Wang v Law Society of New South Wales

Statutory scheme

1. Before identifying the circumstances which gave rise to the claim, it is convenient to set out the statutory provisions governing the scope of claims which can be made upon the fidelity fund. That will allow identification of the relevant issues before the evidence is addressed.
2. The entitlement to make a claim is founded upon s 233(1) of the Uniform Law which 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". That provision contains two important terms, "pecuniary loss" and "default", each of which is defined in Pt 4.5 of the Uniform Law (titled "Fidelity cover"): 219 Definitions In this Part - … default means - (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; … pecuniary loss, in relation to a default, means - (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.
3. It may be seen that the definition of "pecuniary loss" has two meanings. The first requires that there be money or property which can be identified as "trust money" or "trust property". The term "default" also has two meanings, each of which refers to "trust money" or "trust property". There is, however, an apparent mismatch between the language of par (b) in the definition of "pecuniary loss" and par (b) in the definition of "default". On one reading, par (b) in the definition of "pecuniary loss" could refer to any amount of money that a person loses or is deprived of as a result of fraudulent dealing. However, it must be read in context. Thus, when read into s 233 (providing an entitlement to make a claim), it identifies a pecuniary loss "as a result of a default by a law practice". It is therefore restricted to losses which fall within the defaults, as defined and subject to certain other constraints.
4. The definition of "default" requires a failure to pay or deliver trust money or trust property which arises from an act or omission of an associate that involves fraud or other dishonesty, or, specifically in relation to trust property, involves a fraudulent dealing of a kind reflected in the same language. However, there is a further constraint on the nature of the trust money or trust property which qualifies for the purpose of a default. It must be such money or property as is received by a law practice "in the course of legal practice". Section 221 imposes an additional constraint: 221 Defaults to which this Part applies (1) This Part 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. (2) It is immaterial where a default occurs. (3) This Part applies to a default even though an associate involved was but is no longer an Australian legal practitioner or an Australian-registered foreign lawyer. (4) This Part does not apply to defaults or classes of defaults specified in the Uniform Rules.
5. The term "associate", in relation to a law practice, is broadly defined in s 6(1) of the Uniform Law to include a principal, partner, director, officer, employee or agent of the law practice, and an Australian legal practitioner who is a consultant to the law practice. To the extent that it was necessary to rely upon acts of associates, no issue arose in the present case with respect to that term.
6. An issue did arise, however, as to whether the money transmitted to SHS Law from Mr Wang was received by SHS Law "in the course of legal practice" and whether the loss resulted from a default that occurred "in connection with the provision of legal services by the law practice". Those constraints require reference to the definition of "legal services"; it "means work done, or business transacted, in the ordinary course of legal practice": Uniform Law, s 6(1).
7. The definition of "legal services" is also found in the concept of "trust money": Uniform Law, s 129(1). Thus, the money which has been lost must have been entrusted to the law practice "in the course of or in connection with work done in the ordinary course of legal practice", and the default must have occurred in connection with the provision of legal services, that is work done in the ordinary course of legal practice.
8. The primary basis upon which the Law Society denied that the claim was payable from the fidelity fund was that the money was not received as trust money and the default did not arise in the course of providing legal services.
9. In order to understand the factual basis on which the Law Society resisted payment, it is necessary to have regard to the nature of the transactions in the course of which Mr Wang paid an amount of $80,000 to SHS Law. Before identifying the factual basis for the claim, a point of procedural history should be noted.

Mr Wang's evidence

1. Although Mr Wang originally affirmed an affidavit, which was filed in the Court, Mr Wang did not give evidence at the trial. If his affidavit were to be read, the Law Society gave notice that they would want him to be available for cross-examination. The relatively small amount involved, and the difficulties of Mr Wang coming to Australia, meant that cross-examination would, as a practical matter, need to be undertaken by way of an audio-visual link to Beijing. The possible difficulties with that course were identified in an interlocutory decision in this matter. [3] To allow necessary steps to be taken to arrange for cross-examination, the listing of the matter for hearing on 21 and 22 July 2022 was vacated. Although it later appeared that the practical difficulties may have been more limited than was then anticipated, [4] it appears that Mr Wang decided not to incur the additional legal costs in making those arrangements. Accordingly, his affidavit was not read (although the defendant tendered some parts of it).
2. It was by no means clear that Mr Wang suffered prejudice as a result of this change in course. It is likely that one reason for wishing to cross-examine him, was to put to him aspects of two defences pleaded by the Law Society. One was that the conduct of the transaction with SHS was illegal, and that Mr Wang knew or ought reasonably to have known of that illegality. Briefly stated, the illegality involved the lawyers and their agents creating a fraudulent scheme to support the issue of subclass 186 visas whereby employers purportedly sponsored the visa applicants to fill high-paying positions. The Law Society sought, in the alternative to establishing knowledge on the part of Mr Wang, to impute to him the knowledge of his agent, Pantheon. Such a basis for disallowance was provided by s 240(4)(d) and (e) of the Uniform Law. (In written submissions it eschewed reliance on Mr Wang's actual knowledge.)
3. The likely second basis on which the Law Society would have wished to cross-examine Mr Wang was to establish that he had not mitigated his losses by seeking to recover the money paid to the agent from the agent. Again, such a basis for disallowance was provided by s 240(5)(b) of the Uniform Law.

Pantheon and SHS Law

1. Turning to the details of the transaction, in so much of Mr Wang's affidavit as was admitted, he noted that he had acted in about October 2016 on an interest in moving abroad and finding work in Australia. He said that he contacted "a company called Pantheon in Shanghai which specialised in helping Chinese citizens find professional positions overseas and helping Chinese investors and executives with overseas migration". [5] The company Pantheon, as identified from receipts for money paid to it by Mr Wang, was Pantheon Shanghai Investment Management Co Ltd. Mr Wang described Pantheon as an "international introduction company" which took care of matters "such as locating professionals to take care of permits, visas, money transfers, translation of documents and so on". [6] Mr Wang noted that his contact was Mr Qi Huang. [7] He stated that his communications with Pantheon were mainly via WeChat and telephone. [8] He also provided receipts for two payments made to Pantheon, one being by his wife, Pan Yue, on 17 October 2016 (CNY 25,000) and a second dated 4 February 2017 in an amount of CNY 753,716. It was common ground that the amount covered by the receipts was at least $A153,000, the plaintiff stating it was $A180,000. [9]
2. The two receipts given by Pantheon were signed by the general manager and company director with a stamp on the February 2017 document against the director's name referring to Shanghai Xifeng Investment Management Co Ltd.
3. There was also in evidence an unexecuted "Cooperation Agreement" between Xi Feng Investment Management Co Ltd and Pantheon SH Pty Ltd (with a Shanghai address), described as "Party A", and SHS Law Pty Ltd (with a Sydney address), described as "Party B". The first recital stated that Xi Feng Investment Management Co Ltd was a business established in China by "Australia's Pantheon Sydney Pty Ltd". Clause 2 of the agreement (titled "How to cooperate") stated: "Party A has given Party B carte blanche to apply for the employer sponsored migration visa to Australia on behalf of Party A (Australian permanent resident visa Class 186/187 where applicants are exempt from English level test and career assessment)."
4. The responsibilities of SHS Law were identified as follows in cl 3(3): "Party B's responsibilities and rights A Party B shall provide Party A with a list of documents that must be prepared for visa application. B Based on the documents provided by Party A, Party B shall further review the circumstances of the Party A's applicant and suggest any supplementary material be added to the applicant's resume such that the applicant's conditions meet the requirements of Australian Immigration or migration visa based on employer sponsorship. C Party B shall apply for the quota of the migration visa applicant of Party A with the Australian governments and Immigration Department, find a matching employer, prepare and lodge the visa application documents."
5. Clause 4 dealt with "Fees and payment options", stating: "2) Besides the charges by the Australian governments, Party B will charge a Class 186 visa application fee totalling … (AU$170,000) or a Class 187 visa application fee totalling … (AU$180,000). This charge already includes the application fee for quota of employer sponsorship, corporate HR recruitment fee, advertisement fee, legal and accounting fee, administration sundry expenses, marketing service fee, etc." Clause 4 also provided for Party A to make payments in instalments to Party B.
6. It was the Law Society's case that this document reflected both the agency arrangements between Pantheon and SHS Law and the work for which payment was required from Pantheon to SHS Law. It was the Law Society's case that SHS was not engaging in legal services in the sense of work done or business transacted in the ordinary course of legal practice.

Mr Wang and SHS Law

1. There were four primary documents demonstrating the relationship between Mr Wang and SHS Law. First, there were two trust account receipts indicating payments from Suhui Australia Pty Ltd, both dated 8 February 2017. The first, for $A21,000, identified the client as Mr Wang and gave a matter number "17-0024 JC2599", and a matter description as "visa 186". The second payment from the same payer was for an amount of $A59,000. The matter number was "17-0025 JC3015" and the matter description was "retainer agreement". It was inferred that the initials JC referred to the person then in charge of SHS Law, Mr Josh Chan.
2. The first matter (JC2599) was the reference found on a "Cost and Service Agreement" said to be between SHS Law and Mr Wang. The copy in evidence was signed, but only on the final page, and only by Mr Wang. The agreement, dated 20 January 2017, identified the first party as SHS Law and gave a migration agent registration number. It was common ground that the only person at SHS Law who had held a migration agent registration in the relevant period was Mr Sam Hegney and his registration had ceased on 9 September 2016.
3. The first party was referred to in the agreement as the "Agent". The second party was identified as Mr Wang and referred to in the agreement as the "Client". The Cost and Service Agreement, cl 1, provided that the client appointed SHS Law as the agent to "represent the Client and to perform the services described in this Agreement". Clause 2 referred to the code of conduct governing the conduct of registered migration agents, and cl 3 provided the client's acknowledgment of and consent to the "immigration assistance covered by this agreement" being provided by Mr Sam Hegney, or by other registered migration agents by way of delegation. Clause 4.1 guaranteed (falsely) that the agent was registered with the Migration Agents Registration Authority.
4. The services to be provided were identified as follows: X Providing advice relating to the Client's migration goals and their choice of visa category. X Providing frank and candid advice regarding the prospects of success of the visa application. X Analyzing current Immigration Law relating to the Employer Sponsor visa category. X Assisting in the completion and/or checking of relevant application forms. X Providing advice and assistance relating to documentation required to support the application. X Preparing any necessary supporting submissions to the relevant Assessing Authority, Department of Immigration and Border Protection. X Submitting the application to the relevant Assessing Authority of Immigration and Border Protection for processing as soon as possible. X Supplying any further documentation or information requested by the Department of Immigration and Border Protection on receipt of documents from the Client whenever possible. X Assisting the Client to comply with any request made by the relevant Assessing Authority, Department of Immigration and Border Protection or review body wherever possible.

1. The agreement identified the costs as professional fees in the lump sum of $21,000: cl 14.1. Clause 15 provided an estimate of costs, said in cl 15.2 to fall within a range, but expressly identified in the following terms: "1. Instruction and investigation of the matter including general advice for Employer Sponsor visa including find a suitable sponsoring company: $5,000. 2. Up to lodging a Nomination Application including Letter of Submission: $8,000. 3. Up to lodging a Visa Application including Letter of Submission: $8,000." These estimates totalled the amount identified in the lump sum of $21,000.
2. The trust account receipt for the amount of $59,000 was said to be referrable to the "Retainer Agreement". An unsigned copy of the retainer agreement, bearing the typed date 8 February 2017, was a collection of verbiage with little apparent purpose or meaning. It started with the following statement: "Thank you for your instructions to act in this matter. We are required by the Legal Profession Uniform Law (NSW) 2014 to set out the following terms of our engagement for your acceptance or further negotiations. In our experience all litigation creates stress and is expensive. Before starting such litigation, we wish to set down in general terms what we are to do, what obligations you will have in relation to legal costs, how much those costs might be and what your rights are in relation to any dispute which may arise in the future in relation to the payment of costs. The terms and conditions of this Agreement with attached Schedule of Cost Disclosure are set out below. By initialling the bottom of each page, both parties are indicating that they have read, understood and accepted the terms on that page."
3. Apart from proposing a lump sum "general legal cost" of $30,000 per year, if paid on commencement of the retainer, or a charge of $3,000 per month if paid in monthly instalments, most of the remaining pages of the agreement were concerned with litigation. However, the work identified in cl 1 of the agreement was inconsistent with those provisions. It read: "1. The work we will carry out We will carry out the following work: • Provide legal advice on the daily operation of your business; • Review and draft general agreement, deeds and contracts for the daily operation of the business; • Negotiate agreements, deeds and contracts with other parties; • Liaise with relevant parties; • Legal opinion and advice on the Company's Employment Agreements; • Staff legal training; • Assist the Company to make Company Policies in accordance with the law and regulations; and • Other legal services agreed by both parties. Please note that this agreement does not include any mediation, arbitration, conciliation and hearing work, however the client will have priority to instruct our firm to attend. Should the client wish to engage our services to include litigation work, the client will need to pay additional fees and engage in a further costs agreement. Our general hourly rates for litigation work is [sic] listed below."
4. For reasons which will be explained below, the proposition that the amount paid with respect to the retainer agreement was in respect of the payment for legal services, should not be accepted. This money did not constitute "trust money" for the purposes of the statutory claims on the Fidelity Fund.

Was there a payment of "trust money"?

1. These circumstances in effect gave rise to two factual issues. First, was the repayment of $22,000 referable to the Retainer Agreement, or to the Cost and Service Agreement? Secondly, in either case, was it referable to the provision of legal services?
2. There was an SHS document entitled "All Trust Ledgers" bearing the notation "Internal use only!" which identified the repayment on 5 June 2017 as a withdrawal of $22,000 payable to Yuzheng Zhang, who was an officer of Pantheon. It was that amount which was returned to Mr Wang. However, according to the ledger, it was a final withdrawal of the balance of the $59,000 held in respect of the "retainer agreement". Counsel for Mr Wang, however, submitted that that was a mistake, and at least as to $21,000, it was repayment of the payment for the 186 visa.
3. The Law Society submitted that the division of the accounts was an accounting device created by SHS Law which did not reflect the arrangement with Pantheon or its client. First, the Retainer Agreement was self-evidently gibberish; there was no evidence that Mr Wang had signed it or even seen it. It did not relate to the business he was seeking to have SHS Law undertake on his behalf.
4. Secondly, it is tolerably clear that the initial payment from Pantheon was not a figure split in two parts but a single sum of $80,000. That figure accorded with the instalment payable under the Cooperation Agreement between Pantheon and SHS Law. It was supported by the fact that the bank reference on each of the two trust account receipts issued by SHS Law was the same, indicating that there was a single payment. Accordingly, the internal ledger purporting to state that the repayment was made from moneys received on account of the "retainer agreement" did not relate to any contractual obligation as between SHS Law and Mr Wang.
5. Finally, the Law Society placed reliance upon Mr Wang's claim form, accompanied by a statutory declaration dated 15 May 2018, which identified the terms of entrustment of money to SHS Law as "to provide legal services in relation to my visa application". These were identified as oral instructions given by Qi Huang of Pantheon to SHS Law staff on 8 February 2017. I accept that there was a single payment of $80,000 received by SHS Law for that purpose.
6. The Law Society also relied upon the fact that, on 20 August 2017, Mr Wang's agent, Qi Huang of Pantheon, had submitted a complaint to the Office of the Legal Services Commissioner which denied that Mr Wang had received a written costs agreement and/or cost disclosure agreement from SHS Law. The Law Society submitted that, because the claim form was provided to the Law Society in May 2018, the agreement had been signed at some time between the complaint in August 2017 and May 2018, although that was a period after SHS Law had ceased business.
7. It is possible that Mr Wang was sent a single page of the Cost and Service Agreement, being the last page which bears his signature. The fact that no other page is initialled by him, as required according to the statement on the first page, nor was any page initialled or signed on behalf of SHS Law, when combined with the denial of receipt by his agent, demonstrated on the probabilities that no complete document was provided to or executed by Mr Wang.
8. The significance of this finding is that Mr Wang operated through the agency of Pantheon. He had no direct contact with SHS Law. Pantheon, on the other hand, had an agreement with SHS Law which involved a business arrangement but did not reflect an undertaking in the ordinary course of legal practice. It followed, the Law Society submitted, that the money which was paid into the SHS Law trust account was not entrusted to it in the course of or in connection with the provision of legal services. It was therefore not "trust money" within the meaning of s 129(1)(a).
9. Counsel for Mr Wang resisted this analysis on the basis that it would allow a legal practice to hold itself out, falsely, as undertaking a particular recognised form of legal practice, receive money from a client who intended to engage it for such services, and then misappropriate the fund, leaving the client with no recourse against the Fidelity Fund. That submission, however, relied upon a mismatch between the client's intention and the fraudulent purpose of the law practice. The present case was different: it is clear that Mr Wang, through Pantheon, had precisely the same purpose as did the law practice. If he understood, or reasonably should have understood, that it would be necessary to engage in a fraudulent scheme to obtain the relevant visa, his claim would fail under s 240 of the Uniform Law. However, the fact that he may not have known, and should not reasonably have known that fact, does not mean that the moneys transferred to the law practice under the arrangement he had with Pantheon must necessarily have been received by the firm in the course of ordinary legal practice. The Law Society submitted that, on an objective review of the facts, if SHS Law were not acting in the ordinary course of legal practice, the payments it received from clients seeking the services it did offer were not subject to the protection of the fidelity fund. That submission should be accepted.
10. The Law Society also put its case on a different basis. Even were it accepted that the payment received by the law practice was received on two separate accounts, so that the amount attributed to the non-legal retainer agreement account could not be recovered, and if it were further assumed that the repayment of $22,000 related to that account, the balance of $21,000, supposedly paid into the account relating to the Cost and Service Agreement, was also unrecoverable. That was because the services to be provided under that agreement did not fall within the category of services provided in the course of ordinary legal practice.
11. There were two bases for this submission. The first relied upon the fact that, when the Cost and Service Agreement was purportedly entered into (that is at the earliest possible date on which it could have been entered into), SHS Law (and its principal) were not registered by the Migration Agents Registration Authority, whereas, at that time, both migration agents and solicitors were required to be registered for the purpose of giving "immigration assistance". [10] There was an exception with respect to "immigration legal assistance", [11] but that term was defined in a manner which did not include most of the conduct identified in the Cost and Service Agreement. Immigration legal assistance covered acting for a visa applicant in review or cancellation review proceedings and giving advice to an applicant in relation to such matters. It expressly excluded, however, advice for the purpose of preparing or lodging a visa application [12] and advice about nominating or sponsoring a visa applicant. [13] It follows that the services identified in the Cost and Service Agreement could not (as the agreement implicitly accepted) be carried out by a solicitor who was not a registered migration agent. It followed that the carrying out of such work was not a part of ordinary legal practice for a solicitor, but rather ordinary legal practice for a migration agent. Although immigration assistance could have been provided by a lawyer (if registered as a migration agent) it was the capacity in which the work was undertaken which determined whether the work was undertaken in the ordinary course of legal practice. [14] As a migration agent who was not a solicitor acted as a migration agent in giving immigration assistance, so it may appropriately be said that a solicitor who was also a registered migration agent acted as a migration agent in giving immigration assistance.
12. I accept the submission that the work identified in the Cost and Service Agreement was not work within the ordinary course of legal practice in 2017. It follows that money paid for providing such services was not received by the law practice in the ordinary course of legal practice and therefore did not qualify as "trust money".

Contrary authority?

1. Arguably this conclusion is inconsistent with the reasoning in an earlier case. In written submissions, counsel for Mr Wang relied on an earlier decision of this Court bearing a similar name, Qiuxue Wang v Council of the Law Society of New South Wales. [15] Mr Qiuxue Wang paid $130,000 to Andrew Lui, a solicitor in Sydney, to be paid to a Mr Yi Li Li to obtain a permanent resident visa for Mr Qiuxue Wang. The trial judge, Schmidt AJ, found that the money had been paid to the solicitor, Mr Lui, as a "stakeholder", a service which was within the range of services solicitors customarily provide in the course of their practice. Mr Lui, it should be noted, was party to the conspiracy to defraud Mr Wang. However, the judge stated: "83 In any event, on the evidence in this case there can be no question that Mr Lui, a solicitor, came to have control of this money as the direct result of his position as a solicitor and his advice that the services Mr Li was to provide Mr Wang were legal."
2. While the judge described Mr Lui's role as that of "stakeholder", in fact his role was to give a veneer of credibility to the proposed scheme to obtain a visa. In any event, to describe the solicitor as a "stakeholder" was not to address the definition of "trust money" then found in s 243 of the Legal Profession Act 2004, but in similar terms to s 129(1) of the Uniform Law. The money was self-evidently not entrusted to Mr Lui in the course of or in connection with the provision of legal services by his law practice. If for no other reason, the approach adopted in Qiuxue Wang should not be followed.

Possibility of recovery from third party

1. Pursuant to s 247(3) of the Uniform Law, on an appeal to this Court by a claimant against the dismissal of a fidelity fund claim, "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": s 247(3)(a).
2. That provision also provides that the fidelity authority may ask the court to stay the appeal pending further action being taken to seek recovery from other sources: s 247(3)(b). Counsel for Mr Wang submitted that the purpose of s 247(3) was to allow a stay application, and none had been made in the present case. The Law Society resisted that contention on the basis that, whilst such an application could be made, the primary purpose of s 247(3)(a) was to give effect to the requirement of s 244(1), which provides: 244 Reduction of claim because of other benefits (1) A person is not entitled to recover from the fidelity fund any amount equal to amounts or to the value of other benefits in connection with the default concerned - (a) that have already been paid to or received by the person; or (b) that have already been determined and are payable to or receivable by the person; or (c) that (in the opinion of the fidelity authority) are likely to be paid to or received by the person; or (d) that (in the opinion of the fidelity authority) might, but for neglect or failure on the person's part, have been paid or payable to or received or receivable by the person - from other sources in respect of the pecuniary loss to which a claim relates.
3. If it were necessary for the Court to be affirmatively satisfied that the whole or some part of the amount claimed could be recovered from Pantheon, that finding should not be made. However, s 247(3) imposes an obligation on the claimant (as appellant) to establish the negative, namely that the whole or part of the amount is not reasonably available from other sources. As the Law Society pointed out, it had not waived that requirement; rather, it expressly relied upon s 244(1)(d) in rejecting the claim and in par 8 of its defence in this Court. It accepted that the statement of the defendant's opinion in its defence, albeit referred to in s 244(1)(d), was not apt: the appellant must satisfy the Court that the amount in question or some part thereof was not reasonably available from other sources.
4. The Law Society submitted that, under the agreement between Mr Wang and Pantheon, Mr Wang was entitled to recover his payments from Pantheon. In his affidavit, Mr Wang noted that his receipts from Pantheon stated that "[t]hese fees are only used for Australian 186 visa; the total sum will be fully refunded to the payer if there is no substantial progress on this matter". [16]
5. The Law Society also called in aid its entitlement to reduce the amount otherwise payable "if satisfied that the claimant unreasonably failed to mitigate losses arising from the act or omission giving rise to the claim": s 240(5)(b). It was suggested in submissions that that issue raised a similar basis for resistance of the claim to that raised under s 247(3)(a). However, counsel for Mr Wang submitted that in relying upon a failure to mitigate loss, the Law Society bore the burden of proof. He submitted that the Court should not be satisfied that there had been any failure to mitigate.
6. I accept the claimant's submission with respect to mitigation, but the position with respect to s 247(3), on which he bore the burden of proof, is more difficult. If Pantheon had been shown to be a business without a substantial presence in China, I would have been inclined to accept that it would not have been unreasonable for Mr Wang to fail to pursue a claim against it, presumably in Australia. However, the evidence does not support that inference. A printout of the Pantheon website in May 2018 identified that Pantheon was established in 2015, with divisions in Sydney and Shanghai. It offered both immigration and investment advice for Chinese citizens wishing to move to Australia, or invest in Australian real estate. No doubt the collapse of SHS Law has limited, if not destroyed part of its business. However, in its arrangements with Mr Wang, it appears to have operated in accordance with its agreement. It gave instructions to SHS Law on his behalf, transferred $80,000 in accordance with the Cooperation Agreement it had with SHS Law and, in due course, returned the $22,000 received from SHS Law to Mr Wang. According to the Cooperation Agreement, upon failure of SHS Law to obtain a visa for Mr Wang, he was entitled to a full refund of the moneys paid by him to Pantheon.
7. There is no evidence before the Court as to what steps, if any, Mr Wang took to recover the money from Pantheon. It may be accepted that Pantheon has not recovered any amount in excess of the $22,000 from SHS Law on behalf of Mr Wang. However, Mr Wang's evidence is that he paid Pantheon a total amount of at least $A153,000. There is no evidence of any attempt to recover the amount in excess of $22,000 from Pantheon, although it may be inferred that Pantheon retained an amount of some $73,000 over and above that which it transferred to Australia.
8. On the evidence, I am not affirmatively satisfied that the whole of the amount of $58,000 is not reasonably available from Pantheon. Accordingly, the claim must fail on that additional ground.

Involvement in illegal scheme

1. In its points of defence, the Law Society pleaded that the services provided by SHS Law involved a fraudulent migration scheme whereby it prepared documentation for companies which had no relevant position available, but which purported to sponsor a highly paid skilled immigrant. The defendant pleaded that the services provided were in contravention of ss 234, 245AR and 245AS of the Migration Act and that the payments were made and received in return for the occurrence of a sponsorship-related event within the meaning of s 245AQ. It further submitted that the claimant ought reasonably to have known of that illegality or, in the alternative, Pantheon knew or ought to have know that it was providing false documents or making payments to SHS Law to obtain false documents, which knowledge was to be imputed to the claimant. The claim should therefore be disallowed pursuant to s 240(4)(d) of the Uniform Law.
2. Each way in which this defence is put encounters difficulty. First, in relation to Mr Wang himself, no doubt an inference of suspicion could be drawn from the amounts payable, which should have raised some enquiry on his part. However, all that is known about Mr Wang personally is that he appears to hold a responsible position with an international company operating in China. A finding of knowing involvement in an illegal immigration scheme should not be made unless the Court is comfortably satisfied as to the relevant matters. In the circumstances, I am not so satisfied.
3. The position with respect to Pantheon is difficult in a different respect. I accept that Pantheon was the agent of Mr Wang for the purpose of making arrangements to obtain a subclass 186 or 187 visa in Australia. I also accept that Pantheon appears to be an entity having a presence in Australia. One possible inference is that it was, in 2017, closely associated with SHS Law. It entered into a detailed Cooperation Agreement with SHS Law, which reflected all the elements of the fraudulent business arrangements undertaken by SHS Law. On the other hand, the agreement envisaged that visas might not be obtained and envisaged that there would then be repayment of funds by SHS Law. It is quite possible that Pantheon was party to the corrupt dealings engaged in by SHS Law, but as it is not necessary to make such a finding in the present case, I decline to do so. Further, it is not suggested that SHS Law was not an agent of Mr Wang, but it is not suggested its knowledge should be imputed to him. Arguably Pantheon and SHS Law were acting together and their knowledge should not be imputed to Mr Wang. Accordingly, I would not have dismissed the claim on the basis of Mr Wang's constructive or imputed knowledge of the illegality in which SHS Law was engaged.

Conclusions

1. For the reasons set out above, the appeal from the decision of the Fidelity Fund Management Committee must fail. The Court makes the following orders: 1. Dismiss the summons filed on 19 October 2020 in this Court. 2. Order that the plaintiff pay the costs of the Law Society of New South Wales.

Endnotes

1. Law Society of New South Wales v Glenorcy Pty Ltd (2006) 67 NSWLR 169; [2006] NSWCA 250 at [14], (Mason P, McColl and Basten JJA agreeing).
2. (2013) 249 CLR 493; [2013] HCA 35 at [111].
3. Wang Chunfeng v Law Society of New South Wales [2022] NSWSC 986.
4. Liu v Option Funds Management Ltd [2022] FCA 444 at [32]-[36] (Stewart J).
5. Affidavit, Chunfeng Wang, 24 March 2021, par 5.
6. Wang Affidavit, pars 6 and 7.
7. Wang Affidavit, par 11, first sentence, par 26, first sentence.
8. Wang Affidavit, par 16.
9. Plaintiff's written submissions, par 30.
10. Migration Act 1958 (Cth), s 280(1).
11. Migration Act, s 280(3).
12. Migration Act, s 277(1)(c).
13. Migration Act, s 277(3).
14. Cf Council of the New South Wales Bar Association v Dwyer [2015] NSWCA 302 at [12] (Emmett JA); see also Council of the New South Wales Bar Association v Davison [2006] NSWSC 65 at [141] (Hall J).
15. [2009] NSWSC 67.
16. Wang affidavit, pars 21, 23. 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: 15 December 2022