New South Wales Supreme Court CITATION : LAW SOCIETY OF NSW (ACN 000 000 699) v Malcolm Henry HANSEN [2004] NSWSC 790 HEARING DATE(S) : 26/8/04 JUDGMENT DATE : 26 August 2004 JUDGMENT OF : Bell J at 1 DECISION : Verdict and judgment for the plaintiff against the defendant in the sum of $242,630.04; The defendant is to pay the plaintiff's costs LEGISLATION CITED : Legal Profession Act 1987 Supreme Court Act 1970 PARTIES : LAW SOCIETY OF NSW (ACN 000 000 699) (Plaintiff) Malcolm Henry HANSEN (Defendant) FILE NUMBER(S) : SC 12325/03 COUNSEL : N Manousaridis (Plaintiff) No appearance (Defendant) SOLICITORS : A.S. Brown (Plaintiff) M.H. Hansen (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION BELL J Thursday 26 August 2004 12325/03 LAW SOCIETY OF NSW (ACN 000 000 699) V Malcolm Henry HANSEN JUDGMENT 1 BELL J: By these proceedings the plaintiff, the Law Society of NSW, claims the sum of $223,303.58 together with interest. 2 The defendant has appeared and filed a verified defence on 5 November 2003. 3 The proceedings were fixed for hearing at the call-up on 16 April 2004. When the matter was called on today there was no appearance by the defendant. A letter, which appears to be under the hand of the defendant, addressed to the Principal Registrar of the Court and dated 15 August 2004 is on the Court file. In that letter the defendant asked that the hearing be adjourned to a date in early December 2004. In support of this application the defendant referred to proceedings that are pending before the Administrative Decisions Tribunal involving the same parties. When those proceedings are finally determined the defendant noted that the plaintiff may seek to recover further costs and for this reason it was said to be premature that the subject proceedings be heard and determined. 4 The plaintiff opposed the vacation of the hearing date. I was not persuaded that it was appropriate to adjourn the proceedings on the basis of the assertions made in the defendant's letter and the hearing proceeded in his absence. 5 The plaintiff read the affidavit of Anne Maree Siddons sworn on 25 August 2004 and the affidavit of Kym Annette Ayscough sworn on 20 August 2004. The report of Jean Sayer, a chartered accountant, (annexure "AMS 1" to the affidavit of Ms Siddons) and a folder of documents relating to claims made upon the plaintiff's Fidelity Fund by six persons was tendered in evidence. 6 The plaintiff makes two discrete claims, both of which arise out of the defendant's practice as a solicitor. The background is set out in a statement made by the defendant to Jean Sayer that forms part her report, Exhibit A. The defendant was admitted to practice as a solicitor of this Court in 1985. In late 1991 or early 1992 he commenced practice as a solicitor in his own account under the name Hansen Naylor Solicitors. At some time prior to 2000 he was in practice under the name Hansen & Co. He continued to practice on his own account under this name until at least June 2001. 7 On 15 June 2001 Jean Sayer was appointed as receiver of the defendant's property pursuant to s 92 of the Legal Profession Act 1987 ("the Act"). The first claim is for $93,210.47 being the amount paid by the plaintiff to Jean Sayer on account of her professional fees acting as receiver of the defendant's property. 8 Section 110(2) of the Act makes provision for the plaintiff to pay the expenses of receivership and for the sum thus paid to be recoverable by it as a debt owed by the solicitor. 9 Ms Siddons is employed by the plaintiff as Manager of the Solicitors' Fidelity Fund ("the Fund"). In that capacity she has access to the accounting books and records of the Fund. Annexed to her affidavit are tax invoices issued by Ms Sayer with respect to the professional services rendered by her as receiver of the defendant's property. Ms Siddons states that having examined the Funds' accounting books and records she is able to say that the sum of $102,384.93, comprising professional fees in the sum of $93,210.47 and GST in the amount of $9,174.46, has been duly paid by the Fund to Ms Sayer in accordance with s 110(1) of the Act. 10 Annexed to the affidavit of Kym Ayscough are letters dated 15 April 2003 and 27 May 2003 by the plaintiff addressed to the defendant demanding payment from him of the sum of $93,210.47, being the amount paid by it in respect of the receivers' fees, less the amount of GST for which the Society had obtained input tax credit. The letters of demand were addressed to the defendant at an address in Queensland which by letter dated 20 January 2003 he had requested the Society to direct correspondence to him until further notice. 11 I am satisfied that the plaintiff is entitled to judgment in the sum of $93,210.47 together with interest in accordance with the provisions of s 94 of the Supreme Court Act 1970 (the SCA). Interest calculated at nine percent for the period from the date of filing of the claim on 9 September 2003 up to and including 26 August 2004 amounts to the sum of $8,067.17. 12 I turn now to the second claim. In the course of his practice as a solicitor persons entrusted money to the defendant. The details of the sums entrusted to the defendant by six persons who were later to make claims upon the Fund are set out in a table in paragraph 9 of Ms Siddons' affidavit. The circumstances in which the funds came to be deposited with the defendant are detailed in the report of Jean Sayer. 13 Ms Sayer found that in relation to each of Royalla Properties Pty Limited, K & E Wrench, T & J Phillis, FS Reeves & BP North, S & A Townsend and A & B Atkinson that funds had been entrusted to the defendant in the course of his practice as a solicitor and that there had been a failure to account to the named claimants in the amounts that are set out in the table to which I have referred. 14 Ms Siddons states that each of the persons to whom I have referred made a claim against the Fund alleging the failure of the defendant to account for, pay or deliver monies received by, or entrusted to, him in the course of his practice as a solicitor. The management committee of the Fund determined each of these claims in favour of the claimant and made payments to the claimants in the amounts and on the dates that are set out in the table to which I have referred. Annexed to Ms Siddons' affidavit are copies of the documents evidencing the payment of these sums. 15 By the letters that are annexed to the affidavit of Ms Ayscough on 15 April 2003 and 27 May 2003 to which I have referred the plaintiff claimed the sum of $130,093.11 being the total of the funds paid out to the six claimants from the Fund less the amount of $96,226.50 being an amount recovered by the receiver and applied in reimbursement of the Fund pursuant to s 107(1) of the Act. 16 Section 90A of the Act provides as follows: "(1) On payment of a successful claim against the Fidelity Fund, the Law Society is subrogated to the rights and remedies of the claimant against any person in relation to the failure to account or dishonest default." 17 In written submissions, the plaintiff noted that in order to succeed on its subrogated claims against the defendant it must prove those elements of each of the claims that the claimants on the Fund would have been required to prove had they brought proceedings against the defendant to recover compensation for pecuniary loss suffered by them by reason of the defendant's failure to account for money entrusted to him in the course of his practice. 18 The nature of each claim is said to be based upon breach of trust. The breach of trust in each case being the failure of the defendant to deal with monies entrusted to him or his employee in accordance with the terms on which the monies were entrusted. 19 By reference to the investigation conducted by Ms Sayer that is the subject of her report, the plaintiff submits, and I accept, that the monies were entrusted to the defendant on terms that they be returned to the claimants or paid to a third person and that in each case the terms of the entrustment were breached by the money being dissipated for other purposes. 20 I am satisfied having regard to the terms of s 90A of the Act that the plaintiff is entitled to damages in an amount of $130,093.11 together with interest pursuant to s 94 of the SCA from 9 September 2003 up to and including today at the rate of nine percent. This sum amounts to $11,259.29. 21 For these reasons there will be verdict and judgment for the plaintiff against the defendant in the sum of $242,630.04. 22 The defendant is to pay the plaintiff's costs. ********** Last Modified: 08/30/2004 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.