Jacups v The Fidelity Fund Management Committee of the Law Society of NSW

Supreme Court of NSW|2022-09-21|Before: Griffiths AJ

Introduction

This is an appeal under s 247 of the Legal Profession Uniform Law (NSW) (Uniform Law), which was given effect to by the Legal Profession Uniform Law Application Act 2014 (NSW) (Application Act). The appeal by the plaintiff (Mr Jacups) relates to a decision dated 21 May 2021 of the Fidelity Fund Management Committee (Committee) of the Law Society (the first and second defendants respectively). The Committee (acting under a delegation pursuant to s 119 of the Application Act) wholly disallowed Mr Jacups' claim on the Fidelity Fund. The claim related to the conduct of Mr Jacups' former solicitor, Mr Douglas Knaggs, who died in 2016.
The Committee treated Mr Jacups' claim as one for $79,900, which he alleged was received by Mr Knaggs as trust money in June 2003. Mr Knaggs was then representing Mr Jacups following the breakdown of Mr Jacups' relationship with his then partner (Ms Annette Tesoriero).

Relevant legislative provisions identified and summarised

The identification of the correct law to apply is complicated by the fact that the alleged defaults by Mr Knaggs occurred between 2003 and 2004 (when the 1987 Act was in force), but no claim was made on the Fidelity Fund until 2020 (by which time the Uniform Law was in force).
For the following reasons, the relevant provisions of the Uniform Law apply to Mr Jacups' claim as opposed to the 1987 Act or its successor, the Legal Profession Act 2004 (NSW) (2004 Act).
Under s 80 of the 1987 Act, a person who allegedly suffered pecuniary loss as a result of a "failure to account" (as defined in s 79A(1)) could make a claim on the Fidelity Fund established under the 1987 Act. Relevantly, a "failure to account" involved a dishonest "failure by a solicitor to account for, pay or deliver money … received by, or entrusted to, the solicitor … in the course of the solicitor's practice". The requirement of dishonesty was satisfied if the failure to account arose from an act or omission (a) in respect of which the solicitor had been convicted of a crime or offence involving dishonesty, or (b) which the Law Society Council had found to be dishonest (s 79A(2)).
The 1987 Act was repealed by the 2004 Act with effect from 1 October 2005. Schedule 9 of the 2004 Act contained savings and transitional provisions. Although Sch 9 contained no specific transitional provision in relation to claims on the Fidelity Fund, cl 3(3) of Sch 9 of the 2004 Act contained the following general transitional provision: Without limiting subclauses (1) and (2), if a provision of the old Act [Legal Profession Act 1987 (NSW)] that corresponds to a provision of this Act would, but for its repeal by this Act, have applied in relation to anything done or being done or in existence before the commencement day, the provision of the new Act applies in relation to that thing, and so applies with any necessary adaptations.
Under the 2004 Act, a claim could be made on the Fidelity Fund under s 436 in relation to a "default". Relevantly, a "default" included a "failure by the [law] practice to pay or deliver trust money … that was received by the practice in the course of legal practice by the practice, where the failure arises from or is constituted by an act or omission of an associate that involves dishonesty" (s 419). Accordingly, s 80 of the 1987 Act was a provision that "corresponds" to s 436 of the 2004 Act within the meaning of cl 3(3) of Sch 9 of the 2004 Act.
But for the repeal of s 80, that provision would have applied in relation to an alleged failure to account by Mr Knaggs, being a thing done or in existence before 1 October 2005. Accordingly, by reason of cl 3(3) of Sch 9 of the 2004 Act, s 436 of the 2004 Act would have applied in respect of any claim on the Fidelity Fund made by Mr Jacups after 1 October 2005 in respect of Mr Knaggs' alleged default.
The 2004 Act was itself repealed by the Application Act with effect from 1 July 2015. Relevantly, cl 23 of Sch 4 of the Uniform Law contains a specific transitional provision relating to claims on the Fidelity Fund. It applies where there is an alleged default before the commencement day and it "could have been, but was not, the subject of a claim under the fidelity cover provisions of the old legislation": cl 23(1)(b). In such a case, a claim on the Fidelity Fund may be made under the Uniform Law (cl 23(2)) and the Uniform Law applies (with the necessary modifications) in relation to the claim (cl 23(4)).
The reference to the "old legislation" is to the 2004 Act: Sch 4 cl 1. Since Mr Jacups could have made, but did not make, a claim under the fidelity cover provisions of the 2004 Act, the transitional provision in cl 23 of Sch 4 of the Uniform Law applies. Consequently, the provisions of the Uniform Law apply to Mr Jacups' claim.
It might be noted that Garling J arrived at a similar conclusion in Jacups v The Fidelity Fund Management Committee of the Law Society of NSW [2022] NSWSC 313 at [7]. It remains to determine, however, whether any legal significance attaches to the Committee's error in applying the 1987 Act and not the Uniform Law (see further below).
I turn now to describe the Fidelity Fund and its operation.
The Law Society is required to maintain and manage a Legal Practitioners' Fidelity Fund: s 115(1) of the Application Act. The general purpose of the Fidelity Fund is to "ensure that persons who suffer pecuniary loss as a result of defaults by law practices have a source of compensation for defaults arising from or constituted by acts or omissions of associates of law practices": s 218 of the Uniform Law.
The entitlement of a person to make a claim on the Fidelity Fund is set out in s 233(1) of the Uniform Law, which relevantly provides that a person "who suffers pecuniary loss as a result of a default by a law practice is entitled to make a claim about the default against the fidelity fund …".
Of central importance is the definition of "default" in s 219: (a) in relation to trust money or trust property received by a law practice in the course of legal practice by the law practice - a failure of the law practice to pay or deliver the trust money or trust property, where the failure arises from an act or omission of an associate that involves fraud or other dishonesty; or (b) in relation to trust property received by a law practice in the course of legal practice by the law practice - a fraudulent dealing with the trust property, where the fraudulent dealing arises from or is constituted by an act or omission of an associate that involves fraud or other dishonesty
Section 221(1) confirms that s 233 applies to a default of a law practice "only to the extent that it occurs in connection with the provision of legal services by the law practice."
"Trust money" is defined in s 129. Subject to certain exclusions identified in s 129(2), it means (s 129(1)): … money entrusted to a law practice in the course of or in connection with the provision of legal services by the law practice, and includes - (a) money received by the law practice on account of legal costs in advance of providing the services; and (b) controlled money received by the law practice; and (c) transit money received by the law practice; and (d) money received by the law practice, that is the subject of a power exercisable by the law practice or an associate of the law practice, to deal with the money for or on behalf of another person.
Relevantly, s 129(2)(a) excludes from the definition of "trust money": money received by a law practice for legal services that have been provided and in respect of which a bill has been given to the client.
"[L]egal costs" is defined in s 6(1) and relevantly includes "amounts that a person has been or may be charged by … a law practice for the provision of legal services". "[L]egal services" is also defined in s 6(1) to mean "work done, or business transacted, in the ordinary course of legal practice".
"Pecuniary loss" is defined in s 219 to mean, in relation to a default: (a) the amount of trust money, or the value of trust property, that is not paid or delivered; or (b) the amount of money that a person loses or is deprived of, or the loss of value of trust property, as a result of a fraudulent dealing
Thus, in relation to a claim relating to trust money (as opposed to trust property, which is defined in s 128 not to include trust money), the pecuniary loss is limited to the amount of trust money that is not paid or delivered.
Section 240 of the Uniform Law relates to the determination of claims. It relevantly states: … (3) The fidelity authority may determine a claim by wholly or partly allowing or disallowing it, or otherwise settling it. (4) The fidelity authority may wholly or partly disallow a claim, or reduce the amount of a claim, to the extent that - (a) the claim does not relate to a default for which the fidelity fund is liable; or …
The reference to the "fidelity authority" is to the Council of the Law Society: s 16 of the Application Act.
Under s 241, the maximum amount payable in respect of a default is the "pecuniary loss" resulting from the default. This does not include costs payable under s 242 - being the reasonable costs in making and proving a claim - and interest payable under s 243.
Given its central importance to the proceeding, the terms of s 247 of the Uniform Law should be set out in full: 247 Right of appeal against decision on claim (1) A claimant against the fidelity fund may appeal to the designated tribunal against a decision of the fidelity authority - (a) to wholly or partly disallow a claim; or (b) to reduce the amount allowed in respect of a claim - but an appeal does not lie against a decision of the fidelity authority to limit the amount payable, or to decline to pay an amount, under section 230 or 231. (2) An appeal against a decision must be lodged within 30 days of receiving written notice about the decision. (3) On an appeal under this section - (a) the appellant must establish that the whole or part of the amount sought to be recovered from the fidelity fund is not reasonably available from other sources, unless the fidelity authority waives that requirement; and (b) the designated tribunal may, on application by the fidelity authority, stay the appeal pending further action being taken to seek recovery of the whole or part of that amount from other sources. (4) The designated tribunal may review the merits of the fidelity authority's decision to the extent considered relevant by the tribunal. (5) The designated tribunal may - (a) affirm the decision; or (b) if satisfied that the reasons for varying or setting aside the fidelity authority's decision are sufficiently cogent to warrant doing so - (i) vary the decision; or (ii) set aside the decision and make a decision in substitution for the decision set aside; or (iii) set aside the decision and remit the matter for reconsideration by the fidelity authority in accordance with any directions or recommendations of the tribunal. (6) The designated tribunal may make other orders as it thinks fit. (7) No order for costs is to be made on an appeal under this section unless the designated tribunal is satisfied that an order for costs should be made in the interests of justice.
The reference in s 247(1) to the "designated tribunal" is a reference to the Supreme Court (see Table 2 in s 11(3) of the Application Act).
I will discuss below the nature and scope of an appeal under s 247.

(a) Some introductory observations

Most of the relevant events occurred between 18 to 19 years ago. As noted, Mr Knaggs is now deceased. Owing to the passage of time, and the very extensive delay in Mr Jacups making his claim (Mr Jacups says he became aware of the alleged default between September 2007 and July 2009), the relevant records are unsurprisingly incomplete.
As will shortly emerge, Mr Jacups also challenged the authenticity of some of the documents. He raised a serious allegation that Mr Knaggs had forged his signature on several documents. Mr Jacups and his long-time friend, Mr Mark Whittaker, also gave evidence as to a meeting which they said they both attended with Mr Knaggs in July 2003. They both claim that Mr Knaggs told them that he had paid an amount of approximately $12,000 to the Child Support Registrar as required by some Family Court orders. Both Mr Jacups and Mr Whittaker were closely cross-examined on their accounts of this meeting (see further below).
Before outlining the relevant documentary evidence (incomplete as it is) and my assessment of the relevant affidavit evidence, it is desirable to make some additional preliminary observations.
The first matter concerns the standard of proof to apply in a case such as this in fact finding. Undoubtedly the civil standard applies, which requires facts to be established on the balance of probabilities. As required by s 140(2) of the Evidence Act 1995 (NSW), in deciding whether the Court is satisfied that a matter has been proved on the balance of probabilities, the Court is to take into account the nature of the cause of action, the nature of the subject-matter of the proceeding and the gravity of the matters alleged. The last factor is important in this proceeding in regard to the serious allegations of fraud and dishonesty which Mr Jacups levels at Mr Knaggs. This necessarily attracts the well-known Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 standard.
The second preliminary matter concerns the approach to be taken where essential facts which need to be proved occurred many years ago and a party places heavy reliance on the recollection of witnesses of verbal exchanges. In this context, I respectfully agree with and adopt the following observations of Robb J in Australian Retirement Holdings Pty Ltd v Tracey Anne Higgins in her capacity as administrator of the estate of the late Monica Mary Pritchard [2021] NSWSC 1158 at [255] and [256]: 255 A forensic difficulty that may be encountered in proving essential facts that happened many years ago is often considered in the context of proving the making and meaning of verbal statements. Though, there may be no less difficulty in proving the occurrence of mundane or indistinct events. Some events are so clear and inherently unforgettable that testimonial evidence that they have occurred may be readily accepted. However, just as there may be difficulty in persuading a court of subtle meanings in verbal statements made many years previously, the same difficulty may arise where the attempt is made to prove relatively small numbers of fleeting or innocuous events that would not ordinarily be retained in memory. In this respect, the observations made by Hammerschlag J in John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 may apply to proof of fleeting or innocuous events no less than statements: [94] Where a party seeks to rely upon spoken words as a foundation for a cause of action, including a cause of action based on a contract, the conversation must be proved to the reasonable satisfaction of the court which means that the court must feel an actual persuasion of its occurrence or its existence. Moreover, in the case of contract, the court must be persuaded that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question of whether the issue has been proved to the reasonable satisfaction of the court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony, or indirect inferences: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; Helton v Allen (1940) 63 CLR 691 at 712; Rejfek v McElroy (1965) 112 CLR 517 at 521; Watson v Foxman (1995) 49 NSWLR 315 at 319. [95] The sensation of feeling an actual persuasion, after a contest, that an event has happened or that something exists is one which is well known and recognised by experienced trial judges for what it is. [256] To be clear, these considerations do not involve a departure from the civil standard of proof, but merely that there be an appropriate degree of genuine judicial satisfaction having regard to the true weight of the evidence that is presented.
The third matter (which is related to the first two matters) concerns the approach which the Court should adopt where it is faced with serious allegations of dishonesty and fraudulent conduct by a deceased person (such as Mr Knaggs). Mr Prince (who appeared for the defendants) cited Plunkett v Bull (1915) 19 CLR 544; [1915] HCA 14 at 548-9 per Isaacs J where his Honour made the following observations in the context of a claim made against the estate of a deceased person (emphasis added): She had the burden of establishing the original creation of the indebtedness of the deceased to her, and undoubtedly it is established that in cases of this sort the Court scrutinizes very carefully a claim against the estate of a deceased person. It is not that the Court looks on the plaintiff's case with suspicion and as prima facie fraudulent, but it scrutinizes the evidence very carefully to see whether it is true or untrue.
The principle has also been applied in cases where a claim is not made against the estate of a deceased person, "the important point being that the deceased is no longer able to confirm or deny any claim against his or her (prior) interests": Stick-on Signs Pty Ltd v Sign Gear Pty Ltd [2002] VSC 320 at [44] per Osborn J.
The NSW Court of Appeal and Supreme Court have applied this principle most commonly where the Court is called upon to consider claims based on uncorroborated evidence of communications between a deceased person and other persons or to attribute oral statements to the deceased: see, for example, Brown v New South Wales Trustee and Guardian [2012] NSWCA 431; (2012) 10 ASTLR 164 at [67] per Campbell JA (Bergin CJ in Eq and Sackville AJA agreeing); AB v Curry [2015] NSWSC 1063 at [37] per White J; Anderson v Anderson [2016] NSWSC 1204 at [33]-[34] per Hallen J; Smith v Smith [2017] NSWSC 408 at [128] per Lindsay J.
There are at least two authorities which stand for the broad proposition that findings of fraudulent or criminal conduct ought not lightly be made against a deceased person. First, in Curran v Harvey [2012] NSWSC 276, Hallen AsJ stated at [176]: The conventional perception is that, generally, members of our society do not ordinarily engage in fraudulent or criminal conduct, of the type alleged, which is of particular significance in this case as the deceased, is now unable to answer the serious allegations against him …
Secondly, in Palmer v Dolman [2005] NSWCA 361, Ipp JA (with whom Tobias and Basten JJA agreed) stated at [54] to [56]: 54 Thus, the question to be weighed in the balance is: did the deceased have cash to the extent of $250,000 (or the wherewithal to obtain cash to that extent) which he did not disclose to Mrs Dolman at the time of the property settlement, or did he borrow the $250,000 without security from a friend? 55 Support for the proposition that he did not conceal assets from Mrs Dolman (which concealment - if it occurred - must have been fraudulent) is obtained from "the conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct". 56 The latter inference is of particular significance in this case as the deceased, is now unable to answer the serious allegations against him.
In other cases, the principle in Plunkett has been applied in a more general way (ie not limited to circumstances where a party seeks to attribute particular words to the deceased). They include Day v Couch [2000] NSWSC 230, in which Bryson J stated at [9] (albeit in the context of a case where evidence was given of oral representations made by the deceased): Where a claim is made against the estate of a deceased person and knowledge of the facts on which the claim is based is no longer available to the legal personal representative of the deceased, judicial experience requires a careful approach to fact-finding, although there are no special rules relating to the burden or the standard of proof: "[I]n cases of this sort the Court scrutinizes very carefully a claim against the estate of a deceased person. It is not that the Court looks on the plaintiff's case with suspicion and as prima facie fraudulent, but it scrutinizes the evidence very carefully to see whether it is true or untrue": Plunkett v Bull …
In Curran v Harvey, the plaintiff, the daughter of a former de facto partner of the deceased, submitted that she and the deceased had been in a sexual relationship at various times (in the context of making a family provision claim). Hallen AsJ said at [171]: Allegations of this kind that have been made are difficult to test whenever made and, particularly when the party against whom they are made is deceased. I must bear in mind the need for careful scrutiny to which evidence in such a case should be subjected in such circumstances (Plunkett v Bull [1915] HCA 14; (1915) 19 CLR 544, per Isaacs J at 548-9), and whilst there is no absolute legal requirement for it, I should look for some corroboration (Re Hodgson (1886) 31 Ch D 177; Day v Couch [2000] NSWSC 230; Weeks v Hrubala [2008] NSWSC 162, [20] (Young CJ in Eq)).
With those preliminary observations in mind I now turn to address the relevant documentary and affidavit material.

(b) Relevant documentary evidence

Most of the relevant documents were included in Exhibit A, comprising documents drawn from the Law Society's file regarding its investigation of Mr Jacups' earlier complaints to the Law Society about various aspects of Mr Knaggs' professional conduct and his claim on the Fidelity Fund. Those documents support the following findings.
From 1996 onwards, Mr Jacups was involved in litigation in various courts, including the Family Court, with his former de facto partner, Ms Tesoriero. Ms Tesoriero was represented by Barkus Edwards Doolan.
The details of all of the proceedings are not clear. However, by November 2001, a number of costs orders had been made in various proceedings against Mr Jacups in favour of Ms Tesoriero.
On 19 November 2001, the Family Court ordered that Ms Tesoriero be appointed as a trustee for sale of Mr Jacups' interest in property at 102 Govetts Leap Road, Blackheath (Blackheath Property), with the proceeds to be applied, after discharge of a mortgage and payment of costs, to satisfy the costs orders.
In early 2003, Ms Tesoriero commenced further enforcement proceedings as a result of Mr Jacups' failure to give vacant possession of the Blackheath Property.
At around that time Mr Knaggs commenced acting for Mr Jacups in relation to those proceedings and continued to act for him throughout 2003 and 2004.
On 13 March 2003, Ms Tesoriero obtained a writ of possession from the Family Court over the Blackheath Property.
Although the Family Court apparently made orders dated 17 March 2003 which required Mr Jacups to pay certain costs incurred by Barkus Edwards Doolan, a copy of the orders were not included in the Court Book in the present proceeding. They are, however, referred to in order 5 of consent orders dated 28 April 2003 in the Family Court, which were in evidence.
By a letter dated 10 April 2003, Mr Knaggs wrote to the agent for Barkus Edwards Doolan (Mr James Richardson) and said that he had been advised by St George Bank that a loan to Mr Jacups had been approved. The loan was mortgaged over the Blackheath Property. On 2 June 2003, Mr Jacups executed a Loan Agreement with St George Bank for $80,000.
By consent orders dated 28 April 2003 in the Family Court the parties to those proceedings (ie Mr Jacups as applicant and Ms Tesoriero and Barkus Edward Doolan as respondents) agreed that Mr Jacups would by 11 May 2003 produce to the respondents as a condition of the making of the consent orders a written approval of a loan not less than $100,000 by St George Bank or another lender by 18 May 2003. By order 5 of those consent orders it was agreed that, upon settlement of the loan, "all funds shall be directed to the payment (subject to paying out any existing mortgages or charges on the property) the costs as directed in the orders of this court dated 17 March 2003".
The evidence included an unaddressed invoice dated 15 May 2003 by Mr Knaggs in the total amount of $9,900 for costs stated to be for acting for Mr Jacups at a hearing on a writ of possession on 4 March 2003 and in drawing an application for a writ of prohibition in the High Court. As will emerge, Mr Jacups denies ever seeing this invoice on or around that time.
By a handwritten note dated 18 May 2003, Mr Jacups wrote: Payment to: Douglas Knaggs Solicitor ADD: Unit 302 No 115 McKay Street Potts Point Re: $195 Dollars being for payment to Land Titles Dpt to lift: Writs x 2 Barkus Edwards : Court Orders of GJacups Thanks Douglas for doing this. Graham D Jacups 18/V/03 …
On 3 June 2003, after deducting fees of $742, the balance of the $80,000 loan ($79,258) was deposited in Mr Jacups' St George Bank account.
On the same day, two bank cheques were drawn using the funds in that account: 1. A bank cheque for $9,900 was drawn in favour of "Douglas Knaggs"; and 2. A bank cheque for $70,000 was drawn in favour of "Douglas Knaggs Trust Account".
I find that it is more probable than not that the bank cheque for $9,900 was drawn on Mr Jacups' bank account with his authority and for the purpose of paying Mr Knaggs' invoice dated 15 May 2003 for that amount. I accept the defendants' submission that it is "simply unbelievable" and not credible that the St George Bank would allow Mr Knaggs to draw on money from Mr Jacups' account without Mr Jacups' authorisation of those withdrawals. I also accept the defendants' submission that the suggestion in Mr Jacups' handwritten note dated 18 May 2003 (ie shortly after the 15 May 2003 invoice was issued to Mr Jacups) to one of the "[c]heques at settlement" being "for you Douglas" refers to the payment of the $9,900.
Having regard to the exclusion in s 129(2)(a) of the Uniform Law (see [20] above), I find that amount of $9,900 was never entrusted to Mr Knaggs as trust money. An extract from Mr Knaggs' general ledger records an amount of $9,900 as a debit in respect of Mr Knaggs' costs and disbursements and that it was received by a trust transfer dated 15 March 2003. Curiously, this entry appears in the general ledger immediately after an entry dated 27 May 2004 and appears to be out of chronological order. This anomaly was noted by the Law Society in an internal advice dated 18 February 2021. Mr King submitted that the Court should find that Mr Knaggs was trying "to hide what was really happening", namely that Mr Knaggs was taking from the loan proceeds of approximately $80,000 an amount to cover his costs and disbursements which money should have been remitted to Barkus Edwards Doolan in accordance with order 5 of the 28 April 2003 consent orders and the instruction Mr Jacups gave to Mr Knaggs on 18 May 2003. Having regard to the general principles outlined above, I am not prepared to make such a serious finding, which would amount to a serious fraud on the part of a deceased legal practitioner. The date of the general ledger entry appears anomalous but, as the defendants pointed out, it may simply reflect a typographical error in referring to the invoice which was actually dated 15 May 2003. The order of the entries remains unexplained but this does not justify the drawing of an inference of serious dishonesty on Mr Knaggs' part.
The defendant accepts that $70,000 was deposited in Mr Knaggs' trust account in June 2003 and was trust money.
The evidence also included a handwritten note dated 1 July 2003 and evidently signed by Mr Jacups in which he acknowledged that Mr Knaggs had "earned further costs of preparation for the Family Court and amendment of the High Court application of $2000 to 1 June 2003". Mr Jacups denies that it is his signature on the document (see further below).
By a written undertaking dated 10 July 2003 given in the Family Court, Mr Knaggs undertook that he would not withdraw "from the present balance held for Mr Jacups in my trust account namely $68,000 without the consent of the wife or further order of the Court". Mr Jacups also gave a written undertaking on the same day that he would not seek to instruct Mr Knaggs to act in any way contrary to Mr Knaggs' undertaking.
By a notice dated 17 July 2003, the Regional Registrar, Child Support directed Mr Knaggs under the Child Support (Registration and Collection) Act 1988 (Cth) to pay to the Child Support Registrar an amount of $11,060.25, being a debt which was said to be owed by Mr Jacups. A similar notice dated 5 December 2003 directed Mr Knaggs to pay to the Child Support Registrar an amount of $11,421.27. A third notice dated 11 December 2003 required Mr Richardson to pay to the Child Support Registrar an amount of $11,442.94.
By orders dated 12 December 2003 in the Family Court, Mr Jacups was ordered to pay Barkus Edwards Doolan $3,000 by way of costs in relation to Mr Jacups' unsuccessful application for review filed on 11 December 2003. By consent, it was also agreed that Mr Jacups should give "all instructions, directions and authority to his said solicitors for payment to the Child Support Agency of outstanding child support of $11,442.94 such payment to be made by 5.00 pm, 15 December 2003".
By a payment advice dated 16 January 2004 addressed to Mr Jacups, the Child Support Agency acknowledged receipt of an amount of $11,442.94.
The evidence included various invoices and correspondence during the period 1 July 2003 and 7 July 2004 relating to the payment of fees and legal costs to Mr Knaggs, Barkus Edwards Doolan, the Child Support Agency and to a valuer. They include a handwritten note dated 2 February 2004 purportedly signed by Mr Jacups which acknowledged that he had received $4,000 in cash from Mr Knaggs' trust account at his specific request. In cross-examination, Mr Jacups said that he had never seen this document before he was given it by the Fidelity Fund and that it was not his signature. He added that he recalled that Mr Knaggs did refund him $4,000 during the relevant timeframe but he thought it was because he had paid Mr Knaggs "excess money".
Exhibit A also included several slightly different copies of a tax invoice dated 27 May 2004 issued by Mr Knaggs and addressed to Mr Jacups. The invoice was said to relate to Mr Knaggs' further fees on the High Court and Family Court matters and totalled $51,667.00. Each was signed by Mr Knaggs and was purportedly approved by Mr Jacups' signature in the bottom right-hand corner, together with the date 27 May 2004. Under cross-examination, Mr Jacups denied signing the invoices and he said that he first sighted them in the files during 2009. He disagreed with the proposition that Mr Knaggs kept one copy of the invoice in his file and provided the other to Mr Jacups for his records.
On 9 August 2004 Mr Knaggs made an inquiry of the Law Society Ethics Department regarding disbursement of trust monies to his client Mr Jacups. A copy of a report dated 13 September 2005 by the Law Society Inspection and Investigation Department was in evidence. The inquiry was apparently triggered by a demand Mr Knaggs had received on 30 July 2004 from Barkus Edwards Doolan that he pay them a further amount of $13,076.77 from his trust account. The report concluded that Mr Knaggs dispersed monies from his trust account in accordance with an agreement between himself and Barkus Edwards Doolan in a letter dated 28 January 2004. The investigator recommended that no further action be taken on the basis that the funds in the trust account had been dispersed in accordance with that agreement and that Barkus Edwards Doolan had not made any complaint against Mr Knaggs.
Exhibit A included extracts from Mr Knaggs' trust ledger and general ledger regarding Mr Jacups. The trust ledger had an entry dated 13 June 2003 which recorded receipt of $70,000 from St George Bank. It also included various entries for the period from 16 June 2003 to 7 July 2004 which detailed various sums being taken from the trust account. Those sums included various amounts paid to Barkus Edwards Doolan, as well as an amount of $11,442.94 paid on 16 December 2003 to "Child Support", which was said to be pursuant to Court Order.
As noted above, the general ledger included an entry dated 15 March 2003 in the amount of $9,900 for Mr Knaggs' costs and disbursements. As explained above, the date may be a typographical error.
On or about 25 September 2007 Mr Jacups wrote to the Legal Services Commissioner requesting that Mr Knaggs be directed to provide Mr Jacups with his files.
On 10 October 2007 the Legal Services Commissioner acknowledged that it had forwarded this request to the Law Society for investigation.
It appears that Mr Jacups obtained copies of his file but he complained to the Law Society in a letter dated 5 February 2008 that the files were incomplete and of little use. In this letter, Mr Jacups complained that he had been unable to get access to the monies held in Mr Knaggs' trust account, including the sum of $80,000 in respect of the loan monies received from St George Bank.
The evidence included copies of various correspondence between the Law Society and Mr Jacups after 8 February 2008 regarding his complaint against Mr Knaggs. They need not be summarised.
By a notice dated 4 February 2009, Mr Knaggs was directed by the Law Society under s 660 of the 2004 Act to answer various questions, including details of all sums of money received by Mr Knaggs from Mr Jacups from 1 July 2003 to date and whether such sums were deposited in his trust account.
By a statutory declaration dated 12 March 2009, Mr Knaggs responded to this question by stating that the only sums he had received from Mr Jacups were six small reimbursements in 2006-07 for travel, copying, posting, telephones and faxes. He said that to the best of his recollection none of these sums exceeded $100, nor did they exceed in total $500. He said that these amounts were not, and there was no need for them to be, paid into his trust account.
The evidence included copies of various additional correspondence exchanged between Mr Jacups and the Law Society and a solicitor employed in the Professional Standards Unit of the Law Society during the period 2008-2009 regarding his complaints against Mr Knaggs.
By an amended claim dated 7 October 2020, Mr Jacups made a claim on the Fidelity Fund. Various correspondence was exchanged thereafter between the Law Society and Mr Jacups regarding his claim.
As noted above, on 21 May 2021 Mr Jacups was advised by the Committee that his claim had been wholly disallowed and he was provided with a detailed statement of reasons for that decision.

Mr Jacups relied upon the following affidavits: 1. four affidavits sworn by him dated 16 June 2021, 28 August 2021, 29 August 2022 and another also dated 29 August 2022; and 2. an affidavit dated 19 September 2022 by Mr Mark Alan Whittaker.
Both Mr Jacups and Mr Whittaker were cross-examined (see further below).
Mr Jacups also sought to rely upon an affidavit dated 14 September 2022 by Mr John Garlick, but it was ruled to be inadmissible for reasons which are set out below at [135]ff.
In his first affidavit dated 16 June 2021, Mr Jacups claimed that the Committee had wrongly accepted that it was his signature was on various documents. He also said that Mr Knaggs had failed ever to serve him with tax invoices at the time of payment of Mr Knaggs' fees during 2003.
In his second affidavit dated 28 August 2021 , Mr Jacups attached various documents relating to the Law Society's investigation between 2007 and 2009 regarding his complaint. Some of those documents are duplicated documents which were included in Exhibit A as tendered by the defendants.
In his third affidavit dated 29 August 2022 (which was admitted subject to relevance), Mr Jacups purported to give evidence in support of an accompanying notice of motion. That notice of motion was filed in other proceedings. The affidavit was itself a resworn version of an affidavit filed on 8 June 2022 in those other proceedings.
In his fourth affidavit (which is also dated 29 August 2022), Mr Jacups summarised some aspects of the history of the matter, including some of the events which took place in 2003 and 2004, as well as the Law Society's investigation of his complaints.
It might be noted that all four of Mr Jacups' affidavits were prepared by himself at various times in the proceeding when he did not have legal representation. Without any disrespect to him, this is reflected in the form and content of those affidavits.
Mr Jacups denied that he had arranged for the two bank cheques to be drawn using funds in his St George account or that he had authorised the cheque in the amount of $9,900 to be paid to Mr Knaggs for his legal services. Mr Jacups accepted, however, that the other bank cheque in the sum of $70,000 was paid into Mr Knaggs' trust account.
Mr Jacups accepted that he had signed and dated the 18 May 2003 handwritten note. He denied, however, that on 1 July 2003 he signed a note authorising Mr Knaggs to pay $2,000 from his trust account.
When it was put to Mr Jacups in cross-examination that the Family Court had made orders that he instruct Mr Knaggs to pay the outstanding child support debt of $11,442.94, Mr Jacups denied that proposition. He said that, under order 5 of the consent orders dated 28 April 2003, the money should have gone to Ms Tesoriero. He gave a similar response when it was put to him that he had authorised Mr Knaggs to withdraw $7,000 from his trust account on 2 February 2004.
In cross-examination, Mr Jacups also said that on 10 July 2003, Mr Knaggs had told him that there was $68,000 in his trust account and that he (ie Mr Knaggs) was ordered to pay nearly $12,000 for child support. When it was put to him that this never occurred, Mr Jacups said that it "absolutely" had and he referred to Mr Whittaker's affidavit.
In cross-examination it was put to Mr Jacups that, contrary to what he told the Law Society in March 2021, he never made cash payments to Mr Knaggs of approximately $51,000. Mr Jacups said that if he did not pay Mr Knaggs he would not work. He said that the need to pay Mr Knaggs "was always at the eleventh hour" and his payments to Mr Knaggs were always in cash without a receipt.
When Mr Jacups was cross-examined about his knowledge of the existence of Mr Knaggs' trust account concerning him, Mr Jacups said that he had found out only in May 2022 that the $70,000 which was put into Mr Knaggs' trust account in 2003 should have been called "controlled money" and should have gone to Ms Tesoriero consistently with order 5 of the 28 April 2003 consent orders.
In re-examination, Mr Jacups said that he paid Mr Knaggs cash from time to time so that he would continue to do his legal work. He recalled paying Mr Knaggs $12,000 in March 2003 in relation to the High Court proceeding which commenced on 18 March 2003.
Having observed Mr Jacups give evidence, I formed the view that he was a sincere witness who did his best to recollect the details of events which occurred almost 20 years ago. Although he claimed to have a sound memory of "basic things", he properly accepted that the passage of time since 2003 "may have clouded some of the things". Mr Jacups also accepted under cross-examination that parts of the period between 2003 and 2004 were "stressful" in his life and that between 2005 and 2014 he suffered a number of "major medical issues".
Having regard to these matters, as well as the preliminary observations set out above, I have approached Mr Jacups' personal recollections of events which occurred nearly two decades ago with some caution. I do not accept Mr Jacups' evidence that Mr Knaggs told him on 10 July 2003 that he had paid nearly $12,000 from his trust account for child support because he had been ordered to do so. Mr Jacups' claim that this statement was made by Mr Knaggs at a meeting held on 10 July 2003 sits uncomfortably in a temporal sense with the terms the consent order dated 12 December 2003 pursuant to which Mr Jacups was to give "all instructions, directions and authority" to Mr Knaggs to make an outstanding child support payment of $11,442.94, ie some five months after Mr Knaggs made the alleged statement. I see considerable force in the defendants' submission that Mr Jacups' version of the meeting may have been driven by a desire to explain why he gave a personal written undertaking in July 2003 in circumstances where there was a balance of $68,000 in Mr Knaggs' trust account at that time and a question may have arisen as to how the aggregate sum of approximately $80,000 (comprising trust and non-trust monies) which Mr Jacups had provided to Mr Knaggs had declined to $68,000 of trust money only.
I should make clear that in not accepting Mr Jacups' evidence on this issue, I am not suggesting that he was deliberately lying. Quite properly, Mr Prince stated that the defendants sought no such finding.
I will explain below why I do not accept that Mr Whittaker's evidence regarding this meeting provides any reliable corroboration of Mr Jacups' account. A more probable explanation is that when Mr Jacups gave his written undertaking dated 10 July 2003 (which included an express reference to the balance of the trust account at that time being $68,000), this reflected the fact that although the starting balance of the trust account as at 13 June 2003 was $70,000 (reflecting the amount of the second bank cheque), this amount had dropped to $68,000 after $2,000 was withdrawn in respect of Mr Knaggs' legal fees as noted in the handwritten note dated 1 July 2003 (see at [60] above).
I do not accept Mr Jacups' claims that the signatures which appear on various documents as described above are not his, with the necessary inference that they were forged by Mr Knaggs. In the absence of any expert evidence (which Mr Jacups could have produced to the Court in support of his appeal) and any other strong corroborative evidence I am not prepared to accept this very serious allegation against a now deceased legal practitioner.
As mentioned, Mr Jacups called Mr Whittaker as a witness and he was cross-examined by video-link to Cairns in Queensland.
In cross-examination, he acknowledged that he had been involved in various previous proceedings in both the Federal Court and the Family Court during the period 2000 to 2012 in which he had ought to set aside liability to pay child support. He described he and Mr Jacups as "close friends". He was cross-examined on the circumstances preceding him providing a statutory declaration at Mr Jacups' request in March 2021. He said that Mr Jacups asked him to include in his statutory declaration statements that were made when he accompanied Mr Jacups at a meeting with Mr Knaggs in 2003.
Mr Whittaker was also cross-examined regarding the circumstances surrounding the provision by him at Mr Jacups' request of his affidavit dated 19 September 2022. He acknowledged that in his affidavit he had changed the date of the meeting to 13 July 2003, as opposed to 13 June 2003 in his earlier statutory declaration. When it was put to Mr Whittaker that he had changed the date because Mr Jacups had suggested he do so, Mr Whittaker initially denied that proposition. He then added that he "double-checked" the matter and had asked Mr Jacups about the date of the proceeding which did not settle because Mr Whittaker said he called that the meeting occurred a couple of days later.
When pressed, Mr Whittaker then confirmed that the date change was based on conversations he had had with Mr Jacups prior to finalising his affidavit .
After stating that he had "a perfect recollection of the conversation with Mr Knaggs", Mr Whittaker denied the proposition that he had "made up" his account of the meeting. He said that Mr Knaggs told Mr Jacups at the meeting that he had been ordered to pay $12,000 to the Child Support Registrar and that Mr Jacups told Mr Knaggs that he should not have paid the money, to which Mr Knaggs responded that he was ordered to. Mr Whittaker then gave the following evidence: Q. Mr Knaggs never said, in July 2003, that he'd paid $12,000 to the child support registrar, did he? A. I don't know if he said the $12,000 but he said he paid the amount due under the notice. He said there was a notice and he was ordered to pay it. Q. I suggest to you that you have invented the account in your affidavit to assist your close friend, Mr Jacups? A. No, I wouldn't do that.
As noted above, Mr Jacups submitted that Mr Whittaker's evidence corroborated his own version of what Mr Knaggs said at the meeting in July 2003. I do not accept that submission. I strongly doubt that Mr Whittaker had a "perfect recollection" of the conversation with Mr Knaggs, which occurred almost 20 years ago. Secondly, I take into account the fact that in his affidavit Mr Whittaker changed the date of the alleged meeting from 13 June 2003 to 13 July 2003. All the more so when Mr Whittaker finally acknowledged in cross-examination that he had made this change after discussing the matter with Mr Jacups before finalising his affidavit. Thirdly, I note that Mr Jacups said in cross-examination that on 10 July 2003 "[Mr Knaggs] told me he was ordered to pay nearly $12,000 to child support", not 13 July 2003, as stated by Mr Whittaker. Finally, Mr Whittaker's evidence as to what Mr Knaggs said in July 2003 regarding him being ordered to make the child support payment sits uncomfortably with the fact that, as noted above, the Family Court consent orders relating to this matter were not made until 12 December 2003.

(d) The defendants' affidavit evidence

The defendants relied upon an affidavit of Mr Rachelle Fisher dated 17 May 2022. Ms Fisher was briefly cross-examined. The significance of Ms Fisher's evidence primarily lay in the documents which she extracted from the Law Society's files, which became Exhibit A in the proceeding.

Mr Jacups' case summarised

Mr Jacups represented himself during a large part of this proceeding. He was represented briefly between 6 December 2021 and 5 January 2022 by McKells Lawyers. He then was represented by Mr Peter King of counsel, briefed by McKells Lawyers, at the hearing only.
In oral address, Mr King contended that Mr Jacups' case was put in two principal ways. The first related to the undisputed fact that the Committee had mistakenly proceeded under the 1987 Act which he contended amounted to an error of law constituting a constructive failure to exercise jurisdiction. He submitted that the decision should be set aside and remitted to the decision-maker under s 247(5)(b)(iii) of the Uniform Law.
Mr King described the second challenge as being factually based, namely that the decision-maker acted upon the basis of a report dated 13 September 2005 by the Law Society Inspection and Investigation Department without exercising its own discretion. Mr King candidly acknowledged that this claim was not expressly raised in the plaintiff's summons but submitted that it was implicit in the plaintiff's application to have the matter remitted for further consideration.
Mr Jacups also contended that the Committee should not play an active role in the proceeding having regard to R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 12; [1980] HCA 13 (Hardiman rule).

Consideration and determination

I shall now address the primary issues raised in the proceeding with reference to the following topics: 1. the nature and scope of the appeal; 2. the claim of constructive failure to exercise jurisdiction; 3. whether there has been a default; 4. Mr Jacups' claim for equitable compensation; 5. role of the report dated 13 September 2005 by the Law Society Inspection and Investigation Department; 6. the Hardiman rule; and 7. some evidentiary rulings.

(a) The nature and scope of the appeal

This issue turns on the proper construction of s 247 of the Uniform Law (the terms of which are set out at [27] above). As Beech-Jones J observed in Wang v The Law Society of New South Wales [2020] NSWSC 1741 at [3], s 247(4) is a "curiously worded provision", which is to the effect that the Court as the "designated tribunal may review the merits of the fidelity authority's decision to the extent considered relevant by the tribunal". I respectfully agree with his Honour's observation at [3] that this appears to "confer some discretionary ability on the part of the Court to conduct merits review". It is desirable to set out [4] from Beech-Jones J's judgment, with which I also respectfully agree: A provision in similar form was found in s 452 of the Legal Profession Act 2004. Previous decisions of this Court have treated that provision as, nevertheless, indicating that what is involved is a de novo review (see for example Wang v Council of the Law Society of New South Wales [2009] NSWSC 67). It is not possible nor indeed appropriate on this application to finally determine the form of review envisaged by s 247. However, at first blush, it appears to be some form of blended review which enables the Court, if it considered appropriate, to consider whether there was some fundamental defect in the fidelity authority's decision which might warrant it being set aside but otherwise to conduct a merits review, although the capacity for further investigation of some issue by a remittal and referral cannot be discounted.
Justice Garling came to a similar view in determining an interlocutory dispute in the present proceeding (see Jacups at [39]).
Neither party submitted that the Court should adopt a different approach to that taken by either Beech-Jones J or Garling J. The parties were agreed that the appeal under s 247 of the Uniform Law is a de novo hearing, which necessarily means that the parties are at liberty to adduce additional evidence to that before the Committee. The Court is required to determine for itself what is the correct or preferable decision having regard to all the evidence before it. There is no requirement (as there is in an appeal stricto sensu) for the appellant to demonstrate error of either law or fact on the part of the Committee. I did not understand either party to question Beech-Jones J's: 1. description of the matter as involving some form of "blended review", or 2. his Honour's additional observations that, in an appropriate case, the Court could come to the view that some fundamental defect in the fidelity authority's decision might warrant the decision being set aside but otherwise conduct a merits review, without discounting the capacity for further investigation of some issue by a remittal and a referral. Indeed, as noted at [107] above, Mr Jacups urged the Court to set aside the Committee's decision and remit the matter for reconsideration, including in respect of Mr Jacups' claims of fraud and dishonesty which the Committee found unnecessary to determine because of its primary conclusion that there was no failure to account by Mr Knaggs.
Although it is common ground that the Committee incorrectly applied the 1987 Act, I did not understand any of the parties to submit that, if the Court concluded that on the evidence before it that it was not satisfied that there had been a failure of a law practice "to pay or deliver" trust money, the Court nevertheless had to proceed to determine whether fraud or other dishonesty was involved within the meaning of "default" in s 219 of the Uniform Law. The terms of that provision make clear that the issue of fraud or other dishonesty only arises where there has been a failure of a law practice to pay or deliver trust money or trust property.

(b) The claim of a constructive failure to exercise jurisdiction

As noted, it is common ground that the Committee erred in applying the 1987 Act and not the Uniform Law. The plaintiff urged the Court to find that this amounted to a constructive failure to exercise jurisdiction and this alone should result in the matter being remitted to the Committee for reconsideration according to law.
The concept of a constructive failure to exercise jurisdiction ordinarily arises in the context of judicial review proceedings (see, for example, Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; (2003) 197 ALR 389 at [25] per Gummow and Callinan JJ and at [59] per Kirby J). Given the nature of the "blended review" in s 247 of the Uniform Law, it may well be that in some cases it will be appropriate for the Court in such an appeal, having identified a fundamental error on the part of the primary decision-maker, to remit the matter for reconsideration according to law and without the Court completing a full merits review. I consider, however, that this is not such a case. The parties agree that the relevant provisions of the Uniform Law apply. The Court also has before it a considerable volume of evidence adduced by all the parties. Mr Jacups' complaints have been exhaustively investigated by the Law Society. It is difficult to see any practical advantage in remitting the matter to it for a fresh determination. The matter is already affected by the lengthy passage of time since the relevant events occurred, coupled with the significant fact that Mr Knaggs is now deceased. The interest and importance of finality as itself an element of justice is an important consideration here. In Searle v Commonwealth (2019) 100 NSWLR 55; [2019] NSWCA 127 at [172] per Bell P (with whom Bathurst CJ and Basten JA agreed) the now Chief Justice spoke of "the high value of finality".
In the particular circumstances of the present proceeding the appropriate course is for the Court to hear and determine the appeal and apply the correct provisions of the Uniform Law.
This requires the Court to determine, on the basis of all the evidence before it, whether there has been a "default" within the meaning of s 219 of the Uniform Law (as set out at [17] above).

For the following reasons, I am not satisfied that there was any default within the meaning of s 219 of the Uniform Law.
First, there was no default in respect of the amount of $9,900 which was the amount of the bank cheque drawn on Mr Jacups' St George Bank Account on 3 June 2003. The bank cheque was drawn in favour of Mr Knaggs. I accept the defendants' submission that it is more probable than not that this amount was paid to Mr Knaggs in response to his invoice dated 15 May 2003 (see at [53] above). As such, the amount was never entrusted to Mr Knaggs as trust money, so as to attract the relevant provisions of the Uniform Law.
As to the amount of $70,000 which was the subject of the second bank cheque dated 3 June 2003, the defendants correctly accepted that this amount was deposited in Mr Knaggs' trust account in June 2003. It is properly viewed as "trust money" for the purposes of the Uniform Law. I note that Mr Jacups took the position that the money was "controlled money". I consider, however, that this is not supported by any evidence which demonstrated that Mr Jacups directed that the money be held in a special account separately from Mr Knaggs' general trust account. Moreover, "controlled money" is expressly identified in s 129(1)(b) of the Uniform Law to constitute "trust money". The issue of default does not turn on the type of trust money alleged to be involved but rather on whether there has been a fraudulent or dishonest act or omission resulting in a failure to pay or deliver trust money received in the course of legal practice.
I find that, applying the general observations outlined above together with the available evidence, it is more probable than not that all of this trust money was properly dispersed and did not involve any default. It is convenient to explain why this is so with reference to the following specific matters. 1. On 1 July 2003, Mr Jacups signed a handwritten note authorising a deduction of $2,000 on account of Mr Knaggs' costs. I do not accept that it is more probable than not that the signature on this document is not that of Mr Jacups. Rather, it is more probable than not that the $2,000 was withdrawn from the trust account on Mr Jacups' instruction, as recorded in the handwritten note dated 1 July 2003, shortly before Mr Knaggs and Mr Jacups gave written undertakings to the Family Court on 10 July 2003 which, significantly, stated that Mr Knaggs would not withdraw, and Mr Jacups would not instruct him to withdraw, the present balance of $68,000 held in trust for Mr Jacups without consent of Ms Tesoriero or further order of the Court. Thus, as at 10 July 2003, Mr Jacups must have been aware that $2,000 had been withdrawn from the original amount of $70,000 to give a present balance of $68,000 as referred to in the undertakings. 2. On or around 16 December 2003, $3,000 was paid from trust to Barkus Edwards Doolan pursuant to an order dated 12 December 2003 of the Family Court. 3. On or around 16 December 2003, $11,442.94 was paid by way of child support pursuant to an order dated 12 December 2003 of the Family Court. I have explained above why I do not accept the evidence of Mr Jacups and Mr Whittaker regarding what Mr Knaggs allegedly said at a meeting in July 2003 about being ordered to pay child support of approximately $12,000. I find that the child support payment was made by Mr Knaggs from trust account monies in late December 2003, following the Family Court orders dated 12 December 2003. 4. On or around 2 February 2004, $7,000 was withdrawn from the trust account by agreement between the solicitors for the parties to the Family Court proceeding. Mr Jacups signed a handwritten note acknowledging receipt of $4,000 of that amount. The balance of $3,000 was received by Mr Knaggs on account of unpaid fees. I have explained above why I do not accept Mr Jacups' evidence that it was not his signature on the relevant documents. 5. On or about 3 March 2004, $2,500 was paid to Barkus Edwards Doolan pursuant to a costs order dated 26 February 2004 of the Family Court. 6. On or about 10 May 2004, $2,900 was paid to Barkus Edwards Doolan pursuant to a costs order of the Family Court. 7. On 27 May 2004, Mr Knaggs issued and Mr Jacups signed and approved payment out of trust of an invoice for $51,667 for work done by Mr Jacups in relation to ongoing High Court and Family Court proceedings. By this time, there was an agreement between the solicitors that the money standing to the credit of Mr Knaggs' trust account could be disbursed in that way. Mr Knaggs' handwritten trust account ledger shows that nine trust transfers were made for a total of $40,757.06 between 28 May 2004 and 7 July 2004 as follows: Date Amount withdrawn 28/5/2004 $1,850.00 31/5/2004 $6,150.00 31/5/2004 $4,600.00 1/6/2004 $7,000.00 2/06/2004 $2,500.00 2/06/2004 $18,000.00 7/06/2004 $400.00 5/7/2004 $200.00 7/7/2004 $57.06

On 2 June 2004, a cheque for $400 was drawn on the trust account to pay for a valuation of the Blackheath Property conducted in February 2004. The Blackheath Property was sold on 21 May 2004.
A table showing the relevant withdrawals from Mr Knaggs' trust account is as follows: Date Amount Balance Note 13/6/2003 $70,000.00 $70,000.00 Bank cheque deposited 1/7/2003 -$2,000.00 $68,000.00 Payment for Knaggs' fees 16/12/2003 -$3,000.00 $65,000.00 Payment to BED legal costs 16/12/2003 -$11,442.94 $53,557.06 Child support payment 2/2/2004 -$7,000.00 $46,557.06 Payment to Jacups and for Knaggs' fees 3/3/2004 -$2,500.00 $44,057.06 Payment to BED legal costs 10/05/2004 -$2,900.00 $41,157.06 Payment to BED legal costs 28/05/2004-2/06/2004 -$40,100.00 $1,057.06 Payment for Knaggs' fees 2/06/2004 -$400.00 $657.06 Graham Veitch valuer 7/6/2004-7/7/2004 -$657.06 $ - Payment of Knaggs' fees

It follows that Mr Jacups has not established that there was a default in relation to the $70,000 in trust money received by Mr Knaggs. Nor has it been demonstrated to the requisite standard that Mr Knaggs engaged in any dishonesty.

(d) Mr Jacups' claim for equitable compensation

In his written submissions at [12(b)] and [14], Mr Jacups appears to ask the Court to make an award of equitable compensation in his favour for an alleged breach of fiduciary duty by Mr Knaggs.
No such claim is made in Mr Jacups' summons. The Court's jurisdiction in this matter is to hear and determine an appeal under s 247 of the Uniform Law. As explained at [23] and [26] above, s 241 prevents a claim against the Fidelity Fund exceeding the amount of the "pecuniary loss" (plus the reasonable legal costs of making and proving a claim and interest). The "pecuniary loss" relevantly is limited to the amount of the trust money not paid or delivered (s 219). Nor has any breach of fiduciary duty been established.
It follows that no award of equitable compensation can be made.

(e) Role of the report dated 13 September 2005 by the Law Society Inspection and Investigation Department

The plaintiff's claim seems to be that the Committee blindly adopted the report dated 13 September 2005 by the Law Society Inspection and Investigation Department.
As noted above, this claim was not raised in the plaintiff's submissions. As Mr Prince also pointed out, the claim was not developed in any way by Mr King in oral address. There is no evidence at all to support the claim that the Committee did not turn an independent mind to the relevant decision-making tasks. Its statement of reasons contradicts any such claim. The claim must be rejected.

(f) The Hardiman rule

The plaintiff submitted that the Hardiman rule applied so as to limit the defendants' role in the proceeding. He contended that the rule applied such that the role of the defendants should be confined to providing assistance the Court on "particular factual matters by reference to the evidence, or where it is suggested that there's an error or omission", but not make any "substantive argument against the matters that are being put by the plaintiff". For the following reasons, I reject the plaintiff's submission that the Hardiman rule applies.
First, it is desirable to set out the relevant passage from Hardiman at 35-36: There is one final matter. Mr Hughes was instructed by the Tribunal to take the unusual course of contesting the prosecutors' case for relief and this he did by presenting a substantive argument. In cases of this kind the usual course is for a tribunal to submit to such order as the court may make. The course which was adopted by the Tribunal in this Court is not one which we would wish to encourage. If a tribunal becomes a protagonist in this Court there is the risk that by so doing it endangers the impartiality which it is expected to maintain in subsequent proceedings which take place if and when relief is granted. The presentation of a case in this Court by a tribunal should be regarded as exceptional and, where it occurs should, in general, be limited to submissions going to the powers and procedures of the Tribunal. In the result, we would make absolute the order nisi for mandamus.
That approach has been applied in numerous subsequent judicial review cases, some of which are identified by Schmidt AJ in Wang v Council of the Law Society of New South Wales [2009] NSWSC 67 (Wang 2009) at [11]ff. Notably, however, the present proceeding is not by way of judicial review. It is well-settled that some modification may need to be made in respect of the Hardiman rule in the context of an appeal in the nature of a merits review (see, for example, Re New Broadcasting Ltd and Australian Broadcasting Tribunal [1987] AATA 151; (1987) 73 ALR 420 at 430-31).
Secondly, Schmidt AJ helpfully considered this issue in the specific context of an appeal against a decision of the Law Society under s 452 of the 2004 Act in Wang 2009. That provision was in substantially similar, but not identical, terms to those set out in s 247 of the Uniform Law. In concluding that the Hardiman rule had no application, her Honour drew particular attention to provisions in the 2004 Act, which indicated that the Law Society was authorised to take an active role in the appeal. In particular, her Honour drew attention to s 454(b) of the 2004 Act, which provided that any defence that would have been available to a legal practitioner or other person is available to the Law Society's Council. Her Honour stated at [21] that, if the Hardiman rule applied, s 454(b) would have no work to do in an appeal under s 452 and her Honour concluded that the Law Society "may properly play an active role as contradictor in these proceedings".
I respectfully agree. Indeed, the position may be even stronger under the Uniform Law. That is because, as Mr Prince pointed out, provisions such as ss 247(3)(a) and (b), as well as s 249, expressly contemplate that the Law Society will play an active role in an appeal under s 247. These provisions contemplate that the fidelity authority is empowered to waive the requirement which otherwise applies such that an appellant must establish that the whole or part of the amount sought to be recovered from the fidelity fund is not "reasonably available" and that the fidelity authority may apply to the designated tribunal for a stay of an appeal (see ss 247(3)(a) and (b) respectively). Furthermore, s 249 of the Uniform Law is in similar terms to s 454(b) of the 2004 Act (as considered and applied by Schmidt AJ in Wang 2009) which expressly contemplates that the Law Society will appear in the appeal in order to run the defence.
For all these reasons, I reject the plaintiff's submission that the Hardiman rule applies.

(g) Some evidentiary rulings

It is necessary to set out the reasons for two evidentiary rulings which were made at the outset of the hearing. The first relates to the rejection of an affidavit dated 14 September 2022 by Mr John Andrew Garlick, which the plaintiff sought to read. The second relates to the defendants' subsequent withdrawal of two pages of materials which it tendered and formed part of Exhibit A.

Mr Garlick's affidavit

Mr Garlick provided a brief affidavit dated 14 September 2021. He deposed that in late 2006 to early 2007 he had engaged Mr Knaggs to provide him with legal advice and representation in the District Court concerning a real estate purchase. He said that Mr Knaggs never provided him with a costs agreement or any invoices in relation to his legal work. He said that Mr Knaggs always asked him for cash in lieu of invoices. He said that Mr Knaggs had told him words to the effect that his costs would be much less if he had to issue invoices rather than receive cash.
The defendants objected to this evidence on the grounds of its late provision and also relying upon s 97 of the Evidence Act 1995 (NSW). I do not accept the first of those grounds. The defendants were on notice from early March 2021 of Mr Garlick's evidence, as set out in a statutory declaration dated 9 March 2021, which is in substantially similar terms to those of the affidavit.
I accept, however, that the affidavit is inadmissible having regard to s 97(1)(b) of the Evidence Act. Relevantly, tendency evidence is not admissible to prove that a person has or had a tendency to act in a particular way unless the Court thinks that "the evidence will, either by itself or having regard to other evidence adduced or to be adduced by the party seeking to adduce the evidence, have significant probative value". The scope of this aspect of the provision has been considered in numerous cases, including Hughes v R (2017) 263 CLR 338; [2017] HCA 20.
Having regard to the following matters, I am not satisfied that Mr Garlick's evidence has significant probative value. First, it relates to a period of time which is a few years after the conduct complained of in the present proceeding. Secondly, it relates to Mr Knaggs' advice and conduct in respect of an entirely different subject matter, namely a real estate purchase. Thirdly, the evidence does not relate to Mr Knaggs' obligations in respect of his trust account, which is a central issue in the proceeding.

Defendants' withdrawal of tender of two pages of Exhibit A

Exhibit A comprised a bundle of documents tendered by the defendants which were attached to an affidavit dated 17 May 2022 by Ms Fisher. The documents were all extracted from Law Society files. They included copies of two statutory declarations which Mr Jacups had provided to the Law Society. The statutory declarations were made by Mr Garlick and Mr Whittaker and were dated 9 March 2021 and 11 March 2021 respectively.
When the defendants became aware that the plaintiff intended to rely upon these two statutory declarations in the present proceeding, they objected on the basis of hearsay. The plaintiff then obtained affidavits from both Mr Garlick and Mr Whittaker which were in substantially similar form to their respective statutory declarations and, in effect, replaced those statutory declarations. I have already explained why I rejected Mr Garlick's affidavit.
At the outset of the hearing, the defendants asked that Mr Whittaker be available for cross-examination. Mr King indicated that there had been insufficient time to arrange for this to occur and he asked that the matter be deferred until the second day of the hearing. After the defendants tendered Exhibit A (which included copies of the two statutory declarations), Mr King then said that it was no longer necessary for the plaintiff to rely upon Mr Whittaker's affidavit because a copy of his statutory declaration was included in Exhibit A. Mr Prince then sought to withdraw the tender of the copies of the two statutory declarations from Exhibit A copies of the two statutory declarations. Mr King objected to this course. I overruled that objection. This was primarily because Mr Prince had made clear when he tendered Exhibit A that, notwithstanding that the material included copies of the statutory declarations, those documents had effectively been overtaken by the belated provision of affidavits by Mr Garlick and Mr Whittaker. Mr Prince said the following in respect of the proposed tender: That's subject to the stat decs but, in a sense, that doesn't matter anymore, that they included the stat decs but, given that the affidavits have been read I don't think it makes any difference.
Mr Prince reasonably believed that he would have an opportunity to cross-examine Mr Whittaker if the plaintiff sought to rely upon his evidence.
It would be quite unfair to the defendants to prevent them from withdrawing the documents from Exhibit A in circumstances where: 1. Mr Garlick's affidavit was ruled to be inadmissible and it would be unfair to have that evidence introduced by the side wind of Mr Garlick's statutory declaration having been included in Exhibit A in the circumstances described above; 2. Likewise, in circumstances where the defendants' counsel made clear that the tender of the two statutory declarations in Exhibit A was made knowing that they had effectively been overtaken by the subsequent affidavits and that Mr Whittaker was required for cross-examination. If the plaintiff wished to rely upon Mr Whittaker's evidence, the defendants should have an opportunity to cross-examine him.

Conclusion

For these reasons, the summons filed on 25 June 2021 will be dismissed. As the defendants did not seek any order for costs in their favour, there will be no order as to costs.
The orders of the Court will be: 1. The summons filed on 25 June 2021 is dismissed, with no order as to costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 October 2022

Legal Profession Act 1987(NSW)

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At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (21 paragraphs)

Parties

Legislation Cited (6)

Cases Cited (31)

Cited By (1)