Ilea Marijancevic v Paul Ferraro and Ferraro Pruscino and Co Solicitors
[2013] VSCA 124
•28 May 2013
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2012 0109
| ILEA MARIJANCEVIC | Appellant |
| v | |
| PAUL FERRARO and FERRARO PRUSCINO & CO SOLICITORS | Respondents |
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| JUDGES | MAXWELL P, TATE JA and GARDE AJA |
| WHERE HELD | MELBOURNE |
| DATE OF HEARING | 16 May 2013 |
| DATE OF JUDGMENT | 28 May 2013 |
| MEDIUM NEUTRAL CITATION | [2013] VSCA 124 |
| JUDGMENT APPEALED FROM | Marijancevic v Ferraro & Anor (Unreported, County Court of Victoria, Judge Lacava, 28 May 2012) |
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AGENCY – Authority – Solicitor and client – Disbursement of funds held for client in trust account – Appellant was registered proprietor of property – Property restrained – Proceedings to secure release of property – Appellant’s uncle dealt with solicitor on her behalf – Ostensible authority – Express authority – Property released and sold – Whether disbursement of proceeds authorised – Appeal dismissed.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr G T Bigmore QC with Mr A Saunders | Clayton Utz |
| For the Respondents | Mr J J Gleeson SC with Mr S E Marantelli | Wisewould Mahony |
MAXWELL P:
Summary
This appeal concerns the authority of a solicitor to disburse funds from the firm’s trust account. The existence, and scope, of the authority was a question of fact at the trial.
The funds in question were held on trust for the appellant (‘Ilea’).[1] They were disbursed by the first respondent (‘Mr Ferraro’) in accordance with the terms of two written authorities, both of which were drafted by the plaintiff’s uncle, Joseph Marijancevic (‘Joseph’). One authority was signed by Ilea, the other by her father, John Henderson (‘John’), the brother of Joseph.
[1]For ease of identification, the appellant and the various members of her family will be referred to by their first names.
The trial judge found that the disbursement of the trust funds was expressly authorised, and he dismissed Ilea’s claims.[2] In my respectful opinion, his Honour’s conclusion was clearly correct. The appeal must therefore be dismissed. My reasons are as follows.
[2]Marijancevic v Ferraro & Anor (Unreported, County Court of Victoria, Judge Lacava, 28 May 2012), [98].
Factual background
The funds represented the net proceeds of sale of a property in Maribyrnong (the ‘property’). In May 2004, a judge of the County Court made a restraining order in respect of the property under the Confiscation Act 1997 (Vic) (the ‘Act’). The basis of the order was that John had been charged with an offence falling within sch 2 to the Act.[3]
[3]Section 16(2)(c).
At the time the restraining order was made, Ilea was the registered proprietor of the property. It had first been registered in John’s name, then in the name of Ilea’s mother, and then Ilea had become the registered proprietor in July 2003.
The restraining order prevented both Ilea and her father from disposing of or dealing with the property (amongst other assets which were also restrained). The Office of Public Prosecutions (‘OPP’) maintained that John was at all times the effective controller of the property. Ilea denied that this was the case.
In June 2004, Joseph conferred for the first time with Mr Ferraro, provided him with the documents concerning the making of the restraining order and instructed him to seek counsel’s advice. At a subsequent conference between Joseph and Mr Ferraro, attended by Ilea, Joseph said that he would draft an affidavit for Ilea, to be filed in support of an application under s 20 of the Act for exclusion of the property from the restraining order. Joseph subsequently drafted affidavits for Ilea and for her mother and father.
On 7 July 2004, in the presence of both Joseph and her mother, Ilea swore her affidavit before Mr Ferraro, who acted for her in the subsequent exclusion proceedings. In her affidavit, Ilea stated that she had consulted Joseph about the restraining order and that he had ‘advised me that it was of considerable importance to engage a solicitor’.
At the conference with Mr Ferraro, Ilea and her mother, Joseph said that he would arrange for John to swear his affidavit. John was at all relevant times an inmate at Loddon Prison.
Further conferences with Mr Ferraro on 23 September and 18 October 2004 were attended by both Ilea and Joseph. On 22 October 2004, Ilea as applicant applied to vary the restraining order. On that day, and again on 28 October and again on 4 November 2004, Ilea and Joseph conferred with Mr Ferraro in relation to the proceedings.
On 8 November 2004, Mr Ferraro conferred with Joseph and gave him a copy of a letter from the OPP. In unchallenged evidence, Mr Ferraro said that he had done so because Joseph ‘was the person telling [him] what to do’.
The following day, Mr Ferraro again conferred with Joseph, who said he would speak to counsel about subpoenas which had been served on Ilea and on her mother. Joseph subsequently reported to Mr Ferraro that counsel wanted a conference with Ilea and her mother.
On 14 February 2005, the application for exclusion of the property from the restraining order was dismissed. On 30 March 2005, the property was destroyed by fire. In November 2005, the mortgagee in possession sold the property.
In January 2007, a joint application was filed on behalf of Ilea and her father, seeking release of the net proceeds of sale. This application was issued by Mr Ferraro acting for both parties.
The first written authority was dated 31 March 2008. It provided as follows:[4]
[4]Emphasis added.
31 March 2008
Mr Paul Ferraro
Ferraro, Pruscino and Co. Solicitors
Dear Sir,
Re: Exclusion Application County Court matter number CI-04-01835 currently on appeal to the Supreme Court of Victoria
I advise you that I have authorised my uncle, Joseph Marijancevic, to act as my agent in every aspect of this matter. This authority is irrevocable and enduring.
In the event that the above matter is settled, I instruct you to disburse the settlement funds in the following way:
1.take out all reasonable costs and disbursements in respect to these matters;
2.draw one cheque payable to my uncle, Joseph Marijancevic, for the sum of seventeen thousand five hundred dollars ($17,500.00);
3.and, draw one cheque payable to Joshua Marijancevic for the balance of the settlement money;
or, in the alternative,
I instruct you to direct the settlement funds in accordance with the instructions of my uncle, Joseph Marijancevic.
Sincerely Yours
_________[signed]___________
Ilea Marijancevic
On 22 May 2008, the OPP wrote to Mr Ferraro proposing that a cheque payable in favour of Ilea would be ‘the most efficacious method of returning the funds held by [the Asset Confiscation Operation] to your clients.’
The following day, the OPP advised Mr Ferraro that, since Ilea’s father had not been convicted of a sch 2 offence, the property was not automatically forfeited under the Act. On 26 May, Mr Ferraro wrote to the OPP advising that funds could be deposited in his firm’s trust account.
On 19 June 2008, the Department of Justice issued a cheque payable to John in the sum of $159,675.49. Mr Ferraro deposited the cheque into his trust account. The trust ledger account identified the client as ‘John Henderson and Ilea Marijancevic’.
On 30 June 2008, Joseph provided Mr Ferraro with the second authority which was, in its terms, very similar to the first authority. It relevantly provided as follows:
28th day of June 2008
Paul Ferraro
Ferraro Pruscino & Co
Dear Sir,
Re: Exclusion Application County Court matter number CI-04-01835 currently on appeal to the Supreme Court of Victoria proceeding number 40 of 2005.
I advise that I have authorised my brother, Joseph Marijancevic, to act as my agent in every aspect of this matter. This authority is irrevocable and enduring.
I understand the above matters are settled, I instruct you to disburse the settlement funds in the following way:
1.take out all reasonable costs and disbursements and all reasonable costs and disbursements incurred by my daughter, Ilea Marijancevic, in respect to these matters;
2.draw one cheque payable to Mark Adams for the sum of seventeen thousand five hundred dollars ($17,500.00);
3.and, draw one cheque payable to Joshua Marijancevic for the balance of the settlement money;
or, in the alternative,
I instruct you to direct the settlement funds in accordance with the instructions of my brother, Joseph Marijancevic.
Sincerely Yours
_________[signed]___________
John William Henderson
Mr Ferraro disbursed the moneys held in trust in accordance with the terms of the second authority. Five months later, counsel for Ilea telephoned Mr Ferraro and said that, according to her instructions to him, she had not authorised the release of the funds. Mr Ferraro informed her counsel that he had two written authorities on file, one of which had Ilea’s signature. According to her counsel, Ilea maintained that the authority was ‘forged’.
The question of whether Ilea did sign the first authority was the subject of evidence at the trial, given by Joseph (who said that she had signed it in his presence) and by a handwriting expert, who expressed the opinion that the signature on the authority was the same as the signature on other documents admittedly signed by Ilea. Ilea did not give evidence. The judge was satisfied that Ilea did sign the first authority. There is no challenge to that finding.
The disbursement was authorised
The appeal submission for Ilea relied on the following statement by Jenkinson J in Robb v Law Society (ACT):[5]
[M]oneys received on a client’s behalf following settlement are received in trust and … the fiduciary duty owed [by the solicitor] … remains until such time as they are dealt with in accordance with the client’s instructions given by the client unequivocally and after being fully informed by the solicitor as to the proposed disbursal.[6]
(As senior counsel for Ilea acknowledged, Robb was a decision of a five-member bench of the Federal Court. The judgment of Jenkinson J stood alone. In the event, however, nothing turns on this.)
[5](1996) 72 FCR 225, 240 (‘Robb’).
[6]Emphasis added in appellant’s submission.
Counsel for Ilea conceded — quite properly — that a solicitor could, without further enquiry, act on instructions given by a third party if the solicitor’s client had given authority to that person, in unequivocal terms, to provide such instructions. It was said, however, that no such authority had been given in the present case. This was said to be so because the first authority was, on its face, confined to a particular set of circumstances, namely, the anticipated success of the exclusion application and the revival of Ilea’s ability, as registered owner, to dispose of the property.
The circumstances in which the moneys ultimately came into the trust account were — so it was said — entirely different. The exclusion application had failed and the moneys had become available through an altogether unforeseen circumstance — it being determined that Ilea’s father had not been convicted of a sch 2 offence. In order for Mr Ferraro to discharge his obligation to ensure that Ilea was ‘fully informed’, he needed to deal directly with her, advise her of the change of circumstances, and seek positive confirmation of her instructions with respect to disbursement.
Nor, according to the submission, did the second authority justify what had occurred. Since the moneys were held in trust for Ilea, as Mr Ferraro admitted in his defence, no authority from her father could provide the necessary warrant for the disbursement of funds to which she was beneficially entitled.
These submissions must be rejected, in my view. The attempt to confine the scope of the first authority to the exclusion application cannot be reconciled either with the course of conduct in which Ilea participated or with the terms of the authority itself. Plainly enough, the object of the retainer of Mr Ferraro was to secure the release of the property from the restraining order, and the realisation of its (net) value. It was that objective which necessitated the giving of the disbursement instructions contained in the first authority.
This was a perfectly understandable commercial objective, to be achieved by whatever legal means were necessary. Whether this object was achieved by the obtaining of an exclusion order or — as subsequently happened — by the setting aside of the restraining order was of no consequence to Ilea. Had the position been otherwise, she could of course have given evidence to that effect.
Throughout the sequence of conferences with Mr Ferraro which she attended with her uncle, Ilea acquiesced in her uncle’s having conduct of the matter, and responsibility for dealings with Mr Ferraro, on her behalf. This was hardly surprising, given her lack of commercial experience. (At the time she became the registered proprietor, Ilea was a 23-year-old student.) This was a very clear case of ostensible authority. By her conduct, Ilea had represented to Mr Ferraro that her uncle had full authority to act on her behalf in relation to the attempts to release, and realise, the property.[7]
[7]See, eg, Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, 503.
The terms of the first authority are very significant. It stated expressly that Ilea had authorised Joseph to act as her agent ‘in every aspect of this matter’. Moreover, the authority provided two alternative bases for distribution. The first was by way of distribution to the named recipients, the second was ‘to direct the settlement funds in accordance with the instructions of my uncle Joseph Marijancevic’. In these two different ways, Ilea gave written confirmation of what her conduct to that point had unequivocally conveyed to the solicitor, namely, that Joseph had her full authority to deal with the matter in whatever way he regarded as most suitable in her interests.
That authority was expressed to be ‘irrevocable and enduring’. It was, plainly
enough, still in force when the funds came into the trust account. Unsurprisingly, Mr Ferraro’s evidence was that, although he disbursed the money in accordance with the allocation specified in the second authority, he regarded himself as also complying with the instruction which Ilea had given in the first authority. There was no challenge to this evidence, and Ilea gave none to contradict it. The evidence, which the judge accepted, was that Joseph had drafted the second authority and arranged for it to be signed by his brother. This became necessary, of course, because the cheque from the Department of Justice was made out in his brother’s name. This had occurred because the OPP refused to recognise that Ilea had any interest in the property, despite having been the registered proprietor at the relevant times.
Mr Ferraro was fully entitled to view this further step taken by Joseph, in order to secure the disbursement of the funds, as amply covered by the plenary authority given to him by Ilea in the first authority.
TATE JA:
For the reasons stated by Maxwell P, I agree that the appeal should be dismissed.
GARDE AJA:
I also agree with the reasons stated by Maxwell P, and that the appeal should be dismissed.
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