Reuters Australia Pty Ltd v The Credit Connection Pty Ltd

Supreme Court of NSW|2000-03-13|Before: Young J

CITATION : Reuters Australia Pty Ltd v The Credit Connection Pty Ltd [2000] NSWSC 221 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 1432/2000 HEARING DATE(S) : 07/03/2000 JUDGMENT DATE : 13 March 2000

PARTIES : Reuters Australia Pty Ltd (P) The Credit Connection Pty Ltd (D) JUDGMENT OF : Young J

COUNSEL : A P Coleman (P) M Dicker (D) SOLICITORS : Freehill Hollingdale & Page (P) Warren McKeon Dickson (D) CATCHWORDS : Appeal & New Trial [107]- Stay pending appeal - Public interest judgment - Principles - Corporations [188]- Receivers - Application under Commercial Agents & Private Inquiry Agents Act, s 39B - Principles - Whether undertaking as to damages required - Procedure [106] - Preservation - Receivership order sought under Commercial Agents etc Act - Whether undertaking as to damages should be taken. LEGISLATION CITED : Commercial Agents & Private Inquiry Agents Act 1963, s 39B Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (1998) 84 FCR 512 Beach Petroleum NL v Johnson (1992) 9 ACSR 404 Bond Brewing Holdings Ltd v National Australia Bank Ltd (1990) 1 ACSR 445 Corporate Affairs Commission (NSW) v Austral Oil Estates Ltd (1985) 10 ACLR 1 Corporate Affairs Commission (NSW) v Lombard Nash International Ltd (1986) 11 ACLR 566 Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371 In re Glendale Land Development Ltd [1982] 2 NSWLR 563 F Hoffmann-La Roche & Co AG v Secretary for Trade and Industry [1975] AC 295 CASES CITED : Johns v Law Society of NSW [1982] 2 NSWLR 1 Kerridge v Foley (1968) 70 SR (NSW) 251 McBride v Sandland (No 2) (1918) 25 CLR 369 In re Midland Coal, Coke and Iron Co [1895] 1 Ch 267 National Australia Bank Ltd v Bond Brewing Holdings Ltd (1990) 169 CLR 271 Slattery v The King (1905) 2 CLR 546 Southern Tableland Insurance Brokers Pty Ltd v Schomberg (1986) 11 ACLR 337 St Vincents Hospital Sydney Ltd v Boltersten (1996) 132 FLR 278 Stewart v Strevens [1976] 2 NSWLR 321 Re JN Taylor Holdings Ltd (1990) 3 ACSR 516 DECISION : See para 57

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION YOUNG J MONDAY 13 MARCH 2000

1432/00 - REUTERS AUSTRALIA PTY LTD v THE CREDIT CONNECTION PTY LTD

1 HIS HONOUR: This is an application for the appointment of a receiver under section 39B of the Commercial Agents and Private Inquiry Agents Act 1963 ("the Act"). That section, so far as is relevant, provides in subsection 1: "Where the Court on the application made by a creditor of the licensee or by the Minister is satisfied: a) that any defalcation has been or may have been committed in relation to any trust account or trust fund of any licensee...the court may appoint a receiver of all or any property which is held by the licensee...". 2 Schedule 1 of the Act then contains a series of provisions dealing with the procedure for appointment of a receiver and section 15 provides that the expenses of the receivership shall, to the extent they have not otherwise been provided, be paid by the Minister. 3 The defendant is a licensed commercial agent. The aspect of its work currently under scrutiny is its debt collecting business. 4 The material presented to the court shows that on 16 April 1999 a document entitled "Deed to Appoint Mercantile Agent" came into being. The defendant then commenced collecting moneys from debtors of the plaintiff on the plaintiff's behalf. 5 The document was signed by Mr Naumoski on behalf of the defendant, and by a Mr Cannon purportedly on behalf of the plaintiff. At that date, Mr Cannon was employed by the plaintiff as a credit controller. His employment was from 15 February 1999 to shortly after 24 August 1999. 6 The plaintiff's evidence in the present proceedings is that until Mr Cannon left its employ, it was not aware of any contract with the defendant at all. It says that after Mr Cannon left, its other employees found a draft of the deed. It was only after 31 August 1999 that it was discovered that the deed actually may have come into existence. On 1 September the plaintiff withdrew any instructions for the defendant to collect its moneys. 7 It would appear that on 24 August 1999, the same day that Mr Cannon alleges effective employment with the plaintiff company ceased, he gave a list of all of the plaintiff's creditors to the defendant, including people whose credit record with the plaintiff was such that they had always paid on time. 8 Clauses 2, 3, 4, 5 and 6 of the deed are as follows: "COMMISSION 2. Reuters shall pay to Credit Connection a commission of 10 percent of the amount of each debt Credit Connection is instructed by Reuters to collect on behalf of Reuters. The Commission is payable by Reuters to Credit Connection in the following circumstances: a. When the debt or part thereof is recovered; b. If Reuters subsequently withdraws its instructions to Credit Connection to collect the debt; c. If Reuters enters into an arrangement with the debtor and/or Credit Connection for the crediting, set off or write off of the debt. PAYMENT OF COMMISSION 3. The Commission referred to in Clause 2 shall be due and payable by Reuters to Credit Connection on the earlier of the following: -

(i) Upon recovery of the debt or any part thereof by Credit Connection from the 3rd party.

Or (ii) 7 days after the date an account is rendered by Credit Connection to Reuters. OTHER PAYMENTS 4. Reuters shall pay to Credit Connection its solicitors' costs, court filing fees and other litigation disbursements incurred throughout the course of the debt recovery proceedings within 7 days of an account being rendered to Reuters by Credit Connection. STATEMENTS 5. Upon collection of the debt by Credit Connection, Credit Connection will furnish a statement to Reuters setting out the amounts collected from the debtor less amounts deducted for commissions and disbursements. TRANSFER OF FUNDS 6. Where Credit Connection receives monies on trust being a debt which Credit Connection has been instructed to recover by Reuters, and Credit Connection holds such monies on account, Reuters authorises Credit Connection to apply such monies in trust for payment of Credit Connection's commission and disbursements." 9 Other provisions of the deed state that it may be terminated upon seven days' notice up to 16 July 1999, but otherwise there were no provisions for termination. However, the deed was to end on 16 April 2001. 10 The plaintiff claims that the defendant collected about half a million dollars on its behalf. There does not seem to be much doubt about this. However, the defendant's principal answer to the plaintiff's claim for this amount when it sued the defendant in the District Court, was that there was a set off for payment of commission. Under clause 2(b) of the deed, if the plaintiff withdrew its instructions to collect a debt, as happened on 1 September 1999, the defendant says that it is entitled to 10 percent of the debts listed in the document Mr Cannon had given to it on 24 August 1999. It says that 10 percent of that list was about half a million dollars. 11 The plaintiff suggests, though there is no evidence one way or the other at this stage, that there was some serious conspiracy between Cannon and the defendant. It doubts whether the agreement was a bona fide one, and it also suspects that the defendant may well have known on 24 August 1999 that the list was not one which the defendant was bona fide expecting to collect for commission. However, those are serious suggestions, and they will be matters which may have to be decided by the District Court, or this Court as the District Court proceedings have now been removed into this Court. At the moment, I think I must assume that the deed is operative and that there is at least a claim of right by the defendant that it has a set off. However, the plaintiff says that even if one does make those assumptions, any commission for a debt which was not collected because the plaintiff withdrew its instructions was only payable seven days after the date of account was rendered by the defendant to the plaintiff. On any version, no such account was rendered at the proper time, the proper time being before moneys were extracted from the defendant's trust account. 12 The plaintiff issued the current summons on 18 February 2000. On 28 February 2000, by consent, I ordered that Mr McGrath of KPMG be appointed receiver of certain property of the defendant and that the receiver provide a confidential report to the court, with the authorised representatives of both parties to have a copy. 13 Mr McGrath made his report which is annexed to his affidavit of 6 March 2000. The report indicated that prior to 1 September 1999 the defendant had received payments for the plaintiff of $470,687.29, which originally went into the defendant's trust account. The defendant did not operate individual trust accounts, it had one account and it was not possible to identify individual clients' funds at this stage. The report found that between 9 July and 23 August 1999 there were 14 withdrawals made from the trust fund of about $213,000, and a further $292,000 was withdrawn between 9 September 1999 and 7 February 2000. The withdrawals were in round sums but the records of the defendant were in a very poor state. The receiver was not able to obtain all the necessary records, despite having made requests for them. The receiver also investigated where the moneys had gone and the likelihood of them being collected in the short term, and was not particularly optimistic. 14 At the hearing before me last week, evidence was read on behalf of the plaintiff. I took into evidence a series of documents marked PX01, which included as part of the exhibit an account given on 20 October 1999 as to how the defendant claimed to be entitled to commission. The bundle also included the pleadings in the District Court and correspondence between the parties. 15 It should be noted that under section 31 of the Act the defendant was obliged to pay all moneys received on behalf of the plaintiff or anybody else into a trust account, only to be disbursed to the client or as the client directs. It was also obliged to keep accounts of all money received in such a manner as to disclose their true position and to enable the account to be conveniently and properly audited. 16 In September 1999 the plaintiff made it quite clear that it wanted its money back, and it wanted it as soon as possible. The defendant's solicitors wrote at least two letters indicating that the moneys were safe and that they were in a trust account. On 20 September 1999 the defendant's solicitors said: "Of the debts referred to our client on 24 August 1999, our client has collected $506,172.59. Of that amount $39,067.28 has been transferred from our client's trust account to its office account in accordance with clause 6 of the Agreement. All such transfers took place before 31 August 1999. Our client presently holds $467,105.31 in its trust account on behalf of Reuters: ... Our client proposes to retain the amount of $467,105.31 in its trust account pending the resolution of this dispute." 17 On 28 October 1999 the plaintiff's solicitors noted that undertaking and said that notwithstanding that it had been given, they wanted the moneys paid to the plaintiff. On 29 October 1999 the plaintiff's solicitors asked for the details of the bank in which the $470,689.28 was being held. This was answered on 12 November by the defendant's solicitors asking what authority they had for asking which bank was involved. The reply was that this was in accordance with the general law as to fiduciaries having to give details. During the course of this last lot of correspondence and on 22 October 1999 the defendant's solicitors said, "We again confirm our client's undertaking that the balance of $470,689.28 held in its trust account on behalf of your client shall remain there pending agreement between the parties or Court order." 18 The defendant did not give any evidence before me, although its officer had filed an affidavit which was not read. Mr McGrath's report shows that the money was not in the trust account as advised by the solicitors and that there had been, as I said, half a million dollars worth of withdrawals which continue on after 1 September 1999, to as late as 7 February 2000. 19 The court has no evidence as to what other clients the defendant has in its debt collecting business, or as to the amount that such other clients may have had in its trust account. It would have been useful to know this because the plaintiff purports to seek a remedy in the public interest, not only to protect its own moneys, but also the money of any other person that may have had dealings with the defendant. Had the court been assured that the claim in respect of the plaintiff was the only claim which was in dispute, then things could well have been different. It was in the defendant's camp to supply this material. The defendant not having supplied it I can only assume that there was nothing the defendant could have said that would have assisted it in this aspect or indeed any aspect of the case. 20 The issues for me to decide are -

A. Is the plaintiff a creditor of the defendant within section 39B of the Act;

B. May I find that there may have been a defalcation in relation to the defendant's trust fund;

C. Should I require an undertaking as to damages of the plaintiff before making an order appointing a receiver;

I will deal with these matters seriatim. 21 A. The Act does not define the term "creditor". In statutes pari materia courts have tended to give a wide meaning to the term "creditor". Mr A P Coleman for the plaintiff referred me to In re Midland Coal, Coke and Iron Co [1895] 1 Ch 267 and In re Glendale Land Development Ltd [1982] 2 NSWLR 563. These cases do bear out that proposition. However, one must always look at each particular Act. In the present Act the purpose of Part 3 is to protect those who deal with a licensee by way of a financial transaction. When the licensee receives money for such a person that money is to go into a trust account. So there is a relationship not only of debtor and creditor, but also trustee and beneficiary. It is clear these days that the two relationships are not necessarily mutually contradictory. The only reason why the plaintiff might not be a creditor is that the defendant has a set off for fees under the agreement. However, in New South Wales a set off is not something that operates automatically, but operates within the procedure of each court or as a matter of equity. In either event if a person has a claim, yet the defendant has a set off, that does not prevent the first person from being a creditor as a matter of law. 22 However, the cases I have cited and the purpose of the Act makes me consider that "creditor" within section 39B includes any person who on reasonable grounds claims to be a creditor, and accordingly the plaintiff is included within this class and is a creditor. 23 B. "Defalcation" is defined in section 39A of the Act as meaning "any larceny, embezzlement, omitting to account, fraudulent misappropriation or other act punishable by imprisonment, of or in relation to any money or other property." The term "defalcation" is a wide general term and can include acts which are not of themselves dishonest (see eg Daly v Sydney Stock Exchange Limited (1986) 160 CLR 371), but here it is clear from the definition that only dishonest and criminal acts are to be included. The technical terms "embezzlement" and "fraudulent misappropriation" send one to the Crimes Act 1900, but it must be remembered that the "other act punishable by imprisonment" means that one does not necessarily stop at the particular crime specified. "Fraudulent misappropriation" is defined in section 178A of the Crimes Act, which was introduced into the Crimes Act to deal with the problems that had been revealed in Slattery v The King (1905) 2 CLR 546 that solicitors who had received money into their trust account would not be guilty of Common Law embezzlement or larceny because they had lawfully obtained the money. The section says: "Whosoever having collected or received any money or valuable security upon terms requiring him to deliver or account for or pay to any person the whole or any part of such money...fraudulently misappropriates to his own use or to the use of any other person or fraudulently omits to account for or pay the whole or any part of such money...shall be liable to penal servitude for seven years." 24 The plaintiff's claim in the District Court, if made out, would tend to indicate that there has been fraudulent misappropriation. The defendant claims it was able to transfer moneys out of its trust account only because (a) there was prior authority in the agreement; and (b) it had a bona fide claim of right to deduct its commission. 25 However, I do not just stop with the allegations. Nor do I have to find that there has been fraudulent misappropriation. All I need to find is that a defalcation may have been committed. As to that there are various factors which lead me to find on the balance of probabilities that I am satisfied that there may have been a defalcation. 26 The defendant relies on various statements in the relevant deed that it may pay itself commission from moneys it has recovered. The words are in the contract but identical words in Acts relating to legal practitioners in New South Wales and Victoria have been construed so that courts are extremely wary of allowing prior agreements to operate as a sufficient authority to remove moneys from trust accounts. The courts usually look for actual authority to withdraw particular sums (see eg Stewart v Strevens [1976] 2 NSWLR 321, 324 and Johns v Law Society of New South Wales [1982] 2 NSWLR 1, 21). If it were otherwise, then a licensee or a solicitor could, by the small print in a standard agreement or costs agreement, completely circumvent the protection given to the public by provisions such as section 31 of the Act. It is probably the case that sufficiently clear provisions in advance may have that effect, but one approaches that sort of agreement with that sort of suspicion. 27 Secondly, Mr Coleman's submission that even if that were right, the relevant condition under 3(ii) of the contract was not fulfilled, is unanswerable. According to paragraph 12 of the defendant's cross-claim in the District Court, the account was only rendered on 22 October 1999 and the receiver's report shows the defendant helped itself to over $200,000 months earlier. 28 Thirdly, the assessment of the evidence is affected by the fact that there were two assurances given by the defendant's solicitors, obviously on instructions, that the money was safe in the trust account when in fact it was not. 29 Fourthly, there is the matter that the defendant has not given any evidence, so one can infer that nothing it may say would assist its case. Any one or more of these factors makes it more likely than not in the light of the general circumstance of the case that there may have been a defalcation. 30 C. When the court is giving interlocutory relief it normally requires an undertaking as to damages as the price of giving that relief. This is certainly the case of an interlocutory injunction (see eg Kerridge v Foley (1968) 70 SR (NSW) 251, 255), and is the case when a person is seeking to put in a receiver pursuant to security documents (Bond Brewing Holdings Ltd v National Australia Bank Ltd (1990) 1 ACSR 445 and see the special application for leave to appeal to the High Court (which was refused) reported as National Australia Bank Ltd v Bond Brewing Holdings Ltd (1990) 169 CLR 271). 31 There is also authority that one takes an undertaking as to damages in a wider class of case. In Beach Petroleum NL v Johnson (1992) 9 ACSR 404, 412 his Honour considered that it was customary to take an undertaking as to damages for an applicant for a Mareva injunction or where a person seeks an order under section 1323 of the Corporations Law. However, that last statement must be doubtful in the light of the specific provision of section 1323(4) of the Law. 32 However, there is to my mind differences between an interlocutory application such as for an injunction or the appointment of a receiver on the one hand, and an application for final relief on the other. There is also a difference where a private right is involved and where public rights are involved. The point also needs to be made that although the law generally is as I held in Southern Tableland Insurance Brokers Pty Ltd v Schomberg (1986) 11 ACLR 337, that it is almost the invariable practice to take undertakings as to damages in injunction cases, even if the plaintiff is a liquidator, the matter is always one within the discretion of the Court. Thus, in Re J N Taylor Holdings Limited (1990) 3 ACSR 516, Debelle J declined to require an undertaking as to damages when putting in a provisional liquidator. 33 An application under section 39B is not in the true sense an interlocutory application. The court is not, as it is in an interlocutory application, to assess whether there is an arguable case and where the balance of convenience lies. The Court must be satisfied of a fact, usually that there may have been a defalcation. If it is satisfied of that fact, then the Court has a discretion to appoint a receiver. Accordingly, the present application should not be considered in the same light as an interim application to appoint a receiver or to obtain an interlocutory injunction. Secondly, the decision of Lindgren J in Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (1998) 84 FCR 512 at 539 shows that the court takes quite a different view of undertakings as to damages when a public body with a duty to protect consumers applies for relief than it would when a private person does so. His Honour followed what Lord Diplock had said in F Hoffmann-La Roche & Co AG v Secretary for Trade and Industry [1975] AC 295, 364. 34 In the instant case we probably have something between the two. This is not an application by the Minister or by a public officer having a duty to protect consumers, it is an application by a private company. On the other hand, the order being sought is like a provisional liquidation, an order that is being sought not only for the private benefit of the applicant but also in the public interest generally. 35 It seems to me that in the exercise of my discretion in this case, I should not take an undertaking as to damages. Principally, the plaintiff has given enough material to show that this is a case that should be investigated in the public interest, the cost of the receiver will be borne by the Minister, the only undertaking as to damages would be to deal with loss of reputation and business opportunities by the defendant. There has been ample opportunity for the defendant to give some evidence but it has declined to do so. I do not see why the plaintiff should bear the risk of the undertaking as to damages when it is seeking a benefit for the public as a whole. 36 D. As far as counsel or myself can ascertain from the searches we have done, there has been only one reported case where the section of the Act now being considered has come up for consideration. That is my own decision in St Vincents Hospital Sydney Ltd v Boltersten (1996) 132 FLR 278 where at 280 I said that "the section was a remedial section, a section which was meant to protect the general public against defaulting licensees". 37 However, there are many other statutes which do contain comparable provisions, one being section 1323 of the Corporations Law, to which I have already referred. In Corporate Affairs Commission (NSW) v Austral Oil Estates Ltd (1985) 10 ACLR 1, I made it clear that under the Law, or at least the corresponding part of a predecessor Act, one does not put in a receiver where one can see that the company is currently in the hands of honourable and competent people. There are other authorities, such as the Beach Petroleum case to which I have referred, which make it clear that under that section receivers are not to be appointed lightly and are appointed almost as a matter of last resort if the public interest requires it. I made similar remarks with respect to the Futures Industry Act in Corporate Affairs Commission (NSW) v Lombard Nash International Ltd (1986) 11 ACLR 566, 571. 38 Accordingly, I approach the question as to whether a receiver should be appointed by bearing in mind the words from previous cases that the decision is not lightly made, bearing in mind it would be expensive and will seriously affect the business of the defendant, but also bearing in mind that the statute was laid down for the protection of the public. 39 In the instant case, bearing in mind the things that the interim receiver has found out, including the misstatements, to use the weakest word I can find, that moneys were in the trust account when they were not, and the general circumstances which I have outlined, it seems to me that the public interest outweighs the other factors, and I should appoint a receiver. 40 E. Accordingly, a receiver should be appointed. Mr McGrath appears to be the appropriate person. He has already done some work under a consent order which seems to indicate that there is nothing against him as the nominee. The terms of the receivership will mainly be dealt with by schedule 1 of the Act. However, as the costs of the receiver are to be borne by the Minister, the order should be that the plaintiff notify the Minister as soon as possible of the making of this order. 41 I will discuss the form of the order at 2 pm with counsel. The order should be in general terms as the plaintiff seeks in the summons, with the requirement to inform the Minister, liberty to apply to any party and the Minister and an order that the defendant should pay the costs of the proceedings. I suppose I should reserve further consideration generally. 42 Mr Dicker, who appears for the defendant, has forecast that he will seek a stay. I will deal with that application at 2 pm.

[At 2 pm counsel addressed on an application to stay the orders] 43 I have now heard argument from counsel as to whether there should be a stay. Mr Dicker asks for a stay of 28 days, alternatively, as a second choice, for seven days so that he can have the matter considered at least in a preliminary way by the Court of Appeal during motions next Monday. 44 The first application I think I must refuse for reasons I will give in a moment. The second is one which I will reluctantly grant on conditions. 45 Mr Dicker, as I understand his submissions, made five points. First, he said that the issues in this case were extremely difficult and he illustrated the fact that I reserved my decision since last Tuesday in order to consider them. Secondly, he put that I had misstated the burden of proof in referring to the balance of probabilities rather than the Briginshaw standard. Thirdly, he indicated that I had erred in my assessment on the pros and cons of an undertaking as to damages and, in particular, he submitted: (a) that it is not a matter of discretion at all as to whether to seek an undertaking as to the damages, it is required; or (b) that if the undertaking as to damages is a matter of discretion, I had allowed extraneous factors to enter into consideration of the discretion, namely: (i) I treated the matter as a final order where its true nature is interlocutory being auxiliary to the District Court proceedings which have now been brought into this Court; (ii) that the application was essentially an application by a private company in its own interests, and I put too much emphasis on the side issues of the public interest; and (iii) if the receiver is in possession of the business for a long time without an undertaking as to damages, the defendant would have no means of taking action against the plaintiff for loss of business if it were ultimately successful in the proceedings. 46 Fourthly, that I misstated the way in which the cost of the receivership would be borne because although I rightly said that they would be borne by the Minister, the Minister has a right of recovery of those costs. Fifthly, the limited form of receivership currently in place is adequate and means that more drastic orders should not be made. 47 Mr Dicker reminded me that in Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685, 695, the Court of Appeal said that courts must regard the right to appeal as being incident to almost all litigation, particularly where there are arguable grounds for appeal shown; the court must avoid the situation where any successful appeal would be nugatory. 48 There is to my mind a very real distinction between the sort of appeal considered in Alexander's case, which was an appeal against an assessment of damages, and an appeal against an order that is made even partially in the public interest to preserve property. In the latter sort of case, if a stay is granted it may well mean that the order at first instance which is prima facie correct will be frustrated, and that is a very weighty matter to take into account. 49 Further, the mere fact that there are arguable grounds of appeal is not of itself a sufficient basis for the exercise of discretion to grant a stay (McBride v Sandland (No 2) (1918) 25 CLR 369, 374). However, the court does try to preserve rights of appeal if it possibly can, if there are arguable grounds and one can see that prejudice will be suffered by the proposed appellant if there is no stay, so long as there is a satisfactory way of keeping the status quo and the judgment at first instance is not frustrated by granting the stay. 50 Some of the arguments put by Mr Dicker have real substance. Some do not. For instance, the Briginshaw point was not argued before me. It was first mentioned by Mr Dicker in his stay application. At that stage I could have been asked to re-examine the evidence in the light of the Briginshaw standard if it was truly arguable that that standard applied, and I probably would have done so. A point that is not raised can hardly be an appeal point. Point 4 is correct, but is obvious. 51 However, it is important to note that the matter decided against the appellant is a discretionary judgment in at least two aspects: (1) whether I would take an undertaking as to damages; and (2) whether I should appoint a receiver. It is very difficult to succeed in an appeal against a discretionary judgment. Indeed, it should be remembered that as far as my recollection of the argument is concerned, not all of the points noted earlier as 3(i), (ii) and (iii) were actually raised in argument last week. 52 My view is that the appeal is arguable, but as a discretionary judgment and for the other reasons I have given it is only just within that category. Of course, as Mr Dicker very politely reminded me it is always difficult for a trial judge to evaluate his own judgment. 53 The defendant offered that pending the appeal it would pay $470,000 into court within 14 days, or pay $50,000 into court fairly soon, and $16,666 each month for 12 months. I did not think that that was an adequate offer because I am more concerned with the public interest. I am concerned that prima facie there has been a defalcation with respect to this particular plaintiff, that there are inadequate accounting records with respect to the trust account, and the defendant has not at any stage indicated what other people's moneys are involved in that trust account. 54 However, Mr Dicker informs the court that his client is willing to continue the existing regime, that being that undertakings are given to the court not to dispose of assets as per paragraph 6 of the orders made on 28 February 2000 and that the receiver will continue in office on the limited basis referred to in order 2. 55 Although Mr Coleman says that there may still be prejudice if the full order is not made at this stage, it seems to me that balancing all the rights of the parties it would be appropriate to stay the orders, which will be orders 1 and 4 in the short minutes which I will initial, up to and including Tuesday 21 March 2000 to enable the defendant to test the matter before the Court of Appeal next Monday, and giving that Court just a little time to consider the matter. 56 I should probably add as order 5 liberty to either party to list the transferred District Court proceedings associated with these proceedings before the Registrar on 24 March 2000. 57 I will make orders 1 to 6 in the short minutes and I will hand them down so you can see what they are. Then I will stay orders 1 and 4 until Tuesday 21 March 2000 and I note that order 2 made on 28 February 2000 and the undertaking given to the court in paragraph 6 of the orders of 28 February 2000 are to remain in force so long as the stay remains in force. 58 Order 6 is that the exhibits will stay with the papers. oOo

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