FRENCH CJ, HAYNE, CRENNAN, KIEFEL, BELL, GAGELER AND KEANE JJ
LEGAL SERVICES BOARD APPELLANT
AND
SIMON GILLESPIE-JONES RESPONDENT
Legal Services Board v Gillespie-Jones
[2013] HCA 35
14 August 2013
M27/2013
ORDER
1.Appeal allowed.
2.Order 1 of the orders made by the Court of Appeal of the Supreme Court of Victoria on 19 April 2012 be set aside, and, in its place, order that:
(a)the appeal from the order made by the County Court of Victoria on 1 April 2011 be allowed; and
(b)paragraphs 1–4 of the order made by the County Court on 1 April 2011 be set aside, and, in their place, order that the appeal from the decision of the Legal Services Board made on 20 October 2009 be dismissed.
On appeal from the Supreme Court of Victoria
Representation
N J Young QC with S R Senathirajah for the appellant (instructed by Legal Services Board)
M F Wheelahan SC with M F Fleming SC and B J McCullagh for the respondent (instructed by Billings Cloak)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Legal Services Board v Gillespie-Jones
Legal practitioners – Legal Practitioners Fidelity Fund ("Fidelity Fund") – Barrister briefed by solicitor to appear for client – Money paid into general trust account by client on account of legal costs – Money misappropriated by solicitor – No finding that client instructed solicitor to pay third parties – Whether barrister entitled to claim against Fidelity Fund for unpaid fees.
Words and phrases – "default", "failure to pay or deliver trust money", "pecuniary loss", "persons for or on whose behalf money is held", "transit money", "trust money".
FRENCH CJ, HAYNE, CRENNAN AND KIEFEL JJ. In 2006, a person charged with criminal offences ("the client") retained Mr Michael Grey ("the solicitor"), who was the principal of the firm Poulton Elliott & Grey, to act for him in connection with forthcoming criminal proceedings. The respondent, Mr Gillespie-Jones ("the barrister"), was briefed by the solicitor to appear for the client in those proceedings. The client made a series of payments to the solicitor on account of his legal costs. Most of the monies supplied were misappropriated by the solicitor. The amount remaining was insufficient to meet the barrister's unpaid fees. The barrister made a claim against the Legal Practitioners Fidelity Fund ("the Fund").
The Fund is maintained by the Legal Services Board ("the Board") under the Legal Profession Act 2004 (Vic) ("the LPA")[1]. Compensation is payable out of the Fund[2] where a claim is allowed under Pt 3.6 of the LPA. A claim may be allowed under that Part where a person establishes that there has been a default which has caused that person pecuniary loss[3]. One circumstance of default is when a law practice fails to pay or deliver trust money received by it, where the failure arises from…
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.
Continue reading Legal Services Board v Gillespie-Jones
Sign in free to access the full text
Details
AGLC
Legal Services Board v Gillespie-Jones [2013] HCA 35
Case
[2013] HCA 35
Decision Date
CaseChat Overview and Summary
The Legal Services Board appealed to the High Court of Australia from a decision of the Court of Appeal of the Supreme Court of Victoria. The appeal concerned a claim made by Mr Gillespie-Jones, a barrister, against the Legal Practitioners Fidelity Fund for unpaid fees. Mr Gillespie-Jones had been retained by a solicitor, Mr Grey, to act for Mr Grey's client in criminal proceedings. The client paid a total of $85,100 to Mr Grey's general trust account on account of legal costs. Mr Grey misappropriated these funds and was subsequently indebted to Mr Gillespie-Jones for $53,610 in fees. The central dispute was whether Mr Gillespie-Jones was entitled to claim these unpaid fees from the Fidelity Fund.
The High Court was required to determine whether Mr Gillespie-Jones, as a barrister briefed by a solicitor, was a "person for or on whose behalf money is held" within the meaning of the relevant legislation, and therefore entitled to claim against the Fidelity Fund for pecuniary loss arising from the solicitor's default. Specifically, the court had to consider whether the funds paid by the client into the solicitor's trust account constituted "trust money" in relation to the barrister, and whether the solicitor's misappropriation amounted to a "default" or "failure to pay or deliver trust money" that would trigger the Fidelity Fund's liability.
The High Court allowed the appeal, holding that Mr Gillespie-Jones was not entitled to claim against the Fidelity Fund. The court reasoned that the client had paid the money to Mr Grey on account of legal costs generally, and there was no finding that the client had instructed Mr Grey to pay or deliver any specific portion of those funds to Mr Gillespie-Jones. The legislation governing the Fidelity Fund was intended to compensate persons who suffered pecuniary loss due to the default of a law practice, but it required that the money be held by the practice for or on behalf of such persons. In this case, the solicitor received the money from the client, and while the client intended it to cover costs for all involved in the defence, there were no specific instructions to pay the barrister directly or to hold funds for the barrister's benefit in a way that would create a claim against the fund. The court found that the solicitor's failure to pay the barrister was a debt owed by the solicitor, not a misappropriation of trust money held for the barrister.
Consequently, the High Court set aside the orders of the Court of Appeal and restored the Legal Services Board's disallowance of Mr Gillespie-Jones's claim. The appeal from the County Court was allowed, and the appeal from the decision of the Legal Services Board was dismissed.
Orders
Orders of the court
1. Appeal allowed.
2. Order 1 of the orders made by the Court of Appeal of the Supreme Court of Victoria on 19 April 2012 be set aside, and, in its place, order that:
(a) the appeal from the order made by the County Court of Victoria on 1 April 2011 be allowed; and
(b) paragraphs 1–4 of the order made by the County Court on 1 April 2011 be set aside, and, in their place, order that the appeal from the decision of the Legal Services Board made on 20 October 2009 be dismissed.
Background
Background to the litigation
The Board now appeals, by special leave, to this Court from the decision of the Court of Appeal. The result is that the ultimate question should be answered in the negative, the appeal should be allowed, and orders should be made having the effect of restoring the Board's disallowance of the claim.Facts Mr Gillespie-Jones was retained by Mr Michael Grey, an Australian legal practitioner engaged in legal practice on his own account in Victoria. The retainer, between December 2006 and April 2007, was to defend a client of Mr Grey. The client was an individual charged with criminal offences. There was no written agreement between Mr Gillespie-Jones and Mr Grey or between the client and either Mr Gillespie-Jones or Mr Grey. Judge Kennedy found that the retainer constituted a contract between Mr Gillespie-Jones and Mr Grey[66]. Implicit in that finding was that Mr Gillespie-Jones agreed to provide legal services to the client in consideration of Mr Grey paying Mr Gillespie-Jones the fair and reasonable value of those legal services when billed to Mr Grey. [66][2011] VCC 223 at [136]. Mr Gillespie-Jones billed Mr Grey $53,610 between December 2006 and April 2007. There is now no dispute between the parties that the amount so billed was the fair and reasonable value of the legal services Mr Gillespie-Jones provided to the client with the result that Mr Grey became indebted to Mr Gillespie-Jones in that amount. Mr Grey received from the client $85,100, paid directly or indirectly between August 2006 and May 2007. The payment was in two main tranches. Before Mr Gillespie-Jones was retained by Mr Grey, the client paid $21,700 to Mr Grey partly in cash and partly by cheque and a barrister's clerk, to whom the client had made a direct payment, refunded $8,400 to Mr Grey. After Mr Gillespie-Jones was retained by Mr Grey, the client paid $55,000 into Mr Grey's general trust account by electronic transfer in discrete amounts of $5,000, each accompanied by the client's contemporaneous written explanation that the transfer was for "Grey & Jones" or "Sjg [that is, Mr Gillespie-Jones] via Grey" or some variant of those two alternatives. Notwithstanding those variations in the method and timing of payment, Judge Kennedy found, in respect of the total amount of $85,100 the client paid to Mr Grey, that the client "was paying on account of any legal costs in relation to his defence, including 'everybody that was to come and help him' in his defence", a category of persons which "might include Mr Grey himself" as well as medical experts to be engaged by Mr Grey[67]. Her Honour specifically found that Mr Grey did not receive any part of the amount paid to him by the client subject to instructions to pay or deliver it to Mr Gillespie-Jones[68]. Those findings accord with the written explanation Mr Gillespie-Jones gave when making his claim against the Fidelity Fund that the client "paid the money to Mr Grey for legal services including disbursements (barristers fees and other out of pocket expenses)". The evidence before Judge Kennedy established that, when paying to Mr Grey, the client did not know what amounts had been sought to be charged by Mr Grey, by Mr Gillespie-Jones, or by any medical expert and that, as at April 2007, the client expected to be repaid some of the money he had paid to Mr Grey because he believed that he had paid Mr Grey more than his actual costs.[67][2011] VCC 223 at [40]-[42], [84], [92], [138].[68][2011] VCC 223 at [89]-[90], [138].
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
FRENCH CJ, HAYNE, CRENNAN AND KIEFEL JJ
BELL, GAGELER AND KEANE JJ
Section 3.3.20(1)(a) provides for a law practice to exercise a lien for legal costs (a term, it will be recalled, which is defined to include disbursements). But a lien does not provide an authorisation to withdraw trust money. Section 3.3.20(1)(b) requires that trust money may only be withdrawn "for payment to the practice's account for legal costs owing to the practice" if the procedures prescribed in the regulations are complied with. Regulation 3.3.34[28] prescribes such procedures. Unless there is a costs agreement (and, it will be recalled, there was no costs agreement in this case) or the money is owed to the practice by way of a reimbursement of money already paid on behalf of a person, an instruction is required from the client authorising the withdrawal[29]. The regulations also require, for a withdrawal, that the law practice requests payment to be made and sends a bill to the client, and that the client does not make an objection to the bill within a specified period[30].[28]Of the Legal Profession Regulations 2005 (Vic).[29]Legal Profession Regulations 2005, reg 3.3.34(3)(a).[30]Legal Profession Regulations 2005, regs 3.3.34(3)(b), 3.3.34(4).The decisions below and issues on the appeal It is convenient to refer first to a matter which is no longer in issue. Section 3.6.1 states the purpose of Pt 3.6 to be to compensate "clients"[31]. The Board, by reference to this section, held that compensation could be paid only to a client of a law practice. Neither the primary judge[32] nor the Court of Appeal[33] accepted that this view was supported by Pt 3.6, read as a whole. They both held that the word "person" in s 3.6.7, which sets out who may make a claim against the Fund, ought to be given its ordinary meaning.[31]Section 3.1.1(2) of the Legal Profession Act 2004 is in similar terms.[32]Gillespie-Jonesv Legal Services Board [2011] VCC 223 at [57]-[58].[33]Legal Services Board v Gillespie-Jones [2012] VSCA 68 at [41]. That construction is plainly correct. The reference to "clients" must be taken to refer to part only of the class of persons who may seek compensation, given that s 3.6.7, the operative provision, contains a different and wider term. That "persons", and not just clients, are to be compensated, if they can establish the matters required by s 3.6.7, is confirmed by: the reference to "persons" as claimants in the Model Provisions[34], upon which Pt 3.6 is based; the wording of s 6.7.16, referred to above[35]; and s 3.6.28.[34]Parliamentary Counsel's Committee, Legal profession—model laws project: Model Provisions, (2004), s 802.[35]At [10]. Section 3.6.28 provides that an associate of a law practice may make a claim under s 3.6.7 if the associate suffers pecuniary loss because of a default of the law practice arising from the act or omission of another associate of the practice. As the Court of Appeal observed[36], it would be difficult to discern a legislative intention to allow innocent associates of a defaulting solicitor to have access to the Fund but not innocent third parties.[36]Legal Services Board v Gillespie-Jones [2012] VSCA 68 at [39].The first issue – compliance with Pt 3.3 procedures
Ratio Decidendi
Legal Principle Established
Established by:
FRENCH CJ, HAYNE, CRENNAN AND KIEFEL JJ,
BELL, GAGELER AND KEANE JJ