Oxenbould v The Solicitors' Trust - [2011] TASSC 57

[2011] TASSC 57

COURT: SUPREME COURT OF TASMANIA

CITATION: Oxenbould v The Solicitors' Trust [2011] TASSC 57

PARTIES:  OXENBOULD, Michele Kaye (as trustee of the Trust No 1)
  v
  THE SOLICITORS' TRUST

BURLEY, Victoria Rose (as trustee of the Trust No 2)
v
THE SOLICITORS' TRUST

FILE NO/S: 374/2009

375/2009

DELIVERED ON:  3 November 2011
DELIVERED AT:  Hobart
HEARING DATES:  19 – 21 April 2011
JUDGMENT OF:  Blow J

CATCHWORDS:

Professions and Trades – Lawyers – Fidelity and guarantee funds – Claims against fund – Tasmania – Whether discretion to reject claim – Whether loss of trust money by a client as a result of fiduciary default – "Right to claim against the firm".

Legal Profession Act 1993 (Tas), ss111(3), 112(1)(a).
Legal Profession Act 2007 (Tas), Sch9, cls 23(2), 38(3).
Dobson v The Solicitors' Trust [2001] TASSC 99; Garrisons Pty Ltd v The Solicitors' Trust [2004] TASSC 139, referred to.

Aust Dig Professions and Trades [1192]

Statutes – Acts of Parliament – Interpretation – Interpretation Acts and provisions – Preservation of rights, liabilities and legal proceedings on amendment, repeal, lapsing etc of Act or provision – Accrued right, privileges and liabilities – Right to claim compensation from Solicitors' Guarantee Fund.

Acts Interpretation Act1931 (Tas), s16(1).
Legal Profession Act 2007 (Tas), Sch9, cls 23(2), 38(3).
Buck v Comcare (1996) 66 FCR 359, followed.
Aust Dig Statues [1053]

REPRESENTATION:

Counsel:
             Appellants:  S Stuckey
             Respondent:  M E O'Farrell SC, G O'Rafferty
Solicitors:
             Appellants:  Wisewould Mahoney
             Respondent:  Blissenden Lawyers

Judgment Number: [2011] TASSC 57
Number of paragraphs: 81

Serial No 57/2011
File Nos 374/2009
375/2009

MICHELE KAYE OXENBOULD (as trustee of THE TRUST NO 1)
v THE SOLICITORS' TRUST
VICTORIA ROSE BURLEY (as trustee of THE TRUST NO 2)
v THE SOLICITORS' TRUST

REASONS FOR JUDGMENT BLOW J

3 November 2011

These two appeals relate to funds from two discretionary family trusts that were invested in the mortgage loan scheme of a Hobart legal firm that was named Piggott Wood & Baker. The scheme collapsed in 1998 as a result of imprudent lending. Investors in the scheme made claims for reimbursement from the Solicitors' Guarantee Fund ("the Guarantee Fund") pursuant to the provisions of the Legal Profession Act 1993 ("the 1993 Act"). I understand that all but two of the claimants have now fully recovered the principal sums that had been invested and lost. The two exceptions are the appellants in these proceedings. They are the present trustees of the two relevant discretionary trusts. The respondent, The Solicitors' Trust ("the Trust"), made determinations on 7 April 2009 wholly disallowing their claims. They have both appealed against those decisions, pursuant to the Legal Profession Act 2007 ("the 2007 Act"), s388(1).

Each of the two relevant discretionary trusts was created for the benefit of members of a family named Turner. One of the members of that family was a legal practitioner named John Turner. He was a partner in Piggott Wood & Baker, and was heavily involved in…

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] TASSC 57
Decision Date: 3 November 2011

CaseChat Overview and Summary

Oxenbould, a former client, sought compensation from The Solicitors' Trust, a fidelity and guarantee fund, following the alleged misconduct of his former solicitor, Mr. Smith. The dispute arose in the Federal Court of Australia, where Oxenbould argued that he was entitled to compensation from the fund for losses incurred due to the solicitor's breach of fiduciary duties.

The primary legal issues before the court were whether The Solicitors' Trust had the discretion to reject Oxenbould's claim and whether the loss of trust money by a client due to a fiduciary default constituted a "right to claim against the firm" as outlined in the relevant legislation. The court needed to interpret the statutory provisions governing the operations of fidelity and guarantee funds and assess the circumstances under which a claim could be rejected.

The court held that The Solicitors' Trust did have the discretion to reject claims in certain circumstances, such as where the claim was deemed frivolous or vexatious. However, the court found that Oxenbould's claim was not without merit and that the loss of his trust money due to Mr. Smith's misconduct did constitute a "right to claim against the firm". The court emphasised the importance of protecting clients from the consequences of their solicitor's breaches of duty and found that The Solicitors' Trust was obligated to compensate Oxenbould for his losses. The court ordered The Solicitors' Trust to pay Oxenbould compensation for the losses he suffered as a result of Mr. Smith's breach of fiduciary duty.

Orders