Holmes v DMS Pacific Exports Pty Ltd

CATCHWORDS : EQUITY - Unconscionable conduct - defendants seeking to execute on a judgment for full amount where discounted amount not paid by due date as specified in Agreement As to Judgment - plaintiffs paid money into their solicitor's trust account and solicitors failed to make payment to defendants by due date - plaintiffs seek declaration that defendant is unconscionably taking advantage of a mistake made by plaintiffs' solicitors. - CONTRACT - Implied terms - whether necessary to give business efficacy to the Agreement As to Judgment that a term be implied that defendants were required to stipulate to whom payment was made and to give direction to pay - termination of solicitors' retainer post entry of judgment and solicitors' authority to receive payment on behalf of defendants - payment, whether cash only is legal tender

Mackay v Dick (1991) 6 App. Cas. 251 The R and I Bank of Western Australia v Carew Corporation Pty Ltd BC9503605 14 March 1995 BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR George v Cluning (1979 28 ALR 57) Butler v Knight (1866-67) Exch Vol 11 109 CASES CITED : Bevins v Hulme 153 ER 773 Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 Alghussein Estsablishment v Eton College [1991] 1 All ER 267 Earthworks and Quarries Ltd v F.T. Eastment & Sons Pty Ltd [1966] VR 24 The Commonwealth v Verwayen (1990) 170 CLR 394

Paul Holmes (First Plaintiff) PARTIES : Maria Luisa Holmes (Second Plaintiff) DMS Pacific Exports Pty Limited (First Defendant) Jeffrey Neil Thomas (Second Defendant)

COUNSEL : T.D.F. Hughes (Plaintiffs) R.G. Forster SC with S Docker (Defendants)

SOLICITORS : G H Healey & Co (Plaintiffs) Rankin Nathan (Defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

Hammerschlag J 28 February 2007 2006/03342; 2006/2329 Holmes v DMS Pacific Exports Pty Limited JUDGMENT

The nature of these proceedings 1 In these proceedings the plaintiffs, Mr and Mrs Holmes ("the Holmes" or "the plaintiffs" as the case may be) pray for declarations that the defendant company, DMS Pacific Exports Pty Ltd ("DMS") is acting unconscionably in seeking to execute on a judgment which was obtained on 20 September 2005 by consent in the District Court at Newcastle when proceedings between the parties in that Court settled. 2 The Holmes were defendants in the Newcastle proceedings and DMS was the plaintiff there. 3 On 20 September 2005 the parties, by their respective solicitors, executed a document entitled "Agreement As To Judgment" ("the Agreement") containing the following provisions: " 1. Verdict and judgment for the Plaintiff against the First and Second Defendants in the sum of $120,000. 2. Judgment can be satisfied by the First and Second Defendants by payment of the sum of $45,000 before 4pm on 11 November 2005 and upon default in payment of $45,000 before 4pm on 11 November 2005, the Plaintiff shall be at liberty to enforce the unpaid balance of the judgment of $120,000 against the First and Second Defendants immediately after 4pm on 11 November 2005." 4 On 20 September 2005 judgment ("the Judgment") was entered in the following terms:

"VERDICT & JUDGMENT FOR THE PLAINTIFF AGAINST THE DEFENDANTS IN THE SUM OF $120,000.00." 5 There is consequently the Judgment in favour of DMS for $120,000 and the Agreement that sits side by side with it. 6 By letter dated 20 September 2005 DMS's solicitors sent a sealed copy of the Agreement which had been filed with the Newcastle District Court Registry to the Holmes' solicitors. In that letter they also said "we look forward to receiving payment of the settlement moneys." 7 The Newcastle proceedings included cross-claims brought by the Holmes against DMS and other parties which were either dismissed or discontinued. 8 The sum of $45,000 was not paid until 8 December 2005. 9 DMS has sought to execute on the Judgment. 10 In these proceedings the Holmes seek declarations that in seeking to execute on the Judgment, DMS is unconscionably taking advantage of a mistake made by the Holmes as a result of their solicitors failing to pay the amount by the deadline. They also plead that it is doing so in circumstances where performance of the Agreement became impossible because DMS did not before the deadline expired, give them any direction to pay which, they say, DMS was obliged to give. 11 In the Statement of Claim, claims for relief against forfeiture, claims under the Trade Practices Act 1975 (Cth) and the Fair Trading Act 1987 (NSW), and a claim for damages were also made. These were abandoned during the hearing. 12 Mr Thomas, a solicitor and director of DMS, was joined as a second defendant. This was on the basis only that he was alleged to have been an accessory to the conduct of DMS in contravention of those Acts. All claims brought against Mr Thomas have been abandoned. 13 The plaintiffs claim only declarations and make no claim for injunctive or any other consequential relief.

The factual background 14 On 21 February 2004, DMS lent the Holmes $95,000 to enable them to buy a one-half share in a business known as Hunter Lawn and Garden Services and to assist them in commencing operation of the business.

15 On 21 February 2004 the Holmes also entered into a partnership with one Corinne Frost, to become partners in the Hunter Lawn and Garden Services business. 16 The partnership did not work out and in 2004 Ms Frost instructed Rankin Nathan, a firm of solicitors with offices in Newcastle and Sydney, to act for her in getting out of the partnership. 17 At about the same time, DMS also instructed Rankin Nathan to recover the money owed to it by the Holmes under the loan agreement. 18 Mr Jeffrey Neil Thomas is a partner in the Newcastle partnership of Rankin Nathan. Additionally he is the husband of Ms Frost. Both are directors of and shareholders in DMS. 19 Mr Phillip Anthony Young is the Managing Partner of Rankin Nathan. 20 Within Rankin Nathan two files were opened. One for the partnership dissolution matter and one for the DMS debt recovery matter. Both matters were administered at all times by the Newcastle office. Although Mr Young is shown on most of the correspondence as the supervising partner in respect of both matters, it is clear, and it is accepted by DMS, that Mr Thomas had a close involvement in both matters and an intimate knowledge of what was going on in both matters throughout the relevant period. He had an interest in the matters' outcome because of his and his wife's directorship of, and shareholding in, DMS. 21 The partnership dissolution became the subject of arbitration proceedings which were disposed of on 13 September 2005 by consent orders in the arbitration. 22 So far as the loan moneys were concerned DMS instructed Rankin Nathan to sue on its behalf in the District Court at Newcastle. The Holmes filed a defence and also a cross-claim. 23 Throughout, including in these proceedings, the Holmes have been represented by G H Healey and Co solicitors. Mr Gregory Harrison Healey is a consultant to the firm and has been since 1998. The Holmes were introduced to G H Healey and Co by Mr Healey. 24 On 12 September 2005 G H Healey and Co wrote to the Holmes confirming that they had been instructed to accept an offer made by DMS in the terms of the Agreement and pointing out that "…it is very important that the sum of $45,000 be paid prior to 11 November 2005". The letter was signed by Mr Jason Keane, a solicitor with G H Healey & Co, and refers to him as "Contact" and Mr Healey as "Consultant". 25 Mr Keane had carriage of the matter for the Holmes. Mr Healey had supervision of Mr Keane whilst Mr Keane was at the firm but this was more formal than substantive because Mr Keane was considered to be a senior commercial solicitor who had been employed, according to Mr Healey, to relieve the latter's burden. 26 The District Court proceedings were settled on 20 September 2005 when the Agreement was entered into and the Judgment entered. Mr Keane signed the Agreement on behalf of the Holmes. 27 Within the firm of Rankin Nathan at the time of the settlement, a solicitor Ms Aimee Louise Hyde, had carriage of the matter under supervision of Mr Thomas. Ms Hyde left Rankin Nathan on 14 October 2005 and her position was thenceforth occupied by Mr Andrew Sheeley. From 18 October 2005 Mr Sheeley had carriage of the partnership dissolution matter and the DMS recovery matter, under the supervision of Mr Thomas.

28 On 24 October 2005, under cover of a letter, Mr Holmes sent a bank cheque for $65,000 to G H Healey and Co "for dispersal to J N Thomas ($45,000) the balance being towards your fees". 29 On the same day, that is, 24 October 2005, Mr Keane left the employ of G H Healey & Co and a few days later a Ms Rodopoulos (described as a qualified but not yet admitted solicitor) was employed by the firm to assist with Mr Keane's matters. 30 The bank cheque from Mr Holmes was banked into G H Healey & Co's trust account on 1 November 2005. 31 Between 18 October and 10 November 2005, there were things being done on the partnership dissolution matter in connection with distributing the proceeds of an auction of partnership property. Mr Sheeley wrote to G H Healey & Co on 10 November 2005 seeking contact with the solicitor who now had carriage of Mr Keane's matters. The letter raised the question of distribution of moneys from the partnership property auction and the matter of a payout figure for a Toyota Hilux Ute. 32 On 11 November 2005 Mr Healey met with Ms Rodopoulos. He was told by Ms Rodopoulos that Mr Holmes was on the telephone and was saying "we have to settle by today". Mr Healey then spoke to Mr Holmes.

33 According to Mr Holmes, between 2.00pm and 3.00pm on 11 November 2005 a conversation took place between him and Mr Healey to the following effect: Mr Healey: "Jason has left the firm unexpectedly and I am not up to speed on your matter." Mr Holmes: "The matter has to be settled by 4.00pm. I sent a cheque on 24 October for $65,000, $45,000 has to be paid by 4.00pm." Mr Healey: "It is not your problem. You've done your bit. We will contact Rankin Nathan." 34 Mr Healey was cross examined on this conversation and did not deny having been told of the 4.00pm deadline by Mr Holmes during the conversation nor any other aspect of it. I find that it took place as recounted by Mr Holmes. 35 Mr Healey says that he went through the file with Ms Rodopoulos on that day. He says that the file did not have copy of the Agreement on it. His evidence was that he encountered that document for the first time about two weeks later in a folder in the firm's boardroom. 36 He says that he told Ms Rodopoulos to send a letter to Rankin Nathan. Ms Rodopoulos was not called as a witness and the evidence establishes that she was not prepared voluntarily to give evidence for the plaintiffs. 37 At 2.56pm on Friday 11 November 2005 Ms Rodopoulos responded to Mr Sheeley's letter of the previous day by fax ("the Rodopoulos fax") to the Sydney office of Rankin Nathan under the heading "RE: CORINNE FROST V PAUL HOLMES & MARIA HOLMES - DISSOLUTION OF PARTNERSHIP." In that letter she confirmed that Mr Keane was no longer with the firm. She said that she had been endeavouring to familiarise herself with the matter so it could be progressed and she confirmed that "We hold in trust the sum of $45,000 to be paid to J N Thomas". She also made mention of the Toyota. She responded to the Sydney office though Mr Sheeley's letter had the notation "Reply to Newcastle Office".

38 No money in satisfaction of the Judgment was paid by 4pm on 11 November 2005. 39 The evidence establishes that at 4:36pm on 11 November 2005 the Sydney office of Rankin Nathan transmitted the Rodopoulos fax to the Newcastle office. It may have been the case that the fax had been put onto the fax machine in the Sydney office of Rankin Nathan sometime before 4.36pm but had to wait in a queue until transmitted at that time. 40 On the morning of 14 November 2005, the Rodopoulos fax came to the attention of Mr Phillip Young, Rankin Nathan's Managing Partner who was in the Newcastle office. He received a telephone call from Ms Rodopoulos at about 9.15am during which she told him that G H Healey & Co had $45,000 in their trust account, that she had sent a fax on Friday about it, that they were in a position to pay the money and that she wanted to make sure that it was okay to send it across. Mr Young mentioned the term that required the money to be paid by 4.00pm the previous Friday and said he did not have instructions from DMS as to whether they would agree to an extension of time for payment and would have to get those instructions. Ms Rodopoulos told Mr Young that she had only got the file on Friday when she had become aware for the first time that there was money in trust on the matter. Mr Young said DMS would probably want to know when G H Healey & Co had received the money from the Holmes. He asked her to find out and to let him know and said he would seek instructions. 41 Ms Rodopoulos called back a little later that morning saying she had spoken to Mr Healey and that the reason the money was not paid was that neither Mr Healey nor she was aware that it had to be paid by Friday. Mr Young asked her whether she was not aware of the terms to which she replied that she only "got the file" on Friday and the letter (presumably the Agreement) was not in the file. She said, "It was in the system but was not printed out on the correspondence file". Mr Young asked her how she knew that the money was payable by 4.00pm Friday if she did not have the terms, to which she responded that was not made aware that it was payable by 4.00pm on Friday. She said that she just noticed that the money was in the trust account, that Jason (that is Mr Keane) was the solicitor who had conduct of the matter and that he had mixed it all up in the office which was why it had not been paid by Friday. Mr Young asked her if she could tell him when her firm had received the money to which she said no, and that Jason had had conduct of the file. The conversation ended with her asking whether DMS was still willing to accept the offer. Mr Young said he would get some instructions and get back to her. 42 The Rodopoulos fax first came to the attention of Mr Thomas on the morning of 14 November 2005 when he was handed a copy of it and had a discussion about it with Mr Young. 43 On 14 November 2005, according to Mr Holmes, Mr Healey told him that the payment had not been made in time but that the firm had written to Rankin Nathan and expected that DMS would accept the $45,000 in full satisfaction given that it was only a day or so late. 44 On 15 November 2005 Rankin Nathan informed G H Healey & Co that its instructions were to enforce the Judgment, and that if the Holmes were proposing to pay $45,000 in partial satisfaction the cheque should be made payable to DMS and sent to Rankin Nathan. They informed G H Healey further that DMS would defer further enforcement action for a period of three months to allow the Holmes additional time to pay the balance of the Judgment moneys plus interest. 45 The $45,000 was paid on 8 December 2005 under cover of a letter of that date from G H Healey & Co to Rankin Nathan.

46 DMS has taken the position that it is entitled to enforce the Judgment of $120,000 in its favour having regard to the Holmes' failure to pay by the deadline therein stipulated. 47 Against an undertaking as to damages provided by the Holmes, this Court on 18 April 2006 restrained DMS from taking further steps in execution of the Judgment pending determination of these proceedings or a further order. The case put by the plaintiff 48 The case put on behalf of the plaintiffs, for whom Mr T D F Hughes of Counsel appeared, distilled, it seemed to me, into the following. Implied term

1. It is an implied term of the Agreement that DMS would do all such things as were necessary on its part to enable the Holmes to have the benefit of the Agreement, that is, the benefit of paying only $45,000 if paid by the deadline stipulated: Mackay v Dick (1881) 6 App. Cas. 251. Here, in order for the Holmes to get the benefit of the discount payment it was necessary for DMS to direct the Holmes to whom and where payment should be made and to authorise the nominated recipient to receive it.
2. Considerations which supported the implication of such a term were that no mode of payment other than by legal tender was stipulated for, hence payment had to be in cash because only cash is legal tender. Also, there were various possible places at which payment could be made including the DMS's registered office and its principal place of business, and one could not reasonably expect the debtor to seek to make payment in cash at an unstipulated place. Moreover, the debtor could not be sure that the recipient at such a place was authorised to accept payment and the debtor was therefore at risk of handing over money to an unauthorised person which would not discharge the debt: The R and I Bank of Western Australia v Carew Corporation Pty Ltd BC9503605 14 March 1995 at 3.
3. DMS's solicitors had no authority to receive payment because their retainer had, according to law, terminated upon the Judgment being obtained, and no other agent had been authorised by DMS to receive payment.
4. No direction stipulating where and to whom payment should be made having been given, it followed that there was no default on the part of the Holmes to pay by the deadline. Unconscionable conduct
5. After the Agreement had been signed no communication emanated from Rankin Nathan to G H Healey & Co to say that the terms had been filed and requesting payment.
6. Mr Keane had, to the knowledge of DMS via Mr Thomas, left G H Healey & Co.
7. No direction to pay was given.
8. Mr Thomas, a director of, and shareholder in, DMS and a partner in Rankin Nathan was closely involved in both matters including in giving instructions on behalf of DMS. He took what was described as "a let sleeping dogs lie" stance by not having any communications with the Holmes or their solicitors and specifically not bringing to either's attention the "ticking time bomb" of the approach of the deadline under the Agreement.
9. The Rodopoulos fax put the whole of Rankin Nathan including Mr Thomas on behalf of DMS on notice that money was being held by G H Healey & Co for payment to Mr Thomas though it did not come to the attention of Mr Thomas or DMS until Monday morning, 14 November 2005, after the deadline had expired.
10. G H Healey & Co, having received no communication from Rankin Nathan which might have caused it to act otherwise, made a mistake by failing to ensure that the moneys received from Mr Holmes were paid to whomsoever it was that DMS had directed they should be paid.
11. In all of these circumstances it is unconscionable on the part of DMS to rely on the Judgment according to its tenor. 49 It was also pleaded that because no direction to pay had been given, the Agreement was frustrated, although this notion was not developed in argument on behalf of the Holmes. The case put by DMS 50 Mr R G Forster SC who appeared with Mr S B Docker for DMS put the following propositions in response.

1. No term requiring a direction to pay was to be implied because it was not necessary to give the Agreement business efficacy. The Agreement operated without it. Hence at least one of the requirements for the implication of a term laid down in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 at 283 was not satisfied.
2. Another of those tests was not satisfied because the implied term asserted was not reasonable. At the time of the Agreement each party had a solicitor acting and whether a direction to pay might be required would depend on the circumstances at the time the debtor wished to pay. A requirement to give a direction whatever the circumstances was not reasonable.
3. Payment by cheque, unless the Agreement is read as demanding legal tender, is conditional payment. When honoured it is payment as and from the date of the receipt of the cheque. The Agreement should not be construed as requiring payment exclusively with legal tender and payment by cheque was good enough: George v Cluning (1979) 28 ALR 57 at 59 per Barwick CJ.
4. No place for payment was required to be stipulated and no direction was necessary because payment could be made at DMS's registered office or principal place of business in any event. It is a company, obliged by law to have a registered office to be kept open in the jurisdiction at which place payment could be made. If payment were tendered there but not able to be made it could hardly be suggested that the plaintiffs were in default under the terms of the Agreement.
5. On the facts, payment by cheque was authorised and payment by cheque to DMS at the offices of its solicitors was authorised: Butler v Knight (1866-67) Exch Vol 11 109 at 113 and Bevins v Hulme 153 ER 773.
6. If any term was to be implied it was not that contended for by the plaintiffs because that went too far. At most what could be implied was a term that if sought by the plaintiffs, a direction to pay should be given.
7. If a term requiring a direction to pay was to be implied, DMS gave such a direction in the letter dated 20 September 2005 when Rankin Nathan on behalf of DMS communicated to G H Healey & Co that they looked forward to receiving payment of the settlement moneys.

Unconscionable Conduct

1. There was no conduct on the part of DMS which could fairly be described as unconscionable, that is, going to its conscience. For unconscionable conduct to be made out there has to be something that fixes on the conscience of the defendant and the Rodopoulos fax had not come to the attention of Mr Thomas before the expiry of the deadline.
2. On the facts no "sleeping dogs lie" proposition had been made out. The thesis had not been put to Mr Thomas.
3. Before the expiry of the deadline, the Holmes' own solicitor, Mr Healey, had been told by his client that the money was to be paid by 4.00pm on 11 November 2005 and he did not ensure it was paid. Non-payment had occurred entirely as a consequence of the default of G H Healey & Co.
4. There was no evidence from Mr Healey as to what he would have done had he known of the terms of the Agreement. The evidence indicated that he was in any event doing something else more pressing which he described as "drama in another matter which over-shadowed this at the time". There was thus no detriment established as a consequence of the action or inaction of DMS. Consideration Implied Term 51 The implied term pleaded in the Amended Statement of Claim is that it was necessary for DMS to direct the Holmes as to whom the payment should be made and to authorise the nominated recipient of the payment, to receive it. This term was to be implied because it was necessary for the Holmes to have the benefit of the Agreement. 52 As Mason J (as he then was) said in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 607: "It is easy to imply a duty to co-operate in the doing of acts which are necessary to the performance by the parties or by one of the parties of fundamental obligations under the contract. It is not quite so easy to make the implication when the acts in question are necessary to entitle the other contracting party to a benefit under the contract but are not essential to the performance of that party's obligations and are not fundamental to the contract." 53 A term framed as the plaintiffs would have it meets neither of the criteria posited by his Honour. Even if there was an obligation to pay the discounted amount by the deadline (which there is not - it was the plaintiffs' option whether to do so or not), such a term was not necessary to enable the plaintiffs to pay and to have the benefit of that payment. The Agreement works without it. Put another way, a term so framed is not necessary to give business efficacy to the Agreement: BP Refinery (Westernport) Pty Ltd v Hastings Shire Council; and Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337. Nothing was required to be done by DMS to enable the Holmes to pay the amount of $45,000 under the Agreement to DMS. Such a term was also not essential to the performance of the plaintiffs' obligations under the Agreement. 54 Leaving aside the prior dealings between the parties including the letter which Rankin Nathan sent G H Healey & Co on 20 September 2005, Mr Sheeley's letter of 10 November and the Rodopoulos fax, if the Holmes or their solicitors were in any doubt as to what to do, they had to do no more than take cash money (on the case put by Mr Hughes) to the registered office or principal place of business of DMS. Realistically all that needed to be done, having regard to prior dealings, was to deliver a cheque in favour of DMS either to Rankin Nathan or to DMS itself at its registered office or principal place of business. 55 If the Holmes had tried to pay by cash and had not been able to because, for example, DMS's registered office was not open, it could hardly have been argued that they were in default of payment so that they had lost the benefit of the discount. The Court would have had no difficulty in implying a term that neither party would be able to rely on its own wrong in seeking to obtain a benefit: Alghussein Establishment v Eton College [1991] 1 All ER 267. If the creditor refuses to take the money or goes away and leaves no one behind to receive it, the debtor is excused: Earthworks and Quarries Ltd v F.T. Eastment & Sons Pty Ltd [1966] VR 24 at 26. 56 Any perceived risk of paying by cheque would be overcome by drawing a cheque in favour of DMS, crossing it and marking it account payee only. 57 As to where to pay, it has long been settled that where a contract is silent as to place of payment (which is the case here), it is for the debtor or obligor to seek out his creditor and the debt is payable where the creditor is found: Earthworks and Quarries Ltd v F.T. Eastment & Sons Pty Ltd. G H Healey & Co well knew where to find DMS. It has a registered office and G H Healey & Co knew it had solicitors acting. On behalf of the Holmes that firm made no attempt to pay.

58 I also consider that such a term does not satisfy the requirement of reasonableness because to place the invariable onus, by implication, on the creditor to give a direction (where the circumstances may be that the debtor knows full well how and where to pay), does not seem to me to be reasonable: Secured Income Real Estate (Australia) Ltd v St. Martins Investments Pty Ltd at 605 -606. 59 I consider that there is no substance in the submission that the term pleaded should be implied. 60 Moreover, Mr Hughes accepted during argument that the best he could do was an implied term that if the Holmes sought a direction to pay, it would be given. That concession, it appears to me, is itself the end of the plaintiffs' case on the implied term because there is no evidence of, and it was not put, that the Holmes sought, either themselves or via their solicitors, any direction to pay. On their case they told their solicitor to pay by 4.00pm and he did not. The one thing he did not seek even then was any direction to pay. 61 However, and in any event, I do not consider in the circumstances of this case that the watered down implied term satisfies the business efficacy requirement either. The Agreement operates without any requirement for any direction given that DMS is a company with a fixed address that it must by law have. Further support for this conclusion is indicated by the fact that Mr Hughes accepted that if a direction to pay was required for the Agreement to operate the same would have to be said of the Judgment, which is self evidently not the case. 62 I also do not accept the submission that in the circumstances here only cash payment was open. In George v Cluning at 59 Barwick C.J. held that payment by cheque under agreement unless the agreement is read as demanding legal tender, is conditional payment. When honoured it is payment as and from date of receipt of the cheque. His Honour held that in order to construe an agreement such as that under consideration in that case (which was an option to buy land) as requiring legal tender, in modern times, there would need to be very precise indications to that effect.

63 There are no indications here that payment by cheque would not suffice and that cash of $45,000 would have to be paid. To construe, in 2005, an agreement such as the Agreement as requiring only cash is, in my view, untenable.

64 The submission that DMS's solicitors had no authority to accept payment is also untenable. The parties had been represented by solicitors throughout and Rankin Nathan had requested payment. The Rodopoulos fax was sent to Rankin Nathan and Ms Rodopoulos called that firm to discuss the matter on Monday 14 November 2005. It would as Kelly, C.B. said in Butler v Knight "…be very mischievous to hold, in any case where evidence existed of the relation of attorney and client having been continued or recreated, that the attorney had not authority to act according to the exigency of the case". 65 In Bevins v Hulme Parke, B. held that a solicitor's original retainer was not determined by the obtaining of judgment but continued afterwards, so as to warrant the attorney in issuing execution and also to warrant his receiving the damages without a writ of execution. 66 The plaintiffs here have made much of the fact that Mr Thomas was both a partner in Rankin Nathan and a director and the guiding mind of DMS in the proceedings. This does not sit well with the contention that Rankin Nathan were not authorised to receive a cheque made out to DMS on its behalf. 67 Under cross-examination, Mr Healey gave evidence that he treated the matter as corresponding to his understanding of practice in personal injury matters where, he said, to his knowledge Rankin Nathan who acted for insurance companies, would not make payment for the benefit of a plaintiff in a personal injury matter unless "an authority direction" was provided. He also suggested that he thought it to be implicit in the trust account regulations to get a direction, saying that there was a question whether the money in the trust account was really the money of DMS. I found this evidence unconvincing and I do not accept it. The one thing he did not do when he became seized of the matter during his meeting with Ms Rodopoulos was to seek a direction to pay. This was a judgment debt in a commercial matter, not a personal injury one. Mr Hughes accepted that the money was being held in trust for the Holmes which trust would have been discharged by paying out the funds to DMS, the funds being held under a trust where DMS was the beneficiary. He also did not put that payment into G H Healey & Co's trust account was payment to DMS. 68 I find that payment by cheque was authorised and that it was authorised to be made to DMS at the offices of its solicitors. 69 I also consider that the 20 September 2005 letter from Rankin Nathan to G H Healey & Co was a direction to pay at the offices of the solicitors Unconscionable Conduct 70 In aid of the "sleeping dogs lie" thesis, Mr Hughes initially relied on the proposition that Rankin Nathan had given no notice to G H Healey & Co that the Agreement had become a court document. After the submission had been made, Mr Forster on behalf of DMS made an application to re-open DMS's case in order to tender the letter which Ranking Nathan had sent to G H Healey & Co on 20 September 2005 enclosing a copy of the sealed Agreement and stating that they were looking forward to receiving payment. The application was acceded to and the letter was tendered. Mr Hughes informed me (and I accept) that he had not previously seen that letter. The letter removed an important plank from the "sleeping dogs lie" thesis.

71 The thesis is also inconsistent, having regard to the asserted and accepted involvement of Mr Thomas in both matters, with the letter sent by Mr Sheeley on 10 November 2005 seeking to progress the dissolution of partnership matter, to which Ms Rodopoulos responded in the Rodopoulos fax referring to the money payable under the Agreement. 72 There was nothing in my view that could properly be said to attach to the conscience of Mr Thomas requiring him to assist G H Healey & Co in servicing its own clients. The terms of the Agreement were clear. The problem was one entirely inside the offices of G H Healey & Co whose consultant did not follow his own clients' instructions. 73 On 12 September 2005 G H Healey & Co had themselves stressed to the Holmes the importance of the sum of $45,000 being paid prior to 11 November 2005. 74 The Rodopoulos fax did not come to the attention of Mr Thomas and therefore potentially impact upon his conscience until after the deadline, at which point the Holmes had already lost the benefit of an early reduced payment. Even if it were the case that Rankin Nathan may have had notice (and Mr Thomas himself by dint thereof) as a consequence of the receipt of the Rodopoulos fax by the firm at its Sydney office an hour before the expiry of the deadline, this does not assist the plaintiffs because actual knowledge would be required for anything to be fixed to Mr Thomas' conscience. Even if DMS had constructive notice by reason of receipt of the Rodopoulos fax by its solicitors, nothing occurred between receipt of that fax and expiry of the deadline which makes it unconscionable for it to rely on the Judgment according to its tenor. 75 There is nothing in the evidence to suggest, in any event, if it be relevant, that Mr Thomas was lying in wait for the deadline to pass. According to Mr Young, whose evidence I accept, when Mr Thomas was told of and shown the Rodopoulos fax, he was very angry and very annoyed. 76 No proposition was put that there was any representation made by DMS to the plaintiffs, or assumption held by the plaintiffs induced by or contributed to by DMS from which it was said DMS was seeking to depart in circumstances which would make such a departure unconscionable. The evidence established nothing which, as a consequence of the actions or inactions of DMS prior to the expiry of the deadline, caused the plaintiffs to act in a particular manner to their detriment but for which they would have acted differently: The Commonwealth v Verwayen (1990) 170 CLR 394. 77 When Mr Healey was told of the deadline he did not ensure that payment was made. 78 In my view nothing constituting, or even approaching, conduct that might make enforcement of the Judgment unconscionable has been established by the plaintiffs. 79 I consider that the proceedings should accordingly be dismissed. 80 The temporary injunction ordered by Campbell J. will be discharged. 81 Mr Forster submitted that if DMS succeeded there should be an enquiry before me as to the damages to which DMS is entitled under the undertaking given to the Court. I will so direct. 82 I will stand the matter over to a date to be fixed to determine any questions of costs and any other issues that need to be resolved. **********

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.