LAURENT v LAW SOCIETY OF NSW [2002] NSWSC 655

New South Wales Supreme Court

CITATION : LAURENT v LAW SOCIETY OF NSW [2002] NSWSC 655 revised - 31/07/2002 FILE NUMBER(S) : SC 10513/01 HEARING DATE(S) : 23.8.01; 31.8.01; 3.9.01; 4.9.01 JUDGMENT DATE : 26 July 2002

PARTIES : Plaintiff: Daniel Laurent Defendant: The Law Society of NSW JUDGMENT OF : Hulme J at 1

COUNSEL : Plaintiff: M Slattery QC Defendant: S Epstein SC SOLICITORS : Plaintiff: Maurice May & Co Defendant: AS Brown DECISION : Principle issues resolved; Adjourned for further argument.

- 60 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

HULME J

26 July 2002

No: 10513/2001 DANIEL ANTOINE LAURENT & 3 ORS v THE LAW SOCIETY OF NEW SOUTH WALES JUDGMENT 1 HIS HONOUR: These Reasons are divided into the following sections.

Paragraph Introduction 2 The Limits on the Appeal 19 Are Reasons Required 45 The Bondi Properties – Mr Laurent's claim 52 The Bondi Properties – The Receiver's Reports 74 Instructions as to Proceeds 80 Fabrama P/L, Ormtrend P/L and Affiliated Equities 94 Ormtrend's Claim for $774,219.8 99 Fabrama P/L's and Affiliated Equities' Claims 109 Mr Laurents Claim for $322,804.70 119 Mr Kandy's Dealings 124 Credits/Offsets 146 Absence of Records 154 Mr Laurent's Health 159 The Relationship between Mr Laurent and Mr Kandy 163 Sundry Matters 164 History of Claims 168 Denial of Natural Jusitce 194 The Plaintiff's Claims – Conclusions 208 Res Judicata 250

Introduction 2 In these proceedings the Plaintiff seeks the following orders:- 1. Declaration that the late Michael Lawrence Kandy: (a) was a solicitor practising as a solicitor in the State of New South Wales; (b) received or was entrusted with the money claimed by the plaintiffs; (c) received or was entrusted with the said money in the course of his practice; and (d) failed to account for, pay or deliver the said money in accordance with section 79A(1) of the Legal Profession Act, 1987. 2. An order that the decisions of the defendant's Fidelity Fund Management Committee purporting to disallow the first plaintiff's claim for $317,500.00, $308,966.63, and $322,804.70, and the second, third, and fourth plaintiffs' claims of $806,975.22, $774,219.88 and $308,966.00 be set aside. 3. In the alternative, an order that the decisions of the defendant's Fidelity Fund Management Committee of 25 January 2001, purporting to disallow the first plaintiff's claim for $317,500.00, $308,966.63 and $322,804.70, and the second, third and fourth plaintiffs' claims of $806,975.22, $774,219.88 and $308,966.00 be quashed. 4. An order in the nature of mandamus requiring the defendants to make determinations according to law, pursuant to section 79A(2)(b) of the Legal Profession Act 1987 whether the solicitor's failure to account in relation to each of the claims made by each of the plaintiffs was dishonest. 5. Further, orders that the plaintiffs' claims relating to the late Michael Lawrence Kandy, made upon the Solicitors' Fidelity Fund maintained pursuant to part 7 of the Legal Profession Act, 1987 be allowed in whole or in such part or parts as the Court thinks fit together with interest and costs pursuant to section 79C and 85 of the Legal Profession Act, 1987 subject to the defendant's determination according t olaw of the issue of dishonesty under section 79A(2)(b) of the Act. 6. Costs. 7. Such further or other orders as the Court thinks fit. 3 The Law Society filed a "Notice of Contention and Issues in Opposition". Its terms were:- 1. The Plaintiffs are not entitled to any of the declarations sought in paragraph 1 of the Amended Summons because the Legal Profession Act 1987 ("the Act") by providing the right of appeal under s90D of the Act, has impliedly excluded the power of the Court to grant declaratory relief. 2. In the alternative to 1, as a matter of discretion, the Court ought not grant the declarations sought because that would ignore the means by which the Act has provided that decisions of the Defendant made under Part 7, Division 3 of the Act should be challenged, that means being the means set out in s90D of the Act. 3. In the further alternative to paragraph 1, and additionally to paragraph 2, the Court ought not in its discretion make the declarations sought because to do so would be futile. 4. To the extent the Plaintiffs seek the orders claimed in paragraphs 2, 3 and 4 of the Amended Summons on the grounds set out in the grounds of appeal which form part of the Amended Summons ("the grounds of appeal"), the Defendant says that the Plaintiffs are not entitled to any of the orders sought because the Act, by providing the right of appeal under s90D of the Act, has excluded the power of the Court to entertain proceedings by way of judicial review in respect of determinations made by the Defendant pursuant to Pat 7 Division 3 of the Act relating to the Solicitors' Fidelity fund. 5. In the alternative to paragraph 4, if s90D of the Act does not exclude the power of the Court to entertain proceedings by way of judicial review in respect of determinations made by the Defendant pursuant to Part 7 Division 3 of the Act relating to the Solicitors' Fidelity Fund, the Defendant: (a) does not admit that in making the decisions referred to in paragraph 2 of the Amended Summons ("the decisions"), the Defendant denied the Plaintiffs natural justice or procedural fairness in the manner alleged in paragraph 1 of the grounds of appeal; (b) admits that it has not provided reasons for the decisions as alleged in paragraph 2 of the grounds of appeal, but says it was not obliged to do so; (c) does not admit that the decisions were so unreasonable that no reasonable decision maker could have made them as alleged in paragraph 3 of the grounds of appeal; (d) does not admit that the Defendant erred in the manner alleged in paragraph 4 of the grounds of appeal; (e) in relation to paragraph 5 of the grounds of appeal, does not admit that: (i) the facts referred to in paragraph 5 of the grounds of appeal were jurisdictional facts; (ii) the Defendant's finding of fact referred to in paragraph 5 of the grounds of appeal were erroneous; (iii) the Defendant's decisions were ultra vires; (f) does not admit that the Defendant failed to take into account the matters referred to in paragraph 6 of the grounds of appeal. (g) in relation to paragraph 7 of the grounds of appeal, does not admit that: (i) the Defendant was required to make determinations in relation to identified acts and omissions of the late Michael Lawrence Kandy ("Kandy") including the particular acts and omissions which the Plaintiffs alleged he had committed, or alternatively, that the Defendant was required to make a determination about the honesty or dishonesty of identified acts or omissions of Kandy upon the hypothesis that those acts or omissions occurred; (ii) The Defendant failed to make determinations in relation to identified acts and omissions of Kandy, including the particular acts and omissions which the Plaintiffs alleged he had committed, or alternatively, that the Defendant failed to make a determination about the honesty or dishonesty of identified acts or omissions of Kandy upon the hypothesis that those acts or omissions occurred. 6. The Court has no power to make the order claimed in paragraph 5 of the Amended Summons because the Defendant has decided that there was no act or omission of Kandy that was dishonest. 7. In the alternative to paragraph 6, the order claimed in paragraph 5 of the Amended Summons ought not to be made because, in view of the Defendant's having decided that there was no act or omission of Kandy that was dishonest, the making of the order would be futile. 4 The matter has a long history. It is sufficient at this stage to say that on 11 January 1993 Mr Kandy, a solicitor, committed suicide. It is common ground that prior to his death, and due to his dishonesty, many of his clients lost money they had entrusted to him. Some $17M has been paid to them by the Law Society out of the Fidelity Fund. Although I have not felt the need to rely on more than is referred to in copies of the reports of the receiver of Mr Kandy's practice which are in evidence before me, further details of Mr Kandy's defaults are to be found recorded in Macquarie Bank v National Mutual (1996) 40 NSWLR 543 at 563 et seq.