Werden v Legal Services Board
[2012] VSCA 278
•21 November 2012
SUPREME COURT OF VICTORIA
COURT OF APPEAL
| S APCI 2011 0038 | |
| GABRIEL WERDEN | Appellant |
| v | |
| LEGAL SERVICES BOARD | Respondent |
| S APCI 2011 0045 | |
| LEGAL SERVICES BOARD | Appellant |
| v | |
| GABRIEL WERDEN | Respondent |
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| JUDGES | REDLICH and TATE JJA | |
| WHERE HELD | MELBOURNE | |
| DATE OF HEARING | 23 August 2012 | |
| DATE OF JUDGMENT | 21 November 2012 | |
| MEDIUM NEUTRAL CITATION | [2012] VSCA 278 | |
| JUDGMENT APPEALED FROM | [2011] VSC 74 (Beach J) | |
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CRIMES COMPENSATION – Appeal – Solicitor – Defalcation of trust moneys – Subrogation of the Legal Services Board to the rights and remedies of claimants – Application for compensation by Legal Services Board under s 86 of the Sentencing Act 1991 – Whether application for compensation was made as soon as practicable after conviction – Meaning of ‘as soon as practicable’ – Appeal dismissed.
LEGAL PRACTITIONERS – Appeal – Breach of trust – Whether claims for compensation were statute barred – LegalPractice Act1996, ss 208 and 217 – Limitation of Actions Act1958, s 21 – Unrepresented litigant – Procedural fairness – Whether trial judge failed to give adequate assistance to the unrepresented litigant to ensure a fair trial – Whether the Board breached an undertaking not to adduce certain evidence – Appeal dismissed.
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| Appearances: | Counsel | Solicitors |
| For Mr Werden | In person (via videolink) | |
| For the Legal Services Board | Mr J Ruskin QC with Mr S R Senathirajah | Legal Services Board |
REDLICH JA:
This appeal arises out of two proceedings brought by the Legal Services Board (‘the Board’) against Mr Gabriel Werden, a former solicitor who stole money from his clients to finance a gambling habit. Mr Werden pleaded guilty in the Supreme Court to 13 offences, comprising nine counts of theft, three counts of obtaining financial advantage by deception and one count of having a trust account deficiency. The deficiency in his trust account was $1,104,729.11. On 27 October 2006 Teague J sentenced him to a substantial term of imprisonment.[1] The Board sought compensation for payments made out of the Legal Practitioners Fidelity Fund (‘the Fund’) to reimburse Mr Werden’s clients (‘the claimants’) for losses they suffered as a result of Mr Werden’s defalcations.
[1]DPP v Werden [2006] VSC 397.
The Board is a statutory body responsible for the Fund which covers the liabilities of legal practitioners practising in Victoria. From 12 December 2005, all rights, property and assets that were vested in the Board’s predecessor, the Legal Practice Board, became vested in the Board.[2] Pursuant to s 208 of the Legal Practice Act 1996, the claimants were entitled to seek compensation from the Fund arising from Mr Werden’s defalcations.[3] The Legal Practice Board received 19 claims between 1998 and 2001 and made payments totalling approximately $623,000 out of the Fund to these claimants.
[2]See clause 8.7 of Schedule 2 of the Legal Profession Act2004.
[3]Legal Practice Act 1996, repealed by s 8.1.1(2) of the Legal Profession Act 2004. As Mr Werden’s relevant conduct occurred in the period May 1997 to March 1998, the Legal Practice Act 1996 applied in respect of his actions.
On 3 April 2002, the receiver appointed to Mr Werden’s legal practice commenced proceedings against Crown Ltd to recover money stolen from Mr Werden’s clients that he had wagered away at Crown Casino. On 24 September 2004, the receiver settled the claim against Crown Ltd under a settlement agreement which required Crown Ltd to pay a specified amount to the receiver. The agreement contained a confidentiality clause prohibiting any party from disclosing the amount of money paid by Crown Ltd to the receiver. On 3 March 2006 in the Supreme Court of Victoria, Habersberger J ordered the receiver to pay the money received from Crown Ltd to the Legal Practice Board.[4]
[4]Victorian Lawyers RPA Ltd v Werden [2006] VSC 73.
In 2009 the Board commenced two proceedings against Mr Werden. In the first proceeding, commenced on 7 August 2009 (‘the Sentencing Act proceeding’), the Board sought an order pursuant to s 86 of the Sentencing Act 1991 (‘the Sentencing Act’) that Mr Werden pay it compensation in the amount of $623,000 for the payments the Legal Practice Board had made out of the Fund to the claimants.
In the second proceeding commenced on 30 June 2009, the Board sought compensation from Mr Werden for 11 breaches of trust (‘the breach of trust proceeding’). Seven breaches of trust related to matters the subject of the Sentencing Act proceeding. Additional compensation was sought arising from the four remaining breaches of trust totalling $14,343.57. If the Sentencing Act proceeding was unsuccessful, the Board sought the $623,000 claimed in the Sentencing Act proceeding in addition to the sum of $14, 343.57.
On 25 February 2010 Mr Werden applied to Robson J for a stay of the Sentencing Act proceeding as an abuse of process. It was contended by Mr Werden that the proceeding was an abuse of process because the Board had not disclosed the amount of money it received in its settlement agreement from Crown Ltd. Robson J found that the non-disclosure of the settlement sum paid by Crown Ltd did not amount to an abuse of process and dismissed the stay application.[5]
[5]Legal Services Board v Werden [2010] VSC 105.
The trial of the Sentencing Act proceeding and the breach of trust proceeding were heard together by Beach J. Mr Werden was unrepresented. On 15 March 2011, Beach J dismissed the Sentencing Act proceeding and gave judgment to the Board in the breach of trust proceeding. He ordered that Mr Werden pay the Board $637,343.57.
The Board appealed against the decision of Beach J in the Sentencing Act proceeding on the ground that his Honour erred in finding that it did not make its application for compensation as ‘soon as practicable’ under s 86 of the Sentencing Act. Mr Werden appealed the decision of Beach J in the breach of trust proceeding on three grounds. First, that there was a breach of the rules of natural justice as the trial judge failed to provide him with adequate guidance as an unrepresented litigant. Secondly, that the Board was statute barred from bringing the proceeding under s 217(4) of the Legal Practice Act 1996. Thirdly, that the Board breached an undertaking not to adduce evidence that Mr Werden had an interest in money in a particular bank account which was the subject of a restraining order obtained by the Office of Public Prosecutions (‘the OPP’).
The appeal in the Sentencing Act proceeding
It was not in issue that between 1998 and 2001 the Legal Practice Board made payments totalling approximately $623,000 to claimants from the Fund as a consequence of Mr Werden’s defalcations. Further it was not disputed that the Board was entitled to subrogate itself to the extent of those payments to the rights and remedies of each claimant against Mr Werden including the right to seek an order for compensation under s 86(1) of the Sentencing Act.
Section 86 relevantly provided as follows:
86 Compensation order
(1) If a court finds a person guilty of, or convicts a person of, an offence it may, on the application of a person suffering loss or destruction of, or damage to, property as a result of the offence, order the offender to pay any compensation for the loss, destruction or damage (not exceeding the value of the property lost, destroyed or damaged)
(2) If a court decides to make an order under subsection (1) it may in determining the amount and method of payment of the compensation take into account, as far as practicable, the financial circumstances of the offender and the nature of the burden that its payment will impose.
(3) A court is not prevented from making an order under subsection (1) only because it has been unable to find out the financial circumstances of the offender.
(4) In making an order under subsection (1) the court may direct that the compensation be paid by instalments and that in default of payment of any one instalment the whole of the compensation remaining unpaid shall become due and payable.
(5) An order under subsection (1) —
(a) may be made on an application made as soon as practicable after the offender is found guilty, or convicted, of the offence; and
(b) may be made in favour of a person on an application made—
(i) by that person; or
(ii)on that person’s behalf by the Director of Public Prosecutions or (if the sentencing court was the Magistrates’ Court) the informant or police prosecutor.
(6) Nothing in subsection (5)(b)(ii) requires the Director of Public Prosecutions or the informant or police prosecutor (as the case requires) to make an application on behalf of a person.
At the time that Mr Werden was sentenced by Teague J on 27 October 2006, the Board chose not to make an application for compensation because the Board was of the belief that he did not have any assets and would be unable to satisfy any restitution or compensation order. During the sentencing hearing, Mr Werden’s counsel, instructed by Victoria Legal Aid, submitted that Mr Werden was totally impecunious and still in debt to ‘loan sharks’.
On or about 19 March 2009, a solicitor working in the Proceeds of Crime Directorate of the OPP notified the Board that Mr Werden had been released from jail and that the OPP had obtained a restraining order in the Supreme Court restraining money held in a bank account (‘the frozen account’) in which the OPP believed Mr Werden had an interest. The solicitor invited the Board to consider seeking an order for compensation under the Sentencing Act.
It was not until 14 July 2009 that the Board was able to obtain all information and documents that it considered were necessary in order for it to determine whether it should make an application for compensation pursuant to s 86(1) of the Sentencing Act. By originating motion the Board commenced the Sentencing Act
proceeding on 7 August 2009. The question that fell for determination at trial and on this appeal was whether the application satisfied the requirement of s 86(5)(a) that the application be made ‘as soon as practicable’ after Mr Werden’s conviction.
At the hearing before Beach J, the Board did not dispute that its application was made more than 2½ years after Mr Werden was convicted. The Board explained its delay on the basis that at the time of Mr Werden’s sentencing, the information available to it indicated that he was impecunious and would be unlikely to be able to satisfy any compensation order. The Board stated that its practice was not to initiate recovery proceedings or seek orders for payment of compensation against a practitioner, where the available information indicated that a practitioner would be unlikely to be able to satisfy an order for payment. The Board only sought to make an application once the OPP advised it of the existence of the frozen account. The Board contended that having only been notified by the OPP in March 2009, it had made the application for compensation under s 86(1) ‘as soon as practicable’. It submitted that ‘as soon as practicable’ did not mean as soon as possible, but instead referred to what is reasonable in all the circumstances and appropriate to the requirements of the situation.
History and purpose of section 86
At the time of the proceedings before Beach J, s 86(1) was in the same terms as it was when the Sentencing Act 1991 was first enacted. Subsections (1) and (5) were twice amended, initially in 1996 to allow for the enactment of the Victims of Crime Assistance Act 1996. Compensation for ‘pain and suffering’ was included in sub-s (1) and sub-s (5) was amended by the insertion of the words ‘(and, in the case of an application for compensation for pain and suffering, no later than six months)’ after the word ‘practicable.’[6] These words were later removed and the provision returned to its original terms. Pain and suffering compensation was then dealt with under different provisions of the Sentencing Act.[7]
[6]Victims of Crime Assistance Act 1996, s 74.
[7]Victims of Crime Assistance (Amendment) Act2000, s 22(2)(b). See also the explanatory memorandum, cl 22: ‘These amendments are necessary because compensation for pain and suffering must now be made pursuant to Subdivision 1 of Division 2 of Part 4 of the Sentencing Act 1991, rather than pursuant to s 86.’
The explanatory memorandum in relation to s 86 stated:
Clause 86 enables the court to make a compensation order on application as soon as practicable after the offender is found guilty or convicted. …
Section 86 and the suite of provisions in Part 4 of the Sentencing Act facilitate one of the key purposes of the Sentencing Act, that being ‘to ensure that victims of crime receive adequate compensation and restitution.’[8]
[8]Sentencing Act 1991, s 1(i).
The predecessor to s 86(1) was s 92(1) of the Penalties and Sentences Act 1985 and before it, s 546 of the Crimes Act 1958.[9] In Bentley v Furlan,[10] Ashley J (as he then was) discussed the principles that could be drawn from the legislative history of s 86:
First, both ss 84 and 86 of the Sentencing Act, and their predecessors, were originally concerned with property – its restitution, or compensation for its loss, destruction or damage.
Second, the operation of section 84 was confined to restitution of property in cases, colloquially, of theft. But s 86 applied in cases of ‘offences’ generally. The apparent breadth of s 86 in this respect was emphasised by s 546 of the Crimes Act, from which it derived. The earlier section referred to ‘any felony, misdemeanour or summary offence’ ‑ a description replaced in the Penalties Act 1985 and the Sentencing Act 1991 by the word ‘offence’. Its breadth also emerged from a simple comparison of ss 84 and 86 in their 1991 form.
Third, s 546 of the Crimes Act provided a convenient procedure in summary form to enable recovery of compensation for loss or damage suffered. Whether an order should be made was a matter of the court’s discretion.[11]
[9]This section has a long legislative history, going back to s 4 of the Forfeiture for Felony Act 1870 (UK), which provided that the Court may ‘immediately after the conviction of any person for felony, to award any sum of money, not exceeding one hundred pounds, by way of satisfaction or compensation by means of the said felony, the amount so awarded to be deemed as a judgment-debt from the person entitled to receive the same from the person so convicted.’ See discussion in RK v Mirik and Mirik [2009] VSC 14, [34]–[42].
[10](1999) 3 VR 63.
[11](1999) 3 VR 63, 66 [14]–[16].
A summary process
Ashley J was undoubtedly correct that a compensation order under s 546 was contemplated as a ‘convenient procedure in summary form’. In R v Braham,[12] the Full Court (Young CJ, Gowans and Harris JJ) said that s 546 ‘remains a provision designed to enable summary recovery of compensation and not a provision for additional punishment’.[13] Section 546 of the Crimes Act 1958 was distinct from s 86 of the Sentencing Act, in that a compensation order under s 546 had to be sought ‘immediately after a conviction or order’, but despite the absence of the word ‘immediately’ in the current provision, s 86 remains a summary proceeding to be finalised soon after guilt and sentence. As Winneke P said in DPP v Gardner & Coates, s 86 ‘is a summary procedure ancillary to criminal process. In a case of any complexity, it is usually better to leave the parties to their civil remedies’.[14]
[12][1977] VR 104.
[13][1977] VR 104, 108.
[14][2004] VSCA 119, [29]; see also Landolt v R (1992) 63 A Crim R 220, in which Hampel J (Phillips CJ and Vincent J agreeing) said: ‘In my opinion, the object of s 92 (which is now replaced by s 86 of the Sentencing Act 1991 (Vic)) is to enable the court to order compensation to the victim in cases in which both liability to compensation and quantum can be simply determined. The procedure is not designed to require a court sitting in its criminal jurisdiction to engage in what amounts to a contest requiring the examination and cross-examination of witnesses, including the convicted person against whom the compensation order is sought’, at 223.
In R v Monks,[15] Evans J construed s 68(4) of the Sentencing Act 1997 (Tas), which provided that an application for compensation had to be made ‘as soon as practicable after the offender is found guilty or convicted of an offence.’ He described the process contemplated by the provision in these terms:
The general purpose of the legislation is to provide a summary and inexpensive method of compensating a victim for personal injuries or property damage. In an appropriate case, the legislation provides a convenient means for a victim to avoid instituting separate civil proceedings to recover damages. The legislation is not intended to cater for claims involving complicated or extensive inquiry or investigation; R v Kneeshaw [1975] QB 57 at 60, R v Braham [1977] VR 104 at 110-111 and R v Ferrari [1997] QCA 73. If it appears to the court that there is a real issue to be determined, it should decline to make an order and leave the question to be determined
by a civil court in accordance with its normal procedures; Landolt (1992) 63 A Crim R 220 at 223.[16]
[15](2001) A Crim R 324.
[16]Ibid 327.
The restrictions in s 86(8) as to what material a court may have regard in determining whether to make a compensation order also indicate that s 86 applications are to be finalised expediently. Subsection 86(8) provides:
A court must not exercise the powers conferred by this section unless in the opinion of the court the relevant facts sufficiently appear from evidence given at the hearing of the charge or from the available documents, together with admissions made by or on behalf of any person in connection with the proposed exercise of the powers.
The requirement that a court can only exercise its power under s 86 by reference to available documents and evidence given at the hearing provide further support for the view that s 86 was intended to be a summary proceeding brought after a finding at guilt.
Removal of time limit for application for compensation for pain and suffering
In Taylor v Vukovic, Eames J considered the operation of s 86(5), when the section included the 6 month pain and suffering limitation period:
The terms of s 86(5)(a) make it clear, in my opinion, however, that the time period of six months in this case must run from the day on which the plea of guilty was entered, by which plea Mr Vukovic was convicted. In those circumstances the application which is brought here is out of time and accordingly the court has no jurisdiction to deal with the matter.[17]
[17][2000] VSC 29, [5].
Beach J accepted that ‘as soon as practicable’ did not mean ‘as soon as possible.’ Beach J rejected the Board’s submission that it was not a limitation provision in the following terms:
In Taylor v Vukovic,[18] Eames J held that s 86(5)(c) was a limitation provision. I respectfully agree with this conclusion. Whilst the version of s 86(5)(a) considered by Eames J in Taylor contained the words ‘(and, in the case of an application for compensation for pain and suffering, no later than six months)’ after the word ‘practicable’, the subsequent deletion of these words did not change the character of the provision. Section 86(5)(a) has (as the explanatory memorandum relating to it also suggests) always been a provision of limitation, requiring an application to be made as soon as practicable after a finding of guilt or conviction.[19]
[18]Ibid [5].
[19][2011] VSC 74, (“Judgment”), [60].
The view reached by Eames J in Taylor v Vukovic as to the six-month limitation period in relation to a pain and suffering does not advance the question whether the provision in its present form is one of limitation. No periods of time are now specified in the provision. The malleable descriptor ‘as soon as practicable’ dictates when an application can be made.
The Board maintained the submission on appeal that s 86(5)(a) is not a limitation provision, but is permissive. It contended that the provision uses permissive words which requires the phrase ‘as soon as practicable’ be given a liberal construction. It contrasted the use of the word ‘may’ in sub-s (5) with sub-s (8) which provides that ‘the Court must not exercise the powers conferred by this section’ unless sufficient evidence relating to the claim was adduced at the hearing. I reject the contention that the word ‘may’ indicates that ‘as soon as practicable’ is to be given a permissive meaning. It enables the applicant to make an application for compensation within the period defined. The power to make a compensation order may be exercised at the Court’s discretion.[20]
[20]Interpretation of Legislation Act 1984, s 45(1).
A liberal construction as provision has remedial purpose
In support of its submission that a liberal approach to the construction of s 86(5) is required, the Board rightly emphasised the remedial purpose of s 86, designed to compensate victims for any loss suffered, rather than punish the person convicted. In Braham, the Full Court said:
The reference in s 546 to ‘any person suffering loss or destruction of or damage to his property’ and the requirement that a person falling within that description has to make application for an order for the payment of money as compensation, point to the character of the provision as designed to benefit that person rather than to punish the person convicted. That is the view that has been taken historically of the predecessor to this section. In the previous form the reference was to ‘any person aggrieved’ and to his making an application for an ‘award by way of satisfaction or compensation for the loss or damage suffered by the applicant’.[21]
[21][1977] VR 104, 108.
In R v Lovett, Deputy-Assistant Judge Cox stated that the equivalent English provision[22] was ‘was manifestly designed to be in the nature of a remedy for the wrong done to the individual, and to be in addition to, and not as a substitute for, the punishment due to the crime.’[23]
[22]Section 4 of the Forfeiture for Felony Act 1870 (UK).
[23](1870) 11 Cox CC 602, 603.
The Board submits that even if ss (5)(a) is a limitation provision, having regard to the circumstances, the Board’s application for compensation was made as soon as practicable. The term ‘practicable’ connotes utility and as the Board reasonably believed that Mr Werden was impecunious at the time of sentencing, it was inutile to seek a compensation order. Rather the Board sought a compensation order once it was known that there would be some utility in seeking such an order. The Board submits that it would be coherent with the remedial and beneficial purposes of the legislation to construe ‘as soon as practicable’ as requiring an order to be made at a time when there some was utility in such an order.
The Board submitted that a wide range of facts and circumstances can bear upon what is practicable. The Board referred to the decision of Anderson J in Tampion v Chiller, in which his Honour said:
[T]he question is not whether what was done was reasonable and appropriate in the circumstances. For ‘as soon as practicable’ does not mean ‘as soon as possible’; it refers to what is reasonable in all the circumstances and appropriate to the requirements of the situation.[24]
[24][1970] VR 361, 365, citing Lord MacDermitt LCJ in Minister of Agriculture v Kelly [1953] NI 151, 153. This passage was cited with approval by Hayne J in Dickson v Kimber (Unreported, Supreme Court of Victoria, 8 July 1992) and by Smith J in Nicholl v Hunter (1994) 20 MVR 384.
In Monks,[25] Evans J observed that the remedial purpose of the equivalent compensation provision in Tasmania required consideration of all of the surrounding circumstances to the application and dictated that the phrase ‘as soon as practicable’ should be ‘construed generously in favour of claimants’. His Honour said:
The phrase, ‘as soon as practicable’ is intended to impose a time limit on the making of an application and that limit is to be assessed by reference to considerations of reasonable practicality. A determination as to whether or not something has been done as soon as practicable after an occurrence, requires the consideration of all the surrounding circumstances; MMI-CMI Insurance Limited & Zaganite Lake Asphalt Co (Tas) Pty Ltd v Budgen 5/1992 at 3 and McMillan v Territory Insurance Office (1988) 57 NTR 24 at 26–27. The purpose of s 68 is to provide a means for straightforward claims to be dealt with quickly and at minimal cost. It is intended to facilitate claims and, consistent with that intent, I consider that the requirement for claims be made as soon as practicable should be construed generously in favour of claimants. I adopt the following passage from Vision Nominees Pty Ltd v Pangea Resources Ltd (1988) 14 NSWLR 38, Bryson J at 43:
‘The range of facts and circumstances which can bear on what is practicable is a wide range: the choice of that word is a choice away from the narrow, the restrictive and the theoretical. A requirement that a meeting is to be held as soon as practicable is not a requirement that a meeting be held as soon as possible, nor in the least time which can be arranged.’[26]
[25](2001) 122 A Crim R 324.
[26](2001) 122 A Crim R 324, 326.
In Nicholl v Hunter,[27] Smith J referred to the reasons of Anderson J in Tampion v Chiller, in the context of whether a certificate was delivered ‘as soon as practicable’ after a breath sample was analysed. For Anderson J the question of what is ‘as soon as practicable’:
is not one to be determined on some mathematical basis of adding together periods of time taken in relation to the various steps in the process of the breath analysis and the checking of the operation of the instrument. Any such approach is unreal and unwarranted by the language.[28]
[27](Unreported, Supreme Court of Victoria, Smith J, 15 July 1994).
[28][1970] VR 361, 365.
Smith J observed:
This passage appeared in the context of his Honour’s statement that the issue of whether the certificate was delivered as soon as practicable was to be determined in the light of all the circumstances. Thus, it was not a matter of mere mathematics. That having been said, however, mathematics cannot be
completely avoided because it is necessary to analyse the time that elapsed and what occurred in that time.[29]
[29]Nicholl v Hunter (Unreported, Supreme Court of Victoria, Smith J, 15 July 1994), 6.
Beach J acknowledged that what is ‘practicable’ is to be determined by reference to what is reasonable in the circumstances and appropriate to the requirements of the situation.[30]
[30]Judgment, [57].
In order to determine whether to grant a compensation order, courts are required to consider the range of circumstances that bear upon what is practicable, and to apply the criteria of ‘as soon as practicable’ in a manner generous to the claimant.
Was the application made ‘ as soon as practicable’?
Beach J observed that in Monks, Evans J considered that an application made 2½ months after conviction was not made as soon as practicable after the offender had been found guilty. Beach J then said:
Each case must, of course, be considered on its merits. However, in my view, the period of in excess of 2½ years in the present case is excessive, and does not meet the as soon as practicable test. The fact that the circumstances might have disclosed that the defendant was impecunious at the time he pleaded guilty does not justify an applicant under s 86 waiting some indefinite period for assets to be uncovered, before then bringing an application under s 86. There is no basis for any conclusion other than that it was practicable for the plaintiff in this case to make an application under s 86 within a matter of weeks of the defendant’s conviction and sentencing.[31]
[31]Ibid [64].
The Board submitted that the present circumstances were distinguishable from Monks, because in that case, Evans J found that there was nothing to stop the applicant from seeking a compensation order on the day the offender was sentenced.[32]
[32](2001) 122 A Crim R 324, 327.
The Board submitted that of the circumstances, two facts were critical. First, at the time of his conviction in 2006, Mr Werden advised, and the Board believed,
that he was totally without assets. Secondly, in 2009 the Board discovered that Mr Werden did in fact have assets. The Board submitted that knowledge and belief of the offender’s financial circumstances informed the question whether it was practicable to make an application. The Board contended there is a marked difference between not knowing the offender’s financial circumstances and believing that the offender was impecunious. The Board’s delay was founded on a belief in 2006 that seeking a compensation order would have been inutile. If the term of the provision was construed restrictively, the Board contended it would suffer an injustice as it would be unable to obtain compensation in circumstances were there was a justifiable reason for the delay. Mr Werden maintained that only a narrow construction would avoid injustice to him as it would mean that the Board was entitled to wait more than 2½ years until they got the ‘scent of money’ to apply for compensation.
Having regard to the history of s 86 and its purpose which is to enable an application for compensation to be made by a summary process after conviction on confined material, the provision should be construed generously in favour of a claimant. But the words ‘as soon as practicable’ are intended as words of limitation so that claimants do not have an open-ended right to the making of such orders.
A compensation order may be made under s 86 notwithstanding that the financial circumstances of the offender cannot be determined. Subsection (3) contemplates the situation in which the court cannot discover the offender’s financial circumstances. If it is established that an offender is impecunious, the court may in its discretion decline to make the order. The fact that the offender may not be able to satisfy the order does not necessarily preclude its making and does not render it impracticable to seek the order. To seek such an order some years after conviction because it is now believed that the offender may be able to satisfy such an order is not to have made the application as soon as practicable.
There are strong policy reasons for so construing the meaning of ‘as soon as possible.’ A claimant or those who are subrogated to their rights and remedies were not intended to have the capacity by summary process to obtain such orders for inordinate periods after the offender has been convicted. The section does not contemplate claimants waiting to make an application until an offender is in a position to satisfy a compensation order. As Beach J said in his reasons, quoted above, “[t]here is no basis for any conclusion other than that it was practicable for the plaintiff in this case to make an application under s 86 within a matter of weeks of the defendant’s conviction and sentencing”.[33]
[33]Judgment, [64].
The section does not confer upon a claimant like the Board the right to ‘cherry pick’ summary applications on the basis of an offender’s later known financial circumstances, long after conviction. The application for compensation was not made as soon as practicable. I would dismiss the Sentencing Act appeal.
The breach of trust proceeding
Ground 1 – Breach of the rules of natural justice
Under cover of this ground Mr Werden submits that the trial judge failed to draw to his attention that there was no evidence before him capable of supporting a submission which the trial judge knew he intended to make. It was submitted that the trial judge had thus failed to give an unrepresented litigant the minimum assistance required in order to ensure a fair trial.
At the commencement of the trial, counsel for the Board told the trial judge the following:
I have had a brief chat to Mr Werden and he tells me that he is not going to propose to lead any evidence, viva voce evidence. So essentially the matter will proceed by way of submissions and opening and by way of the documents in the court book and in particular the statement of agreed facts and documents.
The ‘statement of agreed facts’ comprised a document filed by the respondent pursuant to an order of Daly AsJ made on 19 October 2010.
At the conclusion of the Board’s submissions, Mr Werden handed up his outline of arguments. The trial judge left the Bench for a short period to read the outline, and upon his return said:
HIS HONOUR: Gentlemen, I am a little confused. I had taken the case to be one that was being run on the basis of a statement of agreed facts and documents which is contained in a court book and a number of other documents which it was proposed to be treated as tendered, if not physically tendered during the course of the hearing. I perhaps address this more to Mr Werden. Mr Werden your document contains many aspects of evidence which are not in the material. Do you propose to call somebody or do you propose to give some evidence or what do you propose to do?
MR WERDEN: Your Honour, I wasn’t proposing to give evidence. The only matter that came about through the submissions of counsel for the plaintiff was perhaps an allegation that money that was subject to being frozen in the public prosecutions application belonged to me back when I was sentenced. I still don’t propose – I was just going to make a comment that it wasn’t mine.
HIS HONOUR: You can make that comment but what I’m specifically troubled by is your document makes reference to moneys from Crown, money that your mother paid three claimants. In the absence of some evidence of these matters, I’m sorry, but I propose to just pay no attention to them. Now, I want to give you the opportunity, if you want, to call some evidence to support any of these matters or what I will do is I will go through your submissions very carefully and rely on those parts of it that are argument based on the evidence that’s before me or submissions of a legal kind. If you are content for me to do that then that is what I will do.
MR WERDEN: I am content, your Honour. The reference of my mother’s payment basically goes to the prejudice I suffer. She has passed away and so that goes to – I can’t prove that that was paid and I don’t propose to ---
HIS HONOUR: As long as we understand ourselves, yes, that’s fine. What else would you like to say, Mr Werden?
MR WERDEN: Yes, your Honour, if I take you through that submission briefly ---
HIS HONOUR: I’ve read it so you don’t need to read it to me.
A little later there was a further exchange between the trial judge and counsel for the Board concerning the payment by Crown.
[COUNSEL FOR THE BOARD]: Then I will hand up some reply submissions because I should add some of these points about payments and Crown were agitated at an earlier hearing before Robson J.
HIS HONOUR: There is no evidence about payment from Crown so you don’t need to attend to that.
In his reasons for judgment Beach J stated that after this discussion, ‘neither party demurred from this course and there was no further debate about the issue.’[34] Mr Werden now submits that following these discussions, he had assumed that his Honour’s statement that he would disregard ‘these matters’ was a reference to the payments made by his mother, not the Crown payments. He proceeded on the basis his Honour would take the Crown payments into account in making his decision.
[34]Judgment, [10].
Issue estoppel
The Board has raised a preliminary objection to this ground. It submits that Mr Werden is estopped from raising this ground of appeal because of the decision of this Court on 9 November 2011. On that date Bongiorno JA and Judd AJA heard an application from Mr Werden, in which he sought leave to adduce further evidence on the hearing of this appeal. He sought to adduce evidence in relation to two matters that he had raised in his outline of argument before Beach J. The first was evidence of the settlement deed between Crown Limited, the former receiver of Mr Werden’s law practice and the Board dated September 2004. The second was evidence of payments made by Mr Werden’s mother to claimants who were also paid by the Board.
Mr Werden’s application was dismissed. Bongiorno JA (with whom Judd AJA agreed), applying the first limb of the test in Clark v Stingel,[35] refused leave to introduce fresh evidence on the appeal as it should be given only if by the exercise of reasonable diligence such evidence could not have been discovered in time to be used in the original trial. His Honour observed:
It is undoubted that the evidence sought to be adduced by the appellant in this case was available to him at trial – he discussed it with the judge, referred to it, and, although invited to do so, declined to give evidence himself or to call any witnesses or tender any documents to establish the facts that he said should have been established.
…
In the circumstances, the appellant in this case fails at the first hurdle. There is no basis upon which this Court should permit the tendering of further evidence on the appeal.[36]
[35][2007] VSCA 292; Orr v Holmes (1948) 76 CLR 632, 635.
[36]Werden v Legal Services Board (Unreported, Victorian Court of Appeal, Bongiorno JA and Judd AJA, 9 November 2011), [18], [21].
The Board submitted that the dismissal of Mr Werden’s application to adduce fresh evidence created an issue estoppel, such that Mr Werden could not now complain that he was denied an opportunity to tender this evidence. The Board’s argument was put two ways: either the Court’s dismissal of Mr Werden’s application created an issue estoppel in respect of ground 1 or, in the alternative, Bongiorno JA’s findings constituted an implicit rejection of the factual basis for ground 1.
I reject the argument that an estoppel arises on either basis. The Court did not decide the issue whether Mr Werden was denied the opportunity to adduce fresh evidence. It only refused leave to file fresh evidence in the appeal. The issue of natural justice was not adjudicated upon. Ground 1 does not depend upon proof of the facts the subject of the fresh evidence application but is concerned with whether he was denied an opportunity which in fairness he should have been afforded to establish those facts.
Duty to unrepresented litigant
A judge has a duty in relation to represented and unrepresented litigants alike to ensure that the trial is conducted fairly and in accordance with law.[37] The duty, often onerous, to assist a self-represented litigant in civil proceedings, requires the judge to provide such guidance to a self-represented litigant as will ensure procedural fairness.[38] Samuels JA described that duty in these terms in Rajski v Citec Corp Pty Ltd:
In my view, the advice and assistance which a litigant in person ought to receive from the court should be limited to that which is necessary to diminish, so far as this is possible, the disadvantage which he or she will ordinarily suffer when faced by a lawyer, and to prevent destruction from the traps which our adversary procedure offers to the unwary and untutored.[39]
[37]MacPherson v The Queen (1981) 147 CLR 512, 523; Dietrich v R (1992) 177 CLR 292.
[38]Minogue v Human Rights and Equal Opportunity Commission (1999) 166 ALR 129, [27] – [29]; Rajski v Citec Corp Pty Ltd (Unreported, NSW Court of Appeal, Samuels JA, 16 June 1986).
[39](Unreported, NSW Court of Appeal, 16 June 1986, Samuels JA), 14.
Bell J in Tomasevic v Travaglini,[40] explained the duty in these terms:
The matters regarding which the judge must assist a self-represented litigant are not limited, for the judge must give such assistance as is necessary to ensure a fair trial. The proper scope of the assistance depends on the particular litigant and the nature of the case. The touchstones are fairness and balance. The assistance may extend to issues concerning substantive legal rights as well as to issues concerning the procedure that will be followed. The Family Court of Australia has enunciated useful guidelines on the performance of the duty.
The judge cannot become the advocate of the self-represented litigant, for the role of the judge is fundamentally different to that of an advocate. Further, the judge must maintain the reality and appearance of judicial neutrality at all times and to all parties, represented and self-represented. The assistance must be proportionate in circumstances — it must ensure a fair trial, not afford an advantage to the self-represented litigant.[41]
[40](2007) 17 VR 100.
[41](2007) 17 VR 100, 130.
The joint judgment of McWhinney v Melbourne Health,[42] after referring to this passage from Tomasevic added:
These propositions are not controversial. It is well understood that a trial judge has certain obligations to assist a self-represented litigant, but those obligations are to be balanced against the requirement that the judge preserve his or her neutrality between the parties.[43]
[42](2011) 31 VR 285.
[43](2011) 31 VR 285, 293.
In oral argument on the appeal, Mr Werden maintained that he understood the statement by Beach J that ‘[i]n the absence of some evidence of these matters, I’m sorry, but I propose to just pay no attention to them’, that his Honour was referring only to the payments made by his mother, and not to the Crown payments. He further asserted that it was his belief at the time that evidence had been tendered to the court relating to the Crown payments. Mr Werden submitted that Beach J failed to adequately explain that he intended to disregard the submissions that depended upon proof of these payments unless Mr Werden could adduce further evidence to support this claim.
The Board contended that as Mr Werden was a practising solicitor for more than seven years, he could not expect the same level of guidance and assistance from the trial judge as a ‘typical’ unrepresented litigant. The guidance to be given to an unrepresented litigant will vary according to the intelligence, experience and personality of the litigant as well as the nature of the issues. Hence the trial judge was entitled to take account of the fact that because of Mr Werden’s legal experience, he was not wholly ignorant of the law. That said, it was also true that he had no trial or advocacy experience and was to that extent at a disadvantage. In discharge of his duty to provide reasonable guidance to Mr Werden, his Honour was required to identify the issues and the state of the evidence in relation to them so as to enable him to consider whether he wished to adduce evidence.
In my view there is no merit in the complaint that there was a breach of the rules of natural justice. Beach J, as fairness dictated, drew to Mr Werden’s attention that there was presently no evidence relating to the payments allegedly made by Crown to the Board or by Mr Werden’s mother directly to three of the claimants. His Honour advised Mr Werden that he would need to provide evidence to support these assertions regarding the Crown payments and the payments made by his mother. He warned him in unequivocal terms that if he could not adduce evidence, he proposed to ignore these assertions. He made plain in his statement to Mr Werden which he subsequently repeated when responding to counsel for the Board, that there was no evidence concerning the payments by Crown to the Board and that he intended to disregard the assertions relating to it. There being no reason for the trial judge to doubt that Mr Werden had understood that he would not be able to pursue certain submissions on the present state of the evidence, no further guidance or assistance was necessary.
Ground 2 – Limitation of Actions Act
Each of the claimants was paid out of the Fund on the basis that the Board would be subrogated to the claimants’ rights against Mr Werden pursuant to s 217 of the Legal Practice Act 1996, which provided:
(1)Subject to section 262, on payment out of the Fidelity Fund of any money in satisfaction of a claim for compensation under this Division, the Board is subrogated to the extent of that payment to the rights and remedies of the claimant against any person in relation to the defalcation.
(2)The Board may exercise its rights and remedies under this section in its own name or in the name of the claimant and must pay into the Fidelity Fund any money paid to it as a result of it doing so.
(3)If the Board brings a proceeding under this section in the name of a claimant, the Board must indemnify the claimant against any costs awarded against the claimant in the proceeding.
(4)Despite anything to the contrary in the Limitation of Actions Act 1958, if, immediately before the subrogation of the Board by virtue of this section to the rights and remedies of a claimant against any person in relation to a defalcation, the period within which the claimant could bring a proceeding in relation to the defalcation had expired or was due to expire within 12 months, the Board may bring a proceeding under this section at any time before the expiration of 2 years after the date of the subrogation.
Mr Werden submits that Beach J erred in law by failing to find that each of the Board’s claims against him were statute barred by virtue of ss 5(1)(a) and 21(1)(a) of the Limitation of Actions Act 1958 (‘the Limitation Act’), which provide:
Section 5
(1) The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued—
(a) actions founded on simple contract (including contract implied in law) or (subject to sub-section (1A)), actions founded on tort including actions for damages for breach of a statutory duty;
Section 21
(1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action—
(a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or
(b) to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use.
Mr Werden’s claim that the Board’s breach of trust proceedings were statute barred was founded on a number of unsound contentions.
First it was submitted that the breach of trust proceeding was not ‘an action by a beneficiary under a trust’, but rather an action ‘by the statutory custodian of a fidelity fund’. This argument was erroneous, as the Board was subrogated to the rights and remedies of the claimants, which included the right to bring a proceeding in respect of the claimants’ rights as beneficiaries under the trust. Section 21(1)(a) of the Limitations Act, provided that no period of limitation applied. The Board by right of subrogation conferred by s 271(1) of the Legal Practice Act 1996 was entitled to the benefit of s 21(1)(a).
Section 217(4) affords the Board a further two years to bring a proceeding where a right of subrogation arose and where the period within which the claimant could bring a proceeding had expired or was due to expire within 12 months. Mr Werden argued that s 217(4) of the Legal Practice Act 1996 applied and that in drafting it Parliament must have intended that s 21(1) of the Limitations Act have no application. Mr Werden submitted that if s 21(1) of the Limitations Act applied, thereby providing that no period of limitation applied to the Board bringing an action against Mr Werden in the breach of trust proceeding, s 217(4) of the Legal Practice Act 1996 ‘would have no work to do’. He contended that s 217(4) requires that a limitation period apply to a breach of trust proceeding brought by the Board by way of subrogation and that under this provision the limitation period had expired.
Two provisions may exist which cover the same conduct. Rules of statutory construction would not ordinarily produce the outcome that one provision, by implication, must be construed as meaning the other provision has no operation. In the present context, there is ample scope for both provisions to operate without the need for such an implication.
The right to subrogation conferred by s 217 is not necessarily confined to defalcations giving rise to a breach of trust. Under s 208(1) of the Legal Practice Act 1996, the Fund ‘is held, and is to be applied, by the Board for the purpose of compensating persons who suffer pecuniary loss from a defalcation.’ Section 208 applies ‘to trust money or other property’. Claimants can therefore make claims on the Fund for defalcations relating to trust money, but also to other types of defalcation.[44]
[44]The definition of ‘defalcation’ in s 3 of the Legal Practice Act 1996 includes, inter alia, ‘an offence under Division 2 of Part I of the Crimes Act 1958 in relation to any money or other property’, meaning that ‘defalcation’ could also encompass other offences unrelated to trust money, such as s 87 of the Crimes Act 1958, blackmail.
Even in cases of breach of trust, Beach J identified two other circumstances in which s 217(4) could apply, notwithstanding the application of s 21(1):[45]
First, there may be cases where a claimant’s claim against the relevant defendant is governed by the law of a forum outside Victoria.[46] Secondly, there may be cases where the alleged fraud is committed by a solicitor’s agent, but the solicitor is not party or privy to the fraud – having no knowledge of the fraud, and not taking part in it, and not deriving any benefit from it. In such circumstances, a claim might validly be made against the Fidelity Fund, without s 21(1) having any application to a subsequent action in, say, negligence against the solicitor (for example, if there was negligence on the part of the solicitor which put the agent in a position to perpetrate the fraud).[47]
[45]Judgment, [99].
[46]See generally John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 and Regie Nationale Des Usines Renault SA & Anor v Zhang (2002) 210 CLR 491; and see further ss 63C and 208(2A) of the Legal Practice Act1996 (noting the commencing words of s 208(2A) ‘Without limiting sub-section (1) …’).
[47]See Thorne v Heard [1894] 1 Ch 599 (Court of Appeal), 608 (Kay LJ). See also Thorne v Heard [1895] AC 495 (Privy Council), 503 (Lord Herschell LC).
It is apparent that s 217(4) will ‘have work to do’ in the circumstances where s 21(1) of the Limitation Act does not apply. Beach J’s examples are merely amplifications of the broad proposition that s 217(4) may apply in many circumstances in which s 21(1) of the Limitations Act does not.
This ground of appeal is not made out.
Ground 3 – Breach of undertaking
The third ground of appeal arises from a chain of emails between the parties. Mr Werden contends that the Board gave him an assurance that it would not adduce any evidence in relation to the funds frozen by the OPP in a bank account in which Mr Werden was believed to have an interest.
On 17 February 2011, Mr Geoffrey Coates, the Manager of Compliance, Legal & Policy at the Board, emailed a copy of the Board’s Statement of Agreed Facts to Mr Werden, with the following note attached:
Please find enclosed a draft statement for your consideration. Could you read, sign and return to us as soon as possible and we will then sign and file them.
Mr Werden replied the following day:
Hi Amy,
Thank you for your email. As discussed my only concerns are as follows:
1. Subrogation is not admitted but I am happy to amend the statement to say in respect to each claim words to the effect that …. x agreed to subrogate …. as per the agreements signed by the claimant and not that x subrogated.
2. Whilst I am happy to accept the last few paragraphs relating to my financial situation and the Board’s reasoning to not proceed with a s 86 claim, if it is the Board’s intention to lead evidence that my financial situation was not as believed at the time of sentencing or that it has improved now, I reserve my right to lead evidence that this was not the case, the money frozen and to be determined in the exclusion application is and was never mine and rely upon documents as set out in The Affidavit of Documents filed.
Thank you
Gabriel
On Monday 21 February 2011, Amy Castos, Senior Lawyer for the Board responded to Mr Werden’s email:
Dear Gabriel,
I refer to the above matter and to the email correspondence below.
Please find attached amended Statement of Agreed Facts and Documents for your consideration. I would be grateful if you would sign and return the document to me as soon as possible so that it may be filed in the Supreme Court.
I confirm that the issues that you have raised in point 2 of your email are not issues in dispute in this proceeding and accordingly, the Board will not be adducing any evidence in respect of them.
Kind regards
Amy Castos
What precisely was agreed to is not free of ambiguity. But it is clear that the Board adduced evidence of the frozen accounts in the Sentencing Act proceeding in order to explain why it was now making an application for compensation but had not done so at an earlier stage. Arguably Mr Werden accepted in his email that he would not seek to challenge evidence of the frozen account for the purpose of the Board explaining its position in the Sentencing Act proceeding. On one view, the parties agreed that the Board could lead such evidence for that limited purpose. Seen in that light Ms Castos’ remark that ‘the Board will not be adducing any evidence’ in respect of the frozen account could be seen as amounting to agreement that it would not seek to prove that he did have an interest in that account.
Mr Werden submits that he was unfairly prejudiced by the Board breaching the specific undertaking made in the email by making submissions in respect of evidence it agreed it would not rely upon in the statement of agreed facts. Mr Werden further submits that as a matter of fairness, as he was unable to lead evidence that the money in the frozen account does not belong to him, the Board should also be shut out from presenting evidence that the money in the account was his.
The monies in the frozen account assumed no importance in the reasons of Beach J. The bank account was of no relevance to the breach of trust proceeding. At
least in that proceeding the Board did not seek to prove that Mr Werden had any interest in the funds in the frozen account.
Ground 3 fails.
Mr Werden’s appeal must be dismissed.
TATE JA:
I agree with Redlich JA.
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