Delphine Dwyer v Law Society of New South Wales

[2000] NSWSC 592

CITATION:	Delphine Dwyer v Law Society of New South Wales [2000] NSWSC 592
FILE NUMBER(S):	SC 30081/99
HEARING DATE(S):	27 June 2000
JUDGMENT DATE:	29 June 2000
PARTIES :	Delphine Dwyer Law Society of New South Wales
JUDGMENT OF:	Sully J

COUNSEL :	M.B. Evans - Plaintiff B.J. Skinner - Defendant
SOLICITORS:	Bowen & Gerathy - Plaintiff A. S. Brown - Defendant
LEGISLATION CITED:	Legal Profession Act 1987
DECISION:	Plaintiff allowed a period to and including 12 July 2000 for the making of a claim against the Solicitors' Fidelity Fund; Each party to pay, respectively, her and its own costs.

SUPREME COURT OF
NEW SOUTH WALES
ADMINISTRATIVE LAW DIVISION

SULLY J

30 June 2000

30081/99 - Delphine Dwyer v Law Society of New South Wales

JUDGMENT

1   HIS HONOUR: By an amended summons filed on 16 December 1999 Mrs. Delphine Dwyer, as plaintiff, seeks against the Law Society of New South Wales, as defendant, the following relief:

“1. An Order pursuant to s 87(4)(b) of the Legal Profession Act 1987 granting the plaintiff an extension of the time within which to lodge a claim on the Fidelity Fund from 15 October 1997 to 15 May 1998.

2. A Declaration that the decision by the Fidelity Fund Management Committee made on 16 September 1999 and communicated to the plaintiff by letter dated 5 October 1999 refusing to allow the plaintiff further time within which to lodge a claim on the Fidelity Fund in respect of a failure to account for moneys placed with the solicitor Jeremy James Cullen constituted a decision disallowing the plaintiff’s claim against the Fidelity Fund in the terms of s 90D of the Legal Profession Act 1987 (as amended).
3. An Order pursuant to s 69 Supreme Court Act quashing the decision of the Fidelity Fund Management Committee made on 16 September 1999 and communicated to the plaintiff by a letter dated 5 October 1999 refusing o allow the plaintiff further time within which to lodge a claim on the Fidelity Fund in respect of a failure to account for moneys placed with the solicitor Jeremy James Cullen.
4. An Order pursuant to s 69 Supreme Court Act quashing the decision of the Fidelity Fund Management Committee made on 16 September 1999 and communicated to the plaintiff by a letter dated 5 October 1999 disallowing the plaintiff’s claim on the Fidelity Fund in respect of a failure to account for moneys placed with the solicitor Jeremy James Cullen.
5. An Order pursuant to s 90D(4)of the Legal Profession Act 1987 allowing the plaintiff’s claim on the Fidelity Fund.
6. Such further or other orders as the Court shall think fit.
7. Costs”

2 The Fidelity Fund to which reference is made in the amended summons is the Solicitors’ Fidelity Fund established by Part 7 of the Legal Profession Act 1987. Part 7 makes elaborate provision for the establishment, administration and funding of the Fidelity Fund. Division 3 of Part 7 deals with the topic of claims against the Fidelity Fund. Section 80, which is part of Division 3 defines as follows the essential purpose of the Fidelity Fund:

“The Fidelity Fund is held, and is to be applied by the Law Society for the purpose of compensating persons who suffer pecuniary loss because of a failure to account or a dishonest default.”

3   The expressions “failure to account” and “dishonest default” are defined, but it is not necessary for present purposes to consider in any detail the statutory definitions. Section 80, in addition to providing the fundamental definition earlier quoted, makes extensive provision for the mechanics of the making of a claim against the Fidelity Fund. Sub-section (3) is relevant for present purposes. It provides:

“If a claim is made against the Fidelity Fund, the Law Society Council must:
(a) investigate the claim, and
(b) determine the claim by wholly or partly allowing, compromising, settling or disallowing it.”

4   When, in any particular case, it is intended to make a claim based upon an alleged failure to account, section 87 of the Act makes provision for the fixing of a final date for the making of such a claim. Section 87 provides, relevantly:

“(1) If the Law Society Council considers that there has been, or may have been, a failure to account by a solicitor, it may publish a notice in the form approved by the Attorney General that fixes a final date on or before which claims relating to the failure to account must be made.
(2) The final date fixed by the notice for making a claim must be a date that is at least 3 months later than the first or only publication of the notice.
(3) The notice must be published:
(a) in a newspaper published and circulating in the district in which the solicitor is, or was, practising or carrying on business, and
(b) in a newspaper published and circulating in Sydney.
(4) A claim arising from a failure to account and made after the final date fixed by the notice is barred unless:
(a) the Law Society Council allows further time, or
(b) the Supreme Court allows further time, if the Law Society Council refuses to do so.
…………………………………………………………………………………………..”

5 In the present particular case, the prayer for relief in paragraph 1 of the amended summons prays in aid the power conferred upon this Court by section 87(4)(b). It is not disputed that the defendant did in fact publish a notice complying with the requirements of section 87(1), (2) and (3); and that the plaintiff did not make a formal claim against the Fidelity Fund until well after the expiration of the period fixed by the defendant’s notice. 6 In those circumstances it seems to me to be clear that the claims for relief made in paragraphs 2, 4 and 5 of the amended summons cannot succeed. Relief of that kind might be appropriately sought were it the case that the defendant had in fact considered on its merits the plaintiff’s claim against the Fidelity Fund, and had then disallowed it as contemplated by section 80(3) earlier herein referred to. In the present case no such point has yet been reached. The position is, rather, that the plaintiff has made a claim out of time; has been unsuccessful in a request to the defendant for an extension of time; and is, therefore, barred from proceeding further with the claim unless this Court grants, pursuant to section 87(4)(b), further time for the making of the application. 7 The only question for present decision by this Court being the question whether the plaintiff should have an extension of time pursuant to section 87(4)(b) of the Act, the essential principles by reference to which that question is to be decided are not, in my opinion, in doubt. The plaintiff must prove to the satisfaction of this Court, and on the balance of probabilities:

[1] that the claim which the plaintiff wishes to pursue against the Fidelity Fund, if permitted to proceed, would put in issue some real, triable question(s) of fact or law. This particular requirement is to be understood as reflecting the established stance of the Court to the effect that relief ought not to be granted if in a real and practical sense it would be useless to grant it.

[2] that there is a satisfactory explanation for the delay in making the claim.

[3] that it would be, upon the striking of a fair balance of the competing interests, just to permit the claim to proceed.

8   In the event, the defendant did not contend that the plaintiff’s claim against the Fidelity Fund, if permitted to proceed, could not give rise to any real, triable question of fact or law. That concession should be understood, in fairness to the defendant, as being a limited one in the sense that the defendant certainly disputes that every element of the plaintiff’s claim, as thus far notified, could give rise to any such triable question(s). The concession does accept, however, that there is at least a portion of the claim, as thus far notified, of which it would be fair to say that it is capable in the requisite legal sense of giving rise to some real, triable question(s) of fact and law. That limited concession made by the defendant , - and it was made, in my respectful opinion, properly and sensibly, given the totality of the evidence placed before this Court, - is sufficient to dispose in the plaintiff’s favour of the first of the three matters which, as noted above, the plaintiff must establish on the probabilities. 9   The matter of a satisfactory explanation for the delay which has brought about the need for the present application, is not as easily disposed of. The background to the making by the plaintiff of the relevant claim against the Fidelity Fund is complex and not easily reduced to a simple exposition. The relevant sequence of events, if what seem to me to be the salient points are isolated, is to the following effect. 10   The plaintiff married in 1988 one Jeffrey Lowry . Mr. Lowry appears to have been a heavy and inveterate gambler; and to have had some connection, which it is not possible on the available evidence to particularise in any precise way, with drug-related criminal activities. The plaintiff gave evidence, which I accept, that it was not until after Mr. Lowry’s death that she became aware of his apparently unlawful and drug-related activities. 11   In September 1991 Mr. Lowry died in circumstances of which it is sufficient for present purposes to say that they were unexpected and tragic. The plaintiff was left a widow with two babies. She was the sole beneficiary under the late Mr. Lowry’s will; and in the course of the administration of Mr. Lowry’s Estate the plaintiff met, retained professionally, and became heavily dependent upon the advice and support of, a solicitor named Jeremy Cullen. 12   In October 1993, in April 1994, in July 1994 and in August 1994 the plaintiff placed in Mr. Cullen’s hands sums of money totalling $310,000. The moneys represented, put simply, proceeds available to the plaintiff from the realisation of various assets in the Estate of her late husband. The way in which Mr. Cullen conducted himself in connection with the funds thus entrusted to him by the plaintiff has been the subject of extensive inquiry by the defendant. It is not necessary, I think, to canvass for present purposes the fine detail of the defendant’s inquiries in that connection. Material deriving from those inquiries forms part of the evidence placed before this Court in connection with the present application; and I am satisfied to the requisite standard that until the end of 1995 the plaintiff had no reason to suspect that there was anything amiss with the investments which she had made through Mr. Cullen and on his advice. 13   By the end of 1995, or thereabouts, the plaintiff ceased receiving periodic payments by way of interest on her investments. In January 1996, by which time Mr. Cullen had left Australia and travelled overseas, she sought to discover by inquiry of various people at Mr. Cullen’s office what was going in connection with her investments, and could get no satisfaction. In the absence of Mr. Cullen, the plaintiff became acquainted with, and heavily dependent upon, advice and assistance given to her by a man called Chand, who seems to have worked out of Mr. Cullen’s office, although it is by no means clear what his actual connection was with that office. 14   In February 1996 the defendant procured the appointment of a manager of Mr. Cullen’s practice. In April 1996 Mr. Cullen was made bankrupt. In May 1996 a Receiver of his practice was appointed. By July 1996 the plaintiff was receiving professional legal assistance, both from a solicitor and from counsel. As a result of that assistance there issued on 20 November 1996, and out of the Common Law Division of this Court, a Statement of Claim in which the plaintiff and the executor of the Estate of the late Mr. Lowry sought damages from Mr. Cullen and a man called Leeming, a business associate of Mr. Cullen. The Statement of Claim is a lengthy and somewhat involved document, and it is not easy to paraphrase it. Put simply, it sues in respect of each of the four investments made by the present plaintiff through and on the advice of Mr. Cullen. Damages are claimed for alleged negligence; for alleged fraud; for alleged breach of fiduciary duty; and for alleged breach of statutory duty. The particulars given in respect of the alleged breach of statutory duty seem to me to have particular relevance for present purposes. They are expressed as follows:

“The first defendant, pursuant to s 79A(1) of the Legal Profession Act 1987, failed to account for moneys paid to J.J. Cullen & Associates in the course of his practice as a solicitor for the purpose of investment for the second plaintiff.” [The reference to the first defendant is a reference to Mr. Cullen. The reference to the second plaintiff is a reference to Mrs. Dwyer, the plaintiff in the present proceedings.]

15   On 20 November 1996 a copy of that Statement of Claim was served upon an officer of the defendant being the person who had been appointed in February 1996, and at the instance of the defendant, as manager of Mr. Cullen’s practice. 16   I do not think that it could be accepted that the quoted portion of the Statement of Claim constituted a formal claim by the present plaintiff against the Fidelity Fund; but I do think that it is fair to say that it put the defendant distinctly upon notice that the plaintiff was intending to make, and hoping to establish, in the Common Law proceedings facts which, if established, would give rise, prima facie, to an entitlement in the plaintiff to make a claim on the Fidelity Fund. 17   On 9 July 1997 the defendant caused a section 87 advertisement to be published in “Sydney Morning Herald”. The date fixed by the notice as the terminal date for the making against the Fidelity Fund of claims arising from things done by Mr. Cullen in the course of his professional practice, was set at 15 October 1997. On the following day, as it happened, the plaintiff withdrew her instructions from the solicitors then acting for her, and retained the solicitors by whom she is now represented. Thereafter, the newly retained solicitors moved promptly to get hold of the plaintiff’s file from her previous solicitors, and to take steps to advance the Common Law proceedings. 18   Miss/Mrs. Ann Maree Bowen, the solicitor having present carriage of the plaintiff’s affairs, gave evidence, which I accept, that she did not receive the file from the plaintiff’s former solicitors until 14 November 1997. The same witness gave evidence, which I accept, that she had no idea that the section 87 notice had been published until about March 1998 when, in the course of examining the contents of the file, she came upon a copy of the notice. Thereafter, it is sufficient to say, the plaintiff’s present solicitors moved with what I consider to have been reasonable despatch in seeking to have a claim against the Fidelity Fund formalised. 19   The plaintiff herself gave evidence that, until so informed by her present solicitors, she too had no idea that a section 87 notice had been published. I accept this evidence. 20   At the hearing of the present proceedings, each party made available to the Court a chronology. Each chronology is much more detailed than the foregoing summary would suggest. I am not unmindful of the matters which are contained in those chronologies and which I have not discussed specifically in the foregoing summary. As I said at the commencement of that summary, I have sought to isolate what seem to me to be the salient matters relevant to the particular issue of delay and the plaintiff’s explanation for it. 21   On that same issue of the giving by the plaintiff of a satisfactory explanation for the relevant delays in the making of a claim against the Fidelity Fund, it is important to keep in mind that a very significant matter which always bears upon the preparedness of a Court to accept an explanation proffered for a lengthy delay, is whether the delay has caused irremediable prejudice to the other party. In the present particular case, I do not see that the undoubted delays that have occurred in the making of a claim against the Fidelity Fund have prejudiced the defendant in its capacity to deal, according to its statutory powers and duties in that behalf, with such a claim if it be now permitted to proceed. The defendant did not press, indeed, any submission seeking to make a case of prejudice. 22   In all the foregoing circumstances I have come to the conclusion that it would be appropriate to accept as adequate for present purposes the explanation put forward by the plaintiff for the bringing out of time of the claim that she wishes to pursue against the Fidelity Fund. 23   There remains, then, the third of the three matters to which I earlier referred. It is that consideration of the overall balance of justice in the particular case that is the true basis of the defendant’s opposition to the present application. 24   The defendant’s case on the point turns upon what is said to be an issue of public policy arising from certain admitted conduct of the plaintiff. The conduct in question concerns, put simply, the attitude taken by the plaintiff when the defendant first became actively interested in exploring the professional affairs of Mr. Cullen. The defendant relies in particular upon two letters written by the plaintiff at the instance of Mr. Cullen’s father-in-law. The defendant submits, and in my opinion it is plainly the case, that the contents of the two letters are false. The defendant submits further that the use that was made of the letters by Mr. Cullen’s associates, and the effect of the letters upon the relevant investigators of Mr. Cullen’s professional affairs, had the effect in substance of, to use counsel’s word: “scuttling” those investigations. I would myself prefer to say that the letters had the effect of distracting and impeding the investigations. 25   The plaintiff was cross-examined strenuously about these letters; and about her conduct and attitude more generally, vis-a-vis Mr. Cullen, throughout the period during which he was under active investigation at the instance of the defendant. I think that it is clear from the available evidence that the plaintiff saw herself as being on the horns of a dilemma. She was, on the one hand, becoming ever more convinced that there was a real risk that, if she was not astute to protect her interests and those of her infant children, her investments through and with the advice of Mr. Cullen, would be wholly lost. She was, on the other hand, still well disposed towards Mr. Cullen personally, largely because of what she saw as his kindness and assistance and encouragement at times in her life when she had needed all of those things. The plaintiff’s evidence about the letters was, essentially, that she had written them at the dictation of Mr. Cullen’s father-in-law; that she had had a certain unease about them; but that the pressures which she saw as building up around her, coupled with the distraction caused by the babies at the particular times at which she was approached to write the letters, had in combination caused her to do something which, with the benefit of hindsight, she ought not to have done. I am inclined to accept this evidence. I saw and heard the plaintiff in the witness box for a not inconsiderable time. She was, as I have earlier observed, closely and strenuously cross-examined. The impression I formed of her was that she was basically intelligent and capable, but not particularly sophisticated; and that she was very much out of her depth in dealing with people like Mr. Cullen, his associate Mr. Leeming, and Mr. Cullen’s father-in-law.\ 26   It cannot be gainsaid that it was wrong, and seriously wrong, of the plaintiff to have written those letters; and to have been, otherwise, lukewarm at best in her cooperation with the investigations, at least in their early stages. The defendant submits, and I accept, that as a matter of public policy a person in the position of the present plaintiff should never be encouraged by a Court to think that he or she can deceive and temporise, with impunity, when the effect of doing so is seriously to prejudice current investigations at the instance of the defendant into the professional behaviour of a solicitor. 27   I do not think, however, that that is the only relevant public policy that now needs to be brought to account. For there is, in my opinion, a further such policy which derives from the fact that a solicitor is an officer of this Court. If a person who has been a bona fide client of an officer of this Court establishes prima facie that such officer of the Court has been guilty of serious breaches of proper professional conduct involving, among other things, a dishonest failure to account in a proper and professional manner for the funds of his client, then there is a very real, and most compelling, public interest to ensure that what is being alleged by the client against the solicitor is investigated thoroughly; and that, to such end, the client is not lightly barred from pursuing any available lawful claim, the adjudication of which will assist in testing the truth of the client’s allegations. 28   In the circumstances of the present case there is, in my view, an obvious tension between the practical operation of those two public policies. All that this Court can do is its best to bring the competing policies into a just overall balance. If, as I think to be the case, the present plaintiff has established on the probabilities the first and the second of the three requisite matters to which I earlier referred, then it seems to me that the just balance of public policy in connection with the third of those requirements is a balance that favours permitting the plaintiff to proceed with her projected claim against the Fidelity Fund. 29   For the whole of the foregoing reasons I have come to the conclusion that the plaintiff is entitled to relief substantially to the effect of the relief sought in paragraph 1 of the amended summons. 30   As to the question of the costs of the present proceedings, I have come to the conclusion that they should lie where they fall. I would not think it fair to order the defendant to pay the costs of an application resulting from delay in no way attributable to the defendant. That view entails that only two practical costs orders remain open: first that the plaintiff pay the defendant’s costs; and secondly that the parties pay their own respective costs. I think that it would be unacceptably harsh to make the first of the orders; and so I will make the alternative order. 31   I make therefore the following orders:

[1] I order pursuant to section 87(4)(b) of the Legal Profession Act 1987 (NSW) that the plaintiff be allowed a period to and including 12 July 2000 for the making by her of a claim against the Solicitors’ Fidelity Fund established by the said Act, being a claim made in response to the notice, a copy of which is annexed and marked “A” to the affidavit of Dorothy Carlin sworn on 12 January 2000 in connection with the present proceedings.

2. That each party pay, respectively, her and its own costs.

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Last Modified: 09/26/2000