Legal Services Board v Werden - [2011] VSC 74

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 8199 of 2009
3607 of 2010

IN THE MATTER of the Sentencing Act 1991
and
IN THE MATTER of the Confiscation Act 1997

BETWEEN:

LEGAL SERVICES BOARD	Plaintiff
v
GABRIEL WERDEN	Defendant

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JUDGE:	BEACH J
WHERE HELD:	Melbourne
DATE OF HEARING:	7 March 2011
DATE OF JUDGMENT:	15 March 2011
CASE MAY BE CITED AS:	Legal Services Board v Werden
MEDIUM NEUTRAL CITATION:	[2011] VSC 74

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CRIMINAL LAW – Theft – Solicitor – Defalcation of trust moneys – Application for compensation – Application by Legal Services Board – Application not made as soon as practicable after conviction –Sentencing Act 1991, s 86.

LEGAL PRACTITIONERS – Solicitor – Defalcation of trust moneys – Breach of trust – Subrogation of the Legal Services Board to the rights and remedies of claimants – Claims not statute barred – LegalPractice Act 1996, ss 208, 211, 217 and 262 – Legal Profession Act 2004, clause 8.7 of Schedule 2 – Limitation of Actions Act 1958, s 21

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S.R. Senathirajah	Legal Services Board
For the Defendant	In person

HIS HONOUR:

Introduction

Gabriel Werden, the defendant, was a solicitor. On 27 October 2006, he was sentenced to a term of imprisonment of five years and ten months (with a non-parole period of three years and four months), having pleaded guilty to various counts of theft, obtaining a financial advantage by deception and having a deficiency in his trust account as a solicitor. The facts underlying the charges that are relevant for present purposes occurred in 1997 and 1998.

The Legal Services Board, the plaintiff, is the successor of the Legal Practice Board. From 12 December 2005, all rights, property and assets that were vested in the Legal Practice Board immediately before that date, became vested in the plaintiff.[1] Prior to 12 December 2005, the Legal Practice Board was responsible for establishing and maintaining a fund called the Legal Practitioners’ Fidelity Fund.[2] Between 1998 and 2001, the Legal Services Board paid various amounts out of the Fidelity Fund in settlement of claims made against the Fidelity Fund arising from defalcations committed by the defendant.
[1]See clause 8.7 of Schedule 2 of the Legal Profession Act 2004.
[2]See s 388 of the Legal Practice Act 1996.

The plaintiff has issued two proceedings against the defendant. In the first proceeding (issued on 7 August 2009), the plaintiff seeks an order pursuant to s 86 of the Sentencing Act 1991 that the defendant pay it compensation in the amount of $623,000 (“the Sentencing Act proceeding”). The amount claimed in the Sentencing Act proceeding is the sum of the amounts paid to the claimants out of the Fidelity Fund in respect of the counts of theft to which the plaintiff pleaded guilty in 2006.

In the second proceeding (issued on 30 June 2010), the plaintiff alleges 11 breaches of trust against the defendant (“the breach of…

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 74
Decision Date: 15 March 2011

CaseChat Overview and Summary

In the Supreme Court of Victoria, the Legal Services Board brought a proceeding against Werden, a former solicitor, concerning defalcation of trust moneys. The Board sought compensation for losses incurred by clients due to Werden's actions and also sought to enforce a pecuniary penalty order made by the Legal Services Commissioner. The central issue before the court was whether the Board's application for compensation was made within the requisite time frame, as stipulated by the Sentencing Act 1991, and whether the Board was entitled to recover the losses under the Legal Practice Act 1996 and the Legal Profession Act 2004.

The court considered whether the Board's application for compensation was made as soon as practicable after Werden's conviction, as required by section 86 of the Sentencing Act 1991. The court found that the application was not made within the requisite time frame, resulting in the failure of the proceeding for compensation under the Sentencing Act. However, the court also found that the Board's claim under the Legal Practice Act was not statute barred and that the Board was subrogated to the rights and remedies of the claimants. The court further held that the Board was entitled to recover the losses under the Legal Profession Act and that the claims were not statute barred under the Limitation of Actions Act 1958.

The court ordered that the proceeding for compensation under the Sentencing Act fail and that the Board was entitled to judgment in the sum of $637,343.57 in the proceeding for breach of trust. This amount represented the total losses suffered by the Board's claimants due to Werden's actions. The court's decision highlights the importance of timely applications for compensation and the Board's ability to recover losses on behalf of clients who have been harmed by the misconduct of a solicitor.

Orders

Orders of the court

(a) the Sentencing Act proceeding fails; and

(b) the plaintiff is entitled to judgment in the sum of $637,343.57 in the breach of trust proceeding.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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