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Decisions of the Superior Courts of New South Wales, 1788-1899

Unwin v Wood (1832) NSW Sel Cas (Dowling) 614; [1832] NSWSupC 16

insolvency, attorney's costs - costs, legal, and insolvency

Supreme Court of New South Wales

Forbes C.J. and Dowling J., 3 March 1832

Source: Dowling, Select Cases, Archives Office of N.S.W., 2/3466[1 ]

 

[p. 147] An Attorney was retained by a Client to carry on a suit, and pending the trial and before verdict and Judgment, the Client was declared insolvent.  The suit having failed the attorney brought an [p. 148] action against his client who pleaded his certificate puis darrein continuance.  Held that under the N.S.W. Insolvent act 10 G 4. No 7 57. the certificate was no bar to the action.

 

Source: Dowling, Proceedings of the Supreme Court, Vol. 64, Archives Office of New South Wales, 2/3247

[p. 166][ 2]

[p. 167] This was an action of assumpsit tried before Dowling J. at Sydney on the 28th October 1831. when a verdict was found for the Plf for £29.12.7. subject to the opinion of the Court on the following case:-

The Plf was employed by the Deft on 1st. May 1829 to prosecute an action in assumpsit againstDonnison & Cobb & accordingly issued a summons returnable on the 1st July 1829. & on the same day filed a declon therein but no further proceedings were then had as the Deft Wood left the Colony & proceeded to V. D. Land where he remained a considerable length of time.  The Deft. was summoned by Grose one of his creditors to appear before the Supreme Court on the 15thAugt. 1830 to be examined touching his alleged insolvency & on the 11th Oct. following was declared insolvent by the said Court but no Trustees were appointed `till long after the trial of the cause agt Donnison and Cobb.

In Sept 1830 Deft. renewed his directions to Plf to proceed with his sd. action agt Donnison & Cobb.  The Plaintiff proceeded with the action accordingly which was tried on the 13th Oct in the same year, being two days after Deft [p. 168] had been declared insolvent & a verdict given for the s.d Donnison & Cobb.  The deft was present in Court assisting and advising with Plf during the whole progress of the trial.  The present action was commenced on the 3.d Jan  1831 & was at issue notice of trial given for the 27th Sept 1831, & the Deft obtained a certificate of his insolvency under the seal of this Court on the 10th Oct last.

The question for the opinion of the Court is, whether the certificate obtained by the Deft on the 10th Oct last with the consent of the major part in number & value of his creditors is a bar to this action.  And if the Court shall be of opinion that the certificate so obtained which has been pleaded puis darrein continuance is not a bar to this action then a verdict is to be entered for the Plf.  But if the Court shall be of a contrary opinion then a verdict is to be entered for the Defendant.

[p. 169] This case was argued by Foster for the Plf, & Wentworth for the Deft.  The Court took time to consider the case.

By the N.S.W. insolvent Debtors act 10 G. 4. No 7. 2d April 1830. Section 7. it is enacted that if the insolvent debtor, shall make such a disclosure of his estate and effects as the act requires, and shall conform to the orders of the court the same shall with the consent in writing under the hands of the major part in number and value of the creditors be certified by a Judge under the Seal of the Court ``and such certificate, may be pleaded and shall be a bar to all suits and complaints for recovery of any debt or damages (except as excepted) due or claimed for any cause prior to the time of his being declared insolvent."

The question for our consideration is whether the cause for which the resent action was brought, was a cause of action arising prior to the time of the deft being declared insolvent.

We are of opinion that it was not, and that the plea of certificate puis darrein continuance in no bar to this action.

The true test by which this case must be determined is whether the [p. 170] cause of action for costs by the attorney against his client in conducting the action agt Domnison & Cobb was entire and complete before the declaration of insolvency.

The declaration of insolvency took place on the 11th October 1830.  Prior to that time, the present Plf, being an attorney, had been retained by the present deft to bring an action of Assumpsit for him against Domnison & Cobb, which action was at issue & ready for trial before the declaration of insolvency, but was not in fact tried until the 13tOctober 18309, being two days after the deft was declared insolvent.  Now had the present plf a complete cause of action until the determination of the cause which he was retained to conduct, to final issue?  It appears to us that having regard to his peculiar character as an attorney he had not.  Before the declaration of insolvency he might have had an inchoate accruing [p. 171] claim for costs, but until verdict & judgement, I apprehend, that claim was not complete.  He could not have stopped short in the middle of the cause without running the risk of losing his costs then incurred, unless his retained was regularly determined & his lien on the papers discharged.  His meritorious cause of action would be the conducting of the suit to the end.  Until then it appears to us that the cause of action would not be complete.  Even the fund out of which his cost would be to be paid be contingent & depending upon whether the cause failed or was successful.  Although the present deft was summoned on the 30th Augt 1830 to attend this court for the purpose of examination touching his alleged insolvency it did not necessarily follow that he would in fact be declared insolvent.  After that time & before the declaration of insolvency, namely in Sept 1830 the Plf receives instructions from the Deft to proceed in the action against Donnison & Cobb.  During the progress & subsequent trial of the cause the Deft himself is an action & was present at the trial instructing & assisting the Plf his attorney. [p. 172] As to the question now for consideration, this circumstance however is not entitled to much weight, for until trustees were appointed, & indeed until his affairs were wound up it was the duty of the insolvent debtor Wood to be aiding and assisting in realising his effects for the benefit of his creditors, part of whicch effects might result from the trial of the cause agt Donnison & Cobb.  Suppose that suit, instead of failing, had been successful, there is no doubt that the sum recovered, if any, would have vested in the trustees of the benefit of the creditors for their right and would have had relation to the time at which the insolvent had been summoned in order to the examination touching his insolvency.  The proceeding in the action buy the Plf, after the summons of the Deft in Augt 1830 must be considered in law as an act done for the benefit of the creditors if the client should ultimately [p. 173] be declared insolvent.  Till the regular appointment of trustees, the Insolvent himself must be regarded as a trustee for their benefit, and when the legal right of the trustees vested, they must take those rights as they find them.  Suppose through the diligence and activity of the attorney a verdict & judgement for a large sum of money had been recovered could the trustees or the insolvent have obtained the fruit of the judgement without discharging the attorney's lien for costs upon the postea.  We apprehend not, he being the meritorious cause of the successful recovery of the money which might otherwise have been lost to the creditors.  Then does the fact of the cause having failed make any difference in principle?  Surely not.  The law regards as sacred the lien of an attorney when he acts honorably & faithfully.  It has been holden in Lambert &Buckmaster 4 D & R 125. B & C 616 that an attorney  has a lien upon deed papers & writings belonging to a bankrupt not merely for his bill for business done [p. 174] before the bankruptcy, but for the costs of an action brought against the bankrupt after the commission issued, to recover the amount of his bill, unless it appears that as an attorney he had improperly commenced the action for the purpose of increasing costs.  Without however adverting to authorities upon this subject, it appear to us that as the Plf had not a complete right of action for his costs until the cause of Wood v Donnison & Cobb was tried & determined, this cannot be considered as a cause of action arising before the 13th October 1830 being two days after the declaration of insolvency.  For these reasons we are on opinion that Judgement must be given for the Plf.

Postea to the Plf.[3 ]

 

Notes

[1 ] A colonial Act was passed in 1830 (11 Geo. 4 No. 7) to deal with both insolvency (release from prison) and bankruptcy (release from debts as well), but was found to be inadequate after two years.  In April 1832, it was replaced by 2 Wm 4 No. 11 which was a conventional insolvency Act.  Under it, an imprisoned debtor who had been in gaol for more than three months could be released from prison on giving up all of her or his property to the creditors and engaging to pay the whole of the debt should he or she subsequently obtain sufficient property to do so.  See Bourke to Goderich, 19 March 1832, Historical Records of Australia, Series 1, Vol. 16, p. 566; and for the statute, see Sydney Gazette, 29 March 1832; and see Australian, 27 January, 3 February, 30 March, 6 April 1832.

The 1832 Act was a very harsh law, both because of the three months' wait, and because local traders could not obtain the bankruptcy relief which was available to their counterparts in England.

[2 ] Marginal note in manuscript: "The Judgement in this case was delivered on Saturday 25th Mar. 1832."

[3 ] Marginal note in manuscript: " Forbes C J after deliberating & looking into authorities agreed with me & relied upon,

Atty Genl v Stewart 2 Merivale 143. 2 B & P

Parslowe v Dearlove 4 East 438 -

Exparte Sutton 11 Ves. J.r 134.

2 Wilson 374."

Published by the Division of Law, Macquarie University