Supreme Court New South Wales Medium Neutral Citation: Council of the Law Society of New South Wales v Cassidy (being the former principal of ZZZ Pty Ltd – an incorporated legal practice trading as ZZ) [2018] NSWSC 2008 Hearing dates: 21 December 2018 Decision date: 21 December 2018 Jurisdiction: Common Law Before: McCallum J Decision: 1. Pursuant to the provisions of Section 341(2) of the Legal Profession Uniform Law (NSW) (Uniform Law) David Lombe, Chartered Accountant, be and is hereby appointed Receiver for the Law Practice formerly known as ZZZ Pty Ltd trading as ZZ formerly situated at Suite 80, 171 Gloucester Street, The Rocks, NSW 2000 (Law Practice). 2. The Receiver shall within one month and thereafter, from time to time furnish to the Plaintiff such reports of his Receivership as the Plaintiff may require and that no further or other reports need be furnished by the Receiver. 3. Until further order, the Defendant and her servants or agents are restrained from: (a) removing, or causing or permitting to be removed, from the State of New South Wales; (b) selling, charging, mortgaging or otherwise dealing with or disposing of; and/or (c) causing or permitting to be sold, charged, mortgaged or otherwise dealt with or disposed of, all or any of her assets within the State of New South Wales without first obtaining the leave of the Plaintiff or of the Court to do so, provided that the Order shall not prevent the Defendant from paying her ordinary living and practice expenses up to the sum of $1,000.00 per week. 4. The Defendant, by 17 January 2019, shall deliver or cause to be delivered to the Plaintiff an Affidavit sworn by the Defendant setting out: (a) the particulars of any accounts in any name upon which the Defendant is entitled to operate in any capacity, including the name and address of each bank, building society or other financial institution, the name of the account, the account number and the balance of the account at the date of service of this order upon her; (b) the name and address of any person or entity indebted to the Law Practice and/or the Defendant at the date of service of a copy of the Order upon it and/or her and the amount of the debt or debts owed by such person or entity; (c) an itemised inventory of any business assets owned by the Law Practice and/or the Defendant; (d) an itemised inventory of any other property, whether real or personal, owned by the Law Practice and/or the Defendant or in respect of which the Law Practice and/or the Defendant has an interest; and (e) in respect of any of the property referred to above, whether it has been given as security for any debt, and, if so, the nature of the security and the debt so secured. Catchwords: LEGAL PROFESSION – application by Law Society for appointment of a receiver to a law practice following complaint of misappropriation – where defendant no longer a director of the law practice Legislation Cited: Legal Profession Uniform Law (NSW), ss 341(3), 365 Legal Profession Uniform General Rules 2015 (NSW) Category: Principal judgment Parties: Council of the Law Society of New South (plaintiff) Christina Helen Cassidy (being the former principal of ZZZ – an incorporated legal practice trading as ZZ) (defendant) Representation: C Flax (solicitor for the plaintiff) K Emanual (solicitor for the defendant) Solicitors: Law Society of NSW (plaintiff) Boyd House & Partners – (defendant) File Number(s): 2018/393901 Publication restriction: Pursuant to orders of the Court dated 4 May 2021, the names of a legal practice and legal practitioner associated with this decision have been anonymised. Judgment 1. HER HONOUR: This is an application by the Council of the Law Society of New South Wales against Ms Christina Cassidy, the former principal of ZZZ Pty Ltd. The Law Society seeks the appointment of a receiver to that practice. 2. Mr Emanuel, who appears for Ms Cassidy, raised a preliminary matter relevant to the relief sought, namely, that Ms Cassidy resigned as a director of the practice, which is an incorporated legal practice, on 13 December 2018. What flows from that is that Ms Cassidy, although she is a proper defendant to some of the other relief sought in the summons, is probably not a proper defendant to the relief sought in order 1, being the appointment of the receiver. 3. However, s 341(3) of the Legal Profession Uniform Law (NSW) provides that the Court can make the appointment of a receiver for a law practice whether or not the law practice or a principal of the practice has been notified of the application and whether or not the practice or principal is a party to the proceedings. It follows, in my view, that I have authority to make the order appointing a receiver, notwithstanding the fact that the law practice is not a defendant and notwithstanding the fact that the only defendant to the proceedings, Ms Cassidy, has resigned as a director of the practice and no longer has any association with it. 4. The application is supported by the affidavit of Ms Anne-Marie Foord sworn 20 December 2018. Ms Foord has set out in careful detail the circumstances in which The Council of the Law Society came to pass resolutions that the present application be made. 5. The material annexed to Ms Foord's affidavit includes a letter to the Law Society from Mr Emanuel on Ms Cassidy's behalf setting out certain matters, principally by way of disclosure to the Law Society but also providing information relevant to the present application. The letter indicates that, although Ms Cassidy was nominated as the principal of the law practice, the arrangements giving effect to her position did not see her undertaking any services as a solicitor on behalf of the practice; rather, she was put in a role by Mr XX, the principal of another legal practice. Mr XX arranged all of the documents for her to sign and offered to pay her a salary in return for which she was to undertake duties in the nature of being a personal attendant or assistant to his wife but no legal duties. 6. The firm, ZZ, did not have a trust account. The circumstances which prompted the Law Society to seek the appointment of a receiver concern a complaint made by a gentleman, Mr Munro, who paid $292,500 ostensibly to ZZ's trust account. As already noted, that firm did not have a trust account. It appears that money has been misappropriated by Mr XX. There is nothing in the material I have seen to suggest that Ms Cassidy had any involvement in those events. In any event, it is plain that the relief sought by the Law Society is appropriate, subject to one qualification. 7. The summons seeks the appointment of a receiver and orders against Ms Cassidy, to which she consents, restraining her from removing, selling or permitting to be sold any of her assets within the State of New South Wales without first obtaining the leave of the plaintiff or the Court. Mr Emanuel has indicated that Ms Cassidy is in the process of attempting to sell a unit and the Law Society has been informed of the circumstances in which she is doing so. It may be that, if the Law Society does not consent to that sale in due course, a further application will need to be brought before the Court to consider whether to grant leave for that to occur. 8. Next, the summons seeks an order that Ms Cassidy provide an affidavit providing certain information and she consents to that order. 9. Prayers 5, 6 and 7 in the summons seek orders that Ms Cassidy pay the costs and expenses of the receiver's remuneration and the Law Society's costs of the summons. Section 365 of the Uniform Law provides that the fees, costs and expenses of an external intervener are payable in accordance with the Legal Profession Uniform General Rules 2015 (NSW) and payable by and recoverable from "the law practice concerned". There does not appear to be any express authority to order payment of those costs by the principal of the law practice as opposed to the law practice. So far as the quick searches of myself and counsel this afternoon reveal, there is no specific rule in the Uniform Rules dealing with that issue. 10. In the circumstances I have recited where, on the strength of the information provide by Mr Emanuel, it appears that the defendant had no practical or legal involvement in the practice, there may be a real issue as to the fairness of ordering her to pay the costs of the receiver, although I accept (as noted on behalf of the Law Society) that she did at least consent to being the principal of the legal practice. More importantly, however, having regard to the terms of the section to which I have just referred, there may be a question as to whether the Court has authority to make an order against the principal of a practice as opposed to an order against the practice. 11. In all the circumstances, and having regard to the fact that this application has been brought urgently on the last Friday afternoon before Christmas, the appropriate course, in my view, is to defer orders 5, 6 and 7 sought in the summons to enable the parties to consider those issues in an orderly way. 12. For those reasons, I make orders 1, 2, 3 and 4 in the form of order provided. I stand the proceedings over for consideration of orders 5, 6 and 7 and I make order 8 granting the parties liberty to apply. ********** Amendments 05 May 2021 - The names of a legal practice and legal practitioner associated with this decision have been anonymised. 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: 05 May 2021