Supreme Court New South Wales Medium Neutral Citation: Fincorp Investments Limited v Trazmar Pty Limited [2012] NSWSC 506 Hearing dates: 13 April 2012 Decision date: 17 May 2012 Jurisdiction: Common Law Before: Schmidt J Decision: The Court has no jurisdiction to determine the merits of the claim brought on the Fidelity Fund. Catchwords: PROCEDURE - fidelity fund - claim against fidelity fund after settlement of proceedings - cross-claim on Law Society - whether court has jurisdiction in respect of appeal on merits of claim - claim that Law Society determined claim on its merits - no decision on merits - no right to have merits of claim determined - no right to appeal to this Court as to the merits of its case - no obligation to investigate a time barred claim - Court has no jurisdiction to determine the merits of the application - separate question application - orders Legislation Cited: Administrative Decisions (Judicial Review) Act 1977 (Cth) Legal Profession Act 1987 Legal Profession Act 2004 Cases Cited: Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 Dwyer v Law Society of New South Wales [2000] NSWSC 592 Walsh v Law Society of New South Wales [1999] HCA 33; 198 CLR 73 Category: Procedural and other rulings Parties: Fincorp Investments Limited (Plaintiff) Trazmar Pty Limited (First Defendant/ First Cross-Claimant) John Gerard Ingegneri (Second Defendant/ Second Cross-Claimant) Anthony Venneri (Third Defendant/ Third Cross-Claimant) Lorenzo Flammia (First Cross-Defendant) Lawcover Insurance Pty Limited (Second Cross-Defendant) The Law Society of New South Wales (Third Cross-Defendant) Representation: Counsel: Mr NJ Beaumont with Mr T Maltz (Third Cross Defendant) Mr RD Marshall with Mr Cowpe (Cross-claimants) Solicitors: MKG Solicitors (Cross-Claimants Henry Davis York (Third Cross-Defendant) File Number(s): 2006/265191 Publication restriction: None Judgment 1These proceedings were originally brought by the plaintiff, who claimed possession of certain land which secured mortgages and loan agreements, which on the defendants' case had been forged. The proceedings brought by the plaintiff and a cross-claim brought by Trazmar Pty Limited ('Trazmar'), the first defendant, were settled in accordance with terms by which Trazmar paid a sum of money to the plaintiff, under consent orders made in May 2009. 2In September 2010, the second and third defendants brought a second cross-claim against the relevant solicitor, Mr Lorenzo Flammia, and the professional indemnity insurer, Law Cover Insurance Pty Limited ('Law Cover'). In December 2011, in ex parte proceedings, McCallum J gave the defendants leave to bring a cross-claim against the Law Society of New South Wales ('Law Society'), seeking a payment from the Fidelity Fund. The two claims rest on the same evidence and the same amounts are sought to be recovered. Trazmar's case was that hearing the two claims in the same proceedings would be an efficient course, consistent with the overriding purpose provided in s 56 of the Civil Procedure Act 2005. As Trazmar explained, it sought to ensure that in these proceedings that it had the opportunity to establish that the conduct in question involved either negligence or dishonesty on Mr Flammia's part. 3In December 2011, after service of the cross-claim on the Law Society, consent orders were made by McCallum J which required it to file a defence. By notice of motion filed before the defence was due, the Law Society sought orders vacating the existing case management orders made by McCallum J, including the order that it file a defence; orders striking out the cross-claim brought against it; orders requiring Trazmar to bring separate proceedings by summons; and consequential case management orders and costs. 4The difficulty raised by the Law Society's motion, is whether or not the Court has jurisdiction to entertain part of the claim which Trazmar seeks to pursue against it. Its case is that in the circumstances, there is no jurisdiction in the Court to consider the merits of the claim Trazmar made on the Fidelity Fund. The Court is strictly confined to the statutory jurisdiction which it is given. There having been no decision made by the Law Society as to the merits of the claim, the Court only had jurisdiction to consider an appeal from the Law Society's refusal to grant Trazmar an extension of time to bring its claim (see Walsh v Law Society of New South Wales [1999] HCA 33; 198 CLR 73). 5What lies between the parties depends on the proper construction of the legislation which governed the claim which Trazmar first made against the Fidelity Fund in 2009, after settlement of the proceedings brought by the plaintiff. 6There is an issue lying between the parties as to whether it is the Legal Profession Act 1987 ('the 1987 Act'), or the Legal Profession Act 2004 ('the 2004 Act'), which governs Trazmar's claim on the Fund. That depends on the operation of transitional provisions provided in the 2004 Act. It was common ground between the parties, however, that the provisions of the two Acts on which the questions which arise on the motion depend are relevantly the same. The parties accordingly addressed their submissions to the provisions of the 2004 Act. The legislative scheme 7Section 436 of the 2004 Act entitles people who have suffered certain losses to make a claim on the Fidelity Fund and obliges the Law Society to investigate such claims. It provides: "436 Claims about defaults (1) 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 Law Society about the default. (2) A claim is to be made in writing in a form approved by the Law Society Council. (3) The Law Society Council may require the person who makes a claim to do either or both of the following: (a) to give further information about the claim or any dispute to which the claim relates, (b) to verify the claim or any further information, by statutory declaration. (4) The Law Society Council must investigate a claim made to it, including the default to which it relates, and may do so in any manner it considers appropriate." 8'Default' is defined in s 419 as: "default, in relation to a law practice, means: (a) a failure of the practice to pay or deliver trust money or trust property that was received by the practice in the course of legal practice by the practice, where the failure arises from or is constituted by an act or omission of an associate that involves dishonesty, or (b) a fraudulent dealing with trust property that was received by the practice in the course of legal practice by the practice, where the fraudulent dealing arises from or is constituted by an act or omission of an associate that involves dishonesty." 9A 'claim' is defined in s 419 to mean 'a claim under this Part'. The time of a default is fixed by s 420. 10The Fidelity Fund is provided for in Part 3.4 Fidelity Cover of the 2004 Act. The purpose of Part 3.4 is provided in s 418 is 'to establish and maintain a fund to provide a source of compensation for defaults by law practices arising from acts or omissions of associates'. 11Section 422 obliges the Law Society to establish and maintain a Legal Practitioners Fidelity Fund. By s 422(2) the Fund is made the property of the Law Society, to be administered by the Law Society Council and 'is to be applied in accordance with this Part'. Payments from the Fund are prescribed by s 425, including in (c) in relation to the payment of claims 'allowed or established against the Law Society in respect of the Fidelity Fund'. Section 426 permits the Law Society Council to delegate its functions in relation to the Fidelity Fund to a Management Committee. 12Defaults in respect of which payments may be made from the Fund are specified in s 434 as a 'default of a law practice arising from or constituted by an act or omission of one or more associates of the practice, where this jurisdiction is the relevant jurisdiction for the only associate or one or more of associates involved'. 13Section 437 imposes a time limit for the making of claims against the Fund. The section provides: "437 Time limit for making claims (1) Subject to section 439 (Time limit for making claims following advertisement), a claim does not lie against the Fidelity Fund unless the prospective claimant notifies the Law Society of the default concerned: (a) within the period of 6 months after the prospective claimant becomes aware of the default, or (b) within a further period allowed by the Law Society Council, or (c) if the Supreme Court allows further time after the Law Society Council refuses to do so-within a period allowed by the Supreme Court. (2) The Supreme Court or Law Society Council may allow a further period referred to in subsection (1) if satisfied that it would be appropriate to do so in a particular case having regard to matters the Supreme Court or Law Society Council considers relevant." 14It is common ground that Trazmar did not bring its claim within the statutory time limit. It is a time limit which can be extended by the Law Society, in circumstances dealt with in s 438 of the 2004 Act. That occurred in this case, but again, it is common ground that Trazmar did not bring its claim within that extended time. Consequently, Trazmar had to make an application to the Law Society for an extension of time to bring its claim, in accordance with the provisions of s 439. This application was made and refused and these proceedings were then commenced, Trazmar seeking orders under s 439(2)(c) in respect of the Law Society's refusal of its application for extension of time. Sections 438 and 439 provide: "438 Advertisements (1) If the Law Society Council considers that there has been, or may have been, a default by a law practice, it may publish either or both of the following: (a) a notice that seeks information about the default, (b) a notice that invites claims about the default and fixes a final date after which claims relating to the default cannot be made. (2) The final date fixed by a notice must be a date that is: (a) at least 3 months later than the date of the first or only publication of the notice, and (b) not more than 12 months after the date of that first or only publication. (3) A notice must be published: (a) in a newspaper circulating generally throughout Australia, and (b) in a newspaper circulating generally in each jurisdiction where the law practice: (i) has an office, or (ii) at any relevant time had an office, if known to the Law Society Council, and (c) on the internet site (if any) of the Law Society. (4) The Law Society Council may provide information to persons making inquiries in response to a notice published under this section. (5) Apart from extending the period during which claims can be made under this Part (where relevant), publication of a notice under this section does not confer any entitlements in relation to any claim or the default to which it relates or provide any grounds affecting the determination of any claim. (6) Neither the publication in good faith of a notice under this section, nor the provision of information in good faith under this section, subjects a protected person to any liability (including liability in defamation). (7) In this section: protected person means: (a) the Law Society or a member of the Law Society Council or the Fidelity Fund Management Committee, or (b) the proprietor, editor or publisher of the newspaper, or (c) an internet service provider or internet content host, or (d) a member of staff of or a person acting at the direction of any person or entity referred to in this definition. 439 Time limit for making claims following advertisement (1) This section applies if the Law Society Council publishes a notice under section 438 (Advertisements) fixing a final date after which claims relating to a default cannot be made. (2) A claim may be made: (a) up to and including the final date fixed under the notice, or (b) within a further period allowed by the Law Society Council, or (c) if the Supreme Court allows further time after the Law Society Council refuses to do so-within a period allowed by the Supreme Court, even though it would have been barred under section 437 (Time limit for making claims) had the notice not been published." 15It is not in issue that the Court has jurisdiction to consider the application made in respect of the refusal of the extension of time application in accordance with s 439(2)(c). What needs to be established in such an application is as discussed by Sully J in Dwyer v Law Society of New South Wales [2000] NSWSC 592. 16In issue between the parties, however, is the nature of the Law Society's decision. 17Trazmar claims that the Law Society not only considered and refused its extension application, it also determined its claim on its merits. That decision, if made, was made in accordance with s 422, which provides: "442 Determination of claims (1) The Law Society Council must determine a claim by wholly or partly allowing or disallowing it. (2) The Law Society Council must disallow a claim to the extent that the claim does not relate to a default for which the Fidelity Fund is liable. (3) The Law Society Council may wholly or partly disallow a claim, or reduce a claim, to the extent that: (a) the claimant knowingly assisted in or contributed towards, or was a party or accessory to, the act or omission giving rise to the claim, or (b) the negligence of the claimant contributed to the loss, or (c) the conduct of the transaction with the law practice in relation to which the claim is made was illegal, and the claimant knew or ought reasonably to have known of that illegality, or (d) proper and usual records were not brought into existence during the conduct of the transaction, or were destroyed, and the claimant knew or ought reasonably to have known that records of that kind would not be kept or would be destroyed, or (e) the claimant has unreasonably refused to disclose information or documents to or co-operate with: (i) the Law Society Council, or (ii) any other authority (including, for example, an investigative or prosecuting authority), in the investigation of the claim. (4) Subsections (2) and (3) do not limit the Law Society Council's power to disallow a claim on any other ground. (5) Without limiting subsection (2) or (3), the Law Society Council may reduce the amount otherwise payable on a claim to the extent the Council considers appropriate: (a) if satisfied that the claimant assisted in or contributed towards, or was a party or accessory to, the act or omission giving rise to the claim, or (b) if satisfied that the claimant unreasonably failed to mitigate losses arising from the act or omission giving rise to the claim, or (c) if satisfied that the claimant has unreasonably hindered the investigation of the claim. (6) If the amount of a claim does not exceed $2,500 or such other amount as may be prescribed by the regulations, the Law Society Council may allow the claim after waiving compliance with such of the provisions of this Part as it thinks fit. (7) The Law Society Council must, in allowing a claim, specify the amount payable." 18That the Law Society refused Trazmar's claim on its merits is not a claim which is presently advanced in its cross-claim. Trazmar accepts that its pleadings are deficient in this respect and that the cross-claim requires amendment, if the case it seeks to pursue against the Law Society in relation to the merits of its claim is to be considered in these proceedings. 19The Law Society's position is that amendment of the cross-claim is futile because it made no decision as to the merits of the claim, it having no power to do so under the 2004 Act. Such a power only arose to be exercised if Trazmar's application for the extension of time was granted. That did not occur. The only decision which it had made was in respect of Trazmar's extension application, which was refused. In those circumstances, it had no power to consider or determine the application on its merits and did not purport to do so, given its refusal of the extension application. Absent a decision of the Law Society on the merits of the application, this Court has no jurisdiction to make an order in favour of Trazmar, for a payment out of the Fidelity Fund. 20To make good its argument, the Law Society relies on s 439 and s 452 of the 2004 Act. Section 452 provides: "452 Appeal against decision on claim (1) A claimant may appeal to the Supreme Court against: (a) a decision of the Law Society Council to wholly or partly disallow a claim, or (b) a decision of the Law Society Council to reduce the amount allowed in respect of a claim, but an appeal does not lie against a decision of the Council to limit the amount payable, or to decline to pay an amount, under the capping and sufficiency provisions of this jurisdiction. (2) An appeal against a decision must be lodged within 30 days of receiving the information notice about the decision. (3) On an appeal under this section: (a) the appellant must establish that the whole or part of the amount sought to be recovered from the Fidelity Fund is not reasonably available from other sources, unless the Law Society Council waives that requirement, and (b) the Supreme Court may, on application by the Law Society Council, stay the appeal pending further action being taken to seek recovery of the whole or part of that amount from other sources. (4) The Supreme Court may review the merits of the Law Society Council's decision. (5) The Supreme Court may: (a) affirm the decision, or (b) if satisfied that the reasons for varying or setting aside the Law Society Council's decision are sufficiently cogent to warrant doing so: (i) vary the decision, or (ii) set aside the decision and make a decision in substitution for the decision set aside, or (iii) set aside the decision and remit the matter for reconsideration by the Law Society Council in accordance with any directions or recommendations of the Court, and may make other orders as it thinks fit. (6) No order for costs is to be made on an appeal under this section unless the Supreme Court is satisfied that an order for costs should be made in the interests of justice." 21The Law Society's case is that Trazmar's out of time claim is barred, the Law Society having refused its application, unless it is granted further time to pursue its application by order of this Court under s 439(2)(c). Only then may the merits of the claim be considered and determined by the Law Society and it is only if the claim is then refused, for reasons specified in s 452(1)(a) or (b), that Trazmar will have a right of appeal to this Court. It is only if such a decision is made and appealed that jurisdiction will lie in this Court to make an order in favour of Trazmar for a payment to be made out of the Fidelity Fund, if it establishes a case on the merits. 22Trazmar's case is that the 2004 Act, properly construed, did not preclude the Law Society from determining its extension application, as well as the merits of its claim. That, in fact, is what it did, refusing both the extension application and the claim on its merits. In those circumstances, this Court has jurisdiction to entertain and determine both appeals. The disputed decision 23In response to the notification which it received of Trazmar's claim on the Fidelity Fund, on 5 November 2009, the Law Society provided Trazmar's solicitor with a claim form, advising that: "(b) As I advised during our telephone conversation, the final date for making claims regarding Manna & Flammia Solicitors / Lorenzo Flammia was 28 August 2007. Thank you for providing at paragraph no. 14 of your letter, reasons as to why, in your submission, further time should be allowed to your clients within which to make their claim. However, this department is unable to make that decision; it must be considered by the Fidelity Fund Management Committee as the delegate of the Council. As the merits of the claim are one of the factors to be taken into account in considering whether to allow further time, this issue is generally considered by the Committee after the claim has been made and investigations undertaken. It is on this basis that the Fidelity Fund claim form is forwarded to you." 24The Law Society later sought various information of Trazmar, which was provided. On 25 November 2011 it advised Trazmar's solicitor that the application for extension of time had been refused. An extract from the Minutes of the Committee meeting at which the decision was made was provided. The minutes also set out reasons why, had an extension of time been granted, the claim would have been disallowed. 25The 'Grounds' given for the refusal of the extension of time application were: "The Committee refused to allow further time because:- (a) the delay is excessive, in both notification and making the claim; (b) there is no satisfactory explanation for the delay in either notifying the Society or making the claim; (c) the Society has been irremediably prejudiced by the delay in its investigation of the claim; and (d) although the claim may raise triable issues, upon striking a fair balance of the competing interests, it would not be just to allow the claim to proceed." 26 The 'Reasons' given were: "(a) the delay was excessive because it was: (i) at least 3 years for notification, instead of the 6 months allowed by the legislation; and (ii) more than 2 years for lodgement of the claim after the final date for claims which was itself more than 1 year after the claimants became aware of the alleged failure to account/default; (b) this excessive delay has not been adequately explained, particularly where the claimants were legally represented over the period of delay in defending proceedings brought by a mortgagee of the relevant properties, Fincorp, and a main basis of their defence was that Mr Flammia had acted dishonestly; (c) the delay and subsequent acts of the claimants during the period of delay have irremediably prejudiced the Society's position, because:- (i) the matters raised by the claimants were not investigated as part of the Society's investigation of Mr Flammia in 2006-07; (ii) the delay has severely hampered the Committee's ability to gather evidence; (iii) notwithstanding the well established line of Supreme Court cases supporting the claimants' defence of the Fincorp proceedings, including Perpetual Trustees Victoria Limited v Tsai (2004) and the Court of Appeal in Provident Capital Limited v Printy (2008), the claimants settled those proceedings before notifying the Society and making the claim, thereby depriving the Society of the opportunity to provide direction regarding the progress of the Fincorp proceedings and, especially, the claimants' decision to settle. (iv) The decision to settle those proceedings quantified the claim so as to include amounts not otherwise allowable as part of the claimants' pecuniary loss, particularly the legal cost of the proceedings, and if settlement was made for the purpose of avoiding further liability for costs that is not a proper basis for determining pecuniary loss in relation to the claim. (d) Upon striking a fair balance of the competing interests, it would not be just to allow the claim to proceed, as the prejudice to the Society caused by the matter set out in paragraph (c) above overrides the public interest in the claim being determined at this stage." 27The 'Reasons' continued: "The Committee indicated, for the benefit of the claimants, that had it allowed further time, it would, nevertheless, have wholly disallowed the claim. While the Committee may have concluded that there had been failure to account or default in relation to the title deeds in question, the following matters would have lead the Committee to disallow the claim:- ... 28Then set out in paragraphs (a) to (d) were the matters which would have led the Committee to refuse the application, had the extension of time been granted. They included the Committee's inability to quantify the pecuniary loss claimed to have arisen from the failure to account or the default, for reasons there explained; its view that Trazmar contributed to its loss, for reasons explained; its view that any loss was the result of the settlement of these proceedings, in the face of settled authority and without recourse to the Society; and Trazmar's failure to seek a settlement or judgment in its favour in these proceedings. 29In the face of that advice, Trazmar argued that in truth, what the Law Society had done was to determine its application on its merits. The advice given to Trazmar amounted to a 'decision' as discussed by Mason J in Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 335. There his Honour observed that: "27. The word has a variety of potential meanings. As Deane J. noted in Director-General of Social Services v. Chaney [1980] FCA 87; (1980) 47 FLR 80, at p 100; [1980] FCA 87; 31 ALR 571, at p 590, in the context of judicial or administrative proceedings it ordinarily refers to an announced or published ruling or adjudication. In such a context, the word may signify a determination of any question of substance or procedure or, more narrowly, a determination effectively resolving an actual substantive issue. Even if it has that more limited meaning, the word can refer to a determination whether final or intermediate or, more narrowly again, a determination which effectively disposes of the matter in hand: see Chaney, at p 100; p 590 of ALR." 30What there arose for determination was what decisions had been made by a tribunal and whether they were reviewable under provisions of the Administrative Decisions (Judicial Review) Act 1977 (Cth). Mason J took the view that in the context of the statutory scheme there in question, 'no narrow view should be taken of the word "decision" 'and that 'the concept of a reviewable decision is not limited to a final decision disposing of the controversy between the parties' (at [29]). Nevertheless, other statutory provisions pointed to the word 'having a relatively limited field of operation'. In the context of that statutory scheme and having in mind relevant policy considerations his Honour concluded as to the meaning of the word: "35 ... My view is more in accord with the tentative opinion expressed earlier by Ellicott J. in Ross v. Costigan (1982) 59 FLR 184; 41 ALR 319 when he said (at p 197; p 331 of ALR) that "it may well be that the word 'decision' means an ultimate or operative determination not a mere expression of opinion or a statement which can of itself have no effect on a person". However, I would not wish for myself to place emphasis on the words "of itself" in this statement. To say that a reviewable decision is an ultimate or operative determination does not mean that antecedent conclusions or findings which contribute to the ultimate or operative decision are beyond reach. Review of an ultimate or operative decision on permissible grounds will expose for consideration the reasons which are given for the making of the decision and the processes by which it is made. 36. Lest it should be thought otherwise, I should say that, to the extent in Lamb v. Moss that the magistrate decided that a prima facie case had been established and that he would proceed with the committal proceedings, a reviewable decision had been made. That decision was one for which s.41(2) of the Justices Act 1902 (N.S.W.) specifically provided. The decision resolved an important substantive issue to be determined before the ultimate decision could be made under s.41(6) of that Act whether to commit the defendant for trial or discharge him from custody." 31Trazmar accepted that whether or not a decision had been made as to the merits of its claim was a matter of fact to be determined on the evidence. It argued that the decision on the merits was evidenced by the advice it was given, that the Law Society did not intend to pay its claim in any circumstances whatsoever, given its view of the merits of the claim. The Law Society had considered all of the extensive material it had required be provided by Trazmar as to the merits of its claim and had decided that it had no merits, for reasons given. If the Law Society had not made a decision on the merits, its approach to the claim had been entirely unsatisfactory. How, in the circumstances, the Law Society could bring an unbiased mind to the merits of the application, if the Court were to extend the time for bringing the claim, was difficult to see. There was no decision on the merits 32On the evidence and having in mind the proper construction of the 2004 Act, I am satisfied that it must be concluded that Trazmar's case as to the nature of the decision made by the Law Society may not be accepted. The evidence shows that it made only one decision, a decision to refuse the extension application. 33From the outset the Law Society advised Trazmar that the extension of time application would be considered in the face of the apparent merits of the claim, amongst other matters. That was the basis upon which information was sought by the Law Society and provided by Trazmar. Advice was given as to the decision made in relation to the extension application for reasons given. The reasons given included an explanation that one of the reasons for the refusal of the extension application, was the view reached as to the merits of the claim. That was plainly a relevant consideration. After all, there would be no point in granting an extension in respect of a potentially worthless application. There was, nevertheless, neither a decision, nor even a purported decision made by the Law Society, as to the merits of Trazmar's claim. Nor was it advised that such a decision had been made. Trazmar had no right to have the merits of its claim determined 34That approach was consistent with the statutory scheme, which did not empower the Law Society to determine the merits of a claim which was time barred. 35On the face of the relevant minutes recording the Law Society's decision, no decision was purported to be made as to the merits of the claim. The reasons given as to the merits, supported the decision to refuse the extension of time application. That approach is consistent with the scheme of the Act. At the time that Trazmar first approached the Law Society in 2009, a claim did not lie under the 2004 Act in respect of the alleged default, because: Firstly, it had not made a claim within the time specified in s 437 and had sought no extension of that time, with the result that the claim was barred (see s 439 (2)) ; and Secondly, it had not made a claim within the extended period which flowed from the operation of s 439, given the Law Society's advertisement under s 438. 36Trazmar's case rested on an argument that the Law Society had misconstrued the provisions of s 436 of the Act. On its approach, so long as a claim, as defined, was made under s 436 in the approved form, the Law Society was obliged by s 436(4) to investigate the claim and by s 442 obliged to determine the claim, whether or not it was made within time. Section 436 did not permit the Law Society to limit its investigation to the question of whether or not an extension of time should be granted under s 439. The 2004 Act drew no distinction between a claim made within time and one made out of time. The effect of s 437 and s 439 was only to provide a bar to recovery from the Fidelity Fund. These provisions did not have the effect that an out of time claim did not have to be investigated or determined by the Law Society. The grant of an extension of time under s 437 or s 439 was not to grant permission to bring a claim, but rather to lift a bar to recovery in respect of an out of time claim. 37That approach to the construction of the 2004 Act overlooks that the Act deals expressly with the time within which claims on the Fidelity Fund must be made. Section 436 must be construed in its statutory context and not in isolation. The construction of s 436 which Trazmar urged, impermissibly overlooks the effect of s 437 and s 439. A claim on the Fund not made within the time specified by s 437 is barred, unless an extension of time is granted, either in accordance with the provisions of s 437(1)(a) by the Law Society; or by the Court on appeal from a refusal of such an extension under s 437(1)(b); or in the event that advertisements are placed by the Law Society under s 438 and the claim is brought within the extended period prescribed by s 439(2)(a); or if in such a case an extension is granted by either the Law Society under s 439(2)(b); or if it is refused by the Law Society, it is granted by the Court on appeal under s 439(2)(c). 38Under this statutory scheme, in the circumstances prevailing when Trazmar first made its claim in 2009, unless Trazmar's extension of time was granted under s 439(2)(b) or (c), its claim was not one which could be allowed under Part 3.4 of the 2004 Act. Trazmar has no right to appeal to this Court as to the merits of its case 39It follows that, despite the advice Trazmar received from the Law Society as to its views of the merits of the claim, the fact remains that on the proper construction of the 2004 Act, the Law Society had no power to make any decision as to the merits of Trazmar's claim, the application for an extension of time having been refused. In the result, there can be no appeal brought to this Court under s 452 in respect of the merits of the claim. Such an appeal depends on the Law Society having made a decision under s 442, either to wholly or partly disallow Trazmar's claim, or to reduce the amount allowed in respect of its claim. Under this statutory scheme, a decision which rests on other grounds, such as those provided in s 456, for example, does not give rise to a right to appeal (see s 456(5)). 40The Law Society having refused to exercise the discretion it was given by s 439(2)(b) to allow Trazmar further time to bring its claim, it has no power to determine the merits of the claim, unless its refusal is successfully appealed to this Court under s 439(2)(c). Until that occurs, Trazmar's claim is barred. It is not entitled to have the claim investigated by the Law Society under s 436; to have it determined by the Law Society under s 442; or to have any payment made to it out of the Fidelity Fund. Such payments are governed by the provisions of s 455, which provides: "455 Payments for defaults (1) The Fidelity Fund is to be applied by the Law Society Council for the purpose of compensating claimants in respect of claims allowed under this Part in respect of defaults to which this Part applies. (2) An amount payable from the Fidelity Fund in respect of a claim is payable to the claimant or to another person at the claimant's direction." There is no obligation to investigate a time barred claim 41To construe s 436 of the Act as obliging the Law Society to investigate a claim which is barred, does not accord with the purpose of the Act. If the claim is barred, it is one which an applicant has no right to pursue under s 436. On the proper construction of this statutory scheme, only claims in respect of alleged default which are not time barred, need be investigated by the Law Society. 42There obviously needs to be an administrative process put in place to enable the Law Society to consider applications made to it for an extension of time, when claims which are statute barred are sought to be pursued. Unless such an application for extension of time is granted, either by the Law Society or by this Court on appeal, there is, however, no claim made on the Fidelity Fund which the Law Society may investigate under s 436. 43To construe the Act as requiring the Law Society not only to consider and determine an extension application, but also to investigate a claim even in cases where the extension of time application is refused by it, or on appeal by this Court, would require the Law Society to pursue a futile exercise. It could certainly not result in any payment being made to the claimant out of the Fidelity Fund, given the provisions of s 455. No other statutory purpose was suggested or is apparent for such an investigation. Given the effect of s 437 and s 439, it is evident that the legislature did not intend to impose an obligation on the Law Society by s 436 to investigate claims which the claimant is barred from pursuing. The Law Society's approach to the reasons given in relation to the refusal of the out of time application 44The criticisms of the advice given Trazmar as to the Committee's views of the merits of the claim, may be accepted. They can, after all, only be preliminary views, given the Law Society's initial advice that the extension application would be considered in the light of the apparent merits of the claim. A preliminary consideration of the merits of a claim is understandable, when an application for extension of time to bring a claim on the Fidelity Fund is being considered. That is plainly a relevant consideration. An extension of time in a clearly hopeless case would not be entertained. 45If an extension of time is refused, giving the unsuccessful applicant an explanation as to why the claim would have been refused, if the extension of time had been granted, without indicating that this is only a preliminary view, is apt to mislead as to what the Committee has power to do in the circumstances. The reasons given for the refusal of an extension of time application, ought to make it clear that any view expressed as to the merits has been formed on the material put before the Committee in support of the extension application and that it is not a final view as to the merits of the application. The Law Society having no power under the 2004 Act to determine the merits of the claim, unless the extension is granted, it ought not to express any views on the merits which could be interpreted as representing final views. 46After all, as in this case, the unsuccessful applicant may seek to exercise the right of appeal against the refusal of the extension application to this Court given by s 437 and s 438. If the appeal succeeds, the merits of the claim will then have to be considered by the Law Society. At that stage, there may, however, be other material which will arise to be considered, either because it is advanced by the claimant, or because, on reflection it is material which the Law Society seeks to be provided with, as s 436(3) contemplates, or which is obtained in any further investigation which it pursues, in accordance with s 436(4). That a claimant who has been advised of the Law Society's preliminary views as to the merits of the claim, and who successfully appeals a refusal of an extension application, may wish to advance other material in support of the merits of the claim, is certainly a real possibility, particularly if reasons for preliminary views as to the merits, or lack of them, have been given by the Law Society. The Court has no jurisdiction to determine the merits of the application 47In the result, in the context of this statutory scheme, while Trazmar may exercise its rights under s 439(2)(c) to appeal the decision refusing the extension of time, it has no right to bring an appeal to this Court under s 452, there having been no decision made on the merits of its claim, which is time barred. Separate question application 48In the circumstances, it is apparent that unless Trazmar's appeal from the Law Society's refusal of its extension application is heard and determined in its favour and the Law Society then makes a decision refusing its application on the merits for reasons which give rise to a right of appeal under s 452, there is no utility in the pursuit of any amendment of the cross-claim, to seek to appeal such a decision. Such a right does not arise to be exercised, until a decision is made by the Law Society as to the merits of the claim. That has not yet occurred. 49The Law Society does not dispute Trazmar's right to appeal the decision refusing its extension application. That is a question which needs separate determination from the claim advanced against Law Cover. Orders 50As discussed at the hearing, the parties should confer as to the orders to be made, given the conclusions reached on the motion, including as to costs. The future course of the proceedings also needs to be considered. The usual order would be that costs follow the event. The matter will come into the list on 25 May at 9:30am for orders and directions. The parties should file and serve proposed short minutes on or before 25 May 2012. ********** 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. Decision last updated: 17 May 2012