Wentworth v De Montfort: a case on ownership of documents in solicitors’ files

May 25th, 2008 · Comments (0)

This post is a companion to this longer companion post which discusses the other cases on the question of who, as between solicitor and client, is entitled to documents relating to their matter found on solicitors’ files and in their accounts. As the decision with the most detailed consideration of the question, it gets its own post.

Twelve classes of documents on a solicitor’s file were in issue in Wentworth v De Montfort (1988) 15 NSWLR 348, a decision of the NSW Court of Appeal. The key issue in the case was described in this way:

‘Ms Wentworth’s primary submission is that any documents brought into existence or received by Sly & Russell in relation to her litigation were documents created or received by Sly & Russell in their capacity as agents for their principal Ms Wentworth, and that, applying ordinary agency principles, any documents so created or received are accordingly hers. As I understand their case, the opponents do not deny that any document created or received by them only as agents for Ms Wentworth would belong to her. However they deny that any documents falling within the twelve categories were so created or received and submit that upon a number of principles applying to solicitors and other professional people, the documents falling within those categories are theirs.’

Summary of previous authorities

The Court reviewed the English authorities, and the 8th edition of Cordery on Solicitors, a very famous English text, and concluded:

‘A number of considerations can be discerned in these decisions and statements as being relevant in the determination of ownership. These include whether or not the client was charged for the creation of the document, and whether the solicitor created the document for his client’s benefit and protection, or did so for his own benefit and protection.’

In resolving the priority to be accorded to these considerations, Hope JA, with whom the other judges agreed, made two conceptual observations: that solicitors should not be assumed to be acting as their clients’ agents in everything they do, and that solicitors are not ordinary trustees, and legislation regulating solicitors’ trust accounts may affect equitable rules associated with trustees generally. The Court also asserted that whether the client paid for the creation of the document was not determinative of whether he or she was entitled to the original document.

Solicitors, like other professionals, are not necessarily agents in everything they do

The Court said:

‘Although solicitors may in particular circumstances receive or create a document as an agent for their client, this is commonly not the case. The distinction between principal and agent and professional person and client is well established. [Hope JA then considered Leicestershire County Council v Michael Faraday and Partners Ltd [1941] 2 KB 205,London School Board v Northcroft(1889) Hudson’s BC, 4th ed, vol 2, at 147, and Chantrey Martin (A Firm) v Martin [1953] 2 QB 286, which are discussed in the other post.]It thus appears that if a solicitor is acting only as agent for a client who is his principal in the doing of some act, the ordinary rules of agency apply to him, and documents brought into existence or received by him when so acting belong to the client. However in other cases, different principles apply, those principles being referable to the relationship between a professional person and his client.’

Solicitors as trustees have different obligations from other trustees

The Court said:

‘A trustee must keep proper financial records and in a real sense, as well as keeping them for his own benefit, he keeps them for the benefit of the beneficiary, to whom he must be ready to render accounts when required. However, while he is trustee, they are his records and he has the legal title to them. The beneficiary is entitled to inspect them, and to have information about them, but they are not the beneficiary’s property: Re Londonderry’s Settlement; Peat v Walsh [1964] Ch 594. Normally, when a trustee ceases to hold office, either on appointment of a new trustee or the determination of the trust, he would be required to hand over all trust property, including documents and financial records, to the new trustee, or to the sole beneficiary or all the beneficiaries if more than one, if required to do so. … This position would generally apply to a trustee who is a solicitor, but there are important qualifications in some cases. If he is solicitor for the client as well as trustee, he is required by law (as I shall describe later) to maintain and to retain proper financial records. He is entitled to retain these records, some of which may refer to other clients as well as the trust, but the beneficiary should be provided with copies if asked for. Other records which he makes as solicitor and not as trustee are subject to the same principles as would apply if he were not a trustee.’

Later, at 357-8, the Court said:

‘Whatever may be the position in relation to ordinary trustees, solicitors who hold money in trust for their clients have two roles and are subject to special duties [under trust account rules and legislation], and they are entitled to and indeed must retain their financial records. …

In so far as the records are those of a continuing trustee, they belong to the trustee, the beneficiary is entitled to information concerning their contents and where appropriate to copies of them but the beneficiary does not own them. In so far as the solicitor has ceased to be a trustee, he is still required by law to maintain and to retain proper financial records.

Looked at as a solicitor’s records, no doubt they are kept in part for the benefit of the client but they are also kept for the benefit of the solicitor who must know and be able to establish not only to the client but to persons exercising the relevant powers under the Legal Practitioners Act precisely what he has done with moneys in his trust account.

His liability to account to inspectors and others pursuant to the Legal Practitioners Act is not a liability which has been created solely for the benefit of the solicitor’s client. It is for the client’s benefit, but it is also for the benefit of the public generally, which has a considerable interest in ensuring the integrity of solicitors and their observance of their professional and other obligations.’ (formatting altered)

Mixed purposes

Hope JA tackled the question of mixed purposes in a passage which does not give up its meaning easily:

‘It is apparent that in many if not most cases a solicitor would have mixed reasons for creating a document.

Thus if on his client’s instructions he writes a letter of demand to a third party, it would be his duty to keep a copy of the letter, for the client may have to prove the sending of the letter and its contents, and the copy kept by the solicitor may be essential for this purpose. On the other hand the solicitor would want a copy for his own protection in order, for example, to be able to prove to his client that he had sent the letter of demand, and also for the purposes of making up a bill of costs. In such a case, the clients would be entitled to a copy of the letter and the solicitor would be entitled to charge him for it. On the other hand the solicitor would be entitled to keep a copy for his own records and absent some special agreement would not be entitled to charge the client for making that copy.

Again if on his client’s instructions the solicitor pays money to a third party and obtains a receipt, the receipt is obviously of benefit for the client for it is evidence that the third party has been paid. It is also evidence for the solicitor that he has carried out his client’s instructions and would be needed by him if any questions as to payments out of his trust account were raised. Again in this case I should have thought that the client was entitled to the original receipt, but that the solicitor was entitled to retain a copy.‘(formatting altered)

If one ignores the last paragraph, the intended meaning of the passage would seem to be that in the case of a mixed purpose, the solicitor is entitled to the original and the client to a copy if he pays for it. It is not clear why the same does not apply in relation to the example in the last paragraph.

Whether the client is charged for the document is not determinative

It is apparent that whether or not a client is charged for work is not determinative. Consider this passage:

‘Thus a barrister may make written notes of arguments he proposes to submit to a court and if he charges upon a time basis for out of court work, the client has in a sense been charged for that work. However I do not think that that makes those notes the property of the client; they would be made by the barrister entirely for his own professional purposes even though they are made in the course of carrying out work for the client. The position is the same in the case of the internal records as in relation to the analogous internal records of a solicitor.’

Evidence about the document and about reasons for creation needed before decision can be made

The question in respect of each document is what the predominant purpose of the creation of the document was. Some classes of documents are inherently for the exclusive or predominant purpose of either the solicitor (for example, internal cheque requisitions) or the client (for example, receipts for payments in discharge of liability of the client, made by the solicitors as the client’s agent). Others require evidence, document by document. It was for that reason that, there having been no document by document examination of the purpose of the creator of the document, reasons were published to assist the parties, but no orders actually determining the ownership of any document were made.

The twelve categories of documents

The twelve categories of documents seem at first glance to be exhaustive, but by virtue of what classes of documents were in dispute between the parties, there are crucial gaps. So copies of court documents filed and served, solicitors’ notes of telephone conversations with and personal attendances on the client, and correspondence between the solicitor and client are not covered. Hope JA did note without disapproval Re Thomson (1855) 20 Beav 545; 52 ER 714; 24 LJ Ch 599, where Sir John Romilly MR held that a client is not entitled to copies of letters written by the solicitor. It seems from the next proposition that he was speaking at that point only of letters to the client, for his Honour also appears to have held that the client was entitled to the original file copy of letters written on behalf of the client by the solicitor to third parties (reiterated by the same judge in Howard v Gunn (1863) 32 Beav 462; 55 ER 181). Re Thomson suggested too that the solicitor is entitled to retain letters received from the client, and it might be extrapolated from that that a solicitor is entitled to keep file notes of oral instructions given by the client. If these authorities are good law, then, in summary, the following is the position:

• the solicitor owns letters received from the client from which it might be extrapolated that the solicitor owns notes of oral instructions from the client;
• the solicitor owns file copies of letters to the client;
• the client owns file copies of letters sent to third parties.

Some classes of documents admitted of a simple answer because they have a relatively obvious, constant purpose. So:

• internal cheque requisitions, photocopying requisition forms are owned by the solicitor (356G, 361C);
• as are trust and other accounts printouts (358) (but note that ‘Having regard to technological advances and the ease with which copies can now be made’, Hope JA said ‘I should have thought that the solicitor who keeps computerised accounts should supply his client with a copy of the relevant printout, but at the client’s expense.’), ‘attempted financial reconciliation documents (361D) and financial records more generally including bank statements (361E-G);
• counsel’s briefs, and solicitors’ notes of attendances on counsel are generally owned by the client (360), except in a special case, such as a discussion between counsel and solicitor about fees, since it is the solicitor rather than the client who is principally responsible for counsel’s fees (359C);
• internal records and memos about work done or to be done are the solicitor’s property (little explanation of what class of documents was conceived of was provided by Hope JA, the only example being ‘a barrister may make written notes of arguments he proposes to submit to a court’) (359-360);
• communications between the solicitor and the Court would generally belong to the client (361);

More difficult were the following classes of documents:

• file notes of telephone conversations with and personal attendances on third parties;
• notes taken at court;
• correspondence with third parties.

They depend on a document by document analysis of for whose benefit the document was created. Examples given included:

• the client would own the file copy of a letter of demand written to a third party on behalf of the client (I say the solicitor owns the file copy because Hope JA asserted that the solicitor would be entitled to charge the client for the provision of a copy to which the client would be entitled) (356A);
• the client would be entitled to the original receipt received by a solicitor upon making a payment on behalf of a client to a creditor of the client (but note the difficulty in interpreting the passage containing the propositions in this and the previous bullet point noted above) (356B);
• the client would own the solicitor’s file note of a telephone conversation with a person the client says owes him money, in which the putative debtor gives his side of the story or makes admissions, or asserts a counter-claim (358E);
• the client would own a statement taken by the solicitor from a third party witness (358F);
• the solicitor would own a note of a conversation with senior counsel about fees because ‘Counsel look primarily to solicitors for the payment of their fees and solicitors have a professional responsibility for their payment. Clients of course have an interest, and a very real interest, in counsel’s fees, but I should think that a record of a conversation by a solicitor with senior counsel concerning the non-payment of his fees would be a record belonging to the solicitor’ (359C);
• the client would own a note of the solicitor’s conversation with the director of a legal aid organisation discussing a costs position (359D);
• the client would own the original exchange of correspondence if the exchange of views with the director of the legal aid organisation had been by letter (359D);
• the client would own notes of what happened in court (360C);
• the solicitor would own ‘to do lists’ made in court and prompted by what had happened there (360D).