Legal Services Board v Gillespie-Jones [2013] HCA 35

HIGH COURT OF AUSTRALIA

FRENCH CJ, HAYNE, CRENNAN, KIEFEL, BELL, GAGELER AND KEANE JJ

LEGAL SERVICES BOARD APPELLANT

AND

SIMON GILLESPIE-JONES RESPONDENT

Legal Services Board v Gillespie-Jones [2013] HCA 35 14 August 2013 M27/2013

ORDER

1. Appeal allowed.

2. Order 1 of the orders made by the Court of Appeal of the Supreme Court of Victoria on 19 April 2012 be set aside, and, in its place, order that:

(a) the appeal from the order made by the County Court of Victoria on 1 April 2011 be allowed; and

(b) paragraphs 1–4 of the order made by the County Court on 1 April 2011 be set aside, and, in their place, order that the appeal from the decision of the Legal Services Board made on 20 October 2009 be dismissed.

On appeal from the Supreme Court of Victoria

Representation

N J Young QC with S R Senathirajah for the appellant (instructed by Legal Services Board)

M F Wheelahan SC with M F Fleming SC and B J McCullagh for the respondent (instructed by Billings Cloak)

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Legal Services Board v Gillespie-Jones

Legal practitioners – Legal Practitioners Fidelity Fund ("Fidelity Fund") – Barrister briefed by solicitor to appear for client – Money paid into general trust account by client on account of legal costs – Money misappropriated by solicitor – No finding that client instructed solicitor to pay third parties – Whether barrister entitled to claim against Fidelity Fund for unpaid fees.

Words and phrases – "default", "failure to pay or deliver trust money", "pecuniary loss", "persons for or on whose behalf money is held", "transit money", "trust money".

Legal Profession Act 2004 (Vic), Pts 3.3, 3.6.

FRENCH CJ, HAYNE, CRENNAN AND KIEFEL JJ. In 2006, a person charged with criminal offences ("the client") retained Mr Michael Grey ("the solicitor"), who was the principal of the firm Poulton Elliott & Grey, to act for him in connection with forthcoming criminal proceedings. The respondent, Mr Gillespie-Jones ("the barrister"), was briefed by the solicitor to appear for the client in those proceedings. The client made a series of payments to the solicitor on account of his legal costs. Most of the monies supplied were misappropriated by the solicitor. The amount remaining was insufficient to meet the barrister's unpaid fees. The barrister made a claim against the Legal Practitioners Fidelity Fund ("the Fund"). The Fund is maintained by the Legal Services Board ("the Board") under the Legal Profession Act 2004 (Vic) ("the LPA"). Compensation is payable out of the Fund where a claim is allowed under Pt 3.6 of the LPA. A claim may be allowed under that Part where a person establishes that there has been a default which has caused that person pecuniary loss. One circumstance of default is when a law practice fails to pay or deliver trust money received by it, where the failure arises from an act of dishonesty. The barrister's claim was rejected by the Board. Her Honour Judge Kennedy of the County Court of Victoria allowed the barrister's appeal and his claim. The Court of Appeal of the Supreme Court of Victoria (Nettle, Redlich and Hansen JJA) dismissed an appeal from her Honour's decision. The client's payments Prior to the barrister being briefed, the solicitor and a senior counsel had acted for the client in committal proceedings. During this period, the client paid the sum of $21,700, by way of cheques and cash, to the solicitor on account of his legal costs. Not all of these monies were paid by the solicitor into his law practice's general trust account. The client also paid directly to the senior counsel an amount greater than the fees ultimately rendered by the senior counsel; the senior counsel's clerk transferred the balance of $8,400 to the solicitor. This amount was never refunded to the client. The barrister was briefed to appear for the client between December 2006 and April 2007. Between 19 December 2006 and 9 May 2007, the client paid a further $55,000 to the solicitor. Of the total sum of $85,100 received by the solicitor, the solicitor dishonestly appropriated $63,030 to himself. The $55,000 which was paid to the solicitor in the latter period was effected by 11 electronic transfers of $5,000 each from the client's account to the solicitor's law practice's general trust account. Seven of the transfers were denoted with the name of the solicitor together with the name of the barrister such as in "Grey & SG Jones" or "Grey & Simon". The other four transfers referred to the barrister as "Sgj via M Grey" or similar. In his evidence before the primary judge, the client explained that he used initials and words such as "Sgj via M Grey" on the transfers because the solicitor had told him that he, the solicitor, had to pay the barrister. The client understood that he could not himself engage a barrister. When the solicitor asked him for money, he assumed that it related to "whatever expenses" including the engagement of whoever was to appear for him. When asked to whose engagement he referred, he replied: "[e]verybody that come and help me". Asked whether there was a person specified, he answered: "[y]es, is [the barrister] and I think the doctor was included, I think [the solicitor] say that, you know, I need to pay him for more legal expenses." The client's instruction was "to pay [the solicitor], to pay whoever that has been engaged." He assumed that the money the solicitor had asked him to pay "was to pay whoever, that [the solicitor] said he was going to pay." It may at the least be inferred that the payments were made by the client at the request of the solicitor and that they were made in order to enable the solicitor to pay the client's legal costs. The primary judge considered whether the instruction, so far as it related to the barrister's fees, was more specific and made findings in that regard. It is also to be inferred that the monies were not to be used for any purpose other than the payment of legal costs and that any balance was to be repaid to the client. The barrister periodically submitted memoranda of his fees to the solicitor, but the client did not see them. There was no costs agreement between the barrister and the solicitor or between the client and either the solicitor or the barrister. The client was not told what the solicitor's or the barrister's fees might be. The total of the barrister's fees was $53,610, of which $31,540 was unpaid. There is no dispute that the barrister's fees for the services that he had rendered were fair and reasonable. There does not appear to be any dispute that, had the monies not been misappropriated, there would have been sufficient money in the solicitor's law practice's general trust account to meet the client's legal costs, including the barrister's fees. The LPA – Pt 3.6 The general purposes of the LPA are to improve the regulation of the legal profession and facilitate the regulation of legal practice on a national basis. It was enacted as part of national reforms which aimed to regulate the legal profession in a uniform manner throughout Australia. The LPA was based largely on the first edition of the Model Provisions, which had been provided to the Standing Committee of Attorneys-General in July 2004. Provision is made for the Fund in Pt 6.7 of the LPA. The Board is required to maintain it and to pay into it contributions and levies from legal practitioners, together with certain other monies. The stated purpose of the Fund is that it "is to be applied by the Board for the purpose of compensating claimants in respect of claims allowed under Part 3.6 in respect of defaults to which that Part applies." Part 3.6 appears in Ch 3, which deals with a number of subjects. On this appeal, attention is directed to Pts 3.3 and 3.6, which are respectively entitled "Trust Money and Trust Accounts" and "Fidelity Cover". Other subjects dealt with in Ch 3 include "Manner of Legal Practice" and "Professional Indemnity Insurance". The purpose of Pt 3.6 is stated in s 3.6.1. It is to compensate persons "for loss arising out of defaults by law practices arising from acts or omissions of associates". The LPA defines an associate to include a partner in the law practice. Section 3.6.7(1) identifies a person entitled to claim and the essential elements of the claim. It provides: "A person who suffers pecuniary loss because of a default to which this Part applies may make a claim against the Fidelity Fund to the Board about the default." It may be observed at this point that s 3.6.7(1) is cast in terms of causation. The event which causes pecuniary loss, and upon which a claim may be based, is "a default". The centrality of a default to the scheme for compensation in Pt 3.6 is confirmed by the provision dealing with the Board's powers in respect of a claim. The Board may disallow a claim "to the extent that the claim does not relate to a default for which the Fidelity Fund is liable." The definition of "default" assumes importance on this appeal as does the definition of "pecuniary loss". In the case of a law practice, "default" means: "(a) … (i) a failure of the practice to pay or deliver trust money or trust property that was received by the practice or an associate of the practice in the course of legal practice by the practice or an associate, if the failure is constituted by or arises from an act or omission of an associate that involves dishonesty; or (ii) a fraudulent dealing with trust money or trust property that was received by the practice or an associate of the practice in the course of legal practice by the practice or an associate, if the fraudulent dealing is constituted by or arises from an act or omission of an associate that involves dishonesty". A "pecuniary loss" is defined to mean: "(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". It may be observed that par (a)(i) of the definition of "default" corresponds with par (a) of the definition of "pecuniary loss" as does par (a)(ii) with par (b). Here, the barrister's pecuniary loss is said to have resulted from the trust money which was not paid or delivered. That loss is neither more nor less than the amount of the money not paid or delivered. What constitutes a "failure to pay or deliver trust money" is not specified. In the context of a practice in receipt of trust money, it must be taken to convey non-compliance with an instruction to pay or deliver trust money to another person, that instruction having been given by the client or other person entitled to give such an instruction. It must be understood, in the context of a default, as an instruction to pay to a third person because it is contemplated that the failure to pay or deliver it may result in loss to that person. "Trust money" is not a term defined in Pt 3.6. A definition can be found in s 3.3.2(1), in Pt 3.3. "Trust money" in relation to a law practice is there generally defined as: "money received in the course of or in connection with the provision of legal services by the law practice for or on behalf of another person". More specifically, it includes "money received on account of legal costs in advance of providing the services". "Legal costs" is defined to mean "amounts that a person has been or may be charged by, or is or may become liable to pay, a law practice for the provision of legal services including disbursements". There can be no doubt that the sums paid by the client in this case were trust money in this sense. "Trust money" also includes "transit money", which is defined to mean "money received by a law practice subject to instructions to pay or deliver it to a third party, other than an associate of the practice". It will be recalled that the failure of a practice to pay or deliver trust money, in the definition of default, comprehends such an instruction. The LPA – Pt 3.3 The issues raised by the Board's submissions and by the reasons of the Court of Appeal direct attention to the relationship, if any, between Pts 3.6 and 3.3. It is therefore necessary to identify those aspects of Pt 3.3 which are said to be relevant to the construction of Pt 3.6 and to an entitlement to claim or recover compensation. One issue concerns the protective purpose of Pt 3.3 and the persons to whom that Part is directed. Section 3.3.1(a) states that one purpose of Pt 3.3 is "to ensure that trust money is held by law practices … in a way that protects the interests of persons for or on whose behalf money is held" (emphasis added). Another issue raised by the Board concerns compliance with certain procedures of Pt 3.3 and whether this was a precondition to making any payment to the barrister. The starting point is the requirement that a general trust account be maintained by a law practice. Trust money, with certain exceptions, must be deposited in such an account. The law practice must hold trust money deposited in its general trust account "exclusively for the person on whose behalf it is received" and "disburse [it] only in accordance with a direction given by the person." An exception to the rule that trust money must be deposited in a general trust account is transit money. This is no doubt because it is subject to a specific instruction to pay a third party. Two particular provisions concerning dealings with, and more particularly withdrawals from, a general trust account are relied upon by the Board. Section 3.3.18(1) provides that money standing to the credit of a general trust account "is not available for the payment of debts of the practice". The Board says that the relevant contract was between the solicitor and the barrister and therefore that the barrister's fees were a debt owed by the solicitor. Section 3.3.20(1)(a) provides for a law practice to exercise a lien for legal costs (a term, it will be recalled, which is defined to include disbursements). But a lien does not provide an authorisation to withdraw trust money. Section 3.3.20(1)(b) requires that trust money may only be withdrawn "for payment to the practice's account for legal costs owing to the practice" if the procedures prescribed in the regulations are complied with. Regulation 3.3.34 prescribes such procedures. Unless there is a costs agreement (and, it will be recalled, there was no costs agreement in this case) or the money is owed to the practice by way of a reimbursement of money already paid on behalf of a person, an instruction is required from the client authorising the withdrawal. The regulations also require, for a withdrawal, that the law practice requests payment to be made and sends a bill to the client, and that the client does not make an objection to the bill within a specified period. The decisions below and issues on the appeal It is convenient to refer first to a matter which is no longer in issue. Section 3.6.1 states the purpose of Pt 3.6 to be to compensate "clients". The Board, by reference to this section, held that compensation could be paid only to a client of a law practice. Neither the primary judge nor the Court of Appeal accepted that this view was supported by Pt 3.6, read as a whole. They both held that the word "person" in s 3.6.7, which sets out who may make a claim against the Fund, ought to be given its ordinary meaning. That construction is plainly correct. The reference to "clients" must be taken to refer to part only of the class of persons who may seek compensation, given that s 3.6.7, the operative provision, contains a different and wider term. That "persons", and not just clients, are to be compensated, if they can establish the matters required by s 3.6.7, is confirmed by: the reference to "persons" as claimants in the Model Provisions, upon which Pt 3.6 is based; the wording of s 6.7.16, referred to above; and s 3.6.28. Section 3.6.28 provides that an associate of a law practice may make a claim under s 3.6.7 if the associate suffers pecuniary loss because of a default of the law practice arising from the act or omission of another associate of the practice. As the Court of Appeal observed, it would be difficult to discern a legislative intention to allow innocent associates of a defaulting solicitor to have access to the Fund but not innocent third parties. The first issue – compliance with Pt 3.3 procedures Her Honour the primary judge found that a "default", for the purposes of Pt 3.6, was established and that the barrister had suffered a pecuniary loss as a result. Her Honour found that there had been a failure to pay or deliver trust money. In characterising the relevant money, her Honour did not accept the barrister's submission that the money was "transit money". Her Honour found that each of the payments made by the client to the solicitor was provided for paying "everybody that was to come and help him" in his defence. Her Honour rejected the submission that "composite money" could be stamped with the character of transit money. It is to be inferred that her Honour was referring to money intended to be paid to more than one person. Her Honour said that, because different consequences follow if money is transit money, such as it not having to be paid into a law practice's general trust account, it is necessary for it to be clearly identified as such. It had not been clearly identified in the present case because the money was "potentially designated for [the solicitor] himself". Her Honour appears to have considered that the money could satisfy that part of the definition of "trust money" which refers to money that is the subject of a power to deal with it for or on behalf of another person, although her Honour took the "other person" to be the client. This finding does not assume importance on the appeal. The finding to which attention is now directed is that the money was trust money because it was "received by the practice on account of legal costs in advance of providing the services". The solicitor's failure to pay or deliver trust money was constituted by the solicitor's failure to pay in accordance with a direction given by the client. The obligation cast by s 3.3.14(1)(b), to disburse trust money "only in accordance with a direction given by the person", had been breached. It was breached because the solicitor disbursed the trust money, her Honour found, "contrary to the direction given by [the client] to pay for his legal costs and instead [the solicitor] … used that money for himself." It has earlier been observed that a "failure to pay or deliver trust money" in the context of the definitions of "default" and "pecuniary loss" necessarily involves an instruction to pay or deliver trust money to a third person which is not complied with. It is a feature of her Honour's findings, one which is important to the outcome of this appeal, that her Honour did not find that such an instruction was given to pay the barrister's fees. The effect of the findings is in fact contrary to the existence of such an instruction. In relation to whether there had been a default, her Honour found that the money was received by the practice on account of legal costs and could be disbursed only in accordance with the client's directions under s 3.3.14. This suggests that the initial instruction did not involve a direction to pay a third party. Her Honour's conclusion that there had been a default did not involve a finding of a failure to comply with an instruction to pay a third party but, more generally, that s 3.3.14 had been breached because the solicitor used the money for himself and not for its designated purpose, the payment of legal costs. These findings are consistent with those concerning whether the trust money was transit money. Significantly, the finding that the money was designated by the client to the solicitor on account of costs, generally, would appear to involve a rejection of any finding that there was at the same time an instruction to pay the barrister. Her Honour rejected the Board's argument that a "failure" to pay trust money was dependent upon a solicitor's compliance with the procedural requirements of Pt 3.3 and in particular s 3.3.20. Her Honour held that, if a solicitor has disbursed trust money contrary to the client's directions, then that solicitor has "failed" to pay trust money, regardless of whether he or she has complied with procedures. The Board now repeats the submission that it made to the Court of Appeal on this issue. It submits that because a claim under Pt 3.6 involves a failure to pay trust money, the barrister must establish that he had an immediate right to receive payment for his fees at the time of default. Until the procedural requirements of Pt 3.3 have been met, there can be no failure to pay trust money held in a law practice's trust account. In the Board's submission, the requirements of Pt 3.3 present an insurmountable barrier to the barrister's claim. The second issue – who is entitled to claim compensation? In the Court of Appeal, the Board argued that it was necessary to interpret Pt 3.6 in light of Pt 3.3, and in particular the protective purpose of the latter, which is stated in s 3.3.1(a). The Board contended that an entitlement to claim under Pt 3.6 is limited, by implication derived from s 3.3.1, to the interests of persons "for or on whose behalf" trust money was held by the defaulting solicitor. Such a person must have a legal or equitable interest in the money. The question which the Court of Appeal posed for itself was "whether [the barrister] was a person 'for or on whose behalf' the money the subject of default was held". The Court accepted that, insofar as Pt 3.6 is concerned with providing compensation to those who suffer pecuniary loss regarding trust money, Pt 3.6 is "logically to be seen as limited to the interests of persons for or on whose behalf the trust money the subject of the default was held." This followed because Pt 3.6 is concerned with trust money, amongst other things, and Pt 3.3 regulates how such money is to be dealt with. The Court of Appeal considered that the word "interests" in s 3.3.1 is co-ordinate with the expression "for or on whose behalf" the money or property is held; but it did not follow that "interests" were limited to legal or equitable interests. It was sufficient that the barrister had a contingent interest in the fund, constituted by the monies paid by the client, which was held on trust for payment to him when his fees became due. The Court of Appeal characterised the trust as one in the nature of a Quistclose trust, which was to be implied from the fact that the client paid the monies to the solicitor to be applied to a particular purpose. The Board submits that the facts do not permit this finding. It further submits that a trust of the kind identified by the Court of Appeal is inconsistent with the requirements of Pt 3.3, which prescribe how trust money is to be applied. In particular, s 3.3.14 requires that trust money be held exclusively for the persons "on whose behalf it is received" and that it be disbursed only in accordance with a direction given by that person. By Notice of Contention, the barrister challenges the underlying premise for the Court of Appeal's finding. He contends that the Court of Appeal erred in holding that the benefit afforded by Pt 3.6 may only be given to a person "for or on whose behalf money is held". In the barrister's submission, none of the provisions of Pt 3.6 requires that a claimant have an interest of this kind. On this view, the Court of Appeal's construction imports a limitation upon the class of persons entitled to claim compensation, one which is not consistent with the language of Pt 3.6. Is compliance with Pt 3.3 procedures a condition of compensation under Pt 3.6? Clearly the monies paid by the client fall within that part of the definition of "trust money" which refers to "money received on account of legal costs in advance of providing the services", as the primary judge found. As such, they were required to be paid into the solicitor's law practice's general trust account, from which point they would have become subject to the provisions of Pt 3.3 concerning dealings with trust money. Section 3.3.20(1)(b) and its associated regulation apply when a law practice withdraws monies to pay its legal costs including disbursements. However, in this case, the law practice had not paid the barrister the fees in question. No question of reimbursement arose. Section 3.3.18(1) denies the availability of monies standing to the credit of the general trust account to meet the debts of the practice. That section is directed to the unilateral action of withdrawal from the account, on the part of a law practice, for that purpose. These provisions do not, in their terms, appear to be referable to the circumstance where a client gives an instruction to disburse monies. The primary judge did not, however, find that such an instruction was given. In any event, the relevant instruction was given by the client before monies were paid into the general trust account. If the instruction had been found to be directed to payment of the barrister's fees, the monies would have qualified as transit money, in which case they would not have been subject to these provisions. But her Honour rejected that contention. In these circumstances, it cannot be said that a specific instruction to pay the barrister's fees was given such that the provisions of Pt 3.3 to which the Board refers do not apply. Nevertheless, the Board's submission that, because the procedures required by Pt 3.3 were not complied with, there could not have been a "failure to pay or deliver trust money" within the meaning of Pt 3.6 cannot be accepted. It cannot be accepted because the legislature could not reasonably be taken to have intended them to apply in the circumstance of a default. Part 3.6 is predicated upon acts of dishonesty giving rise to a default. The Board's submission is that, regardless of this circumstance, the legislature intended to condition recovery of compensation for the default to the defaulting solicitor's compliance with procedural requirements regarding payments that he or she did not intend to make. This is curious logic. Had the solicitor in this case not been acting dishonestly, he would surely have sought the necessary approvals to pay the barrister's fees and it seems likely that they would have been given. Part 3.6 is concerned with compensating persons who suffer pecuniary loss as a result of a default. It contains no statement that compensation is to be conditional upon compliance with the procedural requirements of Pt 3.3, nor can such a condition be implied on ordinary rules of construction. To the contrary, Pt 3.6 may reasonably be taken to be founded upon the assumption that, where there has been a dishonest dealing with trust money, procedures are unlikely to have been complied with. The matters dealt with in s 3.6.14(3) are relevant to the question of legislative intention. That provision gives the Board power to disallow or reduce a claim in certain circumstances, which, in general terms, involve the conduct or knowledge of a claimant in connection with the act of default or the claim. One particular circumstance, referred to in par (d) of the sub-section, is when proper records are not created or kept, and the claimant knew or ought reasonably to have known that they would not be kept or would be destroyed. Two observations may be made regarding this provision. First, the circumstance identified in par (d) confirms, if it be necessary, a legislative understanding that, in dishonest actions or dealings with trust money or property, proper records are not likely to be kept. The same may be said of compliance with procedures. Secondly, it is evident that the legislature has turned its mind to the circumstances where compensation might be denied or reduced, having regard to the conduct or knowledge of a claimant. It is difficult then to infer that the legislature also intended to deny compensation because of a defaulting solicitor's omissions in respect of which a claimant had no knowledge or control. Fundamentally, the Board seeks to impute to the legislature an intention which is neither reasonable nor rational. In Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation, it was said that when a judge assigns labels such as "absurd" or "irrational", he or she is assigning a ground for concluding that the legislature could not have intended a statute to operate in a particular way, and that an alternative interpretation is to be preferred. This is such a case. It is preferable to adopt a construction that will avoid a consequence which appears irrational or unjust. Part 3.6 cannot sensibly be read as conditioning recovery to compliance with procedures in Pt 3.3. Who is entitled to claim compensation? The starting point for a consideration of whether the barrister is within the class of persons entitled to claim compensation must be the provisions of Pt 3.6. It is necessary to give close consideration to its provisions, as those most clearly relevant to a determination of this question. In particular, attention should be directed to the definitions of "default" and of "pecuniary loss". This is not to deny the importance of purpose to the construction of Pt 3.6. The relevant purpose is that of Pt 3.6 itself, which is to provide compensation where a person suffers pecuniary loss as a result of a default, as those terms are defined. That purpose is remedial and beneficial, and the provisions of Pt 3.6 which bear upon the question should therefore receive as generous a construction as the actual language of those provisions permits. It is to the actual language of the Part that resort should be had to determine the limits, if any, on the class of persons who may benefit from the provision it makes for compensation. The purpose of Pt 3.3 is to regulate dealings with trust money and deter persons from dealing with that money contrary to, or without, instructions and contrary to the interests of persons on whose behalf the money is held. The extent to which dishonest dealings may be deterred by such provisions is another matter. What Pt 3.3 and Pt 3.6 have in common, it will be seen, is that they identify a person who has an interest in the money in the sense that the person may suffer loss if it is dealt with other than according to instructions. However, the class of persons identified is not limited to persons beneficially entitled to trust money and s 3.3.1 should not be read as limited in that way. So understood, the question whether the barrister had some interest in the trust money, such as that of a beneficiary of a Quistclose trust for payment of his fees, is not to the point. The question Pt 3.6 poses, which will determine the barrister's entitlement to claim compensation, is whether he suffered a pecuniary loss as a result of a default. Reference has been made above to the two circumstances of default provided for in Pt 3.6 and the pecuniary loss which corresponds with them. It is the person who suffers such loss in the circumstance of a default who is entitled to claim compensation. The question is whether the barrister is such a person. The second circumstance of default is a fraudulent dealing with trust money or property which results in the loss or deprivation of money or the loss of value of trust property. It identifies a person who has a proprietorial interest in trust money or property. That person's loss is the diminution of that interest as a result of the fraudulent dealing. It is not suggested that the barrister has suffered such a loss. It is the first circumstance of default and its corresponding loss which is relevant to the barrister. A person may suffer pecuniary loss where there has been a failure to pay or deliver trust money or property. The pecuniary loss suffered is that which is not paid or delivered. Neither a proprietorial interest nor any entitlement to the trust money or property is required, beyond the fact that, but for the default, the trust money or property would have been paid or delivered to the person. A qualification is necessary with respect to the last statement. A person will not have suffered pecuniary loss as a result of a default merely because, had monies not been misappropriated, there would have been sufficient trust money to meet the person's claim. This seems to us to be the approach taken by her Honour the primary judge. There can be no "failure to pay or deliver" trust money or property unless there is an extant instruction to the practice to pay or deliver the money or property, and it is not complied with. The instruction must necessarily be to pay or deliver the trust money or property to an identifiable person. It is that person who will suffer loss if the instruction is not complied with. The person so identified in Pt 3.6 is also identified in Pt 3.3, in the definition of "trust money". Such a person is the third party who is the intended recipient of trust money which is the subject of an instruction for payment or delivery to that person. That money is "transit money". Both Pts 3.6 and 3.3 therefore comprehend that trust money may be held not only for and on behalf of a person beneficially entitled to it, but also on behalf of a person who is the subject of an instruction that trust money be paid or delivered to that person. To the limited extent to which it is necessary to do so, s 3.3.1(a) should be taken also to refer to a third party recipient of transit money as a person "for or on whose behalf money is held". That person's interests depend upon the instruction given being complied with. The barrister might have been such a person, had there been a finding that the client gave the relevant instruction. It is unnecessary to consider the Board's further submission that a "failure to pay or deliver" trust money is to be equated with a "failure to account". The conclusion sought to be drawn from this premise is that the only person to whom a law practice could pay or deliver trust money is the person beneficially entitled to it. The submission relied on cases involving statutes in terms which differ from the LPA and brings to mind the cautionary statement in Baini v The Queen that such an approach is likely to mislead. Attention should be directed to the text of the statute in question. Was the barrister entitled to claim compensation? For the barrister to succeed, it is necessary that there has been a failure to pay or deliver trust money to him. In the event of such a default, he will have suffered the necessary pecuniary loss. A failure to pay or deliver trust money requires that the solicitor was instructed to pay the barrister's fees upon receipt of his memoranda of fees. The barrister's claim founders on the findings of the primary judge respecting the instruction given by the client. Her Honour's findings in connection with default do not contain the necessary finding that there was a relevant instruction and those relating to whether the money was transit money are inconsistent with such an instruction having been given. The effect of her Honour's findings is that the money was intended to be held by the solicitor and disbursed according to the client's further directions. Her Honour's opinion that transit money cannot be composite money was no doubt influential to the finding of default. It raises the question whether transit money is sufficiently identified by an instruction to pay more than one person and to pay them an as yet unascertained sum of money. But this is not a question that is raised on this appeal. In his submissions, the barrister sought to show that the payments made by electronic transfer could only have been intended for him, because the solicitor's costs were to come out of the earlier payments. But reliance could only be placed upon the circumstance of the manner of those payments, by a combination of cash and cheques payable to the solicitor's law practice. There was no relevant finding by the primary judge in this regard. The submissions point up the essential difficulty for the barrister on this appeal. It is not disputed that the findings made by the primary judge concerning the instructions given by the client were not challenged in the Court of Appeal. They are not now the subject of the appeal to this Court and cannot be revisited. On those findings, the retainer was not made on behalf of the client. The solicitor was personally responsible for the barrister's fees. The instructions the client gave the solicitor did not amount to an instruction to pay the barrister's fees without further reference to the client. It is neither necessary nor appropriate to decide whether a barrister retained by a solicitor on behalf of a client would have a claim against the Fund if the client had paid the solicitor an amount on account of counsel's fees (or disbursements generally) and the solicitor misapplied those monies. It is important, however, to emphasise that the actual disposition of this case, as distinct from the more general discussion of the operation of the LPA, turns upon the facts of the particular case. Variation of either or both of the aspects of the facts of this case that have been noted may, we do not say must, yield a different application of the LPA. Orders The appeal should be allowed and order 1 of the Court of Appeal of the Supreme Court of Victoria of 19 April 2012 set aside. In lieu thereof it should be ordered that the appeal from the decision of the County Court of Victoria be allowed and pars 1 to 4 of the order of that Court of 1 April 2011 set aside. In lieu thereof it should be ordered that the appeal from the decision of the Legal Services Board of 20 October 2009 be dismissed. There is no need for an order for costs, the Board having undertaken to pay the barrister's costs of the appeal regardless of the outcome and to not seek to disturb orders for costs made in the courts below.