New South Wales Supreme Court CITATION : Barber v The Law Society of New South Wales [2000] NSWSC 1164 FILE NUMBER(S) : SC 10479/00 HEARING DATE(S) : 05/12/00 JUDGMENT DATE : 12 December 2000 PARTIES : Charles William Barber Law Society of New South Wales JUDGMENT OF : Bell J at 1 COUNSEL : Mr D Higgs SC/Ms K Rees - Plaintiff Mr Epstein SC/Mr Skinner - Defendant SOLICITORS : Dianne Burn & Yvonne Swift - Plaintiff A S Brown - Defendant CATCHWORDS : Claim against Fidelity Fund - privative clause - whether s 90D Legal Profession Act precludes judicial review of Law Society's determination of question of solicitor's dishonesty. Legal Profession Act 1987 Supreme Court Act 1970 (NSW) LEGISLATION CITED : Prisons Act 1952 Limitation Act 1969 Evidence Act 1995 Vassiliadis v Law Society of New South Wales (1997) 41 NSWLR 303 at 387A-C Associated Provincial Picture Houses Ltd v Wednesbury Corportion [1948] 1 KB 223 The King v Hickman; Ex parte Fox and Clinto (1945) 70 CLR 598 Darling Casino Ltd v New South Wales Casino Control Authority (1997) 191 CLR 602 Bropho v Western Australia (1990) 171 CLR 1 Public Service Association (SA) v Federated Clerks' Union (1991) 173 CLR 132 Stego Pty Ltd v Law Society of New South Wales (1994) 35 NSWLR 466 CASES CITED : Vishnevski & Anor v The Council of the Law Society of New South Wales (unreported) NSWSC 20.02.98 Whitfield & Anor v The Law Society of New South Wales (unreported) NSWSC 04.12.98 Vanmeld Pty Ltd v Fairfield City Council (1999) 46 NSWLR 78 O'Toole v Charles David Pty Ltd [No 1] (1991) 171 CLR 232 Talarico v Law Society of New South Wales (unreported) NSWSC 22.04.98 Laurent v The Law Society of New South Wales [2000] NSWSC 1103 Vezitis v McGeechan [1974] 1 NSWLR 718 Water Administration Corporation v Puntoriero (unreported) NSWCA 21/11/97 Board of Fire Commissioners (NSW) v Ardouin (1961) 109 CLR 105 DECISION : Held jurisdiction to grant the plaintiff relief sought in the further amended summons. IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION BELL J Tuesday 12 December 2000 10479/00 - Charles William BARBER v LAW SOCIETY OF NEW SOUTH WALES JUDGMENT 1 HER HONOUR: On 21 September 1999 the plaintiff commenced proceedings pursuant to s 90D(3) of the Legal Profession Act 1987 ("the Act") by way of appeal against the Law Society of New South Wales' ("the Society") determination of his claim upon the Fidelity Fund. Two determinations were the subject of appeal; the first made on 22 October 1996 wholly disallowing his claim and the second, made on 27 February 1998, affirming the earlier decision. 2 On 20 October 1999 the Society filed a notice of motion seeking to have the plaintiff's summons dismissed by reason that the appeal had been brought out of time. That matter came on before Master Malpass for hearing on 12 May 2000. On 31 May 2000 the Master dismissed the summons. 3 The plaintiff appealed against the Master's determination. The appeal came before Levine J on 6 September 2000. His Honour allowed the appeal and ordered that the hearing of the appeal be expedited. 4 The plaintiff is aged eighty three years. The subject matter of his claim relates to the sum of $325,000 which he is said to have entrusted to a solicitor, Justin Hill, over the period 1984 -1992. It is the plaintiff's case that the solicitor failed to repay these moneys together with interest which was then owing. 5 Under s 70 of the Act the Society is required to establish and maintain a Solicitors' Fidelity Fund ("the Fund"). Provision is made in s 74 for the Law Society Council by resolution to delegate any or all of its functions in relation to the Fund to a Management Committee. 6 Division 3 of Part 7 of the Act governs claims made upon the Fund. Section 80(1) provides that the Fund is to be applied by the Society for the purpose of compensating persons who suffer pecuniary loss because of a failure to account or a dishonest default. In the event of a claim being made upon the Fund the Society is required to investigate it and to determine it by wholly or partly allowing, compromising, settling or disallowing it; s 80(3). 7 The plaintiff's claim is said to arise from a failure to account. The meaning of failure to account is as set out in s 79A: 79A. Meaning of "failure to account" (1) In this Division, a reference to a failure to account is a reference to a failure by a solicitor to account for, pay or deliver money or other valuable property received by, or entrusted to, the solicitor or an associate in the course of the solicitor's practice (in the case of an associate being money or valuable property under the direct or indirect control of the solicitor). (2) This section applies only to a failure to account that arises from an act or omission of the solicitor or associate: (a) for which the solicitor or associate has been convicted of a crime or an offence involving dishonesty, or (b) which the Law Society Council has found to be dishonest. (3) A finding by the Law Society Council under subsection (2)(b) that an act or omission is, or is not, dishonest is final and conclusive. (4) This section applies whether the money or other property was received by the solicitor or associate as trustee, agent, bailee or stake holder or in any other capacity. (5) This section applies whether the failure to account, or the act, omission, conviction or finding of dishonesty took place before or after the commencement of this Act. 8 The Society in its initial determination wholly disallowed the plaintiff's claim upon the basis that the moneys were not received by or entrusted to the solicitor in the course of his practice. At the time of making that determination (and as at 27 February 1998 when the determination was affirmed) the Society had not made a finding as to the dishonesty of the solicitor for the purposes of s 79A(2)(b) of the Act. 9 In the proceedings before Levine J it appears that the Society sought to contend that any appeal would be of limited utility if not futile. I understand that this contention was advanced by reference to the fact that a finding as to dishonesty (in the absence of evidence that the solicitor has been convicted of an offence of dishonesty) is an essential ingredient for a successful claim upon the Fund. Levine J dealt with the above submission at paras 17-20 of his reasons: "The fund made no finding as to Hill having been dishonest. No finding was made one way or the other. In the event that the fund has found the first leg, as I will describe it, namely in the course of the solicitor's practice, and found no dishonesty, the claim would fail. This is clearly so: Vassiliadis v Law Society of New South Wales (1997) 41 NSWLR 303 at 387A-C. In the instant case there has been no finding, as I have said, one way or the other. That point was not reached, nor indeed it seems to me was it adverted to either in annexure B or annexure N to Mr Barber's affidavit in which context I happen to note the observation of Young J at first instance in Vassiliadis (unreported, 10 August 1994) at p 8 as to the question of whether there was a public duty to make any finding. Whilst it may be the law that the finding as to dishonesty, first, is a necessary element, secondly, can only be made by a Fund, the absence of any finding at all as to the latter cannot render futile or of little utility the proposed appeal on an issue which would be binding on the Fund if the appellant were to succeed on it. On the hearing of the substantive appeal whether a finding as to dishonesty could or should be made by the Judge will no doubt be the subject of debate. In Talarico Bruce J made a finding but remitted the matter, as I understand it, to the Fund. The Judge on the hearing of the substantive appeal may uphold the appeal as to the course of the solicitor's practice issue and remit the matter, without a finding of dishonesty, to the Fund." 10 On 23 November 2000 the Society made a finding of no dishonesty for the purpose of s 79A(2) of the Act. 11 The proceedings came on for hearing before me on 5 December 2000. At the outset Mr Higgs SC, who with Ms Rees appears for the plaintiff, sought and obtained leave to file an amended summons in court seeking relevantly: "(a) A declaration that the finding of the defendant on 23 November 2000 pursuant to s 79A(2)(b) of the Legal Profession Act 1987 (NSW) is invalid and of no force or effect; and (b) An order that the defendant make a finding pursuant to s 79A(2)(b) of the Legal Profession Act 1987 (NSW) according to law". 12 Mr Higgs, after briefly outlining the history of the proceedings observing that the litigation had changed somewhat in its journey, informed me that the plaintiff seeks to challenge the Society's determination of 23 November 2000 upon a "Wednesbury basis". He noted that the Society had provided the plaintiff with all the documentation that was before the Fidelity Fund Management Committee (save for certain documents the subject of a claim for client legal privilege to which I will return). Mr Higgs seeks to contend that no reasonable body entrusted with the statutory task conferred on the Society by s 79A(2)(b) could have determined that the solicitor's acts or omissions were not "dishonest" within the meaning of s 79A(2); Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223. 13 Mr Epstein SC, who with Mr Skinner appears for the Society, submitted that the Society's determination with respect to the issue of dishonesty for the purposes of s 79A(2)(b) was immune from challenge upon a Wednesbury basis. 14 It was agreed that the convenient course was for me to deal with this issue as a preliminary one and that is the course the proceedings took. 15 Mr Epstein did not contend that the terms of s 79A(3) operate to exclude judicial review upon Wednesbury, or other, grounds. The significance of s 79A(3) to his argument is that no appeal lies from the Society's determination with respect to dishonesty under s 79A(2)(b); Vassiliadis v Law Society of New South Wales (1997) 41 NSWLR 303 at 387A-C. Proceedings seeking to impugn the Society's determination of 23 November 2000 do not come within the terms of s 90D(3) of the Act. 16 Section 90D provides as follows: 90D Proceedings Against Law Society (1) An action does not lie against the Law Society in relation to the Fidelity Fund except: (a) With the leave of the Law Society Council, or (b) as provided by this section (2) If the Law Society Council wholly or partly disallows a claim, it must (without delay) give written notice of the disallowance to the claimant. (3) A claimant may appeal to the Supreme Court against: (a) A decision by the Law Society Council to wholly or partly disallow a claim, or (b) a decision by the Law Society Council to reduce the amount allowed in respect of a claim, by virtue of s 80A, or (c) a failure by the Law Society Council to determine a claim within such period as is prescribed by the regulations. (4) On an appeal under this section, the Supreme Court may make such order as it thinks fit. (5) … 17 Mr Epstein submitted that the opening words of s 90D(1) were effective to immunise the Society against proceedings in the nature of judicial review save for those challenges which raise an issue of (i) absence of bona fides or (ii) excess of jurisdiction such as to bring them within the principle enunciated by Dixon J in The King v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 at 615. In developing this submission Mr Epstein took me to the joint judgment of Gaudron and Gummow JJ in Darling Casino Ltd v New South Wales Casino Control Authority (1997) 191 CLR 602 at 634 where their Honours state: "[P]rovided the intention is clear, a privative clause in a valid State enactment may preclude review for errors of any kind. And if it does, the decision is entirely beyond review so long as it satisfied the Hickman principle". 18 It is to be noted that the provision with which the Court was concerned in Darling Casino Ltd was one which provided that the decision of the relevant authority under its Act was "final and is not subject to appeal or review". 19 Mr Higgs submitted that the language of s 90D of the Act was not such as to exclude judicial review. He placed reliance on the observations of the majority in Bropho v Western Australia (1990) 171 CLR 1 at 17: "One can point to other "rules of construction" which require clear and unambiguous words before a statutory provision will be construed as displaying a legislative intent to achieve a particular result. Examples of such "rules" are those relating to the construction of a statute which would abolish or modify fundamental common law principles or rights … which would deprive a superior court of power to prevent an unauthorised assumption of jurisdiction…" (citations omitted). 20 Indeed, in this respect in their joint judgment in Darling Casino Limited Gaudron and Gummow JJ observe (at 633): "The operation of a State privative clause is purely a matter of its proper meaning ascertained in its legislative context. However, privative clauses, whether in State or Commonwealth legislation, are construed "by reference to a presumption that the legislature does not intend to deprive the citizens of access to the courts, other than to the extent expressly stated or necessarily to be implied"( Public Service Association (SA) v Federated Clerks' Union (1991) 173 CLR 132 per Dawson and Gaudron JJ at 160) ." 21 Mr Higgs submitted that there was a prejudice in favour of curial review rather than against it. The starting point in his analysis was the language of s 79A(3) which denies a claimant a right of appeal against the Society's determination but which does not by its terms purport to exclude the same from judicial review. The terms of s 90D(3)(c) were also said to be inconsistent with an intention to immunise the Society's determination from judicial review. Pursuant to that subsection an "appeal" is allowed against a failure to determine a claim. 22 Mr Higgs pointed to the opening words of s 90D(1) "an action does not lie against the Law Society in relation to the Fidelity Fund…". He submitted that these were curious words to employ if the intention of the legislature had been to exclude the exercise of judicial review (as distinct from civil claims against the Society). In his submission, proceedings pursuant to s 65 of the Supreme Court Act 1970 requiring the Society to fulfil its duty according to law were not caught by the words "an action against the Law Society in relation to the Fidelity Fund". 23 I was taken to a number of decisions at first instance involving appeals brought pursuant to s 90D(3) of the Act. In no case does it appear that the point now taken was agitated. 24 I do note that in Vassiliadis v The Law Society of New South Wales (No 2) (unreported) NSWSC, 10 August 1994, Young J said: "It may be that if the Law Society Council has not made a decision on the point for an invalid reason, then mandamus or an application under s 65 of the Supreme Court Act may lie. It may be that if the Law Society Council comes to a decision which no reasonable body could have come to it might be able to be challenged by certiorari. I have deliberately put these words in vague terms because the point has not been argued before me and that may not be the situation" (p 6). 25 In Stego Pty Ltd v Law Society of New South Wales (1994) 35 NSWLR 466 Windeyer J followed the approach taken by Young J in Vassiliadis in holding that the terms of s 79A(3) operated to preclude an appeal against the Society's determination on the issue. In that case the plaintiff by its summons additionally appears to have sought orders in the nature of prerogative relief. Windeyer J observed that the summons was framed inappropriately so to do. His Honour went on (at p 469) to note that the Society had not contended that such a claim, if properly made, could not be advanced and to indicate a willingness to grant leave to amend the summons if asked. 26 In Vishnevski & Anor v The Council of the Law Society of New South Wales (unreported) NSWSC, 20 February 1998, the plaintiffs appear to have sought, by way of their s 90D(3) appeal, to invite the Court to embark on a review of the Society's s 79(2)(b) determination upon Wednesbury grounds. Barr J noted that there were two obstacles to their so doing; he did not have before him proceedings of that character and there was, in any event, no evidence which would admit of a conclusion that the Society's determination was unreasonable. 27 The plaintiff during the course of the hearing before me sought and obtained (without objection) leave to further amend his summons so as to seek, inter alia, an order pursuant to s 65 of the Supreme Court Act 1970 (NSW) directing the Society to fulfil its duty by making a finding pursuant to s 79A(2)(b) of the Act according to law. 28 In Whitfield & Anor v The Law Society of New South Wales (unreported) NSWSC 4 December 1998 the plaintiffs sought both a declaration that the Society's finding with respect to a s 79A(2)(b) determination was invalid and an order that the Society make a finding pursuant to s 79A(2)(b) according to law. In that case the plaintiffs appealed against the disallowance of two claims made by them. The claims were disallowed on 19 November 1996 on the ground that there had been no failure to account. It was against these determinations that the proceedings by way of s 90D(3) appeal were commenced. 29 After the proceedings were commenced, on 26 February 1998, the Society again considered the plaintiffs' claims and determined for the purposes of s 79A(2)(b) that there was no dishonesty by the solicitor. It was as the result of that further determination that the plaintiffs amended their summons in order to seek the relief set out in para 28 above. 30 In Whitfield Greg James J held that it had not been open to the Society to recall and reconsider its determinations after the plaintiffs' appeals had been commenced, at least without offering them a real opportunity to be heard. He considered that in these circumstances, the subsequent determinations as to the solicitor's dishonesty were not valid determinations for the purposes of s 79A(2)(b). The formal orders made by his Honour do not form part of the reasons for judgment given on 4 December 1998, however, it appears that the proceedings were remitted to the Society with an order that they be determined according to law. 31 Mr Epstein did not seek to contend that the decision in Whitfield was wrong. He accepted that the second "determination" made in the absence of any notice to the claimant would not be immunised by the privative provision. 32 In Vanmeld Pty Ltd v Fairfield City Council (1999) 46 NSWLR 78 at 111 the Chief Justice observed: "Indeed, breach of the common law obligation of procedural fairness may fall within the R v Hickman principle, as it has been interpreted and extended beyond the original threshold formulation of Sir Owen Dixon. In O'Toole (O'Toole v Charles David Pty Ltd [No 1] (1991) 171 CLR 232) Deane J, Gaudron J and McHugh J contemplate that rules of procedural fairness could be encompassed within the third R v Hickman principle, that is, "reasonably capable of being referred to the power" (at 287.5). Dawson J suggested that some aspects of procedural fairness fell within the concept of bona fides (at 305.5)." On this view the result in Whitfield is not inconsistent with the Society's contention as to the scope and effect of s 90D(1). 33 I note that in Whitfield v the Law Society of New South Wales (unreported) NSWSC, 16 July 1998, Dunford J, dealing with a claim by the Society for client legal privilege with respect to certain documents, observed: "It is necessary to bear in mind that in exercising its powers under s 79A(2)(b) the Council is not involved in the process of litigation but is exercising a quasi-judicial administrative function, determining whether or not the claimant has a right to make a claim on the Fund, and its decision would appear to be subject to judicial review, as is sought in this case." (p.7) I am mindful that his Honour did not express a concluded view on the matter and that he was not in that case considering the effect of s 90D of the Act. 34 In Talarico v Law Society of New South Wales (unreported) NSWSC 22 April 1998 the plaintiff sought relief including orders pursuant to s 65 of the Supreme Court Act 1970 directing the Society to reconsider its determination as to the question of the solicitor's dishonesty. 35 The Society disallowed the plaintiff's claim in Talarico upon the basis that the money had not been entrusted to the solicitor in the course of his practice as a solicitor. There was no finding made on the question of dishonesty for the purposes of s 79A(2)(b) of the Act. His Honour expressed an opinion, following a hearing in which the plaintiff gave oral evidence, that the solicitor had acted dishonestly in relation to the sums of money entrusted to him. His Honour appears to have remitted the s 79A(2)(b) determination to the Society for its further consideration after having expressed the opinion to which I have referred. The case is of little assistance in resolving the present question. The Society does not appear to have taken the point now taken. 36 I was also taken to the decision of Adams J in Laurent v The Law Society of New South Wales [2000] NSWSC 1103. In that case the Society had made no determination on the question of dishonesty. Senior Counsel on its behalf conceded that it was bound to make such a finding and, to this extent, that the appeal had been appropriately brought. On the plaintiff's behalf it was sought to have the Court make affirmative findings as to those elements of his claim other than the issue of dishonesty. In the event he was successful in these respects, the Court was invited to remit the question of dishonesty to the Society. His Honour did not accede to this course. He adopted the reasoning of Greg James J in Whitfield. The effect of s 79A(2) was that only decisions involving a finding of or a conviction for dishonesty might be the subject of appeal. 37 As I have noted, in no case to which I was referred had the Society invited the Court to consider the effect of s 90D upon the availability of relief by way of judicial review. In the absence of authority it is necessary to have regard to the terms of s 90D viewed in their legislative context. 38 The word "action" is given a broad definition for the purposes of the Limitation Act 1969: 11(1) In this act, unless the context or subject matter otherwise indicates or requires: "action" includes any proceeding in a court. 39 This definition lends support to a contention that the words of s 90D(1) are capable of excluding proceedings in the nature of judicial review. It is necessary to consider whether an intention to achieve this result is to be found in the terms of the provision. 40 Taylor J gave consideration to a provision purporting to bar the bringing of actions against the Commissioner for Corrective Services in Vezitis v McGeechan [1974] 1 NSWLR 718. Section 46 of the Prisons Act 1952 provided: "No action or claim for damages shall lie against any person for or on account of anything done or commanded to be done by him and purporting to be done for the purpose of carrying out the provisions of this act, unless it is proved that such act was done or commanded to be done maliciously and without reasonable and probable cause." 41 The plaintiff in that case sought declaratory relief including a declaration that he had been dealt with in breach of the Regulations to the Prisons Act. On the Commissioner's behalf it was contended that s 46 applied to all actions and that proceedings of this character were "an action" against the Commissioner within the meaning of the section. His Honour observed at p 719: "The word "action" in its proper legal sense is a generic term and includes every sort of legal proceeding; see Re: Carter Smith; Ex parte The Commissioners of Taxation (1908) 8 SR(NSW) 246 at 249 per Street J where the learned judge cited a passage from the decision of the House of Lords in Clarke v Bradlaugh (1881) 7 QBD 38 at 50 the passage being approved by the House of Lords on appeal) (1883) 8 App. CAS 354 at 361,374). Street J went on to say that when used by the legislature - that is the word "action" - must be construed according to its true legal meaning, unless it is apparent upon the face of the act in which it is used that it is intended to bear a more restricted meaning. In my opinion when s 46 is examined in the context of this act it is clear that it is concerned with actions for damages against persons who are carrying out or purporting to carry out the provisions of the act. As a matter of construction it is my opinion that the words "no action or claim" in s 46 are both directed to the recovery of damages and should be read as "no action for damages or claim for damages". … In my opinion, therefore, these sections have no application to the present proceedings, which are proceedings for a declaration as to the prisoner's rights." 42 The inclusion of the exception in the case of malice and the absence of reasonable and probable cause in the provision with which Taylor J was concerned in Vezitis pointed to the purpose of the provision being protection of the Commissioner and his employees from proceedings to recover damages. 43 The language of s 90D does not contain an indication of that character. However, bearing in mind the principles of construction to which I have made reference in paragraphs 19 & 20 (to which might be added the statement of Mason P in Water Administration Corporation v Puntoriero (unreported) NSWCA, 21 November 1997, "A provision exempting or limiting liability in respect of the exercise of a statutory function is to be construed narrowly against the interests of the relevant authority: Board of Fire Commissioners (NSW) v Ardouin (1961) 109 CLR 105 at 116)") I consider there is force to the submissions advanced by Mr Higgs as to why the opening words of s 90D(1) should not be read to include proceedings by way of judicial review. To which may be added the consideration that prior to the introduction of s 90D into the Act the use of a provision couched in terms that "no action … shall lie…." had been held not to exclude the granting of declaratory relief. 44 To my mind the terms of s 90D(1) do not evince a clear and unambiguous intention to oust the jurisdiction of this Court to entertain proceedings by way of judicial review in respect of determinations made by the Society pursuant to Part 7 Division 3 of the Act relating to the Fund. 45 I consider that I have jurisdiction to entertain the plaintiff's proceedings as pleaded in his further amended summons. 46 At the conclusion of proceedings on 5 December 2000 Mr Higgs invited me (in the event that I found that I had jurisdiction to deal with the plaintiff's further amended summons) to also rule on the Society's claim of privilege with respect to advices which were before the Fidelity Fund Management Committee at the time it made its determination of 23 November 2000. To this end he tendered both a minute of the Committee's determination and correspondence passing between the plaintiff's solicitor and the solicitor acting for the Society. Mr Higgs referred me to The Attorney General for the Northern Territory v Maurice (1986) 161 CLR 475 and to a recent decision of the Queensland Court in Queensland Law Society Incorporated v Albietz [2000] 1 QR 621. 47 In the way the matter was developed the submissions going to this issue were brief and advanced by reference only to the common law as it applies to waiver of legal professional privilege. It seems to me, having regard to Part 36 r 13 of the Supreme Court Rules 1970, that the issue falls to be determined by reference to the provisions of Part 3.10 of the Evidence Act 1995 and to s 122 in particular. On the material before me I incline to the view that client privilege has not been lost in relation to the advices of Ms Siddons, Chester Porter QC, David Davies SC and Ms Siddons and Mr McKillop. In this regard I note the decision of Dunford J in Whitfield & Anor v The Law Society of New South Wales (unreported) 16 July 1998 where his Honour dealt with a similar claim. However, since I did not have the benefit of the parties' submissions on this aspect I propose not to rule without hearing from them further. 48 I stand the hearing of the plaintiff's further amended summons over to 10.30 am on 14 December 2000. ***** Last Modified: 12/12/2000 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.