Everett v Neale

District Court of NSW|2012-04-19

A. Introduction 1The plaintiff, Mr Peter Everett, a solicitor, commenced proceedings in 2011, claiming that in 1994 he paid $100,000 to his then client, Mr James Neale, the defendant, in respect of a debt incurred in 1987. The plaintiff asserts that he made the 1994 payment in the mistaken belief that the debt was still outstanding. He alleges that he had earlier repaid the debt in 1989, but that he had forgotten about that payment. 2The defendant has filed a defence. He alleges that the debt had not been repaid but remained outstanding prior to the payment in 1994, that the claim is statute-barred, that the plaintiff in 1994 owed the defendant further monies in excess of the amount repaid in 1994, and that a deed of release signed by the parties in 2009 precludes the plaintiff's claim. 3The defendant has filed a notice of motion seeking: "1. That the Plaintiff's claim be dismissed pursuant to UCPR ["Uniform Civil Procedure Rules 2005"] 13.4 (1) (b). 2. That Dibbs Barker disqualify themselves from acting for the Plaintiff. 3. Indemnity costs and interest in favour of the Defendant." The notice of motion is the subject of this judgment.

C. Pleadings and affidavits 31On 30 May 2011 the plaintiff commenced proceedings to recover the 1994 payment plus interest. The terms of the statement of claim are as follows:

On or about 15 December 1987, the defendant loaned to the plaintiff the sum of $40,000 ("Loan").
By arrangement made between the plaintiff and the defendant, on or about 15 November 1989 the plaintiff paid a debt owed by the defendant to the law firm known as, Dibbs Crowther and Osborne in the sum of $46,002.89 by way of repayment of the Loan. PARTICULARS The amount of $46,002.89 was comprised of the principal amount of the Loan being $40,000, plus $6,002.89 for interest.
In or about 1994, the defendant again sought repayment of the Loan from the plaintiff, contrary to the arrangement made between the plaintiff and the defendant referred to in paragraph 2 above.
In May and June 1994, owing to the plaintiff being under the mistaken belief that he still owed the Loan to the defendant, the plaintiff paid to the defendant the sum of $100,000, being the amount he believed at that time he was obligated to pay to the defendant as the principal amount of the Loan, plus compound interest ("Mistaken Payment"). PARTICULARS NAB account statements in the name of Enterprise Devereux Pty Limited dated 1 and 15 June 1994 recording four separate debits of $5,000 on 30 May 1994, $30,000 and $20,000 on 1 June 1994 and $45,000 on 9 June 1994 paid at the direction of the defendant to Carol Joan Neale, the defendant and to McCaughan Futures.
The plaintiff became aware of the mistake referred to in paragraph 4 above on 1 June 2005. On becoming aware of the mistake, the plaintiff wrote to the defendant notifying him that he had become aware of the Mistaken Payment and sought the prompt repayment of the Mistaken Payment from the defendant. PARTICULARS Letter dated 1 June 2005 from Peter Everett to James Neale.
The defendant failed to repay the Mistaken Payment.
By email dated 13 March 2008 and by letter dated 16 May 2011 from the plaintiff to the defendant, the plaintiff again sought repayment of the Mistaken Payment from the defendant.
The defendant has failed to repay all or any of the Mistaken Payment.
In the circumstances the plaintiff says that the defendant has been unjustly enriched in the sum of $100,000.
Further, the plaintiff was required to borrow the amount of the Mistaken Payment at bank overdraft rates in order to repay the Loan, which Loan had already been repaid in 1989. The plaintiff says that it was unconscionable of the defendant to seek repayment of the Loan in circumstances where the Loan had already been repaid or alternatively, upon being notified of the Mistaken Payment by the plaintiff, it was unconscionable of the defendant to refuse to repay the Mistaken Payment to the plaintiff, plus the amount of interest paid by the plaintiff on the amount he was required to borrow, at bank overdraft rates, in order to make the Mistaken Payment.
The plaintiff claims the amount of: (i) $100,000, (ii) plus interest on $100,000 from 9 June 1994 to date or alternatively , plus interest from the date the plaintiff demanded repayment of the Mistaken Payment from the defendant, being 1 June 2005, at bank overdraft rates from time to time or alternatively, at rates determined by the Court. 32The defence pleads the following matters:
This matter was settled by Order of the Supreme Court of New South Wales on the 14th July 2009. The Deed of Release dated 13th July 2009 which caused me to consent to the above orders released me from any claim the Plaintiff might make. I say that the Plaintiff is estopped from proceeding against me by virtue of the Deed of Release and in particular clause 4 thereof which contains a release of all claims by the Plaintiff against me which includes this claim.
This matter is stale. The matter relates to a debt incurred by the Plaintiff in 1983 and added to by unpaid interest and by a capital increase of $40,000 in December 1987. The alleged cause of action did not accrue within six (6) years before the commencement of this action and the plaintiffs cause of action is therefore statute barred.
The $46,000 was repaid by me in full. The Plaintiffs loan account with me was credited with $46,000 as at November 1989.
In relation to the Plaintiffs Claim I reply using the paragraph numbers in his Statement of Claim as follows;
Agreed. The amount advanced was in addition to a loan of $100,000 plus interest made by me to the Plaintiff in 1983 on which he had paid very little of the promised interest. When the Plaintiff borrowed the $40,000 in 1987 it increased the amount owing by him to me from $185,584 to $225,584.
Denied. The Plaintiff paid exactly $46,000 in reduction of his firm's fees in November 1989. It was not $46,002.89. It was not a computed amount. It was a round figure. I did not ask him to make this payment in this way. At the time the Plaintiff made the $46,000 payment to his firm he had unilateral access to a Societe Generale account of mine which had over $100,000 in it. He wrote to me and his partners confirming that at the time. The Plaintiff paid no interest on any of the loan and owed me $308,939 at the time the $46,000 payment to me was made. The $46,000 was credited by me to this balance. The Plaintiffs agreement with me provides that he would pay me interest at the rate I was paying to my bankers so that I would make neither a profit nor a loss on my loan to the Plaintiff. I in fact charged him at the bank indicator rate which was less than I was paying. I note that during 1988 and 1989 calendar years the indicator rate varied from 13% to 20.25%. That rate was provided to me by the Plaintiffs accountant. I did not calculate the interest on the $40,000 separately. Had I done so the interest from December 1987 to November 1989 on $40,000 would have been approximately $13,820 not $6,000.
I deny that there was any connection between the $46,000 payment and the $40,000 loan. The $40,000 loan was repayable by the Plaintiff on demand and I made that demand in 1994. The Plaintiff paid approximately $95,000 to me. A correct calculation based on our written agreement would have been $118,000. After that $95,000 payment was credited the Plaintiff owed me $397,593 on the original $100,000 loan on which he had paid practically no interest since 1983. The Plaintiff had borrowed this $100,000 to purchase from me an interest in real property worth $100,000 at the time the Plaintiff drew down the loan. That property had appreciated in value.
In the period 1989 to 1994 the Plaintiff was my solicitor and handled many matters for me. We were in regular contact. I deny that the Plaintiff banking law specialist and the most senior external solicitor for the National Australia Bank could have believed that his payment of $46,000 was sufficient to repay my $40,000 loan plus interest after two years at the interest rates prevailing in those days. I deny that we ever discussed that possibility. I would not have agreed to it as it would have amounted to my having lent the Plaintiff, on an unsecured basis, $40,000 at half the rate I was paying on my fully secured borrowings. That was contrary to our written agreement.
I responded to those letters in the context of proceedings commenced by me against the Plaintiff. The proceedings were settled as set out above.
Denied.
Agreed.
Denied.
Denied.
Denied.
Denied. 33The plaintiff has filed an amended statement of claim which makes an inconsequential amendment to the second paragraph of the statement of claim. 34The defendant, who was self-represented, read two affidavits on the application sworn in November and December 2011. Apart from documents to which reference has already been made, the affidavits contained the following paragraphs (omitting rejected material and references to documentary exhibits):
In 1959 I worked for my uncle Max Edwards as a clerk in the law firm now known as DibbsBarker ("Dibbs") in which he was a partner. I met the Plaintiff there. DibbsBarker has acted for me in dozens of matters from then until 2008.
In 1983 the Plaintiff drew agreements for me with Donna Aldridge (...) whereby Donna invested in my development property at Avon Rd Pymble. That site was zoned for housing however it had the potential for rezoning to medium density residential with substantial capital gains which were not taxable in 1983.
Later in 1983 I lent the Plaintiff 100% of the purchase price of $100,000 to make the same investment (...) as Donna had made. The Plaintiff only paid a small fraction of the interest on the loan (...). I tolerated this because he was a good friend (...), I could then afford it and the loan was secured by his entitlement to shares in a property I owned.
By 1987 I had given the Plaintiff as my friend and solicitor authority to withdraw funds from a cash deposit with Societe Generale (...) using his signature alone. I owned and operated, as a sole trader, a large equity and options trading business on the floor of the Sydney Stock Exchange. The Plaintiff had advised me, and I agreed, to give him unilateral access to my account to provide necessary liquidity in the event of my sudden death or disability.
In or about October 20th 1987 the World stock markets crashed. I made a substantial and immediate "paper" profit from this however my funds and the proceeds of that investment were with my stockbroker and their parent company Elders Finance and Investment Corporation ("ELFIC") who funded me. I had to sue them both to get paid. I instructed the Plaintiff as my solicitor on that day and he acted for me through to settlement in late 1989. ELFIC paid my costs to Dibbs in 1990 (...).
The day after the crash, I received a phone call from the Plaintiff while I was on the trading floor. We exchanged words to the following effect; PE "My bank is being difficult - could you lend me some money?" JN "Well, as you know, I've got plenty of problems myself, how much?" PE "$40,000 would probably tide me over until this crisis passes". JN "OK"
There was no reference at the time to any car accident relating to the Plaintiff s son although I did learn of that later.
The Plaintiff drew $40,000 from my Societe General account on about 15th November 1987. He sent me a handwritten note on 27/6/88 confirming it (...) with interest running from 1st November. He sent me an undated fax (...) on his firm's letterhead again confirming the loan but stating that interest ran from December 1987 and that he hoped to clear the debt by 30/6/92. My recollection is that that acknowledgement was sent many months later than the previous one.
I recorded the transaction in my computer as an increase of $40,000 in the 1983 loan of $100,000 (...). No additional security was provided. The plaintiff gave express personal guarantees in both cases (...).
On 6th December 1988 the Plaintiff wrote to me (...) asking to offset the asset represented by his interest in my Avon Rd property against the loans I had made to him plus interest. The terms on which the Plaintiff proposed this were contrary to the exit provisions of the agreement he had signed with me (...) and greatly favoured him at my expense.
We continued to discuss and correspond on this issue for several years (...). The Plaintiff wanted to exit from his 1983 contract on a basis very different from that expressed in the contract. He wanted to value his interest on the basis that a DA had been approved when it had not been approved.
The ELFIC matter was settled in about November 1989. A month or so before settlement the Plaintiffs managing partner wrote to me requesting payment of legal fees of over $40,000. This surprised me as the Plaintiff still had unilateral access to over $100,000 of my money and was several hundred thousand dollars in arrears in paying his interest on the two loans referred to above (...).
In early November 1989 after receiving the above letter I telephoned the Plaintiff and had a conversation to the following effect; JN "I've just had a letter from Geoff Sutherland threatening to stop acting for me if I don't pay your firm some $40,000. If it was that desperate you could have drawn the money from the Soc Gen account. And you haven't been paying the interest on your loan which is now several hundred thousand dollars behind." PE "I've been away. I'll sort it out with Geoff. I'll pay the bill myself." JN "It's about time you paid some interest on the Avon Rd loan." PE "I'll have to think about the tax but I'll make the payment myself."
On 15th November 1989 the Plaintiff paid $46,000 exactly into my trust account with the firm (...). The amount was not $46,002.89 as stated in the Plaintiffs affidavit. That amount may have included Financial Instrument Duty...There had been no reference prior to payment that this $46,000 was related only to the $40,000 loan (...). The magnitude of the amount arose from the fees allegedly owing to Dibbs. ...
I recall that my accountant, Carolyne Dunsford, in about 1992 had a conversation with me to the following effect in the context of preparing my income tax returns; CD "Peter Everett paid $46,000 to his firm towards your costs in the Elders matter, how do you want me to deal with it?" JN "Are you sure he didn't deduct it when Elder's paid my costs? They were paid to his firm." - CD "Yes -I checked that. He didn't recover them in that way." JN "OK then credit his interest account on Avon Rd. It's what we agreed." CD "I'll have to declare it as income then? JN "Yes"
Based on discussions with the Plaintiff over many years I believe the $46,000 personal payment which he says he has forgotten would have represented about 25% of his personal income. I cannot accept that his accountant would not have raised such a large amount when the Plaintiff was preparing his tax return.
In or about 1992 I asked the Plaintiff to repay the $40,000 plus interest and he eventually agreed to do so.
In 1993 I sent him the calculation of the $40,000 loan principal and interest (...) on the basis that I would make no profit and merely recover my costs of having effectively borrowed the money which I lent to him.
In 1995 he repaid $95,000 which was $21,000 less than my cost of funds. I credited this sum to his loan account (...).
In 2006 I commenced proceedings against the Plaintiff to recover the balance of the loan account.
That matter was settled and a Deed of Release dated 13th July 2009 (...) entered into by the Plaintiff and myself which included settlement of all matters between the Plaintiff and myself. 35On 29 February 2012 the plaintiff swore an affidavit which was read on the application. Omitting references to documents already discussed, that affidavit is in the following terms:
I first met Mr Neale in 1959 when we were both employees of Dibbs Crowther Osborne (now DibbsBarker).
I have remained with DibbsBarker since this time, as an employee, partner and more recently as a consultant.
Mr Neale and I became close friends and remained friends until around 1993.
In 1983, Mr Neale was involved in a property development at Avon Road, Pymble (Development). A company associated with me, Enterprise Devereaux Pty Limited (Enterprise Devereaux), borrowed $100,000 from Mr Neale's wife, Carol Neale, to invest in the Development. ...
In 1987, my son was involved in a car accident which damaged another vehicle.
Pursuant to the Loan, Mr Neale advanced $40,000 to me to pay the owner of the other vehicle involved in the accident.
My understanding was, and remains, that the Loan was a separate transaction from my investment in the Development, and the two were unrelated. ...
From 1969 to 1990 DibbsBarker acted for Mr Neale in respect to several matters.
In 1989, Mr Neale had an outstanding account with DibbsBarker in the amount of approximately $46,000.
I was advised by Mr Geoff Sutherland, the managing partner of DibbsBarker at that time that Mr Neale had refused to pay his account because I owed the Loan to him.
I agreed to pay Mr Neale's account with DibbsBarker in satisfaction of the Loan. I paid DibbsBarker $46,002.89 on or around 15 November 1989 (1989 Payment).
I had not discussed a specific rate of interest on the Loan with Mr Neale, however I considered approximately $6,000 to be reasonable interest. ...
In 1994, Mr Neale approached me and demanded payment of the Loan.
Mr Neale claimed interest on the Loan in the amount of approximately $60,000.
I paid Mr Neale approximately $100,000 by way of 4 separate bank transfers on 30 May 1994, 1 June 1994 and 9 June 1994 to accounts nominated by Mr Neale (Mistaken Payment).
At the time I made the Mistaken Payment I did not recall having made the 1989 Payment in satisfaction of the Loan. ...
By statement of claim filed on 23 October 2006 in the Supreme Court of New South Wales, Mr Neale commenced proceedings against Enterprise Devereaux, myself and the Partners of DibbsBarker at the time (the Proceedings).
The Proceedings related to legal services provided to Mr Neale by myself in relation to the refinancing of Mr Neale's borrowings with Australia and New Zealand Banking Group Limited to Macquarie Bank Limited, and Mr Neale's dealings with investors in the Development.
The Proceedings arose out of a release given by Mr Neale in respect to those legal services. The Proceedings claimed that the release was obtained because of my alleged influence and my alleged breach of fiduciary obligation to Mr Neale.
The Proceedings were dismissed on 14 July 2009 at the mutual agreement of Mr Neale and myself.
The Proceedings did not relate in any way to the Loan, the 1989 Payment or the Mistaken Payment. ...
On 1 June 2005,1 was reviewing some old paperwork and became aware of the Mistaken Payment.
On 1 June 2005, I wrote to Mr Neale requesting repayment of the Mistaken Payment...
I also wrote to Mr Neale requesting repayment of the Mistaken Payment by email on 13 March 2008 and by letter dated 3 June 2011...
Mr Neale has refused to repay the Mistaken Payment. 36The plaintiff's affidavit also annexes a letter dated 3 June 2011. This letter contains the following paragraphs:
In 1993 you pressed me for repayment of the original $40,000 advance (which had already been repaid) and canvassed my partners with suggestions that the matter should be taken up by the Law Society. Much had happened in the interim and I overlooked the fact that you had already been repaid, of course, the entry in my cash book showed a cheque payable to DC & O not JWN.
At the urging of my partners, I had my accountant Tom Dock speak to you and he recalls discussing with you the basis upon which he should calculate the amount "now due" in accordance with then current interest rates. I have his calculations and his note indicating that they were discussed with and agreed by you. The calculations commence with a capital sum of $40,000 on 15 December 1987.
Accordingly, I paid $100,000 to you or at your direction, being the (supposedly) outstanding principle of the 1987 advance together with accrued and compounded interest. I have the bank records indicating my transfers to your account and accounts nominated by you. Tom's calculations indicated an amount of $97,000 in December 1993, an additional $3,000 was added to cover interest to repayment in May 1994.
It was not until 2005 when I was running through old files with the intention of throwing out all irrelevancies that I came upon this sequence of transactions and realized that the original debt had, in fact, been discharged and that you had subsequently been paid that debt plus accrued interest on a compounded basis at very considerable expense to me (I found it necessary to borrow $100,000 to clear what I thought was still outstanding debt). I wrote to you on that occasion - 1 June 2005 - advising you of the double payment and you suggested that I was paying interest on the Avon Road, Property, which is patently ridiculous as we both know but because I have had rather a difficult time since then I have not got around to resolving this issue.
I have all of the necessary evidence to recover this payment in error of $100,000 plus (as you insisted upon) interest at commercial rates, compounded for the interim period. My maths was never very good and has not improved but on a compound interest basis, taking $100,000 as a start in 1993,I figure we should be somewhere north of $500,000 by now. 37There was no cross-examination of either deponent. 38A further 122 page bundle of documents was tendered by the defendant. The documents had been expressly referred to in correspondence between the parties that became part of the evidence in this application, and the plaintiff received a copy of the documents, but there remained a dispute as to whether the plaintiff was properly put on notice of the use to be made by the defendant of the documents. Ultimately, I admitted the documents as part of the history of correspondence that was already in evidence, but granted liberty to the plaintiff to make an application limiting the use to be made of those documents. 39The plaintiff availed himself of that liberty, and sought an order under section 136 of the Evidence Act 1995 that the documents not be used to determine any contested question of fact, because, it was submitted, the plaintiff had had no opportunity to put before the Court evidence contrary to those documents. I reserved that question until I had heard the defendant's final submissions and had reviewed the documents. The defendant made no submission referring to any of the documents despite my express invitation for him to do so if he wished to rely upon them, and on my review of the further documents I found some of them to be already in evidence and the others to be of no assistance in deciding the notice of motion. 40Accordingly, I propose to make the order sought by the plaintiff, which has the effect in the application of limiting the use of the documents in exhibit 2 to the purpose only of evidencing the history of correspondence between the plaintiff and the defendant.

D. UCPR 13.4 41UCPR 13.4 is as follows: 13.4 Frivolous and vexatious proceedings ... (1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings: (a) the proceedings are frivolous or vexatious, or (b) no reasonable cause of action is disclosed, or (c) the proceedings are an abuse of the process of the court, the court may order that the proceedings be dismissed generally or in relation to that claim. (2) The court may receive evidence on the hearing of an application for an order under subrule (1). 42The circumstances for the application of an order under rule 13.4 have been considered on many occasions. The most quoted decision in the area is General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 where Barwick CJ held that a lack of a cause of action needed to be clearly demonstrated. In that case the Chief Justice was specifically dealing with paragraphs (a) and (c), but the principles stated have commonly been applied to UCPR 13.4(1)(b) also. In General Steel, the Chief Justice countenanced the possibility of extensive argument to demonstrate whether the plaintiff's case is sufficiently untenable. 43Assistance may also be derived from the judgment of Dixon J, as he then was, in Cox v Journeaux (No 2) (1935) 52 CLR 713, who decided in an application under the equivalent provision to UCPR 13.4(1)(b) that the Court: "...may consider the undisputed facts. Further, it is not limited to cases where there is no dispute of fact." 44In the present matter, evidence has been received on the factual matters in accordance with subrule 13.4(2). 45Section 56 of the Civil Procedure Act 2005 ("CPA") may also have some application. It provides: 56 Overriding purpose ... (1) The overriding purpose of this Act and of rules of court, in their application to a civil dispute or civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the dispute or proceedings. (2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule. ... 46These provisions raise the question of whether the discretion in rule 13.4(1), or the proper interpretation of rule 13.4(1)(b), is affected by the overriding purpose of facilitating the just, cheap and quick resolution of the real issues in the dispute. 47In State of NSW v Mulcahy [2006] NSWCA 303, a case referred to with apparent approval by the High Court of Australia in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27 at [91], the Court of Appeal determined that section 64 of the CPA now controlled the power of amendment. The Court also referred to sections 56 to 58 of the CPA, and concluded at [29]: 29 When regard is paid to all these provisions of the Civil Procedure Act the relative importance of changes in the way the action was conducted at earlier stages ...is significantly altered. 48Mulcahy differs from the present case in that it was a case involving a proposed amendment. In Shaw v State of New South Wales [2012] NSWCA 102 the Court of Appeal considered whether the General Steel test required revision or reappraisal in the light of sections 56 and 58 of the CPA. That question was not ultimately decided by the Court, which found in that case that: "134...it is not shown that the Civil Procedure Act provisions warrant any result different from that indicated by the General Steel test." 49In Spencer v The Commonwealth [2010] HCA 28 the High Court, speaking of a related but differently worded provision under the Federal Court Rules granting to the Court a power of dismissal if the proceedings had "no reasonable prospect", stated in a judgment of Hayne, Crennan, Kiefel and Bell JJ that the provision: 53 ...departs radically from the basis upon which earlier forms of provision permitting the entry of summary judgment have been understood and administered. Those earlier provisions were understood as requiring formation of a certain and concluded determination that a proceeding would necessarily fail. That this was the basis of earlier decisions may be illustrated by reference to two decisions of this Court often cited in connection with questions of summary judgment: Dey v Victorian Railways Commissioners and General Steel Industries Inc v Commissioner for Railways (NSW). 54 In Dey, the defendants moved for summary judgment on the grounds that the action was frivolous, vexatious and an abuse of process. In a passage often later cited, Dixon J said that "[a] case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury". What Dixon J meant by "very clear" was identified by his observation that "once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process". And there would be a "real question" unless the defendant could "show that it was so certain that [the question] must be answered in the [defendant's] favour that it would amount to an abuse of the process of the court to allow the action to go forward for determination according to the appointed modes of procedure". The test identified by Dixon J in Dey can thus be seen to be a test requiring certain demonstration of the outcome of the litigation, not an assessment of the prospect of its success. 55 In General Steel Industries, Barwick CJ pointed out that previous decisions about summary termination of actions on the motion of a defendant had been given in cases in which the so-called "inherent" jurisdiction of a court to protect itself and its processes from abuse had been invoked, and in cases where the defendant had relied upon a particular rule of court permitting the court to strike out pleadings or dismiss an action on it being shown that a pleading "does not disclose a reasonable cause of action" or the action "being shown by the pleadings to be frivolous or vexatious". The material available to the court might differ, depending upon which power was invoked, but all the cases emphasised the need for "exceptional caution" in exercising a power to dismiss an action summarily. As Barwick CJ also pointed out in General Steel Industries, the test to be applied was expressed in many different ways, but in the end amounted to different ways of saying "that the case of the plaintiff is so clearly untenable that it cannot possibly succeed". As that formulation shows, the test to be applied was one of demonstrated certainty of outcome. 56 Because s 31A(3) provides that certainty of failure ("hopeless" or "bound to fail") need not be demonstrated in order to show that a plaintiff has no reasonable prospect of prosecuting an action, it is evident that s 31A is to be understood as requiring a different enquiry from that which had to be made under earlier procedural regimes. It follows, of course, that it is dangerous to seek to elucidate the meaning of the statutory expression "no reasonable prospect of successfully prosecuting the proceeding" by reference to what is said in those earlier cases. 57 Likewise, it is dangerous to apply directly what has been said in the United Kingdom about the application of a test of "no real prospect" or what has been said in United States decisions about summary judgment. The United Kingdom cases are directed to a different test. The controversies in the United States about what is sufficient to resist a motion for summary judgment, reflected in the recent decisions of the Supreme Court of the United States in Ashcroft v Iqbal and Bell Atlantic Corp v Twombly and in that Court's earlier decision in Conley v Gibson, turn upon the requirements of the Federal Rules of Civil Procedure applied to a system of "notice" pleading. The notion of what is not a "plausible" claim, discussed in Iqbal and Twombly, may in some cases overlap, but does not coincide, with the notion of "no reasonable prospect". 58 How then should the expression "no reasonable prospect" be understood? No paraphrase of the expression can be adopted as a sufficient explanation of its operation, let alone definition of its content. Nor can the expression usefully be understood by the creation of some antinomy intended to capture most or all of the cases in which it cannot be said that there is "no reasonable prospect". The judicial creation of a lexicon of words or phrases intended to capture the operation of a particular statutory phrase like "no reasonable prospect" is to be avoided. Consideration of the difficulties that bedevilled the proviso to common form criminal appeal statutes, as a result of judicial glossing of the relevant statutory expression, provides the clearest example of the dangers that attend any such attempt. 59 In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like "clearly", "manifestly" or "obviously") as "frivolous", "untenable", "groundless" or "faulty". But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word "reasonable", in the phrase "no reasonable prospect", be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a "frivolous", "untenable", "groundless" or "faulty" claim. 60 Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is "no reasonable prospect" of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to "no reasonable prospect" can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase "just and equitable" when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes. [emphasis added in Spencer] 50The relevant power relied on in the present case involves an assessment of whether the cause of action is "reasonable", a different test from whether the cause of action "has reasonable prospects of success". Yet as is recorded by the author of Ritchie's Civil Procedure Rules at [13.4.15], when commenting on rule 13.4(1)(b) and referring to Spencer: " ...it is at least arguable that the criterion of reasonableness introduces a permissive qualification that is not found in the terms of the summary judgment [Rule 13.1] power". 51It appears to me that the requirement in section 56(2) of the CPA that the Court must seek to give effect to facilitating just, quick and cheap resolution of proceedings when exercising any power under the Rules and when interpreting any provision of the rule, must apply to the power given to the Court under rule 13.4(1)(b) and to the construction of that rule (see also the decision of the England and Wales Court of Appeal: Jameel (Yousef) v Dow Jones & Co Inc [2005] EWCA Civ 75 at [57] to [58]). Further, rather than the "judicial glossing" condemned by Spencer at [58] the Court should attempt to determine whether the cause of action disclosed by the plaintiff is reasonable, whilst noting that "the power to dismiss an action summarily is not to be exercised lightly" (Spencer at [60]). 52It should be noted that the plaintiff claims the specific sum of $100,000 mistakenly paid plus interest, and does not claim damages. This feature of the proceedings explains the absence of any certification by the plaintiff's solicitor that the claim has reasonable prospects of success and takes the proceedings outside the requirements of sections 345, 347(2) and 348 of the Legal Profession Act 2005 which deal with the need for claims for damages to have reasonable prospects of success. I assume without deciding that section 347(1) of the Act, although it makes no specific reference to damages, or even a claim, would properly be construed as applying only to claims for damages.

E. The issues 53I have identified earlier in these reasons the four bases advanced by the defendant as to why the plaintiff's proceedings must fail. 54These bases are independent, in that each alone, if established, is sufficient to empower the Court to dismiss the claim. Accordingly, each basis warrants separate consideration.

(a) $40,000 loan not repaid in 1989 55This assertion in the defence is the foundation of the uncontroversial proposition that if the loan was not repaid by the 1989 payment, but remained unpaid, then there could be no subsequent "mistake" in repaying it. 56The plaintiff's correspondence with the defendant dated 27 June 1988, 6 December 1988, 15 November 1989, March 1992 and the undated confirmation of the debt presumably in early 1992 all confirm that throughout this period the debt remained owing, and had not been repaid. 57Of particular significance is: (i)the plaintiff's letter of 15 November 1989 - the precise date of the $46,000 payment - which does not assert that the $46,000 payment was a repayment of the $40,000 loan; (ii)the facsimile presumably in the 1992 financial year confirming the debt was outstanding in 1992; and (iii)the 2 March 1992 letter that confirms that the $40,000 debt remained outstanding. 58The effect of this correspondence is that the plaintiff has continued to assert, on three separate occasions at and after the 1989 payment of $46,000, that the 1987 loan for $40,000 remains unpaid. The plaintiff does not dispute this correspondence; indeed, two of the three items of correspondence were annexed to the plaintiff's affidavit. 59The plaintiff's claim depends upon the 1987 loan for $40,000 being repaid in 1989. Thus each of these three letters from the plaintiff confirming the existence of the loan at or after this date must also manifest a similar mistake. Yet the plaintiff does not allege that he was mistaken in 1989 when the $46,000 payment was made, nor does he allege that he was mistaken in 1992. The allegation was that he was mistaken "in May and June 1994". 60The specific nature of the mistake is relevant. The plaintiff has sworn an affidavit dated 29 February 2012 deposing to having reviewed some old paperwork on 1 June 2005 and thereupon becoming "aware of the mistaken payment" [i.e. the 1994 payment]. Similarly, the statement of claim asserts that the plaintiff on 1 June 2005 became aware of the mistaken payment (the 1994 payment) and sought prompt repayment. 61This evidence can be contrasted with the allegation in the statement of claim that on 1 June 2005 the plaintiff became aware of the "mistake" in June 1994, namely that he had believed, at the time of the mistaken payment, that the $40,000 loan plus interest remained owing. The plaintiff also deposed to not recalling in 1994 having made the 1989 payment in satisfaction of the loan. 62A third possibility is that the mistake is about the location of the evidence proving the 1989 payment. 63In his 2005 letter, the plaintiff described the "mistake" in these terms: "Although I had a feeling I had attended to it, I could not find the evidence because, of course, I was looking for a cheque payable to you rather than a cheque payable to [DibbsBarker]". And in 2008 the plaintiff wrote: "...I could not trace the earlier payment as I had forgotten that I paid it to [DibbsBarker] not direct to you..." 64In these circumstances, there remains a real question of the precise nature of the mistake, if any, made by the plaintiff. Although the defendant urged me to find that there was no mistake (in the sense that the plaintiff in 1994 had not forgotten about the 1989 payment of $46,000), I am of the view that the mental state of the plaintiff in 1994 cannot be the subject of a finding on this application. 65On an application for summary dismissal it is appropriate that I make assumptions on genuinely contested matters in favour of the plaintiff. Accordingly, although the precise mistake is not clearly revealed either in the statement of claim or in the plaintiff's affidavit, I assume on this application that the mistake made in 1994 was that the plaintiff did not recall making the 1989 payment, and that the plaintiff became aware of this mistake on 1 June 2005. 66However, the evidence before me, unchallenged and authored by the plaintiff, seems overwhelmingly to compel the conclusion that the $40,000 loan remained unpaid until 1994. In that event, whatever may have been the belief of the plaintiff in 1994, the amounts paid in respect of the 1987 loan were properly payable. 67The plaintiff, however, submitted that the plaintiff's claim must be "so clearly untenable that it cannot possibly succeed" and that "fatal defects in the plaintiff's case must be very clear" before it will be summarily dismissed. So much may be accepted. It does not controvert the findings in the previous paragraph. 68The only evidence dealing with the purpose of the 1989 payment for $46,000, apart from the correspondence to which I have referred, is the affidavit evidence of the parties. The defendant's evidence is relevantly consistent with that correspondence. The plaintiff, however, deposes: "14. I was advised by Mr Geoff Sutherland, the managing partner of DibbsBarker at that time that Mr Neale had refused to pay his account because I owed the [1987] loan to him. 15. I agreed to pay Mr Neale's account with DibbsBarker in satisfaction of the [1987] loan. I paid DibbsBarker $46,002.89 on or about 15 November 1989 (1989 payment). 16. I had not discussed a specific rate of interest on the loan with Mr Neale, however I considered approximately $6000 to be reasonable interest". 69The evidence included a schedule of interest rates, admitted without objection, showing that interest rates peaked late 1989 at 22.5%. The interest rate allegedly paid by the plaintiff ($6,000 over 2 years on $40,000), were it to be full payment of interest, equates at 7.5% simple interest. 70Nevertheless, despite its deficiencies the question remains as to whether the plaintiff's evidence, coupled with the assertion in the statement of claim that the 1989 payment of $46,000 to DibbsBaker was "by way of repayment of the [1987] loan", is sufficient to raise a genuine factual dispute such that summary dismissal is inappropriate. 71I do not regard paragraph 14 of the plaintiff's affidavit as being of significance. The reason stated by the defendant to a third party for refusing to pay legal costs is immaterial to the effect of the later payment by the plaintiff to the defendant. 72Paragraph 15 and the assertion in the statement of claim are in a different category. They involve an assertion by the plaintiff that he was intending to repay the 1987 loan by the 1989 payment. They do not evidence any agreement between the plaintiff and the defendant: the assertion in paragraph 15 that "I agreed to pay Mr Neale's account" must be read as an agreement between the plaintiff and Mr Sutherland with whom he was conversing, and a conversation with the defendant about the matter is apparently rejected by the plaintiff in paragraph 16 of his affidavit. 73Further, in circumstances where the defendant is self-represented and has not taken objection to an objectionable paragraph, I do not think I should give the paragraphs a generously wide reading, when the literal words convey something less. 74The allegations in the statement of claim of an "arrangement" must be read against the plaintiff's own affidavit which provides sworn evidence of the content of that arrangement. 75There may also arise a question as to whether any of this material is privileged and whether the failure by a self-represented defendant to take objection to that material may constitute a waiver of privilege. No submissions were put on this issue. I think it best not to express a conclusion about it. 76Accordingly, the outstanding issue is whether: (a)evidence of a belief in the plaintiff some 25 years ago that he was discharging the 1987 loan by the 1989 payment, (b)when that belief is inconsistent with the contemporaneous and relatively contemporaneous documentary evidence created by the plaintiff (including the letters tendered by the plaintiff in this application) is sufficient to establish a genuine factual dispute not merely about the plaintiff's belief, but about whether the 1987 loan was discharged by the 1989 payment. 77In my view, rule 13.4(1)(b) (construed in accordance with the "overriding purpose" pronounced by CPA section 56) does not require this Court to suspend common sense and reason to simply focus on whether as a hypothetical possibility, however extreme, the plaintiff may have an argument. In my view, the plaintiff's case is so weak, and the defendant's case so strong that a trial would be futile. Certainly it is impossible to describe the plaintiff's cause of action, relying upon his recollection of his belief 23 years earlier when that recollection is inconsistent with his own contemporaneous notes, as a "reasonable cause of action". 78Moreover, a belief by the plaintiff as to the purpose of the payment is not sufficient to render the payment to have the quality believed. In the absence of an agreement between the plaintiff and the defendant, the payment of $46,000 would be credited against the oldest debt, namely the outstanding interest on the 1983 loan, which on the evidence had reached approximately $85,000 by the time of the 1987 loan (see Devaynes v Noble (also known as Clayton's case) [1814-23] All ER Rep 1). 79There are three additional issues in relation to this aspect of the defence. 80First, it appears that, as a matter of law, the mistake did not cause the payment. 81According to the plaintiff's affidavit in 1994 the defendant "demanded payment of the [1987] loan" plus interest (at [18]) and that "[a]lthough I had a feeling I had attended to it, I could not find the evidence" (at Annexure "D"). 82The necessary element of causation is absent in circumstances where there is a voluntary payment to settle a dispute. The High Court in David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48 at [33] noted the principle of voluntary submission, referring to the judgment of Latham CJ in Werrin v The Commonwealth [1983] HCA 3, (1938) 59 CLR 150 at 159: "...if a person, instead of contesting a claim, elects to pay money in order to discharge it, he cannot thereafter, because he finds out that he might have successfully contested the claim, recover the money which he so paid merely on the ground that he made a mistake of law." 83In David Securities the judgment of the plurality at [36] records: ". ...The payment is voluntary or there is an election if the plaintiff chooses to make the payment even though he or she ... is not concerned to query whether payment is legally required; he or she is prepared to assume the validity of the obligation, or is prepared to make the payment irrespective of the validity or invalidity of the obligation, rather than contest the claim for payment. We use the term "voluntary" therefore to refer to a payment made in satisfaction of an honest claim..." (underlining added) 84Secondly, David Securities at [59] recognizes a defence of change of position. In the present case, the defendant entered a "Release" on 11 September 2000 (and indeed a deed of release in 2008) with the plaintiff. However, I am unable to determine on this application whether the 1994 payment was an operative cause of the defendant entering the release or the deed and therefore this second issue does not constitute an additional reason why the plaintiff's claim must fail. 85Thirdly, the plaintiff has submitted with some force that the parties to the 1983 loan were different to the parties to the 1987 loan. That much must be accepted. However, this is not a case where the defendant is seeking to enforce the 1983 loan against the plaintiff. Rather, the proceedings involve determining the true nature of the 1989 payment. 86It is clear that the plaintiff, by virtue of his guarantee of the 1983 repayments and by virtue of being the borrower of the 1987 loan, was obliged under both loans to make repayments. The correspondence from the plaintiff dated 6 December 1988, 15 November 1989 and 2 March 1992 show that the plaintiff regarded himself as obliged to make payments under both loans, and that to some extent he did so. 87Nor, to the extent that they were made, were repayments always made by the borrower to the lender. In the letter dated 6 December 1988 the plaintiff asserted that he made cash payments in respect of the 1983 loan. The plaintiff gave evidence that the 1989 repayment consisted of a payment to DibbsBarker, and the 1994 repayment was made by Enterprise, the borrower under the 1983 loan but not a party to the 1987 loan. Recitals D and E of the 2009 deed indicate that the parties did not attribute significance to the question of whether the individual or his corporate entity (or, in the case of the defendant, his wife) made or was responsible for the loans or payments. 88In the circumstances, I do not think that the character of the parties named in the 1983 loan can determine the nature of the 1989 payment.

(b) The plaintiff's indebtedness exceeded the 1994 payment 89As mentioned above, the defendant tendered without objection accounts indicating that as at 1994, the plaintiff was indebted, pursuant to the 1983 loan for $100,000 and the 1987 loan for $40,000 and interest, in the amount of $489,634. Although the plaintiff did not concede the precise amounts, it was not in contest that in 1994 the plaintiff was substantially indebted to the defendant. I did not understand it to be in contest that the amount of unpaid interest in 1994 was in excess of $100,000. 90The plaintiff submitted that notwithstanding these debts it was entitled to recover the 1994 payment plus interest, because the 1994 payment was made solely to pay off that 1987 loan. 91It is common ground that the payments in 1994 resulted from the demands of the defendant that the 1987 loan plus interest must be repaid. However, it remains unclear whether the payments were solely for that purpose. In the first place the payments were not made by the plaintiff to the defendant, at least on the plaintiff's case. The statement of claim asserts that the payments were made by Enterprise, at the direction of the defendant, to the defendant, Mrs Neale and another company. As Enterprise was the principal debtor under the 1983 loan and Mrs Neale the principal creditor, this mode of payment indicates a possible connection with the 1983 loan. 92Secondly, the correspondence in evidence indicates that the amount paid - varying from $94,000 (plaintiff's letter of 1 June) to $95,000 (defendant's tendered accounts) to $100,000 (plaintiff's letter dated 3 June 2011 and statement of claim) - was somewhat short of the $116,000 amount owing on the $40,000 loan, according to demands made by the defendant. The defendant's accounts record the payment as a reduction in the total indebtedness arising from the 1983 loan, the 1987 loan, and interest. 93Assuming in the plaintiff's favour that the 1994 payment was solely made in respect of the 1987 loan of $40,000; and that the 1987 loan had been wholly or partly repaid by the 1989 payment of $46,000, the question that remains is whether the plaintiff is entitled to be repaid a sum of money paid in respect of a non-existent debt, if in fact the plaintiff is otherwise indebted to the defendant. 94The foundation for the doctrine of recovery for money paid under a mistake is that the defendant has been unjustly enriched: see David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353 at [39] and Australia and New Zealand Banking Group Limited v Westpac Banking Corporation [1988] HCA 17; (1988) 164 CLR 662 at [11]. The defendant was unjustly enriched by the 1994 payment if he was not entitled to receive it. 95The High Court stated in David Securities at [40]: "...In referring to moneys paid under a mistake of law, we intend to refer to circumstances where the plaintiff pays moneys to a recipient who is not legally entitled to receive them. It would not, for example, extend to a case where the moneys were paid under a mistaken belief that they were legally due and owing under a particular clause of a particular contract when in fact they were legally due and owing to the recipient under another clause or contract (Barclays Bank v W J Simms Ltd (1980) QB 677 per Goff J at 695: "Of course, if the money was due under a contract between the payer and the payee, there can be no recovery on this ground")." 96In the present case there appears to be no dispute that in 1994 the plaintiff owed interest under the 1983 loan for an amount in excess of the amount paid in 1994. Thus, even assuming the 1987 loan had been repaid in 1989, there was no unjust enrichment of the defendant. The monies paid by the plaintiff remained due and owing under another contract, the 1983 loan, and thus were not amenable to recovery by the plaintiff.

(c) The limitation defence 97The defendant has pleaded a limitation defence. In submissions, the plaintiff asserts two matters in support. 98First, the plaintiff submits that section 56 of the Limitation Act 1969 is the applicable provision. Section 56(1) provides: 56 Mistake (1) Subject to subsection (3), where there is a cause of action for relief from the consequences of a mistake, the time which elapses after a limitation period fixed by or under this Act for the cause of action commences to run and before the date on which a person having (either solely or with other persons) the cause of action first discovers, or may with reasonable diligence discover, the mistake does not count in the reckoning of the limitation period for an action on the cause of action by the person or by a person claiming through the person. 99Secondly, the plaintiff submits that "limitation issues" should not ordinarily be determined on an interlocutory basis. 100As to the second point, reliance was placed upon the well known passage in Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 at [31], where the plurality stated: 31. We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question... 101However, it is apparent that the limitation issue in the present case is not "of the kind under consideration" in Wardley. The present case does not seek damages, but is a claim for money had and received. 102The time at which the cause of action arose, assuming the plaintiff's claim, must have been in May and June 1994 when the 1994 payment was made. Moreover, the vexed issue present in Wardley - determining the time at which a guarantor suffers damage as a result of a principal debtor's default - is not present here. The existence of a good limitation defence may be sufficient to establish that a reasonable cause of action is not disclosed: see Hillebrand v Penrith Council [2000] NSWSC 1058 at 33. 103As to the first point, it is apparent that the date of discovery of the mistake is significant in the application of section 56 of the Limitation Act 1969. 104I have earlier assumed for the purpose of this application that this mistake was discovered on 1 June 2005. The proceedings were commenced two days short of six years later, on 30 May 2011. Section 56 of the Limitation Act 1969 involves a determination of whether the plaintiff not only did not discover his mistake until after 30 May 2005, but also whether the plaintiff could not, with reasonable diligence, have discovered the mistake until then. 105On 15 November 1989 it is undisputed that the plaintiff: (a)was the solicitor for the defendant; (b)obtained a bank cheque for $46,000 in favour of the defendant; (c)deposited the bank cheque into the plaintiff's trust account, to the credit of the defendant which was recorded on the trust statement; (d)arranged for the withdrawal of two amounts of approximately $32,000 and $14,000 from the trust account to pay the defendant's legal costs to the plaintiff's firm; (e)recorded or arranged for the recording of those withdrawals in the trust account statement; and (f)sent to the defendant a letter explaining that the payment was made to the firm in respect of the fees owed by the defendant. 106I am unable to find any basis on which it can be said that the plaintiff, with reasonable diligence, could not have discovered the mistake of the forgotten payment until 2005. The plaintiff did not advance any possible reason, but relied solely on the date of discovery of the mistake. The mistake, this error of forgetting the 1989 payment, was entirely of the plaintiff's making. Records were kept of the matter, which at all times must have been in the custody of the plaintiff or his firm. Exercising reasonable diligence would have led the plaintiff to discover the 1989 payment in 1989, and in 1994 when he "had a feeling he had attended to it". 107For these reasons, I am of the view that section 56 cannot assist the plaintiff and the cause of action must be statute-barred.

(d) The deed of release 108On 13 July 2009 the plaintiff and defendant, along with unrelated parties, entered a deed of release "to settle their differences and all claims" according to recital J of the deed. 109The plaintiff asserts that this recital is insufficient to preclude his claim for repayment of the 1994 payment plus interest. 110Clause 4 of the deed says: 4. Everett releases and forever discharges Neale and JW Neale from all Claims he may now have or at any time may have had, or which, but for the execution of this deed, he might have had in connection with or incidental to the provision of Legal Services, the Loan, the Avon Road project, the Proceedings and the recitals to this Deed. 111The plaintiff asserts that his claim for repayment of the 1994 payment plus interest has no connection with the provision of Legal Services, with the 1983 loan, the Avon Road project, the proceedings or the recitals to the deed. 112I cannot see how this is so. The claim relies upon the assertion that the Legal Services (defined in the deed as including DibbsBarker legal services for the defendant in any matters in the period 1962 to 2001) were paid for in part by the 1989 payment of $46,000. This supplies a connection between the Legal Services and the plaintiff's claim against the defendant. Accordingly, the claim must fall within clause 4 of the deed, and therefore the plaintiff has released the defendant from the claim. It does not assist the plaintiff's case that he "discovered his mistake" well before this deed was executed. 113In my view, the plaintiff's claim is also connected to the 1983 loan (since both the 1989 and the 1994 payments were credited against the 1983 loan), the Avon Road project (for the same reason, and because of the plaintiff's repeated requests to amalgamate the assets and debts to produce a net result) and the proceedings (which involved recovery in respect of the loan, for the same reason). Perhaps most strongly, the plaintiff's claim must also be connected to the recitals to the deed because recital J refers to "all claims". 114Finally, it would be an entirely uncommercial construction of the deed for it to be construed so as to exclude the 1987 loan, the 1989 payment and the 1994 payment from the releases, in circumstances where the overpayment assertion by the plaintiff was known to both parties and had been the subject of demands in correspondence by the plaintiff on two occasions in 2005 and 2008.

F. Conclusion 115Accordingly, because of each of: (a)the existence of the undisputed debt to the defendant at the time of the 1994 payment; (b)the limitation period; (c)the provisions of the deed; and (d)the fact that the 1987 loan remained outstanding, in my view no reasonable cause of action is disclosed and the proceedings should be dismissed.

G. Disqualification of the plaintiff's solicitors 116Because of the view I have reached on this matter, it may be thought that the possible disqualification of the plaintiff's solicitors is an issue unnecessary to determine. However, in case I am found to be wrong in the application of rule 13.4, and because the parties have argued this matter, and in any case because the proceedings might be the subject of an appeal requiring the involvement of solicitors, I propose to deal with this aspect of the application. 117No issue has been raised by the parties about the jurisdiction of this Court to make an order precluding the plaintiff's solicitors from continuing to act for the plaintiff. In any event, section 46(2) of the District Court Act 1973 appears to grant me the power to make the order sought. 118The law applicable to an application by a former client to restrain a solicitor acting for the other party is conveniently summarised by Brereton J in Kallinicos v Hunt (2005) 64 NSWLR 561 at [76]. After a detailed analysis of the authorities, Brereton J writes (omitting references): "...

Once the retainer is at an end, however, the court's jurisdiction is not based on any conflict of duty or interest, but on the protection of the confidences of the former client (unless there is no real risk of disclosure)...
After termination of the retainer, there is no continuing (equitable or contractual) duty of loyalty to provide a basis for the court's intervention, such duty having come to an end with the retainer...
However, the court always has inherent jurisdiction to restrain solicitors from acting in a particular case, as an incident of its inherent jurisdiction over its officers and to control its process in aid of the administration of justice...
The test to be applied in this inherent jurisdiction is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice...
The jurisdiction is to be regarded as exceptional and is to be exercised with caution...
Due weight should be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause...
The timing of the application may be relevant, in that the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief..." 119Three issues arise: (a)Would a fair-minded, reasonably informed member of the public conclude that the proper administration of justice requires that DibbsBarker should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice. (b)Is there a risk of disclosure of confidential and privileged material. (c)Are there any relevant issues of cost, inconvenience or impracticality. 120The defendant has addressed this matter in correspondence with the plaintiff's solicitors. 121In an email to "Emma" of DibbsBarker dated 9 July 2011 at 5.55pm, the defendant wrote: Dear Emma, In my opinion it is unethical for your firm DibbsBarker to legally represent Peter Everett against me. Mr Everett acted for me as a partner in Dibbs Crowther and Osborne and its successors ("Dibbs") from about 1960 onwards. The matter on which he last advised me as a consultant with Dibbs was settled in 2007 and completed on the 1st of May 2008. That matter originated in 1983 via agreements which Mr Everett as a partner in Dibbs drew for me and he also participated in them as an investor. The transaction of which he now complains was an integral part of that agreement. Dibbs played an integral part in the matters the subject of the Statement of claim and the firm is seriously compromised. Many other partners of Dibbs assisted Mr Everett with my matters when he was ill, overseas, on leave or temporarily occupied with bigger matters. I recall Dibbs partners or associates such as Peter Luke, Dale Kemp, Ian Osborne, Geoff Sutherland, Max Edwards, Lynn Gerathy, Lisa Hansky, Justin Kang and others either handling my matters while Peter was unable to do it or advising him in their specialist areas. Mr Everett reminded me of these ethical obligations when he explained that he couldn't act for me in my divorce because he had occasionally acted for my ex-wife in joint matters. In about 2006 appointed Watts McCray (Watts) to act for me and Mr Watts was very careful to make sure that his firm had never acted for my ex-wife before he would allow me to engage the firm. Justin Dowd of Watts then did substantial work preparing my case. Two months later solicitor John Pollard joined Watts McCray. Mr Pollard had acted for my ex-wife in the past however she had appointed other solicitors some years before and had no further dealings with him. My ex-wife's solicitors objected to Watts acting for me for the same reasons I now give to object to your firm acting for Mr Everett. Watts sought a legal opinion from barrister Peter Batey who had an extensive meeting with Watts and me and advised us that Watts could not ethically act for me and that it was not worth contesting the matter in the court. Please advise by return email that DibbsBarker will withdraw as the solicitor on the record for Mr Everett in these proceedings forthwith. Regards, Jim Neale 122Chloe Wallace from DibbsBarker responded in the following terms: Dear Mr Neale We refer to your email below. It is not apparent how DibbsBarker is conflicted in acting for Mr Everett in this matter as you suggest. Mr Everett sues you in respect of a debt he repaid to you twice, in error. We are instructed that debt arose from a loan you made to him to cover the costs of a car accident his son was involved in i.e. it had nothing to do with any matter where this firm acted on your behalf previously. Please particularise what information you believe this firm has as a result of having acted for you previously, which places it in a position of conflict by acting for Mr Everett in relation to this matter. We look forward to hearing from you. Yours faithfully Chloe Wallace Lawyer 123Further correspondence followed. On 7 November 2011 at 9.48am, Mr Neale sent an email to Chloe Wallace in the following terms: Dear Chloe, I spoke to Matthew Seisun on 28/10/2011. He had carriage of and settled all matters involving Peter Robert Everett and others and myself by mutual releases on 14th July 2009. Mr Seisun was assisting a partner of your firm, Mr Dean Newell who also signed the settlement. See attached Court Orders and Deed of Release. Mr Seisun recalls receiving the 122 pages of documents which were faxed and mailed to him by me on 5/11/2008 and which supported and led to the above settlement. They clearly establish that the $40,000 by me to Mr Everett loan was part of the settlement. Mr Seisun said he would speak to you and ensure that you could obtain access to those documents. Almost all of your requests relate to documents drawn by Mr Everett. I have not heard from Mr Seisun or yourself since my conversation with him on 28/10/2011. My response to your request for particulars therefore consists of the above 122 pages sent to Mr Seisun and my second attachment hereto which gives further particulars about the financial calculations. These were sent to Mr Everett previously. Both Mr Seisun and Mr Newell will be subpoenaed as principal witnesses in this matter and this heightens the necessity that your firm must disqualify itself from acting for Mr Everett. DibbsBarker has documents of mine going back to 1962 and as previously indicated has acted for me from 1959 until 2008. Your firm acted for Mr Everett in the above settlement with our consent only because it was a settlement negotiation. My solicitor advised me at the time that Mr Everett had a conflict and that DibbsBarker should not be acting for him. I also have a SC's opinion that Mr Everett and your firm had been so seriously conflicted as a result of the 1983 and 1987 advances from me that he and his firm should be reported to the Law Society. The future timetable in this matter will require dates for filing a motion for disqualification of DibbsBarker from acting for Mr Everett and for my lodgement of an application for summary judgment. Please advise by return email if you are prepared to consent to such a timetable and mention my appearance as before. Regards, Jim Neale. 9489 6112 124Written submissions were filed on behalf of the plaintiff. The application for disqualification was dealt with briefly and contained the following submission: "DibbsBarker does not have a conflict of interest in acting for Mr Everett against Mr Neale. In particular, the firm did not act for Mr Neale or Mr Everett in respect of the loan, the 1989 payment or the mistaken payment." 125It is apparent from recital A of the deed that the plaintiff as a partner of DibbsBarker has acted for the defendant from 1962 until 2001 including in respect of the Avon Road project according to recitals C and F of the deed.

(a) Does the proper administration of justice require disqualification of the solicitors 126Assuming I am wrong in summarily dismissing the plaintiff's claim, one step in the plaintiff's journey in establishing his case is to displace his own correspondence in respect of the 1987 debt. As a practical matter, this seems to require oral or affidavit evidence, presumably from the plaintiff and other members of DibbsBarker. 127The defendant has listed nine partners or associates who were involved in giving him advice in relation to the Avon Road project. Further, the defendant asserts that Mr Seisun and Mr Newell, members of the firm "will be subpoenaed as principal witnesses - this matter". The plaintiff did not dispute these assertions. The plaintiff in his affidavit refers to statements by Mr Geoff Sutherland, and in annexures to that affidavit refers to him having "advised his partners" (letter of 15 November 1989) and to conversations between the defendant and "Ian Osborne and Geoff Sutherland" (letter of 1 June 2005). 128Speaking of the solicitor-witnesses, Brereton J in Kallinicos at [86] wrote that the solicitor-witness in that case: "...will owe obligations of loyalty to his present client...he will have an interest in presenting the facts in a manner which exonerates himself, and he will have a duty to the court to be frank." 129His Honour also noted: "[87] It is generally undesirable for a practitioner who is aware that he is likely to be called as a witness, other than in relation to formal or non-contentious issues, to continue to act. If a practitioner's credibility is at stake as a witness, his personal integrity may be put in issue and that may constitute a personal interest inconsistent with the practitioner's duty to the court or to the client. In (2005) 64 NSWLR 561 at 585 those circumstances, it is relevant though far from decisive to note that the Revised Professional Conduct and Practice Rules 1995 provide as follows: "19. Practitioner a material witness in client's case A practitioner must not appear as an advocate and, unless there are exceptional circumstances justifying the practitioner's continuing retainer by the practitioner's client, the practitioner must not act, or continue to act, in a case in which it is known, or becomes apparent, that the practitioner will be required to give evidence material to the determination of contested issues before the court." ... [89] In Holborow, Heenan J remarked that it had long been accepted that a legal practitioner who was likely to be a witness should not act as counsel or continue as counsel if a situation arises where he is unexpected required to give evidence, since the personal integrity of the practitioner may be put in issue if his word or credibility is at stake as a witness, and that will or may constitute a personal interest inconsistent with the practitioner's duty to the court or to the client. Similar conflicts of interest can arise if, for example, the counsel or solicitor had a substantial personal stake in the litigation such as, for example, if he or she were to be a partner in a firm which was a party to the litigation, or a substantial shareholder in a corporation which was a party (Holborow (at [29])). [90] In my opinion a fair-minded, reasonably informed member of the public would conclude that the independent objectivity of Mr Moloney as solicitor (2005) 64 NSWLR 561 at 586 and/or witness was compromised by conflicts between his obligation of loyalty to his client Mr Hunt, his role and knowledge as a witness of material facts, and his potential personal interest. Although I do not think that fair-minded and reasonably informed members of the public conceive that legal representatives are entirely impartial, as most would see them as aligned with the parties whom they represent, and while it needs be borne in mind that the alternative to legal representation is self representation, in which case none of the controls which legal representation imposes on the conduct of litigation would apply, nonetheless, fair-minded and reasonably informed members of the public expect that lawyers will provide advice to their clients, and conduct litigation in which they act, free of and unaffected by any personal interest in the outcome." 130In accordance with this decision, the likely presence of DibbsBarker partners as witnesses in the proceedings should they continue seems to me to be a reason why an order for disqualification should be made.

(b) Risk of disclosure of confidential material 131The defendant referred in correspondence and in submissions to the circumstance where his legal representatives could no longer act for him in a family law dispute with his wife because they had previously acted for his wife. Of course I cannot say in this case whether the withdrawal of his legal representatives in that matter was appropriate. However, even assuming that it was, it seems to me that there is a significant difference between Family Court proceedings, which I must assume may range over the wide expanse of interaction between the married partners, and this relatively narrow commercial dispute. The issue is whether the lawyers are aware of confidential material relevant to the present dispute and the application of that test must differ according to the nature of the dispute. As stated by Lord Millett in Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222 at 237G: "...there was no ground on which the court could properly intervene unless two conditions were satisfied: (i) that the solicitor was in possession of information which was confidential to the former client and (ii) that such information was or might be relevant to the matter on which he was instructed by the second client. This makes the possession of relevant confidential information the test of what is comprehended within the expression 'the same or a connected matter... My Lords, I would affirm this as the basis of the court's jurisdiction to intervene on behalf of a former client." 132The defendant was not able to identify with precision any particular matter of confidence known by DibbsBarker which would be relevant to the litigation, when the defendant was invited to do so during the hearing of the application. However, I do not think that this failure is fatal to his application. It is, of course, difficult for any person to identify with precision what they may have discussed with their legal representatives more than two decades ago. 133I can readily accept that confidential and indeed privileged matters were revealed by the defendant to DibbsBarker in the period 1987 to 1994. The difficulty is in ascertaining whether any of those matters are relevant to the present dispute and at risk of disclosure. In this matter the defendant bears the onus of proof. 134The judgment of Lord Millett in Prince Jefri Bolkiah at 235E, agreed to unanimously by the other members of the House of Lords, dealt with the onus of proof in these words: "...it is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own. Although the burden of proof is on the plaintiff, it is not a heavy one. The former may readily be inferred; the latter will often be obvious. I do not think that it is necessary to introduce any presumptions, rebuttable or otherwise, in relation to these two matters. But given the basis on which the jurisdiction is exercised, there is no cause to impute or attribute the knowledge of one partner to his fellow partners. Whether a particular individual is in possession of confidential information is a question of fact which must be proved or inferred from the circumstances of the case." 135I have indicated that I am prepared to infer the satisfaction of the first condition. With some hesitation, due to the matter being finely balanced, I am also persuaded that I should favour the defendant on the second issue. I can readily foresee that confidential matters concerning the structuring of the various loans, involving at different times, or to different degrees, the defendant, his former wife and his companies, on the one hand, and the plaintiff and his company (and perhaps his firm) on the other, may have been done for taxation and other consequences. These are private and confidential matters, yet they seem to me potentially to be relevant to the case the plaintiff wishes to make about the arrangements in respect of the 1987 loan, the 1989 payment and the 1994 payment. This is not idle speculation, for the plaintiff has argued with some force on this application that the parties to the various loans is a matter of significance. 136For these reasons, I am satisfied on the balance of probabilities that DibbsBarker is possessed of information confidential to the defendant, and that information may be relevant to this matter. 137Once it is established that DibbsBarker were in possession of confidential information, the burden lies on the plaintiff to establish that there was no real risk of disclosure: Prince Jefri Bolkiah at 237G. The plaintiff advanced no evidence or submissions on this issue and I am not persuaded that the risk is non-existent. I refer to the words of Lord Millett in the Prince Jefri Bolkiah decision at 237F: "...In my view no solicitor should, without the consent of his former client, accept instructions unless, viewed objectively, his doing so will not increase the risk that information which is confidential to the former client may come into the possession of a party with an adverse interest." 138It might be thought that there is some inconsistency between the decision to dismiss the proceedings as not disclosing a reasonable cause of action and a finding that the solicitors should not continue to act because they may be witnesses in the proceedings. The latter finding is conditioned on my decision in respect of dismissal being found to be incorrect. If it is incorrect, it seems to me to be likely that it is because, contrary to my findings, the plaintiff and members of his firm can give relevant evidence of conversations some 20 or more years ago to displace the plain meaning of the plaintiff's correspondence. In that event, the evidence of the plaintiff's solicitors becomes relevant and raises the issues canvassed in Prince Jefri Bolkiah and Kallinicos.

(c) Question of costs, inconvenience and impracticality 139As this is at an early stage of proceedings, issues of costs and convenience are not large. It may be that as a consultant of DibbsBarker, the plaintiff is favoured with an economical costs arrangement, although again there is no evidence of this matter. 140However, there is one remaining issue of concern, that of practicality. Does it make a difference that the plaintiff himself was the primary legal representative of the defendant during the relevant time? 141An action by a client against a solicitor may operate as a waiver of privilege. In Benecke v National Australia Bank 35 NSWLR 110 Gleeson CJ stated (at 111E and F): The rule that prevents an unauthorised disclosure of confidential communications between a client and a legal adviser, when such communications are for the purpose of obtaining legal advice, or for use in existing or anticipated litigation, constitutes a restriction upon the capacity of courts to ascertain the truth in certain circumstances. That restriction, however, is regarded as acceptable on the ground that it promotes the public interest, and assists the administration of justice, by facilitating the representation of clients by legal advisers. It does this by encouraging uninhibited communication. Thus, in cases where the rule operates, one aspect of the public interest is preferred against another (discovering the truth). It would be inconsistent with the reason for the existence of the privilege to permit it to operate in the manner for which the appellant contends. But for her own actions, the privilege would have enabled the appellant to insist that nobody should be able to give evidence of the confidential communications between the appellant and her senior counsel about the settlement of the first proceedings, without the consent of the appellant. However, it did not enable the appellant to make public her version of those communications and, at the same time, to enforce silence on the part of others who disagreed with that version. The law permits the search for the truth in legal proceedings to yield, in certain circumstances, to the public interest in preserving the secrecy of communications between lawyer and client. In the present case, however, the appellant herself lifted the veil of secrecy by giving her version of the communications. Thereafter, there was no reason in principle why the pursuit of the truth should not take its course, or why the court should be inhibited in seeking to ascertain the true facts concerning those communications. 142It follows from this passage that the privilege belongs to the client and an action by the solicitor against the client is ineffective to waive it. If disclosure of the privileged material is necessary for the solicitor plaintiff's action to succeed, the action must fail. 143The current proceedings have not been commenced by the defendant. At this stage, neither party has suggested that privilege has been waived. Unless that occurs or has occurred there remains a real prospect that the plaintiff will be limited in the evidence he can disclose. Whilst this may remain a problem potentially of some significance to the plaintiff, I do not see it as a reason for a different order in respect of the solicitors. 144For these reasons, were the proceedings to continue I would grant the injunction sought. I do not, however, think that the injunction should be granted in respect of an appeal made against the decision to dismiss the proceedings or the decision in respect of the disqualification of the plaintiff's solicitor. In such an appeal the members of the firm are not likely to be witnesses, nor is there any real prospect of disclosure of confidential material. Accordingly, no order is necessary in view of the decision I have made in respect of the application under UCPR 13.4(1)(b).

H. Costs 145The defendant also sought an order for "indemnity costs and interest". 146The defendant made no submissions seeking a special costs order, and I do not see any circumstances attaching to the present application that warrant either an order for indemnity costs, or interest. 147UCPR 42.20(1) provides that in the ordinary case of dismissal of proceedings under UCPR 13.4 the plaintiff must pay the costs. However, a "litigant in person who is not a lawyer is not entitled to receive an order for costs to compensate him for time spent in preparing and conducting his case": Preston v Commissioner for Fair Trading [2011] NSWCA 40 at [183], applying Cachia v Hanes [1994] HCA 14; 179 CLR 403. 148During his submissions the defendant made reference to having received some assistance from a solicitor. Whether costs arose from that assistance, and whether they are recoverable, seems to me to be a matter to be determined on an assessment if not otherwise agreed. 149Accordingly, I propose to order that the plaintiff pay the defendant's costs of the proceedings, including the costs of the notice of motion, but that those costs not include any compensation for time spent by the defendant in preparing and conducting his case. 150The orders of the Court shall be: (1)Pursuant to section 136 of the Evidence Act 1995, the use of exhibit 2 be limited so that the documents therein may not be used to determine any contested question of fact. (2)The proceedings be dismissed pursuant to UCPR 13.4(1)(b). (3)The plaintiff pay the defendant's costs of the proceedings including the notice of motion, those costs not to include any compensation for time spent by the defendant in preparing and conducting his case.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 May 2012

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