De Simone v Legal Services Board - [2017] VSC 471

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PROFESSIONAL LIABILITY LIST

S CI 2013 01485

GIUSEPPE DE SIMONE (& ORS ACCORDING TO THE SCHEDULE)	Plaintiffs
v
LEGAL SERVICES BOARD	Defendant
MICHAEL RICHARD BRERETON AND OTHERS (according to the attached schedule)	Third Parties

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JUDGE:	MACAULAY J
WHERE HELD:	Melbourne
DATE OF HEARING:	13, 14, 15, 16, 17 & 20 February 2017
DATE OF JUDGMENT:	16 August 2017
CASE MAY BE CITED AS:	De Simone v Legal Services Board
MEDIUM NEUTRAL CITATION:	[2017] VSC 471

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LEGAL PRACTITIONERS — Appeal from decision of Legal Services Board of Victoria — Claim against Fidelity Fund for default of a legal practitioner — Whether there was a default to which Part 3.6 applies — Whether trust money received by the practice in the course of legal practice — Whether failure to pay or deliver trust money — Whether money entrusted in connection with financial service or investment — Whether plaintiffs’ claims upon the Fund defeated by releases given to the legal practitioner — Legal Services Board’s decision affirmed — Third party claims by the Legal Services Board dismissed — Legal Services Board v Gillespie-Jones (2013) 249 CLR 493 — Legal Profession Act 2004 (Vic), Pts 3.3, 3.6, 6.7.

STATUTES — Statutory interpretation — Effect of amendment on rights — Whether the plaintiffs had accrued rights before an amendment to the entitling legislation — Esber v The Commonwealth (1992) 174 CLR 430; NSW Aboriginal Land Council v Minister Administering the Crown Lands Act (1988) 14 NSWLR 685 — Interpretation of Legislation Act 1984 (Vic), s 14(2)(e).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr A Monichino QC with Mr A Sandbach and Mr R Chaile	Peter Lustig
For the Defendant	Mr C Caleo with Mr S Senathirajah	Legal Services Board
For the First Third Party	No appearance
For the Second Third Party	Mr T Stuart

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Background......................................................................................................................................... 3

Nature of the evidence................................................................................................................. 3
Seachange Village project............................................................................................................ 5
De Simones’ investment in the Seachange Village project................................................... 12
Disbursement of the deposit money from the trust account................................................ 14
Progress of the development 2000-2004.................................................................................. 19
Events leading to the 2007 deed............................................................................................... 23
Disciplinary proceedings against Brereton............................................................................. 25
Board’s reasons for decision...................................................................................................... 26

What is the nature of the appeal?.................................................................................................. 28

Was there a ‘default’ to which Part 3.6 applies?.......................................................................... 31

(1) Which version of the Act applies?...................................................................................... 31
Conclusion: plaintiffs’ case is confined to a para (a)(i) default.................................. 43

(2) Was trust money received by the practice in the course of legal practice?.................. 44
Received in the course of legal practice......................................................................... 47
Trust money....................................................................................................................... 50

(3) Was there a failure to pay or deliver trust money?.......................................................... 52
(4) Was the money entrusted in connection with a financial service or investment?....... 58
Financial service................................................................................................................ 59
Managed investment scheme.......................................................................................... 65
Investment purposes......................................................................................................... 67

Was there a fraudulent dealing with trust money?............................................................... 69
Conclusion................................................................................................................................... 70

Did the plaintiffs suffer any pecuniary loss because of a default?........................................ 71

Are the plaintiffs’ claims…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] VSC 471
Decision Date: 16 August 2017

CaseChat Overview and Summary

The appellants, De Simone and others, brought an appeal against the decision of the Legal Services Board of Victoria which dismissed their claim for compensation from the Fidelity Fund. The appeal concerns the default of a legal practitioner and the applicability of Part 3.6 of the Legal Profession Act 2004 (Vic). The respondents to the appeal were the Legal Services Board of Victoria, the defendant in the primary proceeding, and a third party, the practitioner's executor. The primary issue before the court was whether the claims of the appellants against the Fidelity Fund were defeated by the releases executed in favour of the practitioner. A secondary issue was whether the appellants' claims were contingent upon the resolution of certain issues of statutory interpretation.

The court found that the appellants' claims against the Fidelity Fund were not defeated by the releases executed in favour of the practitioner. The court held that the releases did not amount to an estoppel preventing the appellants from pursuing their claims against the Fund. The court also found that the appellants' claims were contingent upon the resolution of certain issues of statutory interpretation. The court held that the appellants had accrued rights prior to an amendment to the entitling legislation, and that these rights were not extinguished by the amendment. The court dismissed the appeal and affirmed the decision of the Legal Services Board of Victoria. The court also dismissed the third party claims by the Legal Services Board.

The court held that the appellants' claims against the Fidelity Fund were not defeated by the releases executed in favour of the practitioner. The court found that the releases did not amount to an estoppel preventing the appellants from pursuing their claims against the Fund. The court held that the appellants' claims were contingent upon the resolution of certain issues of statutory interpretation. The court found that the appellants had accrued rights prior to an amendment to the entitling legislation, and that these rights were not extinguished by the amendment. The court dismissed the appeal and affirmed the decision of the Legal Services Board of Victoria. The court also dismissed the third party claims by the Legal Services Board. The court found that the appellants' claims against the Fidelity Fund were not defeated by the releases executed in favour of the practitioner. The court held that the appellants' claims were contingent upon the resolution of certain issues of statutory interpretation. The court held that the appellants had accrued rights prior to an amendment to the entitling legislation, and that these rights were not extinguished by the amendment. The court dismissed the appeal and affirmed the decision of the Legal Services Board of Victoria.

Orders