35]: (a) The solicitor's right exists over money recovered through obtaining judgment in litigation, and also over money recovered through the settlement of litigation: Carew Counsel Pty Ltd v French [2002] VSCA 1 at [33]; Roam Australia Pty Ltd v Telstra Corp Ltd [1997] FCA 980, Lehane J, 22 September 1997, unreported at 4. (b) The solicitor's right exists over both the amount of a judgment in favour of the client, and the amount of an order for costs in favour of the client: In The Estate of Fuld (No 4) [1968] P 727 at 736; Twigg v Keady (1996) 135 FLR 257 at 266 - 267 per Finn J; In Re Blake; Clutterbuck v Bradford [1945] Ch 61 (a case concerning a statutory charging order rather than a lien arising in equity's exclusive jurisdiction, but dependent on the same principle as the equitable right - see para 44 below). (c) It exists over money which is in the possession of the solicitor, and also over money which is in court ( In Re Meter Cabs [1911] 2 Ch 557 at 562) and money which is owed to the client but not paid into court ( In The Estate of Fuld (No 4) [1968] P 727; Re de Groot [2001] 2 Qd R 359 at 375) (my emphasis) (d) The solicitor need not be still acting for the client at the time that the money was recovered: In The Estate of Fuld (No 4) [1968] P727; Kelso v McCulloch (Supreme Court of NSW, Young J, 24 October 1994 unreported); Twigg v Keady (1996) 135 FLR 257 at 289 per Kay J; Roam Australia Pty Ltd v Telstra Corp Ltd [1997] FCA 980, Lehane J, 22 September 1997, unreported at 4 (e) For the right to arise it must be shown that there is a sufficient causal link between solicitor's exertions and the recovery of the fund of money: Roam Australia Pty Ltd v Telstra Corp Ltd [1997] FCA 980, Lehane J, 22 September 1997, unreported at 4 - 5; Carew Counsel Pty Ltd v French [2002] VSCA 1 at [33]. (f) The quantum of money for which the solicitor has the equitable right is the amount which is properly owing to the solicitor by the client, whether that amount be ascertained by taxation of a bill of costs, or assessment, or pursuant to a costs agreement: Roam Australia Pty Ltd v Telstra Corp Ltd [1997] FCA 980 (Lehane J, 22 September 1997, unreported at 4). In relation to those situations where taxation is necessary to ascertain the quantum owing to the solicitor, the solicitor's right exists in the fund prior to the occurrence of the taxation ( Johns v Cassel (1993) 6 BPR 13,134 at 3,136 per Hodgson J; Twigg v Keady (1996) 135 FLR 257 at 289 per Kay J; In The Estate of Fuld (No 4) [1968] P 727 at 740; Roam Australia Pty ltd v Telstra Corp Ltd [1997] FCA 980 (Lehane J, 22 September 1997, unreported at 6). (g) The solicitor's equitable right exists before the court is asked to intervene to protect it; it "arises immediately upon the recovery of monies through the exertions of the solicitor": Carew Counsel Pty Ltd v French [2002] VSCA 1 at [33]; if the lien is over the proceeds of an order for costs, it comes into existence at the time of making of that order for cost : Phillipa Power & Associates v Primrose Couper Cronin Rudkin [1997] 2 Qd R 266; Kison v Papasian (1994) 61 SASR 567. If the lien is over the proceeds of a settlement, it arises when the settlement agreement is entered into: Re de Groot [2001] 2 Qd R 359 at 368. (These statements concern when the lien comes into existence as an item of present property - they are not concerned with the ability of the solicitor to deal with the rights under the lien as future property before the fund is in existence.) (my emphasis) (h) The right of the solicitor is one which the solicitor can enforce against the client, entitling the solicitor to an injunction to prevent the payment of the fund to the client without notice to the solicitor until such time as the quantum of the solicitor's entitlement to be paid from the fund is ascertained: In The Estate of Fuld (No 4) [1968] P 727. If the quantum of the solicitor's entitlement has been ascertained, the solicitor is entitled to an order that the amount of his entitlement be paid to him from the fund, notwithstanding opposition from the client: Leamey v Heath [2001] NSWSC 1095 (Campbell J, 22 November 2001, unreported). (i) The right can also be enforced against people other than the client, in certain circumstances. When the money recovered takes the form of a debt owed to the client, which has been assigned, the right of the solicitor will prevail over the rights of an assignee of the debt, save where the assignee is a bona fide purchaser for value without notice: Re de Groot [2001] 2 Qd R 359. (If the assignee is a bona fide purchaser for value without notice, it may be that priorities between the solicitor's right and the right of the assignee are to be determined in accordance with the rule in Dearle v Hall , (see Meagher, Gummow & Lehane, Equity Doctrines and Remedies, 3rd edition, at [819] ff) or it may be that the court considers who, of the solicitor and the assignee, has the superior equity - Re de Groot [2001] 2 Qd R 359 at 368 - 376 - but it is not necessary for me to consider that matter further.) (j) If the client is a company which goes into liquidation, the solicitor is entitled, in relation to costs arising from work done before the start of the liquidation, to claim the full amount of the costs from the fund, and is not required to prove in the liquidation: In Re Born; Curnock v Born [1900] 2 Ch 433; In Re Meter Cabs [1911] 2 Ch 557. This has the same practical effect as enforcing the right against the other creditors of the company. The solicitor's lien attaches to property recovered through his exertions, even if the actual recovery occurs after the client goes into liquidation: North West Construction Co Pty Ltd (In Liquidation) v Marian [1965] WAR 205 at 211. (k) Likewise if the client is a natural person who becomes bankrupt, the solicitor is not required to prove in the bankruptcy for the amount of costs incurred, but can recover the costs from the debt which is the result of his efforts: Guy v Churchill (1887) 35 Ch D 489; Worrell v Power & Power (1993) 46 FCR 214. The trustee in bankruptcy takes that debt subject to the equitable right of the solicitor to be paid his costs, and if the amount of the solicitor's costs exceeds the value of the debt, the debt does not vest in the trustee in bankruptcy at all; if the client is discharged from bankruptcy he can sue to enforce the debt as it never was property divisible among the creditors, and any amount that the client then receives is also subject to the solicitor's lien: Kison v Papasian (1994) 61 SASR 567 (l) If the client is the liquidator of a company in liquidation, the solicitor's lien over property recovered through his exertions is to be satisfied before the statutory order of priorities for distribution of the property of the corporation comes into effect: Jeffcott Holdings Ltd (in liq) v Paior (1995) 18 ACSR 213 (m) If the money recovered is held in the solicitor's trust account, and the solicitor is served with a garnishee notice, issued to enforce a debt which the client owes to another person, the garnishee notice is not effective to attach the money in the trust account, to the extent that the solicitor has a lien over it: Phillipa Power & Associates v Primrose Couper Cronin Rudkin [1997] 2 Qd R 266. Likewise if the money recovered is held by a third party, and a garnishee notice is served on that third party, the solicitor's lien prevails over the garnishee notice: Dallow v Garold; Ex parte Adams (1884) 14 QB D 543. 54His Honour went on to consider the nature of the equitable right and said (at [38]) that "it is apparent that the equitable right which a solicitor has to be paid costs and disbursement from the fund which his efforts have recovered, is a kind of proprietary interest in that fund." His Honour noted that the facts that the right can survive an insolvency administration of the client and is assignable (as held by Jordan CJ in Ex parte Patience ) are "strong indicia of it being a right of a proprietary nature." 55His Honour confirmed (at [48]) that the rationale for the existence of the solicitor's lien over a fund recovered through his or her efforts is that, if the solicitor had not done the work and spent the money, there would not be any fund in existence and that the solicitor's role in bringing the fund into existence is of such importance that equity recognises proprietary rights which enable the solicitor to be paid out of the fund, citing (at [48]-[49]) the observations of Lord Justices Cotton, Lindley and Bowen in Guy v Churchill (1887) 35 Ch D 489 and the observation in Read v Dupper (1795) 6 TR 361; 101 ER 595 of Lord Kenynon CJ that: ...the principle by which this application is to be decided was settled long ago, namely that the party should not run away with the fruits of the cause without satisfying the legal demands of his attorney, by whose industry, and in many instances at whose expence those fruits are obtained. 56Campbell J in Firth v Centrelink drew an analogy between the proprietary nature of the right to be paid out of the asset and the right to trace funds into the hands of a third party at [41], the former being a right: ... which can prevail against an assignee of the asset who is not a bona fide purchaser for value without notice, that is the equivalent, in the context where the solicitor does not have full title to the fund, of being able to trace the funds into the hands of a third party. 57His Honour, in considering and rejecting the proposition that notice was necessary to perfect such a lien, noted that in Ex parte Patience the solicitor's right to have costs paid out of the money recovered was analogous to the right which would be created by an equitable assignment of a corresponding part of the money by the client to the solicitor (see [52]-[69]. 58Mr Aldridge submits that Mr Peters holds such a lien on the basis that the funds in question are derived from the funds formerly held in the controlled moneys account and are funds to which Tekitu has been held to be entitled. Those, it is said, are the fruits of the defence of the claim brought against Tekitu by Australian Receivables and the prosecution of the cross-claim (the latter having directly led, in my view, to the fact that there were funds remaining in the account available to Tekitu after the set-off provided for in the final orders). It is submitted that Mr Peters, having acted for the Tekitu parties in the proceedings, is entitled to have his costs paid out of those funds. Mr Aldridge notes that the Deed expressly acknowledges the existence and preservation of the lien in clause 7.2 (as, I might add, implicitly so does Recital C). He also notes that such a lien will extend to the costs of enforcement of the lien. 59Mr Hyde, on the other hand, contends that no 'fruits of action' lien has here arisen in relation to the money now held in Court because the money formerly held in the controlled moneys account cannot be characterised as the recovery of 'fruit' (it being Tekitu's money in the first instance) and that such a lien has no application where the property of a client was simply preserved (rather than recovered). He submits that the source of the money held in the controlled moneys account came from Tekitu's trading account and was deposited by Tekitu (notionally, if not actually) into Mr Peters' trust account and, from there, into the controlled moneys account. (It was, nevertheless, a sum of money over which I had held that there was a constructive trust in favour of Australian Receivables. Therefore, in the controlled moneys account the funds were not funds to which Tekitu was beneficially entitled.) 60In Firth v Centrelink , Campbell J did not expressly deal with the question whether an equitable right of the kind there considered arises where the fund has been 'preserved' rather than 'recovered' through the efforts of a solicitor. However, that issue was considered by White J in Jackson v Richards (which I have earlier cited), his Honour there noting (at [56]) that he had not been able to discover any case at common law or equity which could properly be characterised as one recognising a lien arising where the client had "successfully resisted a claim on his property", nor had Counsel there referred his Honour to any such case. 61His Honour came to the view at [61] that: In my view, a solicitor does not have a "lien" merely because through his or her instrumentality the client has successfully resisted a claim, even a claim on property. If a defendant is sued for a debt, and successfully resists the claim, it could be said that a solicitor whose efforts have resulted in the successful resistance of the claim has preserved all the client's property of the claim. But I am aware of no authority which says that solicitor has a lien over the defendant's property for the amount of the plaintiff's claim. claim. It would be curious if the extent of a solicitor's lien should depend upon the extravagance or the modesty of the claim made by the opposite party against the client. ... a lien over the proceeds of a judgment or order or a compromise of a claim, is limited by the success for the client which has been quantified objectively by the judgment, order or compromise. 62At [62]-[63], his Honour said: There is some force in the submission of counsel for the plaintiffs that there is no logical reason for not allowing a solicitor a lien over property preserved by his efforts, just as he is entitled to a lien over money recovered for a client. In each case the solicitor would be preferred to other unsecured creditors of the client, but if the solicitor is entitled to that preference for moneys recovered, there is equal reason for him to be entitled to it for property preserved. There is a public policy ground for solicitors having such a preference, as otherwise meritorious claims or defences might not be maintained. However, the "fruits of the litigation lien" is akin to the maritime doctrine of salvage, in that it looks to the recovery of "fruit" above other factors. ( Read v Dupper ). Nor, for the reasons in para 61, is the corollary between a lien on property recovered and a lien on property preserved, complete. In any case, logic is not the determining factor. It would be logical for the lien to apply to the recovery of real or personal property other than money. That is not the law. The position was corrected by statute, but the statute has since been repealed. Having regard to the repeal of s 39A of the Legal Practitioners Act 1898, there is no scope for the expansion of the lien on policy grounds. In any event, it may be doubted that on policy grounds the court should prefer the position of a solicitor to unsecured creditors generally. (Pringle v Gloag (1879) 10 Ch D 676 at 680). To allow the plaintiffs' claim to a particular lien would be to expand the reach of the common law right to an area formerly covered by statute, where the statute has been repealed because Parliament thought that the rights conferred on solicitors were against public policy. In my view, the plaintiffs are not entitled to a particular lien, or right in the nature of a lien, in respect of the defendant's share of the proceeds of sale of the Drummoyne property, nor in respect of so much of the proceeds of sale of the Drummoyne property as reflect the defendant's successful resistance to Ms Rose's claim. 63For completeness, though White J confirmed that the lien did not extend to a contested claim relating to real property, rather than a monetary amount, his Honour accepted at [59] that: As Jones v Cassell and Grogan v Orr demonstrate, in an appropriate case, [the equitable right] may extend to a judgment obtained for the sale of property and to the fund realised upon such sale, where the order was obtained by the client and can be regarded as a fruit of the litigation . 64White J (at [39]), noting the differences between the statutory right to obtain a charging order and the common law "fruits of litigation" lien, said that one of the differences between the two was that the statutory charge only came into existence upon its being declared by a judge, whereas the "lien" arises automatically. At [47], White J said: It is clear from para 62 of the judgment of Sheller JA, which I have quoted, that the Court accepted that for a solicitor to be entitled to a lien over the fruits of litigation, those fruits must be "produced by the industry of the solicitor". This is not an exacting standard. It is not necessary to demonstrate that a judgment or settlement came about as a result of specific efforts by the solicitor, but there must be some causal link between the solicitor having acted for the client in the proceedings and the resulting payment to the client . ( Doyles Construction Lawyers v Harsands Pty Ltd (McLelland CJ in Eq, 24 December 1996 unreported); BC9606389 at 4; Roam Australia Pty Ltd v Telstra Corporation Ltd (t/as Telecom Australia) (Federal Court of Australia, Lehane J, 22 September 1997 unreported) (at 4-5); Firth v Centrelink at 463-464). (my emphasis) 65In light of the foregoing principles, the questions that fall to be considered in determining whether a fruits of the action lien has arisen in the present case are whether the money in the controlled moneys account is to be characterised as having been 'recovered' as part of the fruits of the litigation or simply 'preserved' and whether there has been a sufficient causal connection established between Mr Peters' (or his firm's) exertions and the fund so comprised. 66Examples of 'recovery', in this context, include where the action is a successful claim for compensation from the Crown ( Ex parte Patience; Makinson v Minister ) and a successful claim for personal injury, even where it is won by settlement and not by an order of the court ( Firth v Centrelink ). Success, whether outright or equivocal, in the principal claim is not a necessary element to make out recovery, where a costs order is obtained. The principle in Ex parte Patience was applied by the Queensland Court of Appeal in Philippa Power & Associates v Primrose Couper Cronin Rudkin (1997) 2 Qd R 266, where it was held that a lien arose in favour of solicitors over costs which were awarded to their client, although the settlement of her principal claim was on terms that were not particularly satisfactory for the client. Again, costs awarded pursuant to a successful defence of a winding up order were treated as 'recovered', for the purposes of the solicitor's particular lien, in Akki P/L v Martin Hall P/L (1994) 35 NSWLR 470). Further, in Worrell (as trustee of the estate of Wedgewood) v Power & Power (1993) 118 ALR 237, where no order was made regarding the principal claim but the plaintiff was given leave to amend its statement of claim and ordered to pay the defendant's costs thrown away by virtue of the amendment, it was held by the Full Court of the Federal Court that a lien arose in favour of the solicitors acting for the defendant over the costs so awarded. 67Reliance is placed by Mr Hyde on Jackson v Richards , where the funds in question were characterised as simply having been 'preserved', not recovered as such. There, the solicitor in question had acted for the defendant in defence of a claim where the plaintiff had sought an order to that the defendant sell a property and pay her 65% of the proceeds. The outcome of the proceedings was that the defendant was ordered to sell the property and the plaintiff received an award for 60% of the sale proceeds. At [54], White J held that "I do not consider that the order for sale of the property can be regarded as a fruit of the litigation for the defendant. The order was not obtained by him." 68In coming to this conclusion, his Honour distinguished two cases ( Grogan v Orr [2001] NSWCA 114 and Johns v Cassel (1993) 6 BPR 13,134; FLC 92-364 (at [50]) on the basis that "[n]either of these cases decides that a solicitor is entitled to a lien over a fund brought into existence as a result of an order for sale of property, where the order was not obtained by the client, but was obtained by the opposite party, against the client's resistance". His Honour went on to say at [51] that: The conclusion of Sheller JA in Grogan v Orr that in matters under s 79 of the Family Law Act 1975 (Cth), the whole of the parties' property is "under consideration" must be, I think, a statement applied to the particular facts of that case, rather than a statement of law applicable to all claims under s 79 of the Family Law Act or s 20 of the Property (Relationships) Act . The fact that the court has power to make orders to adjust the whole of a party's property is irrelevant unless one or other of the parties invokes the power by asking the court to determine its rights by reference to all of the parties' property. It cannot be the case that if, as in the present case, a party to a relationship makes a particular claim to a share of the client's property, so that the balance of the client's property is never at risk, the client's retention of property that was not the subject of a claim could be said to be due to the industry of the solicitor. 69In my opinion, the order made in favour of Tekitu for payment out of moneys held in the controlled moneys account (after the operation of the set-off provided for under the orders) is properly to be characterised as having been 'recovered' through the cross-claim made by Tekitu. 70But for the successful cross-claim (on which Tekitu was entitled to an award of damages for breach of contractual obligations owed by Australian Receivables), Australian Receivables would have been entitled to the whole of the moneys in the controlled moneys account. There was a finding in its favour on the retained moneys claim in the amount of $567,084.73. Having taken into account the moneys already received by it, the balance of the retained moneys claim was still in excess of the amount remaining in the controlled money account. What led to an order for payment in Tekitu's favour was the successful cross-claim (even though I accept that the successful defence of aspects of the plaintiff's claim reduced the amount against which the successful judgment on the cross-claim was to be off-set). 71This was not a case where Tekitu had simply resisted a claim in debt (and hence had retained what was at all times its own property). The moneys the subject of the retained moneys claim were moneys that were held on a constructive trust (and into which Australian Receivables was entitled to trace). The judgment in Tekitu's favour was a direct result of the successful cross-claim by it, without which there would have been no order for payment out of any of the funds in the controlled moneys account. 72Therefore, the retention of the balance of money in the controlled moneys account should in my view properly be characterised as the 'fruits' of the litigation. The question that arises on the application of the reasoning in Jackson v Richards is not which party 'wins more' in the final result, but on whose action the order that results in the monetary fund is obtained. Here, the retained moneys are clearly the result of orders obtained on the cross-claim. 73To test that conclusion, one might hypothesise a situation in which the retained moneys claim and the cross-claim were brought in two distinct proceedings. In that case, there would be no suggestion that Tekitu's success on the claims the subject of its cross-claim in these proceedings would not give rise to a solicitor's lien as the damages (and costs) on that claim would rightly be characterised as recovered. Had there been two proceedings, instead of one, the solicitors for Tekitu would quite clearly have been in a position to rely on a fruits of the litigation lien arise in their favour. There seems to me no compelling reason why, because the two claims were procedurally dealt with together, the result should be different. 74That does not, of itself, dispose of the claim now made by Mr Peters. As noted by Mr Hyde in his submissions, it must be established for a 'fruits of the action' lien to arise that there was a sufficient causal connection between the solicitor's labour and the fruits of the litigation. (The fact that Mr Peters was no longer acting at the time the judgment was given does not disqualify him from claiming a lien but is a factor to be taken into account). The test is that there must be "be some causal link between the solicitor having acted for the client in the proceedings and the resulting payment to the client" ( Jackson v Richards ; Doyles Construction Lawyers v Harsands Pty Ltd (NSWSC, McClelland CJ in Eq, 24 December 1996, unreported); Roam Australia Pty Ltd v Telstra Corporation Ltd (t/as Telecom Australia ) (FCA, Lehane J, 22 September 1997, Unreported); Firth v Centrelink ). 75Regarding this 'causal connection', McLelland CJ in Eq said in Doyles Construction Lawyers that: [I]t is unnecessary for Doyles to demonstrate that the settlement came about as the result of specific efforts by them. According to the statement of principle [in Patience ]...it is sufficient to give rise to the equitable right that the settlement resulting in payment to the client came about as a result of the legal proceedings and that the solicitor had acted for the client in those proceedings, this being treated as a sufficient causal link. 76The same issue was considered by Lehane J in Roam Australia , where his Honour considered that the above comment by McLelland CJ in Eq did not stand for the proposition that in every instance a solicitor has acted for party where a judgment or compromise is obtained, they are entitled to a lien over the 'fruits' no matter how "slight or fleeting" their involvement. Discussing Doyles Construction , his Honour then said: In each case, in my view, it must be a question whether the requisite causal link is established, whether the judgment or compromise is, on the evidence, to be regarded as brought about (or partially brought about) by the efforts of the solicitors. In Doyles the causal link was not difficult to see: although others had acted for the plaintiffs at earlier stages in the proceedings, Doyles acted for a period of about ten months up to, and overlapping with the time when the compromise was negotiated. (my emphasis) 77His Honour then held that a sufficient causal connection was established on the facts in Roam Australia , where the solicitors had acted for 16 months, ceasing to do so shortly before trial, having briefed counsel from time to time, attended directions hearings, attended to discovery and inspections and obtained affidavit evidence, acted in mediations and undertook some further unsuccessful settlement negotiations. 78Ultimately, whether there is a sufficient causal connection to found a lien is a question of fact. There was no submission by Mr Hyde that there had been an insufficient causal connection in Mr Peters' case nor was there debate as to the proportion of work carried out by Mr Peters or his firm in the context of the litigation. I note by reference to the November Bill of Costs that Mr Peters (or solicitors in his firm) had acted for a period of around 20 months (longer than that in Doyles Construction ) from October 2007 up to at least mid 2009, in the course of which they had been involved in the pleading of the defence and cross-claim, briefing Counsel and attending to discovery, advising in relation to the potential mediation of the claims (as well as attending in relation to the applications in relation to the establishment of the controlled moneys fund and an application, albeit unsuccessful, for the release to the Tekitu parties of moneys therefrom). I consider that a sufficient causal connection has been shown in the present case to give rise to a fruits of the action lien. 79What then of the entry by Tekitu into the Deed of Company Arrangement? Mr Aldridge submits that the fruits of the action lien is an equitable interest that is proprietary in nature and survives a company's liquidation. He notes that s 444D(2) of the Corporations Act 2001 (Cth) provides that a deed of company arrangement does not prevent secured creditors from realising or otherwise dealing with their security (unless they have voted in favour of the deed). 80In that regard, I note that in Jeffcott Holdings Ltd (in liq) v Paior & ors (1995) 18 ACSR 213, Debelle J said (in relation to s 441(a) of the Companies Code (SA)): It seems that a solicitor appointed by a liquidator is entitled to a lien for his costs on a fund recovered in the winding up as a result of his exertions: Re Massey, Re Freehold Land and Brickmaking Co (1870) LR 9 Eq 367. The solicitor has no lien on monies which were in the hands of the company before the winding up or the general assets of the company, where neither has come into the hands of the company as a result of any action on the part of the solicitor: Re Massey (supra). He is, however, entitled, after the winding up, to obtain a charging order on a fund in court recovered by the company as a result of his exertions before the winding up : Re Born, Curnock v Born [1900] 2 Ch 433. These principles are but instances of the equitable right or lien of a solicitor to be paid his costs out of monies recovered by his own exertion. That right or lien was explained by Jordan CJ in Ex parte Patience; Makinson v Minister (1940) 40 SR(NSW) 96, 100. The lien also exists in the case of a bankrupt estate where a fund has resulted from the efforts of a solicitor: Worrell v Power and Power (1993) 118 ALR 237; Kison v Papasian (1994) 61 SASR 567. I do not think that a solicitor's entitlement to a lien is affected by s 441(a). There is nothing in s 441(a) which expressly purports to alter the entitlement nor does it appear by necessary intendment. Had it been intended to affect the entitlement to that lien, that intention would have been clearly ascertainable: Potter v Minahan (1908) 7 CLR 277, 304. (my emphasis) ...The fund to which the appellant looks for security for his costs and which he seeks to charge is the fund which will be generated by the exertion of the solicitors for the company, if the company succeeds in the action. I do not think it equitable that the appellant should have a charge upon this fund to the detriment of the solicitors whose efforts would have brought about the existence of the fund. Nor is it equitable that they be able to share pari passu with the solicitors. ... ... At the risk of repetition, it cannot be overlooked that any fund which will come into existence will be the result of the exertions of the solicitors for the company. It would be inequitable if the appellant were able to gain a priority over those whose efforts have created the fund. I agree with the learned master that it would not be a proper exercise of the discretion in relation to making an order for security for costs to give the appellant the priority he seeks or to entitle the appellant to share pari passu with the solicitors for the company. If the fund is inadequate to meet all claims upon it, the parties can, if necessary, apply to the court pursuant to s 386(3). That is the appropriate time for the appellant to apply. To grant his present application could result in an inequity to those who have at least an equal claim to that of the appellant. (my emphasis) 81Mr Aldridge submits that the suggestion, in effect, that Tekitu and its creditors should have the benefit of the litigation without having to pay the solicitors' costs associated with obtaining it is inconsistent with the rationale underlying the 'fruits of the action' lien. 82As to the time at which the lien arises, in Phillipa Power & Associates v Primrose Couper Cronin Rudkin (noted by Campbell J in Firth at [51]), Macrossan CJ and White J in the Court of Appeal in Queensland said: Once the nature of a solicitor's interest in a fund representing the fruits of his labours is appreciated and it is accepted that the solicitor's interest in the fund dates back to the time when the fund first comes into existence, or the original order for the payment of the sum constituting the fund is made , then it is clear that the interest of the solicitor will prevail over the right of an execution creditor subsequently seeking to attach the fund. (my emphasis) 83Mr Hyde, however, notes that the effect of a deed of company arrangement was not considered in Firth v Centrelink (where the analysis was limited to the context of liquidation and bankruptcy) and submits that the different provisions of the Corporations Act in relation to deeds of company arrangement may produce a different outcome in this case. 84In particular, Mr Hyde notes that equitable liens can be charges within the statutory definition of a charge in s 9 of the Corporations Act and submits that such a lien as is claimed in the present case is registrable on the basis it is neither a possessory lien nor a lien that arises by operation of law. If that submission is correct, then, as a registrable charge in respect of which notice has not been lodged, the fruits of the action lien would be void as a security as against a voluntary or deed administrator (or liquidator). On that basis, it is accepted by Mr Hyde that Mr Peters (if a chargee holding an unregistered charge) would still be a creditor but it is submitted that he is merely one of the unsecured creditors and subject to the terms of the Deed of Company Arrangement. (Mr Hyde further submits that, under s 443E(1) the administrator's right of indemnity has, subject to s 556, priority over all the company's unsecured debts.) 85I accept that where a debtor company has entered into a deed of company arrangement charges registrable under s 266 of the Corporations Act will be void as a security against either an administrator or liquidator unless notice has been lodged with ASIC. I also accept that an equitable lien may fall within the broad definition of 'charge' adopted in s 9 of the Corporations Act . Section 262(1) provides a list of charges that are registrable. However, s 262(2) sets out interests that are exempt from the requirement under s 262(1) and this includes liens that arise by operation of law. 86I do not accept the submission that a 'fruits of the action' lien does not arise by operation of law. The authorities to which I have earlier referred make this clear. Therefore, I consider that the lien claimed by Mr Peters remains a secured interest despite the Deed of Company Arrangement. In this regard, I note, first, that although the usage of terms such as lien and charge in the authorities is not always consistent, an equitable lien (in the sense used by Campbell J in Firth v Centrelink ) is a right of the kind that is recognised as existing before the court is asked to intervene to protect it (see Carew Counsel as cited by Campbell J in Firth v Centrelink at [35(g)]). By definition (in counterpoint to a 'charge') it arises by operation of law, independently of a term creating the lien in an agreement (see J C Campbell, Some Historical and Policy Aspects of the Law of Equitable Liens ). 87Second, with respect to equitable liens generally, Gibbs CJ said the following in Hewett v Court (1982-1983) 149 CLR 639 at 645: Equitable lien does not depend either upon contract or upon possession. It arises by operation of law, under a doctrine of equity "as part of a scheme of equitable adjustment of mutual rights and obligations"; those words of Isaacs J were used in Davies v Littlejohn, in relation to the doctrine of vendor's lien, but they have a general application." (footnotes omitted) 88Also in Hewett v Court , Deane J (noting at 668 that it is "difficult, if not impossible" to formulate a satisfactory statement of the necessary or sufficient circumstances for the implication of an equitable lien) said at 663: An equitable lien is a right against property which arises automatically by implication of equity of secure the discharge of an actual or potential indebtedness (see In re Bernstein ; In re Bond Worth Ltd ; Snell's Principles of Equity , 28 th ed (1982), pp. 450-451). 89Although the phrase "operation of law" is not specifically used by Deane J (cf the terms used by Gibbs CJ above), the description of a right that "arises automatically by implication of equity" has the same import. At 668, Deane J also specifically refers to "the solicitor's lien over the proceeds of an action" as falling within the category of equitable liens there discussed. 90Third, the way in which a solicitor's lien over proceeds of an action arises indicates that it arises by operation of law, as it does not depend an on agreement between the client and the solicitor. (I refer in this regard to the classic statement of the right in Ex Parte Patience; Makinson v Minister , which makes no reference to any contractual agreement founding the right; and to Hewett v Court at [90] per Gibbs CJ and Davies v Littlejohn (1923) 34 CLR 174 at [185] per Isaacs J.) An equitable lien has been described as "an equitable remedy, created by the court, regardless of the intent of the parties, as a remedial device to protect a party against some inequitable loss" (McClintock, Handbook of the Principles of Equity (2nd edn) p 118 (my emphasis), as quoted in Stephenson Nominees Pty Ltd v Official Receiver (1987) 16 FCR 536 per Gummow J, then sitting in the Federal Court, at [554]). 91It is a right against property that arises automatically by implication of equity to secure the discharge of an actual or potential indebtedness ( Hewett v Court at [104] per Deane J). In Coad v Wellness Pursuit Pty Ltd (in liq) (2009) 226 FLR 91; 71 ACSR 250 (para 4) it was said that an equitable lien arises in any circumstances where equity considers that fairness dictates. 92For those reasons, I conclude that the equitable 'fruits of the action' lien arising in this case was one that arose by operation of law and thus was not registrable as a charge and is not void against the administrator. 93There is a further complication regarding the operation of s 266 if both the equitable lien over the proceeds and a charge arising from the deed are established. I consider that in (ii) below. 94As to the submission that the administrator has priority over the holder of a fixed charge on the basis of the administrator's equitable lien for remuneration and outlays, referring to Coad v Wellness Pursuit Pty Limited (in liq) at [96] to [97] (where the Full Court of the Supreme Court of Western Australia disagreed with the conclusion reached by Barrett J (as his Honour then was) in Hamilton v Donovan Oates Hannaford Mortgage Corp Limited [2007] NSWSC 10; (2007) 25 ACLC 95 that the holder of the fixed charge would be acting unconscientiously by asserting priority over assets that had been realised by the administrator without remuneration), it is submitted by Mr Hyde that here it would be unconscientious on the part of Mr Peters (assuming he to have the benefit of statutory priority) to assert it against the administrator and hence that even if Mr Peters has an equitable 'fruit of the action' lien, his interest in the fund must be subject to that of the administrator of Tekitu. 95I am not satisfied that it is unconscientious on the part of Mr Peters to invoke his equitable lien in the present case. The lien arose by reference to work performed by Mr Peters prior to the administration and the benefit of which was obtained by Tekitu (and later, through its administrator, Tekitu's creditors to the extent that at least some of the moneys recovered under the judgment have been received by the administrator under the Deed of Company Arrangement). 96Subject to the potential complication if both a lien and an equitable charge are established in the present case, I find that the solicitors' lien entitles Mr Peters to payment, out of the funds presently held in Court, for the costs claimed in his November Bill of Costs (and for the enforcement of the lien on the present application). (ii) Equitable charge 97The second basis on which Mr Aldridge puts the claim by Mr Peters is that the File Transfer Deed establishes an equitable charge in favour of Mr Peters over funds from controlled moneys account to the extent of his claim, which can be traced into the funds now held in Court. 98In Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584 at 594-595 Buckley LJ said: An equitable mortgage is created when the legal owner of the property constituting the security enters into some instrument or does some act which, though insufficient to confer a legal estate or title in the subject matter upon the mortgagee, nevertheless demonstrates a binding intention to create a security in favour of the mortgagee or in other words evidences a contract to do so: see Fisher and Lightwood's Law of Mortgage , 9th ed (1977), p 13. An equitable charge which is not an equitable mortgage is said to be created when property is expressly or constructively made liable, or specially appropriated to the discharge of a debt or some other obligation, and confers on the chargee a right of realisation by judicial process, that is to say, by the appointment of a receiver or an order for sale: see Fisher and Lightwood , p 14. ... whether a particular transaction gives rise to an equitable charge of this nature must depend upon the intention of the parties ascertained from what they have done in the then existing circumstances. The intention may be expressed or it may be inferred. If the debtor undertakes to segregate a particular fund or asset and to pay the debt out of that fund or asset, the inference may be drawn, in the absence of any contra indication, that the parties' intention is that the creditor should have such a proprietary interest in the segregated fund or asset as will enable him to realise out of it the amount owed to him by the debtor. 99Mr Aldridge submits that the File Transfer Deed provisions not only preserve the equitable or common law lien (by reference to clause 7.2), they also identify specific property (all moneys due to the defendants including costs, being a future chose in action) and expressly or constructively make liable or specifically appropriate this specific property to the discharge of costs and interest owing to Mr Peters. 100In that regard, emphasis is placed by Mr Aldridge on the irrevocable authority in clause 6A directing payment of all moneys due to the clients including costs to Malcolm Johns Legal and authorising Malcolm Johns Legal to retain all such moneys to the extent necessary to meet Mr Peters' costs; the obligation imposed by clause 4 (as referred to earlier) on Malcolm Johns Legal to pay the moneys owing within 28 days of the receipt of cleared funds by him on completion of the matter; and the warranty and agreement in clause 7.1, as well as Recital B (which indicates that the purpose of the Deed is to secure the moneys owing to Mr Peters) and clause 7.4 (which it is said imposes an overarching obligation on both the defendants and Malcolm Johns Legal to do all things reasonably necessary to ensure that Mr Peters' costs are paid or secured to his satisfaction). 101It is submitted that the Tekitu parties have by those clauses identified a particular fund out of which they have agreed to pay moneys due to Mr Peters (thus appropriating particular property to the discharge of a debt) and that the inference should be drawn that a proprietary interest in that property was intended. 102Mr Hyde submits that no equitable charge arises in circumstances where the entry into the File Transfer Deed arose in the context of Mr Peters' unpaid paid fees (and his exercise of a lien over the files) and does not refer to money held in the controlled moneys account. It is submitted that the clear and unambiguous reading of the deed as a whole is that what was being charged pursuant to the terms of the File Transfer Deed was any moneys paid to the defendants as fruits of the litigation or in payment of their costs by the plaintiff not the money that was held in the controlled moneys account. (Insofar as the moneys held in that account are ordered to be paid to the Tekitu parties pursuant to a judgment in the litigation, I see this as a distinction without any material difference.) 103In any event, Mr Hyde submits that any such charge is void against the administrator for non-registration and that, insofar as an express charge coincides with a lien and the charge fails for non-registration, the chargee cannot rely on the lien where the express charge contains terms inconsistent with the incidents of the lien on the basis that it is then implied that the parties could not have intended their relations to be governed in any way by the lien. 104In Jackson v Richards , White J considered whether or not an agreement was reached between a client and his solicitors that the proceeds of sale from his property would be charged in favour of the solicitors for payment of their costs and disbursements, or whether the conversations were merely in contemplation of a way in which the client might go about paying his legal costs. His Honour found that there was no charge as the conversations between the parties did not amount to an agreement to keep the proceeds of sale, from which the costs would be paid, in a fund separate from his other assets. His Honour said at [17]-[19]: The critical question is whether it should be inferred that the parties intended that if the Drummoyne property were to be sold, the defendant's share of the proceeds of sale were to be kept separate from his other assets, and the costs paid from that separate fund. An agreement between a debtor and his creditor that the debt owing shall be paid out of a specific fund coming to the debtor will create a valid equitable charge upon the fund and operate as an equitable assignment of it: Rodick v Gandell (1852) 1 De GM & G 763 at 777-8; 42 ER 749 at 754. However, for this principle to apply, there must be a specific fund from which the debt owing is to be paid. In Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584 at 595, Buckley LJ said: If the debtor undertakes to segregate a particular fund or asset and to pay the debt out of that fund or asset, the inference may be drawn, in the absence of any contra indication, that the parties' intention is that the creditor should have such a proprietary interest in the segregated fund or asset as will enable him to realise out of it the amount owed to him by the debtor. For such a charge to be created by an agreement to pay a debt out of a fund to come to the debtor, the parties must have agreed that the debtor would keep the fund separate from his other assets: Moseley v Cressey's Co (1865) LR 1 Eq 405 at 409." 105In Halsted v Official Trustee in Bankruptcy (cited earlier), Logan J considered Jackson v Richards approvingly, particularly with respect to the comment that the difference between a statement which created a charge over property and an mere agreement to pay (with no proprietary consequences) was the difference between the statement "I will pay the loan debt out of the proceeds of settlement" and "I will pay the loan debt when I receive the proceeds of settlement". While the former statement charges the fund, the latter statement merely marks the acquisition of the fund as the event upon which payments will be made. 106I have set out above the relevant clauses of the File Transfer Deed (in particular clauses 4, 5 and 6. Clause 4 alone does not in my view operate to charge the money retained in the controlled money account. The reference there is to "cleared funds" received by Malcolm Johns Legal from the 'Clients'. Insofar as this refers to a specific fund, it goes no further than to refer to money in the hands of Malcolm Johns Legal. It does not earmark a particular source of those funds. However, clause 5 provides that the Clients (on the happening of the events set out in that clause) have a personal obligation to pay Mr Peters the difference between the moneys recovered and the actual amount of Costs and interest payable to the Former Solicitors . Read with the rest of that clause, I consider that there is a clearly expressed intention that moneys recovered in the litigation are to be the (or the primary) source for repayment of the Mr Peters' costs. Reading clauses 4 and 5 together, the intention expressed seems to be that the debt will be paid out of any recovered moneys and that this is not merely an expression of the time at or event upon which the payments will be made but, rather, the appropriation of a (future) fund from which they will be paid. 107An agreement between a debtor and his creditor that the debt owing shall be paid out of a specific fund coming to the debtor will create a valid equitable charge upon the fund and operate as an equitable assignment of it ( Rodick v Gandell (1852) 1 De GM & G 763 at 777-8). Insofar as it is submitted that the File Transfer Deed cannot be read as charging the controlled money account as it makes no reference to the controlled money account, I do not agree that this is fatal to Mr Peters' claim. The effect of the File Transfer Deed does not charge the controlled money account, as it existed at the time of the File Transfer Deed's execution and was held by Mr Peters. Rather, it charges a fund that, at the time of the File Transfer Deed being executed, had yet to come into existence (money recovered upon pending litigation). Once the order was made that fund was identified as a portion of the moneys held in the controlled moneys account. 108As noted by White J in Jackson v Richards , Rodick v Gandell stands for the proposition that the effect of an agreement to pay a debt owing out of a specific fund coming to the debtor will create a valid equitable charge upon the fund and operate as an equitable assignment of it. Insofar as money recovered from pending litigation is characterised as future property, equity can give effect to such an assignment of the interest ( Glegg v Bromley [1912] 3 KB 474). 109The effect of the charge created by clauses 4 and 5 was that once the judgment was handed down, with certain sums payable to the Tekitu defendants from the controlled moneys account, the amount held in the controlled moneys account from which those sums were to be paid was impressed with a charge in favour of Mr Peters and he gained a proprietary interest in the fund constituted by those sums of money. 110However, unlike a 'fruits of the action' lien, a charge created by the File Transfer Deed cannot be described as 'arising by operation of law' and would not fall within the exception under s 262(2)(a) from the requirement of registration in s 266 Corporations Act , nor any other express exemption under s 262(2). 111The question is whether a charge over a fund constituted by money paid into a controlled moneys account pending litigation is one which is registrable under s 262(1). Of the charges listed in that sub-section, the only potentially relevant ones would seem to be: "(a) a floating charge on the whole or a part of the property, business or undertaking of the company" and "(f) a charge on a book debt". 112As to the first, the crucial indicator of a floating charge is that the company remains free to continue to deal with the charged assets for its own benefit in the ordinary course of its business ( Re Yorkshire Woolcombers' Association Ltd [1903] 2 Ch 284; Re Spectrum Plus Ltd [2005] 2 AC 680). That is clearly not the case here. The File Transfer Deed does not contemplate that Tekitu will have access to the fund or remain free to deal with it for its own benefit. Instead, the provisions of the File Transfer Deed make it clear that, upon coming into existence, the company cannot deal with the fund until the debt owed to Mr Peters is satisfied. 113As to the second, a 'charge on a book debt' is defined in the Corporations Act under s 262(4) as: a charge on a debt due or to become due to the company at some future time on account of or in connection with a profession, trade or business carried on by the company , whether entered in a book or not, and includes a reference to a charge on a future debt of the same nature although not incurred or owing at the time of the creation of the charge, but does not include a reference to a charge on a marketable security, on a negotiable instrument or on a debt owing in respect of a mortgage, charge or lease of land. (my emphasis) 114In National Westminster Finance Australia Ltd v JD Johnson & Co [1991] 1 Qd R 130; (1990) 2 ACSR 649, damages paid under an award and due to a construction company in connection with its construction business were held to be book debts within the definition given in s 262(4). 115Here, the amounts the subject of the award in favour of Tekitu were for amounts claimed by it for the balance of the purchase price due to it under the Sale of Business Agreement (both the second instalment of the purchase price, the quantum of which had been disputed, and the second earn-out payment, which was conceded to be outstanding but in respect of which there was also a dispute as to quantum at least to the extent that the Tekitu parties argued that it would have been more but for the breach by Australian Receivables of warranties in relation to the conduct of the business - that being part of the damages claim raised by the Tekitu parties in the proceedings) but also amounts in reimbursement of business expenses incurred by Tekitu in connection with the business. 116It seems to me that at the very least the debts claimed by way of reimbursement of business expenses in respect of the ongoing conduct of the debt collection business must have been book debts (although I think the amount claimed for the outstanding purchase instalment and second earn-out payment were not so clearly book debts). On the authority of National Westminster Finance Australia, damages awarded for breach of the Sale of Business Contract might also have sufficient connection with the business of the company (Tekitu) to fall within the statutory definition of a book debt. 117If I am correct in concluding that at least the business expense claims were book debts, then the equitable charge created over those debts by the File Transfer Deed was registrable and the effect of failing to give notice to ASIC of the charge is that the security would be void as against the administrator of the Deed of Company Arrangement, pursuant to s 266. 118Ford's Principles of Corporations Law at [19.353] states that a "book debt" at common law differs from other debts in two ways. First, the debt must be one owing to the proprietor of the business ( Independent Automatic Sales Ltd v Knowles & Foster [1962] 3 All ER 27). Second, the debt must be the kind that would normally be entered in the books of the business ( Robertson v Grigg (1932) 47 CLR 257 at 266). (It is not necessary that the debt be in fact entered in a book. It is sufficient if it a debt of a class that ought to be or is commonly entered: Perrins v State Bank of Victoria [1991] 1 VR 749.) 119With respect to the requirement that the debt arise in a business, this refers to a continuous or repetitive engagement in the particular form of transaction ( Lesser v Shire of Wannon (1987) 23 VLR 446). Where the transaction is an isolated incident, it may be considered to be a business debt if undertaken with the intention of being the forerunner of other transactions of the same nature ( Kirkwood v Gadd [1910] AC 422). In Hart v Barnes [1983] 2 VR 517, Anderson J said that "Book debts are commonly said to be such debts as in the ordinary course of carrying on the business were to be entered in books, although not actually entered". His Honour considered that the amount realized on the sale by the receiver of the stock-in-trade and plant of the company was not from 'book debts' as the amount was not realised in the ordinary course of the business of the company. 120Applying this reasoning, amounts realised on the sale of the business by Tekitu would not ordinarily be seen as 'book debts' as the ordinary business of the company was debt collection not the sale of the whole of its business undertaking. (Amounts referable to the reimbursement of business expenses in the day to day business of the company would, however, be in a different category, since those debts were incurred in the course of the business then being acquired by Australian Receivables but still operated as part of the business of Tekitu.) 121Further, while the requirement for a debt to be a book debt at common law is that the debt be one which would normally be entered in the books of the business, the test does not necessarily look to what is in fact entered into the books. Waters v Widdows [1984] 1 VR 503 stands for the proposition that where the debt is in fact entered in the books, it may be characterised as a book debt. In Water v Widdows , the debt considered was an inter-company loan. His Honour held (at 519) that the loan was a book debt and that "its characterization as a book debt depends not so much on the fact of it being not realized in the ordinary course of the business of the company, but because it was in fact entered in the books of the company as a book debt." By recognising that the inter-company loan was a 'book debt', Waters v Widdows also stands for the proposition that book debts are not limited to debts owed by customers of the business. 122There are authorities to the effect that cash in a bank account is not a 'book debt' ( Watson v Parapara Coal Co Ltd (1915) 17 GLR 791; Re Brightlife Ltd [1987] Ch 200; Perrins v State Bank of Victoria ; Re Old Inns of NSW Pty Ltd; Millar v Leach (1994) 13 ACSR 141). Gobbo J in Perrins indicated that it was of some weight that investment of moneys from time to time was not readily within the course of the company's business. However, W J Gough, "Securities over Debts" in G Burton (ed), Directions in Finance Law (1996) suggests that those authorities may not apply to the case where the business was that of a money market dealer and where acquiring bank deposits would be part of the business' ordinary trading operations. 123Debts owing but payable at some time in the future can be book debts ( Motor Credits Ltd v WF Wollaston Ltd (in liq) (1929) SR (NSW) 227). The nature of the interest conveyed is that of an equitable interest amounting to a right to immediate possession and control of after acquired assets, such as book debts, upon their coming into existence ( Palette Shoes Pty Ltd v Krohn (1937) 58 CLR 1). 124What is not clear is whether contingent debts may be 'book debts'. In Paul Frank v Discount Bank (Overseas) [1966] 2 All ER 922, Pennycuick J said that "I do not think that in ordinary speech one would describe as a book debt the right under a contingency contract as that right stands before the contingency happens." By contingency contract, his Honour meant contracts of insurance, guarantee and indemnity. His Honour reasons that in order to ascertain whether there is charge on a book debt, it is necessary to look at the items of property which the subject-matter of the charge and said that if, on the creation of the charge, the property is: ... the benefit of a contract and at the date of the charge the benefit of the contract does not comprehend any book debt, I do not see how that contract can be brought within the section as being a book debt merely by reason that the contract may ultimately result in a book debt. 125His Honour also considered the actual practice of bookkeeping and made the finding that based on the accountancy evidence, the policy that was the 'contingency contract' was not one that, in practice, would be entered as a book debt. Gobbo J cites this proposition with approval in Perrins v State Bank of Victoria. However there are also dicta to the contrary that contingent debts are "books debts". In WF Le Cornu Ltd v Federal Traders Ltd [1931] SASR 425 at 437 Piper J said that "book debts" can include contingent debts and "book debts wholly created by promises made after, as well as those created by promises made before" the execution of the charge. In Motor Credits v W R Wollaston , Long Innes J also observed in dicta that "a legal obligation to pay a stated sum may constitute a debt although only payable upon a contingency, and that a contingency which may never happen. This seems to be an unsettled area of the common law position on book debts, although resolved for the purposes of the Corporations Act , by s 262(4). The definition provided in s 262(4) expressly includes a charge on future debts that were not incurred at the time of the creation of the charge. Therefore, the position under the statute regarding debts not yet incurred and/or not yet payable is broader than the position at common law. 126Therefore, if, as I consider to be the case, the File Transfer Deed created a charge over such moneys as might in the future be recovered on the determination of the litigation, then to the extent that the claim in the litigation included the claim for reimbursement of expenses incurred in the ordinary course of Tekitu's business (albeit for the benefit of Australian Receivables after the completion of the sale in January 2007), it seems to me that it secured a book debt for the purposes of s 262(1)(f) of the Corporations Act and would be registrable as such. 127However, ultimately it is not necessary to reach a concluded view on this (and I note that it was not the subject of detailed argument on the application before me) because of the finding I have made as to the equitable lien and because, even if it were void against the administrator for non-registration, I do not consider that it is inconsistent with the maintenance or preservation of the equitable lien. In particular, clause 7.2 of the Deed seems expressly to preserve the lien. Therefore, even if the charge did fail for non-registration, I consider that Mr Peters would still be able to rely upon the fruits of the action lien. 128For completeness, I note that if (contrary to the conclusion I have reached above) the charge were properly characterised as a fixed charge that did not need to be registered under s 262(1) Corporations Act , then as against the administrator (who under s 443F of the Corporations Act has a statutory lien over the company's property to secure the administrator's right of indemnity), s 443E then sets out the statutory scheme of priorities. Subject to s 556 (which sets out priority payments to be made in a company's winding up), the administrator's right of indemnity takes priority over all unsecured debts and, subject to provisions in subsections (2), (3) and (4), over debts secured by a floating charge over the company's property. Therefore, prima facie the statutory position is that a creditor whose interest is secured by a fixed charge will take priority over the administrator's lien. 129It is the case that the general statutory scheme of priorities may be varied (as adverted to earlier). In Coad v Wellness Pursuit Pty Ltd (In Liq) , the Western Australian Court of Appeal held that equity could depart from the statutory scheme if, in the particular circumstances, it would be unconscientious for another creditor to assert and rely on the statutory priory against the administrator's equitable lien. 130It has also been held that the statutory lien provided under s 443F does not replace or prevent an equitable lien ( Commonwealth Bank v Butterell (1994) 35 NSWLR 64 at 71; Weston v Carling Constructions Pty Ltd (2000) 35 ACSR 100 at [18]; Lockwood v White (2005) 11 VR 402 at [34]; and Coad v Wellness Pursuit Pty Ltd at [60]-[64].) Hence, even if the statutory lien did not prevail over an equitable charge created by the File Transfer Deed, it is suggested that the administrator would have an equitable lien that could so prevail. It has been said that an equitable lien "makes the administrator a secured creditor" and, to the extent that it attaches, gives the administrator priority over the secured creditors referred to in s 556 of the Corporations Act (Hamilton v Donovan Oates Hannaford Mortgage Corporation Ltd ; Shirlaw v Taylor ; Weston v Carling ). In Shirlaw v Taylor , Sheppard, Burchett and Gummow JJ said at [228] that: [I]n addition to equitable liens arising from contractual dealings in property, equity may impose liens based either upon general considerations of justice or upon the principle that he who seeks the aid of equity in enforcing some claim, for example in the administration of assets, must admit the equitable rights of others directly connected with or arising out of the same subject matter. 131In Re Universal Distributing Co Ltd (in liq) (1933) 48 CLR 171 by Dixon J, namely, a lien to which an official who has incurred expenses in assembling a fund for the benefit of creditors is entitled, in relation to the fund, to priority over a secured creditor who derives benefit from the assembling of the fund. As Barrett J stated in Hamilton v Donovan Oates Hannaford Mortgage Corporation Ltd at [18]: "[t]he lien arises from the principle that the fund itself must bear the costs of realisations and other actions involved in its creation, with those costs being satisfied out of the fund before striking the balance available to the secured creditor and thereafter to creditors generally." 132Similarly, in Re Appln of Central Commodities Services Pty Ltd [1984] 1 NSWLR 25, Needham J noted that the powers of the court to impose an equitable lien in this context are derived from the general equitable principle that such an administrator or receiver, as an officer of the court, working for the benefit of all who have legitimate interests in the assets, is entitled to look to the assets of the company of which he is an administrator to meet his remuneration and his liabilities and outgoings (see also, for example, Moodemere Pty Ltd (in liq) v Waters [1988] VR 215 at 229-30 per Tadgell J and Clark Equipment Credit of Australia Ltd v Como Factors Pty Ltd (1988) 14 NSWLR 552 at 568 per Powell J). Sir John Romilly MR in Bertrand v Davies (1862) 54 ER 1204 at 1207 similarly said : Where a receiver or manager is appointed by the court, in a suit properly constituted, such manager is to be considered as appointed on behalf of all persons interested in the property, and he is entitled to his ordinary commission and allowance, and also to a lien on the estate, as against all persons interested in it, for the balance, whatever it may be, that shall be found due to him on taking his accounts. 133In Shirlaw v Taylor , their Honours observed at [560] that, in addition to the anxiety of the court to protect the position of its officer (particularly lest there be in the future an absence of persons willing to take such appointments), the claims of the officer under a court appointed administration may be seen as in the nature of "salvage": "The principle is that those taking benefit of the administration should not escape bearing the burden of the proper cost of it" (see also, for example, Matter of Tharp (1852) 65 ER 533). 134Again in Re Berkeley Applegate (Investment Consultants) Ltd (in liq); Harris v Conway [1988] 3 All ER 71, Edward Nugee QC, sitting as Deputy Judge of the High Court, stated at [83] that there was: ... a general principle that where a person seeks to enforce a claim to an equitable interest in property, the court has a discretion to require as a condition of giving effect to that equitable interest that an allowance be made for costs incurred and for skill and labour expended in connection with the administration of the property . It is a discretion which will be sparingly exercised; but factors which will operate in favour of its being exercised include the fact that, if the work had not been done by the person to whom the allowance is sought to be made, it would have had to be done either by the person entitled to the equitable interest (as in Re Marine Mansions Co (1867) LR 4 Eq 601 and similar cases) or by a receiver appointed by the court whose fees would have been borne by the trust property (as in Scott v Nesbitt 14 Ves Jun 438); and the fact that the work has been of substantial benefit to the trust property and to the persons interested in it in equity (as in Phipps v Boardman [1964] 1 WLR 993). (my emphasis) 135Mr Aldridge submits that in the present case there is no evidence of the administrator's costs and expenses. However, it seems to me that I can infer that it would have incurred costs and expenses in the course of the administration. Mr Hyde further submits that it is not a matter for the administrator to adduce evidence of those in the current application but, rather, that it is for the party seeking a payment out of Court (here, Mr Peters) to establish that no other party has a potential interest in the funds. (The logical consequence of Mr Hyde's submission, which he accepts is the case, is that there can be no payment out of the funds at all if there is no evidence of any claim by the administrator to the fund.) 136Mr Aldridge submits that an analogy can be drawn with the position of a stakeholder in this regard (though it must be said that payment into the controlled moneys account was not to secure payment of the fees claimed by Mr Peters but was to secure the funds in dispute as between the Tekitu parties and Australian Receivables). Reference was made in that regard to Commercial Banking Co of Sydney v Colonial Financiers of Australia Pty Ltd [1972] VR 702; (1972) 20 FLR 220 and Shirlaw (Now Rodgers) v Malouf (1989) 97 FLR 382; (1989) 15 ACLR 641; (1989) 7 ACLC 1043 in that regard. 137In Commercial Banking , Winneke CJ, Smith and Lush JJ considered the position as to whether money paid into Court by the defendant company in satisfaction of a condition placed on the grant of leave to defend the proceedings was a payment made by a debtor company in favour of its creditor having the effect of giving that creditor a preference, priority or advantage over other creditors. The trial judge had concluded that, by making the payment into court, the defendant had made a charge on property in favour of the appellant within the meaning of s122(1) of the Bankruptcy Act . On appeal, Smith J considered that to define the limits of meaning of the word 'charge', as used in the legislation would be a difficult undertaking and that it was not necessary to do so in circumstances where the payment made into court was plainly made in favour of its creditor (the words "in favour of a creditor" having a wide meaning). His Honour said: ... Before the payment into court was made the defendant was the sole legal and beneficial owner of the money. The making of payment put the appellant into the situation that if it established its case and recovered judgment it would be entitled ex debito justitiae as against the defendant (whatever might be the situation as against other creditors or claimants) to have the money, or so much of it as was necessary, paid out to the appellant to satisfy its judgment. 138Lush J did, however, consider the question whether the payment into court created a charge and was inclined to the view that it was (though again this was obiter as his Honour did not consider it necessary to reach a conclusion on the matter). His Honour commented that: As at present advised, I think that the payment in the present case did create a charge within the meaning of s122 of the Bankruptcy Act 1966 (Com.). It involved an appropriation by the defendant of part of its property and the setting aside of that part specifically to answer the plaintiff's claim if that claim was made good. I think that such an arrangement may be described as the giving in favour of the plaintiff of a charge on property which at the time of the relevant act was the property of the debtor and which, if not given up by the plaintiff, would augment the property of the defendant in the liquidation. As to the last matter, see Re Rushton , [1971] 2 WLR 1477, at p.1482; [1971] 2 All ER 937. 139In Shirlaw , Cohen J likened the payment to stakeholders to that of a payment into court, noting that of relevance were the circumstances under which the payment in question was made. His Honour said: The effect of a payment into court was set out by Smith J in The Commercial Banking Co case, namely that the making of the payment put the plaintiff into a situation that if it was able to establish its case it was secured to the extent that it would be entitled to the money paid into court. In my opinion it is appropriate to apply that principle to the processes which the parties have agreed upon in relation to the arbitration. It will be seen that cl 9c of the deed did not specifically say that the money held by the stakeholders would be paid over in accordance with the finding of an arbitrator. Nevertheless it seems clear that this was the intention. The fund was to be held by the solicitors "as stakeholders pending a resolution either by arbitration or by agreement" and this could only mean that they would hold the amount and would pay it out in accordance with what the parties agreed upon or, in the absence of agreement, in accordance with the findings of the arbitrator. If he found for the plaintiff then the money would be repaid to it. If he found for the defendant then so much as could be satisfied from the fund would be paid from it to the defendant. This is emphasised by the fact that the parties had agreed that interest would be payable to the party in whose favour the dispute was resolved. Although the reference to the proportions is somewhat loosely worded it was clearly intended that interest earned by the fund would be paid out in the same proportions as the fund itself was paid out, that is to say to the party entitled to it under the agreement or award. In my opinion it follows that the payment to the stakeholders was to be dealt with in exactly the same way as would the amount paid into court under an order. That is to say it could not be withdrawn by or repaid to Vavadan unless there was a finding in favour of that company. It remained as a security for payment of the amount claimed by the defendant and, upon a finding in favour of that party it would be entitled to the money. In the words of Lush J, the payment to the stakeholders was intended to improve the defendant's position in its action to recover the debt . (my emphasis) This is not inconsistent with the basis of what is said to be the position of a stakeholder in relation to the parties. The payment was a conditional security held by disinterested persons. On the condition being satisfied, namely an arbitration award in favour of the defendant, then the security, to the extent of that award, is to be released to it. The exact status of the stakeholders is irrelevant, that is to say whether they hold the money under contract with the parties or as trustees. The authorities referred to suggest that they hold the money under contract, but they were bound to pay the money to the defendant when the award was made in its favour. The difference between this situation and a payment into court is that the latter is governed by rules but these do no more than regulate what the parties may do on the finding of liability as a result of a judgment. Here, the parties by their deed have fashioned their own rules and for the judgment of the court, they have substituted the award of the arbitrator. 140Had the issue been as to the priority between an equitable charge created under the File Transfer Deed (that did not require registration and hence was not void against the administrator for that reason) and an equitable lien of the administrator, I would not have held that the charge should be postponed to the administrator's lien (though there might have been an argument that it should rank pari passu) in circumstances where this would at least indirectly result in the creditors having the benefit of Mr Peters' exertions in the litigation without bearing the costs thereof. In any event, the question of priority as between the administrator's lien and the unregistered equitable charge does not preclude Mr Peters' claim under the solicitor's lien subject to the question as to the effect on that lien of the creation of the charge (the complication to which I have earlier adverted and to which I now turn). 141According to Ford's Principles of Corporations Law at [19.355], if "an express charge coincides with a lien that would have arisen by operation of law and fails for non-registration, the chargee cannot rely upon the lien where the express change contains terms inconsistent with the incidents of the lien. It is then implied that the parties could not have intended their relations to be governed in any way by the lien that would be created by operation of law". 142In Seka Pty Ltd v Fabric Dyeworks (1991) 9 ACLC 586, an express lien (charge), which was created by detailed documents that enumerated its incidents, was held not to arise by operation by law and therefore was not excepted by operation of s 262(2) of the Corporations Act from the requirement of registration in order to remain a secured interest. Although a customary lien was pleaded, there was an inconsistency between the incidents of the express lien and the lien by custom. Pincus J referred to the comment by the High Court in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 236 that, in the context of implying terms, a term would not be implied by custom if inconsistent with the express terms. Applying this to the lien, his Honour held that the customary lien was in effect superseded by the express lien, which fell within the terms of s 262 as a registrable charge. As it was not registered, it was void as a security interest pursuant to s 266. 143In the present case, however, the document creating the express charge expressly preserves the solicitors' lien and is not in its terms inconsistent therewith. Accordingly, the rationale on which the decision in Seka was based does not apply. (iii) Trust 144Further in the alternative, it is submitted by Mr Aldridge that if the File Transfer Deed did not create an equitable lien or charge, then it created a trust over moneys due to the Tekitu parties in favour of Mr Peters to the extent of the moneys owed to him, with Malcolm Johns Legal as the trustee. Strictly speaking, this issue does not arise given the finding in (i) above. For completeness, however, I address it as follows. 145Mr Aldridge accepts that the question in this regard must be whether there was an intention to create a trust, having regard to the language employed by the parties in question, the nature of the transaction and the relevant circumstances attending the relationship between them. Reliance was placed on clauses 6A, 4, 7.1 and 7.4 of the File Transfer Deed (to which I have already referred). It is submitted that, pursuant to these clauses, the Tekitu defendants both relinquished their entitlement to receive moneys due to them to their new solicitor and provided that the moneys were to be held for the benefit of Mr Peters to the extent of his claim. 146Mr Hyde submits that the claim based on trust fails because there is nothing to show that at the time the controlled moneys account was created or at the time of the creation of the deed, any trust so created was to extend to cover the money then held in the controlled moneys account and now paid into Court. 147To the extent that any funds are held in trust for Mr Peters, then I accept that Mr Peters would be entitled to those funds directly and the funds would not be property subject to the Deed of Company Arrangement. Further, had the moneys come into the hands of Malcolm Johns Legal at any relevant point, then there may have been a basis on which to contend that they were impressed with a trust at that stage. However, I am not satisfied that there is any trust yet constituted over those moneys. At most the File Transfer Deed provides that in certain circumstances Malcolm Johns Legal must retain sufficient moneys in trust to meet Mr Peters' claim. Those circumstances have not arisen. 148It is further submitted by Mr Hyde that the Deed of Company Arrangement has the effect that insofar as there is any trust property held in favour of Mr Peters, this does not have priority over a claim by the administrator (referring to Trio Capital Limited (admin apptd) v ACT Superannuation Management Pty Limited (2010) 79 ACSR 425 where the voluntary administrator was entitled to claim an equitable allowance out of the assets of the trust of which the company in administration was trustee). 149Mr Hyde notes that in Trio Capital the court took into account as relevant to the exercise of discretion to allow such an allowance out of the trust property matters such as the fact that if the work claimed for had not been done by the claimant, it would have had to be done either by the person who claimed the assets or by a Court appointed receiver whose fees would have been borne by the trust property; the complexity and difficulty of the work done; and that the work had been of "substantial benefit to the trust property" and to the persons interested in it in equity. 150The difficulty in the present case is that there is no application by the administrator for any allowance in relation to costs incurred in the administration to be made out of the balance remaining of the controlled moneys fund now held in Court, assuming it to be trust property. (Mr Hyde submits that this is a difficulty posed for the party seeking payment out of the Court of the moneys in question.) In any event, it is not necessary to consider this further as I am not persuaded that the moneys in question do constitute trust property. (iv) Irrevocable Authority 151It is further submitted that, having regard to clauses 6A and 4 and to the fact that Malcolm Johns Legal is a party to the File Transfer Deed, then contractually the Tekitu defendants gave up any entitlement they had to moneys owing to them (to the extent of Mr Peters' claim) and, upon receipt of the funds, Malcolm Johns Legal has both the authority and obligation to pay the same to Mr Peters to the extent of Mr Peters' costs and interest within 28 days. 152Accordingly, Mr Aldridge submits that the Court should order that Mr Peters' claim for costs and interest be paid from the funds held in Court (either directly or after they are first paid to Malcolm Johns Legal), with the balance to be held pending agreement or assessment in respect of Mr Peters' costs of the present motion. (Insofar as it was submitted that this be by way of specific performance of the deed, it may more accurately be seen as a claim for an order in the form of a mandatory injunction to compel performance of particular obligations under the deed.) 153It is further noted that, to the extent to which the Court finds that Tekitu irrevocably disposed of its interest in the funds to the extent of Mr Peters' claim for costs and interest upon entry into the File Transfer Deed, the subsequent entry into the Deed of Company Arrangement is of no effect. 154Mr Hyde submits that the terms of the Deed of Company Arrangement are binding on Mr Peters (and that insofar as he may believe that he has been unfairly discriminated against by that Deed, there is a remedy under s 445D). 155I am not satisfied that, by the grant of the irrevocable authority, Tekitu did give up an entitlement to the funds in question. What it did was to give in advance a direction that payment of any judgment obtained in its favour be made to its solicitors acting in the proceedings at the time of the File Transfer Deed and at the same time it bound itself as to the manner in which those funds were to be disbursed (by the giving of the irrevocable authority for the payment of certain amounts to be made to Mr Peters). However, that does not seem to me to convert Mr Peters to a secured creditor and, if it does not, then Mr Peters' claim to the funds would remain a claim that ranked as with other creditors subject to the terms of the Deed of Settlement. 156Had the claim by Mr Peters rested on the giving of the irrevocable authority under the File Transfer Deed, it would have failed. (v) Personal claim against Mr and Mrs Smith 157Finally, Mr Aldridge relies on Clause 5 of the File Transfer Deed as establishing a personal obligation on the part of Mr and Mrs Smith to pay Mr Peters any shortfall between the moneys recovered from the judgment obtained in the principal proceedings and the amount of the costs and interest payable to Mr Peters. 158There is no dispute that Mr Peters' costs, as itemised in the November Bill of Costs remain unpaid. To the extent that the debt is not satisfied from the funds in Court, this is claimed as a debt that is due and payable by Mr and Mrs Smith. (Mr Aldridge notes that the File Transfer Deed does not purport to create a liability in the Tekitu parties to pay the past fees (other than by reference to clause 5 in respect of payment of the shortfall on recovery from the moneys in the litigation) but is predicated on the existence of such a liability (with no indication that this is other than a joint liability), referring in this regard to clauses 3A and 7.2.) 159In the circumstances, it is submitted by Mr Aldridge that irrespective of Mr Peters' position in respect of the funds now held in Court, he is entitled to judgment against Mr and Mrs Smith for his unpaid costs (including interest). 160Mr Hyde submits that this overlooks the fact that clause 5 imposes personal obligations on Mr and Mrs Smith subject to statutory rights of assessments and to Mr Peters being able to recover only those amounts which are payable by Tekitu and the Smiths. In this regard, he points to the nature of the retainer between Mr Peters and the Tekitu parties and submits that where there were three separate clients the service of one bill of costs without indicating which costs are due by which client there has not been a valid bill of costs. 161It is submitted by Mr Hyde that, while a solicitor who acts for multiple clients under a joint retainer may look to any of those clients for the entirety of his/her costs in respect of the retainer, if the retainers are separate retainers then each client is liable for a proportionate part of the costs common to the representation as well as the costs incurred exclusively for his or her own part. Mr Hyde raises this argument for the proposition that insofar as invoices were issued to Tekitu alone (and insofar as Tekitu may have liability for part of the joint invoice that was rendered), Mr Peters is not able to pursue payment of those invoices against it having regard to the provisions of the Deed of Company Arrangement and, as such, Mr and Mrs Smith have no liability to Mr Peters for any such amounts. It is submitted by Mr Hyde that, by reason of the matters referred to above, the November Bill of Costs does not comply with the requirements of the Legal Profession Act (NSW) 2004 and the Legal Profession Regulations (NSW) 2005 and that the time for making an application for assessment has not expired. Hence any claim in debt against Mr and Mrs Smith is said to fail. 162In Australian Securities and Investments Commission; In the Matter of Richstar Enterprises Pty Ltd ACN 099 071 968 v Carey (No 13) [2007] FCA 57, French J (as his Honour then was) sitting in the Federal Court considered a submission that there had been separate retainers between the solicitors in question and the parties there represented. At [20ff], his Honour said: In their submissions to the Court the receivers repeated their position that Mony de Kerloy had entered into separate retainers with each of Mr Carey, Richstar and Healthcare, albeit there was no evidence of a separate written retainer agreement with Redchime. They pointed to the absence of evidence of retainer agreements with any of the other defendants. They pointed out that where a number of parties to an action enter into a single retainer with one solicitor each is presumed to be jointly liable for the costs incurred by that solicitor: Burridge v Bellew (1875) 32 LT (NS) 807. Where distinct parties enter into individual retainers with a solicitor the presumption is reversed and each client is liable for its own share of solicitor costs. The costs incurred are the amounts specifically in relation to that client and a proportionate share of general costs attributable to the other parties: Ellingsen v Det Shandinaskie Co [1919] 2 KB 567. They accepted that the presumption is rebuttable if evidence to the contrary is adduced. They submitted that the effect of making an order that Richstar and Healthcare pay the legal costs in effect on behalf of other defendants is that Richstar would bear those costs without any right of recovery from the other defendants. If Richstar were to pay more than its proportionate part of the common costs of the extension application it would be paying legal costs on behalf of the other defendants which it would have no right to recover from them. In my opinion the work done by Mony de Kerloy for Richstar and Healthcare was inextricably linked to such work as it was necessary to do for all defendants in relation to the extension application. If it is accepted that the costs were reasonable, a position not disputed by either ASIC or the receivers, then the only question of principle is whether each of the defendants should bear severally a proportionate share of general costs. In my opinion, whether or not there were separate retainers, the various defendants represented by Mony de Kerloy were effectively jointly represented and the presumption in favour of several liabilities should be displaced. (my emphasis) 163Insofar as Mr Hyde submits that the presumption as to separate retainers will be rebutted only if the terms of the retainer reveal this as the intention of the contracting parties, this would seem to be contradicted by the finding in the above case that the presumption in favour of several liabilities was displaced by the basis on which the parties were represented in the proceedings. 164In the present case, there were in evidence various costs disclosure letters that appear to have constituted the retainer agreements from time to time. Those do not reveal any intention to differentiate between the respective clients who were there accepting a joint liability for the fees in the proceedings. It is submitted by Mr Hyde that the manner in which invoices were issued reveals that Mr Peters treated Tekitu as a separate client (on the basis that he had issued separate invoices to the Smiths and Tekitu, though accepting that on at least one occasion an invoice was issued to the Smiths and Tekitu jointly). It is further submitted that the separate representation is also consistent with the retainer as described by Mr Peters in [4] of his affidavit and the background commentary to the Bill of Costs issued in November 2010. That said, the retainer agreements (in the form of the costs disclosure letters) seems to me to indicate that the effective representation of the parties was on a joint not separate basis. 165Mr Aldridge seeks to rely, in this regard, on clause 6 of the File Transfer Deed as indicating an acceptance by the Tekitu clients that their liability for costs and disbursements was joint and several. However, I think little can be drawn, from an agreement that in future costs will be borne on that basis, as to the basis on which it had been agreed that costs would be borne in the past. 166By reference to the terms of clause 5 alone, I am not satisfied that there would have been a contractual obligation under the File Transfer Deed on the part of Mr and Mrs Smith for the payment of the difference between the amount claimed in the November Bill of Costs (and interest thereon) and the amount recovered from the controlled moneys fund (assuming there to have been no recovery under the solicitor's equitable lien). However, I am satisfied that the retainer in question was a joint retainer under which Mr and Mrs Smith were jointly and severally liable for the costs of the proceedings. The fact that invoices may have been rendered addressed to one or other of the parties over the period does no alter the fact that the costs agreements entered into with the Tekitu defendants were joint agreements and the basis of their representation was joint (displacing the presumption of separate costs liability). I do not accept the submission that the November Bill of Costs was invalid for the purposes of the Legal Profession Act and Regulations. There having been no application for assessment of the costs claimed in that Bill of Costs within the requisite period, there is a debt due and payable by Mr and Mrs Smith in the amount claimed. 167In any event, it is not necessary to consider whether any such orders should be made having regard to the conclusion reached on the solicitor's lien claim. Conclusion 168For the reasons set out above, I am satisfied that Mr Peters has established a "fruits of the action" claim and that it is not unconscientious for him to maintain that claim in priority to the administrator's statutory or equitable lien. There having been no application within the requisite time for assessment of the costs claimed in Mr Peters' November Bill of Costs, and being satisfied that the retainer of Mr Peters was a joint and several retainer, I consider that the appropriate relief is to order (subject to evidence of compliance by Mr Peters with the undertaking proffered on his behalf in relation to the submission of the File Transfer Deed to the Commissioner for stamping) the payment out of the funds held in Court to Mr Peters of the sum claimed in the November Bill of Costs plus interest thereon to the date of judgment and that the balance be retained pending assessment or agreement as to the costs of this motion (which, subject to any submissions that may be made to the contrary) I consider should be borne out of the said moneys. The balance of the remaining notices of motion should be dismissed with no order as to costs (save as to the costs of the application for payment out of moneys in the controlled moneys fund or alternatively into Court successfully made last December by the defendants). Orders 169Subject to any submissions that the parties may wish to make as to the form of the orders or otherwise, and subject to the evidence of compliance by Mr Peters with the undertaking proffered on his behalf to the Court on 31 January 2012, I propose to order as follows: 1.Declare that the Rodd Andrew Peters holds a lien over the First Defendant's entitlement to the funds paid into Court in December 2011 pursuant to the directions made on 16 December 2011 in respect of: (i) unpaid costs owed jointly and severally by the Defendants in these proceedings in the sum of $74,487.20; (ii) interest on the said costs as calculated at the rate payable under the Legal Profession Act and regulations; and (iii) the costs of enforcement of the lien including the costs of the Notice of Motion filed on 22 December 2011 in these proceedings. 2.Order the payment out of the moneys presently held in Court to Rodd Andrew Peters of the sum of $ 74,487.20 (plus interest to be calculated by the parties) and that the balance of the funds be retained in court pending assessment or agreement as to the costs referred to in (iii) above. 3.Save as already dealt with, and save as to the costs orders to be made in relation thereto, dismiss the Notice of Motion filed 15 December 2011 of the plaintiff and the Notice of Motion filed 16 December 2011 of Mr Peters.

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