Legal Services Board v Gillespie-Jones

[2013] HCATrans 53

Replacement Transcript

[2013] HCATrans 053

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne       No M46 of 2012

B e t w e e n -

LEGAL SERVICES BOARD

Applicant

and

SIMON GILLESPIE-JONES

Respondent

Application for special leave to appeal

FRENCH CJ
GAGELER J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 15 MARCH 2013, AT 2.03 PM

Copyright in the High Court of Australia

MR N.J. YOUNG, QC:   May it please the Court, I appear for the applicant with MR S.R. SENATHIRAJAH.  (instructed by Legal Services Board)

MR M.F. FLEMING, SC:   May it please the Court, I appear with my learned friend, MR B.J. McCULLAGH, for the respondent.  (instructed by Billings Cloak)

FRENCH CJ:   Mr Fleming, we might be assisted to hear from you first, I think, as to why special leave should not be granted.

MR FLEMING:   If the Court pleases, we say that there are five summary reasons why special leave should not be granted.  First, we say that the Court of Appeal’s construction of Part 3.6 of the Act and the definition of “trust money” in section 3.3.2 as extending to a Quistclose trust is correct.

Secondly, we say that although the applicant contends that the court erred in determining that the client had created a Quistclose trust in favour of the respondent barrister, in relation to moneys provided by the client to a solicitor for inter alia a solicitor’s future services; we contend that the court did not so err.  But regardless of that, we say that the court’s exposition of the ingredients for such a trust was conventionally stated.  Accordingly, this proceeding does not necessitate the grant of special leave in order to clarify or restate the principles giving rise to a Quistclose trust.

Third, we say in any event, whether there was such a trust dependent upon the application of uncontroversial principles to the specific and distinctive facts of this case, so the inferring of a Quistclose trust relationship here being dependent upon the particular facts of the case makes this matter inappropriate for the grant of special leave.

GAGELER J:   How are the facts of this case any different from any other case where a solicitor gets money up front?

MR FLEMING:   The specific facts would go to establish the nature of the purpose, and the way the purpose is inferred, presumably.  There would be a range of instances, perhaps, in which a solicitor might be putting funds for the future incurring of a barrister’s fees.  In this case, the court relied on a particular matrix of circumstances which included, for example, the electronic transfer of funds which were impressed, if you like, with a specific reference to the barrister’s name, at least in some of the instances, a reference to these funds had been provided to that barrister via the solicitor.  So the inferring of the relationship in this case, we would say, is most likely to be dependent on facts such as these, which show how the purpose in this case is able to be identified and why it gives rise to a trust in this circumstance where it might not in another.

Fourthly, your Honour, we say that the court’s approach to the proper construction of the Part 3.6 scheme of compensation by having regard to the context provided by Part 3.3, particularly section 3.3.1, led only to the court holding that the claimant be able to show that the trust money was held for and on his behalf, and not that the claimant’s relevant interest was required to be interpreted “as limited to legal or equitable beneficial interests.”  That is paragraph 53 of the court’s decision.  Although the court then went on to say that the facts as found:

appears to us to imply that the relationship thereby established was a Quistclose trust creating an interest by the respondent in the trust money –

That is at paragraph 55.  Properly understood, we say, the court was only describing the claimant’s interest that it inferred from those facts, which is to say, the Quistclose trust interest.  It was not saying that any such trust interest, or any other trust interest, was necessary to show that a particular claimant’s interest in the trust fund be held for or on his behalf.  The court’s limitation merely required that the facts as found be capable of demonstrating the amount the subject of the compensation claim had been trust money held for or on his behalf.  The court was so satisfied.

So the discussion about whether or not that interest amounted to a particular type of interest – in this case, as the court went on to say, a Quistclose trust interest – was additional elaboration, but not dispositive, not necessary to the reasoning process construing the statutory requirements of the scheme of compensation.  Analysed in that fashion, we say, the court’s application of the found facts to Quistclose trust principles may be seen as obiter dicta and not necessary to the disposition of the appeal.

It may be said then that to the extent the applicant seeks to agitate an appeal in this matter to consider the proper requirements for the establishment of Quistclose trust, this matter would not be a proper vehicle as the appeal would be likely, or at least may be likely, to be resolved by answering the true question, which is “Whether on the facts as found, was it open to infer the claimant’s interest in the amount claimed as compensation could constitute an amount held for and on his behalf within the meaning of section 3.3.1?”  That is what we say was the dispositive holding of the Court of Appeal.

FRENCH CJ:   One pathway to that is the finding of the Quistclose trust, but you say not the only pathway?

MR FLEMING:   Yes.  What the court does, they are building on what her Honour the learned primary judge did.  She did not feel it was necessary to establish whether or not my client had a trust interest or any other kind of interest.  All she felt she had to do was properly construe the entitling provision, and the definition of defaults to which the part applies, and had to construe what the statutory phrase in the Act “pecuniary loss” meant.  She felt, having done that, and having found facts and applied them to those construed elements for entitlement, it was not necessary for her to go on beyond that point.  So she found that there was a loss that arose out of the default without having to go any further.

The Court of Appeal did go further.  They did not say she was wrong, and that is interesting, we would say, with respect.  They did not say she was wrong.  They upheld what she did, but they said they introduced a new limitation which she had not identified, which is this limitation that derives from Part 3.3, and in particular section 3.3.1, and they held, construing the entitlement scheme in the light of that context, they said provided for the definition of the trust moneys in 3.3.

GAGELER J:   So is this a submission that the Court of Appeal was wrong on the construction of the Act?

MR FLEMING:   No, not at all.  We say that they correctly construed that limitation.  We accept that and our friends, I think we understand them as accepting that that construction was right, but there was this additional limitation that the Court of Appeal had found that you do not merely apply the language of the entitling provision.  You must understand the entitling provision in the light of the context at 3.3.1, and that the limitation they then bring in is that the funds that the claimant barrister is seeking must be by way of compensation; must be sums that can be seen to be amounts held for and on behalf of the barrister in the solicitor’s trust fund. 

They then go on to say that that statutory phrase “for and on behalf of” is a protean concept and does not require legal and beneficial interests, and there are plenty of authorities on that, they say, and we do not understand our friends to quarrel with any of that legal analysis.  So what it really comes down to is on the facts as found, did the claimant barrister’s claim fall within that limitation?  The amounts he was seeking were sums that were properly understood and capable of being characterised as held for and on his behalf within the meaning of 3.3.1.  That did not require the Court of Appeal, we would say, to go on, but they did, and we say, unnecessarily.  They did not have to go on, but they did, and they went on to talk about and characterise what that interest was, the Quistclose trust.

FRENCH CJ:   Well you say two parts to the one answer?

MR FLEMING:   Indeed.

FRENCH CJ:   They are both ratio, are they not?

MR FLEMING:   We would say not, your Honour.  We would say that the only ratio part is the part that says the entitlement provisions have this additional limitation, and that is a construction point.  That is part of the ratio.  The second part of the ratio is on the facts as found, and they are uncontroversial, they apply to that limitation.  The barrister’s claim fits within it.  That is the ratio.

FRENCH CJ:   Do you accept that there is a matter of some general importance that a payment of this kind is found to be impressed with a trust relationship?

MR FLEMING:   Can we say this about – we have made some points about this ‑ ‑ ‑

FRENCH CJ:   I know.  You have embedded your response to that, in a sense, by reference to the particular statutory framework, and I understand your point as going to what is necessary for the disposition of this case.

MR FLEMING:   There is a public interest we would obviously accept that, in the correct administration of the Victorian scheme.  We would have to accept that.  What we do not accept is the applicant’s contention that the reasoning and decision involves construction of statutory provisions that are materially identical to the provisions of the legal profession and national law, the proposed national model legislation for the regulation of the profession across Australia.  We would see that contention as premature and hypothetical, and so far as we are aware, that proposed ‑ ‑ ‑

FRENCH CJ:   Well, I think at this stage, as I understand it, that proposal is alive and well only in New South Wales and Victoria?

MR FLEMING:   As of, I think, yesterday, when we looked on the New South Wales Law Institute website, they are saying the national legal profession reform is progressing in New South Wales and Victoria, notwithstanding the decision of the other States and Territories not to commit ‑ ‑ ‑

FRENCH CJ:   I do not think you need to worry about that swinging disposition of this application.

MR FLEMING:   Yes.  We would say that there has been a recession, if you like, of the value of that particular submission since our friend’s affidavit was prepared.  We do concede that there is obviously a public interest in the proper administration of the scheme, and the scheme administrators have an interest in that.  Of course, the precedential consequence of an appeal, though, being of interest of them is of no interest to my client as a private barrister, and we would see ‑ ‑ ‑

FRENCH CJ:   This is what you have put in paragraph 37, I think, of your ‑ ‑ ‑

MR FLEMING:   Yes.  If the Court were minded to give leave to appeal, we would wish to address the Court on ‑ ‑ ‑

FRENCH CJ:   Have you had a response to that from the other side?

MR FLEMING:   What we have sought is not being offered to us, no.  We were offered less than that, and rejected it.  We would say that we are in a vulnerable position, obviously.  The Costs Fund Act would not provide sufficient recompense.  If leave were to be granted and our client was to lose, it would not come near looking after his legal costs. 

Since this application seems to be sought essentially for precedential purposes of which we have no real interest, and an amount of money is in fact insignificant, having regard to the fact that the client is the innocent victim of a solicitor’s default, that the County Court upheld his claim and it was supported on appeal by a unanimous Court of Appeal, in justice he should not be exposed to the risk of costs, we would say, if the Court pleases.  If leave were to be given, it ought to be given on a condition that his party/party costs of here and of an appeal be paid by the successful applicant, and the costs orders below not be disturbed.

FRENCH CJ:   Thank you, Mr Fleming.

MR FLEMING:   If the Court pleases.

FRENCH CJ:   Mr Young, we would be assisted if you could just address us on the question of the condition which is sought by the respondent.

MR YOUNG:   Yes, your Honour.  It is correct that we offered something less, and the difference related to some of the costs below, but I have instructions to say we would submit to a condition as per paragraph 37.

FRENCH CJ:   Thank you.  All right, subject to the condition sought by the respondent, that the respondent’s costs of the special leave application and the appeal be paid by the applicant regardless of the outcome on appeal, and that the costs orders already made by the primary judge and the Court of Appeal in favour of the respondent not be disturbed, there will be a grant of special leave.  That would not take more than half a day to a day, I would think?

MR YOUNG:   Certainly less than a day, your Honour, yes.

FRENCH CJ:   Yes.  I just like to be sure.  Yes, thank you, Mr Fleming.

AT 2.17 PM THE MATTER WAS CONCLUDED