Solicitors:
The People's Solicitor (Plaintiff/Respondent)
D Courtenay & Co Solicitors (Defendant/Applicant)
File Number(s): 20120/299646
[2]
EX TEMORE Judgment
On 26 October 2020 the defendant to these proceedings, the Law Society of New South Wales (the "Law Society"), filed a notice of motion seeking that they continue on pleadings.
The proceedings were commenced on 19 October 2020 when the plaintiff, Chunfeng Wang filed a summons initiating an appeal to this Court under s 247 of the Legal Profession Uniform Law (NSW) 2014 (the "Uniform Law") against a decision of the Law Society to deny his client's claim on the fidelity fund. The form of the summons that was filed reflects a view that was taken that the form of review provided by s 247 is effectively judicial review. Thus, the summons focused upon the matters that the Law Society allegedly did or did not consider in making its decision to reject the plaintiff's claim.
One could be forgiven for reading s 247 of the Uniform Law in those terms. In particular, s 247(4) has the curiously worded provision that provides that the "designated tribunal", in this case being this Court, may "review the merits of the fidelity authority's decision to the extent considered relevant by the tribunal". This appears to confer some discretionary ability on the part of the Court to conduct merits review.
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.
For the purpose of these proceedings, however, the future conduct of the proceedings will be conducted on the basis that what is involved is a merits review, subject to the possibility I have identified, namely that circumstances may transpire where further investigation of some aspect of the claim may be required.
As one would expect, the plaintiff completed a form provided by the Law Society in making his claim on the fidelity fund. From reading that form, it appears that the broad outline of his claim was that approximately $80,000 was provided to a particular law practice known as "SHS Law" for legal services, that either no or an inadequate service was provided and that, upon his request to return the money, he only received a refund of $22,000. Hence, his claim as identified in the form and in the proceedings in this Court is for the sum of $58,000 plus interest and costs.
The reasons of the Law Society for rejecting the claim are detailed. In summary, the Law Society put in issue whether $80,000 was in fact provided on account of the plaintiff, and what the nature of the services to be expected for that sum required. Further, the Law Society raises various matters under s 240 of the Uniform Law to defeat, in part or in whole, the plaintiff's claim.
A decision to require that the proceedings continue on the pleadings is governed by the provisions of the Civil Procedure Act 2005 including, and especially, s 56. In this case, there are two competing considerations.
The first is whether to order pleadings would involve the visiting on the parties of a disproportionate cost compared to the amount in dispute. As I have stated, the amount in dispute is $58,000 plus interest which, in the scheme of litigation, is a relatively modest sum. The second consideration is that, at the heart of the plaintiff's claim is an allegation of fraud and such allegations are usually pleaded. More importantly, the real factual issues in this matter appear to arise out of the numerous responses that the Law Society has to the plaintiff's claim on the fidelity fund. It strikes me that it is very much in the interests of the parties, especially the plaintiff, that those issues be identified and crystallised in a pleading.
Having now had the benefit of submissions from the plaintiff's counsel, and to allow the matter to advance, I would propose to adopt the course of, identifying what I understand to be the essential factual claims made in support of the plaintiff's claim on the fidelity fund, then allow the plaintiff a short period of time to confirm or supplement that as his pleaded claim and then order the Law Society to respond with a detailed pleading to allow the isolation of the factual issues in dispute.
To that end, I note that the provisions of the Uniform Law which are relevant to the plaintiff's claim includes s 233, which provides:
(1) 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, if this jurisdiction is the relevant jurisdiction of an associate of the law practice whose act or omission (whether alone or with one or more other associates of the law practice) gives rise to or constitutes the default.
(2) Subsection (1) extends to an associate of the law practice who, or to the law practice itself in the case of an incorporated legal practice that, suffers pecuniary loss as a result of the default.
This provision needs to be read with the definitions of "default" and "pecuniary loss" in s 219 of the Uniform Law as well as the definition of "trust money" in s 129:
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;
trust money
(1) For the purposes of this Law, trust money is 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.
(2) …
Having considered those provisions, reviewed the plaintiff's form and discussed the matter with his counsel, it seems to me that the essential factual claims made by the plaintiff to support his claim on the fidelity fund are as follows:
The person who was said to have suffered "pecuniary loss" is the plaintiff, namely Chunfeng Wang.
The "law practice" the subject of the plaintiff's claim, is SHS Law Pty Limited.
The "default", the subject of the plaintiff's claim, is said to be related to "trust money" being the sum of $80,000 said to have been provided on or about 8 February 2017 to the law practice on behalf of the plaintiff.
The plaintiff contends that the sum of $80,000 was trust money because it was received by the law practice on account of legal costs in advance of the provision of legal services to him, namely, advice and assistance in obtaining a visa and such future legal services as may be required for the conduct of his business.
The default alleged by the plaintiff is said to be the failure of the law practice to return $58,000 of the sum of $80,000 in or around mid-2017 in circumstances where legal services referable to that amount had not been provided and there had been a request to repay the funds provided.
The failure is said to arise from an act or omission of an associate of the law practice, namely, those members of the law practice who dealt with his matter, that involve fraud or other dishonesty, namely, their conduct in failing to return the funds on request when the legal services referable to the $58,000 had not been provided and the law practice had no entitlement to retain that sum.
The pecuniary loss, the subject of the plaintiff's claim, is the balance of the funds advanced that were not returned.
As I have said, the proposed orders will now provide a regime whereby the plaintiff can indicate whether it accepts those seven facts, matters and circumstances as representing the essential facts it needs to raise in support of its case with a view to the Law Society then filing its points of defence.
This process will allow the plaintiff to reflect upon whether that is the essential facts that they require but also will hopefully minimise costs in relation to a matter which, I have said, involves a relatively modest sum.
Accordingly, I order as follows:
On or before 5.00pm on 11 December 2020 the plaintiff is to notify the defendant of whether he accepts the seven facts, matters and circumstances identified in this judgment as constituting its points of claim or, if he does not, to provide points of claim to the defendant.
On or before 5.00pm on 5 February 2021 the defendant is to file points of defence.
On or before 5.00pm on 26 February 2021 the plaintiff is to file any points of reply.
On or before 5.00pm on 26 March 2021 the plaintiff is to file and serve any affidavits in support of his claim.
The matter will be listed for further directions at 9.00am on 6 April 2021 before the Registrar.
[Parties addressed on costs.]
The costs of the defendant's notice of motion filed 26 October 2020 be costs in the cause.
The defendant's notice of motion be otherwise dismissed.
[3]
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Decision last updated: 04 December 2020