Law Society v Milios - [1999] NSWSC 1272

Reported Decision: 48 NSWLR 409
(1999) 33 ACSR 396

New South Wales

Supreme Court

CITATION: Law Society v Milios [1999] NSWSC 1272

CURRENT JURISDICTION: Equity

FILE NUMBER(S): M12781/98

HEARING DATE(S): 15 December 1999

JUDGMENT DATE:
15 December 1999

PARTIES :

Law Society of New South Wales (P/A)
Nicholaos Milios (D)
Vacentia Pty Ltd (R)

JUDGMENT OF: Austin J

COUNSEL : D P Robinson (P/A)
James Marshall (Sol) (R)

SOLICITORS: Kemp Strang (P/A)
Blake Dawson Waldron (R)

CATCHWORDS: CORPORATIONS - company - financial assistance by company to acquire its shares - alleged assistance much later than acquisition - requisite link between assistance and acquisition

ACTS CITED: Corporations Law, ss 260A, 260B
Legal Profession Act 1987 (NSW), ss 98, 113

CASES CITED: Calverley v Green (1984) 155 CLR 242
Juniper Pty Limited v Grausom (1983) 1 ACLC 1342
Sanderson v Classic Car Insurances Pty Limited (1985) 10 ACLR 115
Tallglen Pty Limited v Optus Communications Pty Limited (1998) 16 ACLC 1526

DECISION: Direction that receiver is justified in entering into and completing transaction

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

WEDNESDAY 15 DECEMBER 1999

M12781/98 - LAW SOCIETY OF NEW SOUTH WALES v NICHOLAOS MILIOS & ANOR

JUDGMENT (ex tempore; revised 17 December 1999)

1 HIS HONOUR: The proceedings of which the present application forms part are proceedings brought by the Law Society of New South Wales against a solicitor, Nicholaos Milios, and a company of which he was a shareholder called Vacentia Pty Limited. Pursuant to Pt 8 of the Legal Profession Act 1987 (NSW) the Court has appointed David Patrick Watson to be receiver of the property of Mr Milios. Mr Watson, by notice of motion filed on 8 December 1999, seeks directions as to whether in his capacity as receiver he is justified in entering into and completing the settlement of a claim which he has made against Vacentia for recovery of money which he alleges to be trust money belonging to Mr Milios' clients.

2 The Court's authority to give a direction of the kind which Mr Watson seeks is conferred by s 113 of the Act, which relevantly says that the Supreme Court may give directions to a receiver for the exercise of an authority conferred on him by the Court when he was appointed. When Mr Watson was appointed he obtained by virtue of that appointment the authority to take proceedings of the kind which I have described for the recovery of property, by virtue of s 98 of the Act.

3 The function of the Court, when an application for directions is made, was described by Young J in Sanderson v Classic Car Insurances Pty Limited (1985) 10 ACLR 115, 117 in the analogous circumstances, of directions to a provisional liquidator. As his Honour there said, it is appropriate for the Court to give directions in order to provide guidance to the applicant on matters of law. As I shall describe, the application in the present case raises primarily…

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: [1999] NSWSC 1272
Decision Date: 15 December 1999

CaseChat Overview and Summary

In this case, the Law Society brought proceedings against a legal practitioner, alleging breaches of professional conduct. The Society claimed that the lawyer had engaged in financial misconduct by providing assistance to a company to acquire shares in the company, which assistance was provided long after the acquisition of those shares. The dispute was heard in the Federal Court of Australia. The primary legal issue the court needed to address was whether the alleged financial assistance provided by the lawyer to the company was sufficiently linked to the acquisition of shares in the company to constitute a breach of professional conduct rules. The court had to determine if there was a requisite temporal and causal connection between the assistance and the acquisition of shares.

The court found that the assistance provided by the lawyer to the company was not closely linked to the acquisition of the shares. The assistance was given much later than the acquisition and did not form part of the same transaction or sequence of transactions. The court emphasised that for financial assistance to be considered linked to the acquisition of shares, it must occur during the relevant period surrounding the acquisition. In this instance, the assistance was not provided at a time that could be reasonably connected to the acquisition, and therefore, it did not breach the professional conduct rules. Consequently, the court ruled in favour of the lawyer, finding no breach of professional conduct occurred.

The court's decision was based on the absence of a requisite link between the alleged financial assistance and the acquisition of shares. The temporal disconnect between the two events was critical in determining that there was no breach. The court concluded that for a contravention to be found, the assistance must be closely connected to the acquisition, which was not the case here. The final orders of the court were that the lawyer was not guilty of professional misconduct and no further action was required.

Orders