Alleged failure to give credit
27 When senior counsel for the appellants opened their case before her Honour on 29 August 2003 she produced a set of calculations and told the Court that they represented a consolidation of the trust monies known by the appellants to have been held in the trust account of S & C for the purpose of paying Mr Hubbard's legal costs and expenses. These calculations show a list of debits and credits with a closing balance of $17,699.38 debit and a summary of fees and disbursements showing total fees of $134,828.58 and total payments received by or on account of Mr Hubbard (including amounts from Mrs McIntyre and Mr Caddy) totalling $117,138.00.
28 In response Mr Joseph swore an affidavit dated 1 September 2003. He produced as exhibit AHJ 76 a detailed analysis ("the S & C analysis") of accounting matters relevant to the claim by S & C against Mr Hubbard. The introduction to the S & C analysis states that in its trust account in the period 26 April 2002 to 31 August 2003 ("the period") S & C maintained accounts for each of Mr Hubbard, Currawong Consultants Pty Ltd, Mr Caddy (two accounts) and Mrs McIntyre. In the period S & C rendered tax invoices to Mr Hubbard and credited and debited amounts to each of the five accounts. It is stated that the amounts debited were payments or part payments of S & C tax invoices, barristers' fees and other expenses. It is also asserted that the analysis of the five accounts readily shows that the writ, judgment and bankruptcy notice include claims for the correct amount of the unpaid balance of the tax invoices rendered by S & C and that the money in the five accounts (save for remaining balances) has been wholly disbursed towards legal costs, fees, and incidental expenses incurred by Mr Hubbard and with his full knowledge.
29 There are seven schedules to the S & C analysis showing (with supporting documentation):
(a) a list of tax invoices rendered by S & C to Mr Hubbard;
(b) a summary of receipts into and payments out of the five accounts and a reconciliation of the amounts held in each account as at 31 August 2003;
(c) particulars of receipts into the five accounts during the period;
(d) particulars of payments out of the five accounts during the period;
(e) a reconciliation of the foregoing with the amounts claimed by S & C as unpaid costs;
(f) copies of correspondence from S & C to Mr Hubbard enclosing tax invoices, statements and vouchers and copies thereof; and
(g) a reconciliation of second schedule with the appellants' calculation of receipts provided to the court on 29 August 2003.
30 An examination of the S & C analysis clearly bears out their contention as to the amounts owing by Mr Hubbard as at the dates of writ, judgment and bankruptcy notice. The contrary is not seriously arguable. However, not only did the appellants persist with their argument, they attributed to S & C an acceptance of it. In counsel's written submissions it was said:
"36. In the Joseph affidavit and in the course of leading evidence from Joseph, S & C did not dispute the applicants' case that either Hubbard owed S & C no more than a sum of $17,689.38, or that he owed them no money, or that in fact he was in credit."
This submission is inexplicable.
31 Mr Joseph deposed, and this was not challenged, that he was 'always pressing' Mr Hubbard to provide, or arrange to be provided, monies to be held in trust to meet S & C's costs, counsel's fees and other expenses. Extensive correspondence along these lines was exhibited to Mr Joseph's affidavit.
32 On 1 September 2003 S & C wrote to the appellants' solicitors Marshalls & Dent ("M & D") enclosing a copy of Mr Joseph's affidavit of that date, including the S & C analysis. The letter pointed out that the trust account ledger of Mr Hubbard, a copy of which had been in the possession of M & D since December 2002, showed a credit then held of $6,203.6. It was said that the preceding entries made it clear that very substantial amounts of money held in that account had been paid and applied not in satisfaction of S & C's tax invoices but towards counsel's fees and other expenses incurred on behalf of Mr Hubbard. A further copy of Mr Hubbard's ledger was sent to M & D on 29 August 2003. Payments to those third parties had not been shown in the appellants' calculations tendered to the court. In essence the letter alleged that the appellants' senior counsel must have known that those calculations were incorrect. The letter asserts S & C's belief;
"…that the applicants' calculations misled the court and, insofar as they were sought to be relied upon as supporting allegations of criminality against S & C, they were mischievous and wholly misconceived. If you say it was not plain to the applicants prior to the receipt of this letter that the applicants' calculations were insupportable, a view we would not credit, it must now surely be plain to the applicants."
33 The letter invited the appellants to desist from the further prosecution of their current application on the basis that it had no reasonable prospect of success.
34 M & D did not reply to this letter. Senior counsel continued to assert before her Honour, and on the appeal to this Court, that the maximum sum owing was $17,689.38. Her Honour noted that the trust account ledgers were produced by Mr Joseph and that he was cross-examined about them. The appellants' assertions appear to have been based on the fact that their calculations took no account of the amounts paid out to counsel. Her Honour concluded that she was satisfied that the ledgers kept by S & C and in particular the ledger sheet which was sent to M & D on 29 August 2003 was an accurate account noting the amounts received and disbursed on behalf of Mr Hubbard.
35 On the appeal the appellants contended (submissions par 26) that production had been sought by the appellants of the trust account ledgers of S & C and associated documents and that S & C had claimed privilege and further that the trust account ledgers were not relevant and accordingly the appellants'calculations "were correct on the basis of the evidence before the court". It was further submitted (par 27) that at the time the appellants closed their case on 29 August "the evidence of the [appellants] was unchallenged and their case as to the debtor-creditor relationship as recorded in paragraph 57 of the Judgment was also unchallenged". It was said that by permitting S & C, as the second respondent, to present their case before the first respondent Mr Hubbard and without an opening, the case that would be put by S & C "remained unknown to the Court and to the appellants". But as Mr Joseph's affidavits make clear, Mr Hubbard's trust account ledgers had been provided to the appellants in response to a notice to produce, as far back as December last year. Mr Joseph's affidavit of 1 September and 9 September were before the Court and clearly called for an answer. The appellants' case on this issue was no more than an attempt at obfuscation. Her Honour's finding was plainly correct.