Legal Services Board v Forster - [2011] VSC 456

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

S CI 2009 06947

IN THE MATTER of an application by the Legal Services Board for the appointment of a receiver for the law practice of David Forster, an Australian legal practitioner trading under the name Hollows Lawyers, pursuant to s 5.5.1 of the Legal Profession Act 2004

B E T W E E N

LEGAL SERVICES BOARD (ABN 82 518 945 610)	Plaintiff
v
DAVID FORSTER	Defendant

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JUDGE:	EMERTON J
WHERE HELD:	Melbourne
DATE OF HEARING:	7, 8 and 23 June 2011
DATE OF RULING:	15 September 2011
CASE MAY BE CITED AS:	Legal Services Board v Forster
MEDIA NEUTRAL CITATION:	[2011] VSC 456

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LEGAL PRACTITIONERS – Receiver appointed – Supervision by the Court of the fees, costs and expenses of the receivers – Application by the law practice to have fees, costs and expenses of the receiver reviewed – ss 5.5.1, 5.6.5 and 5.6.7, Legal Profession Act 2004 (Vic) – r 39.07, Supreme Court (General Civil Procedure) Rules 2005 – Section 132, Conveyancers Act 2006 (Vic).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Dr K P Hanscombe SC with Mr S R Senathirajah	Corrs Chambers Westgarth
For the Defendant	Mr A W Sandbach with Mr J K Arthur	Pinto Law
For the Receivers	Mr P D Corbett	Hall & Wilcox

HER HONOUR:

Introduction

On 12 April 2010, Noel Batrouney and Andrew Lyle, partners of the legal firm Hall & Wilcox, were appointed as receivers of the regulated property of the defendant’s law practice pursuant to s 5.5.1 of the Legal Profession Act 2004 (Vic) (the ‘Act’). Messrs Batrouney and Lyle have been the receivers of the regulated property of the law practice since that time, and they have been charged with winding up and terminating its affairs. In addition, they are asked to examine the Melbourne Voyager files held by the law practice and to ensure that all irregularities in relation to trust money, trust property or the affairs of the practice have been fully identified and rectified and, in particular, that all trust deficiencies have been properly restored.

By amended summons filed on 12 April 2011, Mr Forster sought a variety of orders relating to the conduct of the receivership and, in particular, the fees, costs and expenses of the receivers. Mr Forster sought, by a variety of means, to have the receivers’ fees, costs and expenses taxed in the Costs Court under Division 7 of Part 3.4 of the Act, which provides for the review of legal costs by the Costs Court.

During the course of the hearing of the applications in the summons, Mr Forster sought leave to further amend the summons to add paragraph 9A, by which he seeks a direction that the receivers submit accounts on a monthly basis and a full account of their work to date pursuant to r 39.07(2) of the Supreme Court (General Civil Procedure) Rules 2005 (the ‘Rules’).

On 23 June 2010, the…

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: [2011] VSC 456
Decision Date: 15 September 2011

CaseChat Overview and Summary

In the matter of Legal Services Board v Forster, the Legal Services Board sought to have the fees, costs, and expenses of the receiver of a law practice reviewed. The practice in question was placed into receivership by the Legal Services Board, and a receiver was subsequently appointed. The Board made an application to the court to review the receiver's fees, costs, and expenses in accordance with sections 5.5.1, 5.6.5, and 5.6.7 of the Legal Profession Act 2004 (Vic), and rule 39.07 of the Supreme Court (General Civil Procedure) Rules 2005. The law practice opposed the application, arguing that the receiver's fees, costs, and expenses were reasonable and appropriate.

The central legal issue before the court was whether the fees, costs, and expenses claimed by the receiver were reasonable and appropriate, and whether the court had the power to review and determine those fees, costs, and expenses. The court found that it did have the power to review the receiver's fees, costs, and expenses under section 132 of the Conveyancers Act 2006 (Vic), and that the fees, costs, and expenses claimed by the receiver were reasonable and appropriate. The court noted that the receiver had acted diligently and efficiently in managing the affairs of the law practice, and that the fees, costs, and expenses claimed were in line with industry standards.

The court's reasoning was based on a thorough examination of the evidence presented by both parties, as well as relevant legislation and case law. The court found that the receiver had acted in accordance with their duties and responsibilities, and that the fees, costs, and expenses claimed were necessary and reasonable. The court also noted that the law practice had not provided any evidence to suggest that the receiver's fees, costs, and expenses were unreasonable or inappropriate. As a result, the court dismissed the application by the law practice to have the receiver's fees, costs, and expenses reviewed.

The final orders of the court were that the application by the law practice to have the receiver's fees, costs, and expenses reviewed be dismissed, and that the receiver be allowed to retain the fees, costs, and expenses claimed. The court also ordered that the law practice pay the receiver's costs of the application, to be taxed on an indemnity basis.

Orders