Palmer and Anor as Trustees of the J B and v M Palmer Superannuation Fund v Wootton and Ors T/as Levis Stace and Cooper (a Firm) and The Solicitors' Trust

[2002] TASSC 106

CITATION:Palmer & Anor as Trustees of the J B & V M Palmer Superannuation Fund v Wootton & Ors T/as Levis Stace & Cooper (a Firm) and The Solicitors' Trust [2002] TASSC 106

PARTIES: PALMER, John Blair
PALMER, Veronica Myra

AS TRUSTEES OF THE J B & V M PALMER

SUPERANNUATION FUND
v
WOOTTON, Leon Roydon
CHURCH, Catherine Sue
WILLIAMS, Ronald David
TRADING AS LEVIS STACE & COOPER (A FIRM)
THE SOLICITORS' TRUST

TITLE OF COURT:  SUPREME COURT OF TASMANIA
JURISDICTION:  ORIGINAL
FILE NO/S:  M326/2002
DELIVERED ON:  28 November 2002
DELIVERED AT:  Hobart
HEARING DATE:  18 November 2002
JUDGMENT OF:  Cox CJ

CATCHWORDS:

REPRESENTATION:

Counsel:
           Applicants:  R E Hudson
           1st & 2nd Respondents:                M E O'Farrell
           3rd Respondent:  M F Daly
           4th Respondent:  A D Davis
Solicitors:
           Applicants:  Butler McIntyre & Butler
           1st & 2nd Respondents:                Levis Stace & Cooper
           3rd Respondent:  Rae & Partners
           4th Respondent:  Tony David

Judgment Number: [2002] TASSC 106
Number of paragraphs: 5

Serial No 106/2002
File No M326/2002

JOHN BLAIR PALMER & VERONICA MYRA PALMER
AS TRUSTEES OF THE J B & V M PALMER SUPERANNUATION FUND
v LEON ROYDON WOOTTON, CATHERINE SUE CHURCH &
RONALD DAVID WILLIAMS TRADING AS
LEVIS STACE & COOPER (A FIRM) &
THE SOLICITORS' TRUST

REASONS FOR JUDGMENT COX CJ
28 November 2002

By originating application filed on 1 October 2002, the applicants sought an order pursuant to the Legal Profession Act 1993 ("the Act"), s111(1)(b), that the first named respondents ("the firm") be declared to be in default, and one pursuant to the Act, s111(2), that a Court fund be established.

In their affidavit in support, they claim that a sum of $150,000 of which they are trustees, was misappropriated by the respondent Williams at a time when he, Mr Wootton and Ms Church were the sole members of the firm. Mr O'Farrell, who appears for Mr Wootton and Ms Church, opposes the making of any order at this stage because other claims of similar defaults by Mr Williams have been made involving an apparent loss in the order of $M1.25 - $M1.50 suffered by over 40 other clients. These alleged misappropriations occurred at different times when the firm was variously constituted. The Law Society of Tasmania, by originating application issued a fortnight before the present application, sought similar orders against respondents who include all previous partners of the firm since the first default is alleged to have taken place.

Mr O'Farrell submits that because of the complexity of the investigation it would be preferable not to make any of the orders sought in the present application at this stage and that it should proceed under the umbrella of the Society's proceedings. He concedes the present applicants have a "legal right" to a default order (by which I understand him to mean that the conditions necessary for the making of such an order have been shown to exist) but submits that the making of the order is discretionary and that the court should not make it in the present circumstances. These circumstances include the possibility that other clients affected by misappropriations might make similar applications leading to a proliferation of proceedings when the Law Society's application is designed to ensure that all clients affected have their claims processed in an orderly and cost effective way.

Although the Solicitors' Trust is obliged under the Act, s111(6), to pay into a Court fund such amount from the Guarantee Fund as is sufficient to meet the clients' claims there specified, it has a power under s111(6B) to determine the time or times at which the amounts it is obliged to pay are to be paid. Under subs(6C) it may take into account (inter alia) any other known fiduciary default and the likely claims resulting from it and the amount of any other Court fund and any claims made or likely to be made on it. In the present circumstances there is every likelihood that payments into the fund by the Solicitors' Trust will be guided by the progress of the Law Society's application on behalf of all known claimants and that the present applicants will gain no advantage over them by the making of the orders sought.

In my view, the proper course is to adjourn the further hearing of the present application pending the outcome of the Law Society's proceedings. So as to enable the applicants to retain, if not some control over, at least some opportunity to be heard should those proceedings not be pursued with diligence, or should other circumstances arise making review of this order appropriate, I will reserve liberty to apply.

CaseChat Overview and Summary

In this case, the applicants, John Blair Palmer and Veronica Myra Palmer, as trustees of the J B & V M Palmer Superannuation Fund, brought an originating application against Leon Roydon Wootton, Catherine Sue Church, Ronald David Williams, trading as Levis Stace & Cooper (a firm), and The Solicitors' Trust. The applicants sought a declaration that the firm was in default under the Legal Profession Act 1993 and the establishment of a Court fund. The applicants alleged that $150,000 of the superannuation fund had been misappropriated by Williams while he was a member of the firm. The respondents, represented by different counsel, opposed the application on the grounds that the matter should proceed under the umbrella of a similar application made by the Law Society of Tasmania, which sought similar orders for over 40 other clients.

The legal issues before the court were whether to make the orders sought by the applicants and, if so, whether to adjourn the hearing of the application pending the outcome of the Law Society's proceedings. The respondents argued that the court should not make the orders sought by the applicants because of the complexity of the investigation and the possibility of a proliferation of proceedings. The applicants argued that they had a legal right to the orders sought, and that the making of such orders was not discretionary. The court had to consider the relevant provisions of the Legal Profession Act 1993, including the power of the Solicitors' Trust to determine the time or times at which payments into a Court fund are to be made.

The court found that the respondents were correct in their submission that the making of the orders sought by the applicants was discretionary, and that the court should not make them in the present circumstances. The court held that it was preferable for the present application to proceed under the umbrella of the Law Society's application to ensure that all clients affected by the misappropriations had their claims processed in an orderly and cost-effective way. The court also held that there was every likelihood that payments into the Court fund by the Solicitors' Trust would be guided by the progress of the Law Society's application and that the applicants would gain no advantage over the other claimants by the making of the orders sought. The court therefore adjourned the further hearing of the present application pending the outcome of the Law Society's proceedings, and reserved liberty to the applicants to apply if circumstances arose making review of the order appropriate.

This case highlights the importance of considering the broader context of a legal dispute, including the interests of other affected parties and the efficiency of the legal system, when making discretionary orders under statute. The court's decision to adjourn the hearing of the present application pending the outcome of the Law Society's proceedings ensured that all affected clients had their claims processed in an orderly and cost-effective way, while also allowing the applicants to retain some opportunity to be heard should those proceedings not be pursued with diligence or should other circumstances arise making review of the order appropriate.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established