SUPREME COURT OF QUEENSLAND

Transcription

1 SUPREME COURT OF QUEENSLAND CITATION: PARTIES: FILE NO: of 2008 DIVISION: PROCEEDING: ORIGINATING COURT: Taylor v Queensland Law Society Incorporated [2011] QSC 8 SYLVIA PAMELA TAYLOR (appellant) v QUEENSLAND LAW SOCIETY INCORPORATED (respondent) Trial Division Application Supreme Court of Queensland DELIVERED ON: 4 February 2011 DELIVERED AT: Brisbane HEARING DATE: 5 August 2010 JUDGE: Daubney J ORDER: 1. The questions referred for preliminary determination are answered as follows: (a) Section 24(3) of the Queensland Law Society Act 1952 (Qld) is the law governing the liability of the Fund in respect of the appellant s claim by virtue of s 742(2)(b) of the Legal Profession Act 2007 (Qld). (b) Section 25 of the Queensland Law Society Act 1952 (Qld) applies to the appellant s claim. (c) The current proceedings are neither invalid nor a nullity. (d) Sections 375 and 392 of the Legal Profession Act 2007 (Qld) do not apply to the appellant s claim. 2. I further order and direct that the present proceeding continue as an application pursuant to s 25(6) of the Queensland Law Society Act 1952 (Qld). 3. I will hear the parties as to further directions and

2 2 as to costs. CATCHWORDS: COUNSEL: SOLICITORS: PROFESSIONS AND TRADES LAWYERS FIDELITY AND GUARANTEE FUNDS CLAIMS AGAINST FUND where the appellant appeals against the decision of the Queensland Law Society where the respondent rejects the claim on the Legal Practitioners Fidelity Guarantee Fund where the appellant alleges the Legal Profession Act 2007 and Queensland Law Society Act 1952 apply to the claim. Legal Profession Act 2007 (Qld), ss 10, 355, 356, 359, 364, 374, 375, 381, 392, 395, 742 Legal Profession Act 2004 (Qld), ss 146, 147, 163, 168(1), 181(1), 371(1)(b), 609(2) Queensland Law Society Act 1952 (Qld), ss 12, 24, 25 Uniform Civil Procedure Rules 1999 (Qld), r 483 Re Wan [1997] 1 Qd R 216, cited. Maxwell v Murphy (1957) 96 CLR 261, cited. John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503, cited. Phipps v Australian Leisure and Hospitality Group Ltd [2007] 2 Qd R 555, cited. SM Gerber for the appellant JK Chapple for the respondent Lillas & Loel Lawyers for the appellant ClarkeKann Lawyers for the respondent Introduction [1] The appellant, Sylvia Pamela Taylor, has appealed, ostensibly pursuant to ss 392 and 375(1) of the Legal Profession Act 2007 (LPA 2007), against the decision of the respondent Queensland Law Society Incorporated ( QLS ) dated 13 November 2008 rejecting the appellant s claim on the Legal Practitioners Fidelity Guarantee Fund ( the Fund ). The relief sought in the appeal is that the appellant s claim on the Fund be allowed, or alternatively that the period within which the appellant has to make the claim be extended pursuant to s 375(1)(b) of the Legal Profession Act 2004 (LPA 2004) or the LPA 2007 until after 27 August [2] On 17 May 2010, the parties requested the Court to refer certain stated questions for preliminary determination pursuant to the UCPR r 483. When the hearing of those stated questions came on before me, it became apparent that some of the questions which the parties had asked to be referred for preliminary determination were inapt for that process apart from anything else, some of the questions involved contentious questions of fact, and embarking on a hearing concerning those questions would have involved, in effect, half-hearing the primary appeal and making factual determinations without the benefit of a full and proper hearing. Accordingly, with the assistance of counsel for the parties, the list of questions for present preliminary determination was refined to those involving only questions of statutory interpretation on uncontentious facts. That final list of questions will be set out later.

3 3 Background [3] By a letter from her solicitors to the QLS dated 27 August 2008, the appellant made claim pursuant to the provisions of [the LPA 2007] in respect of a default (within the meaning of s 356 of the Act) by the firm Compass Legal Solutions on or about 1 August [4] The circumstances alleged by the appellant to underpin her claim were, in brief, that in mid-2003 she was engaged in certain property dealings with her brother. Specified amounts from the sale of a property then owned by the appellant were to be used to purchase another property ( the Staatz Court property ) for the appellant, with the balance of the proceeds of sale (some $185,000) to be paid to the appellant. A Mr Seabrook (then an employee of Compass Legal Solutions) acted for both the brother and the appellant in respect of these transactions. The new property was supposed to be purchased in the name of a company, of which the appellant s daughter was to be the sole director, and be held in trust by that company for the appellant s four children. This structure was designed to shield the new property from claims by the appellant s ex-husband. The appellant alleges that the solicitors (by Seabrook) failed to act in accordance with their instructions with respect to the establishment of this company and in relation to the disbursement of funds from the sale of the first property. The appellant s letter of claim alleged: 14. Contrary to the instructions listed in paragraph 12 herein, Seabrook: (a) Appointed himself as the sole director of a company SPL Securities Pty Limited ( SPL ) which he caused to be incorporated and used as the entity to purchase the Staatz Court property. (b) Borrowed the sum of $250,000 from Perpetual Trustees Victoria Limited to purchase the Staatz Court property and secured by way of mortgage over the Staatz Court property; (c) Used only the sum of $258, from the proceeds of sale of the property to purchase the Staatz Court property; (d) Used the balance of the proceeds from the sale of the property for his own benefit; and (e) Failed to account to Ms Taylor for the remaining proceeds from the sale of the property. The default In these circumstances, there has been a default in relation to a law practice within the meaning s.356 of the Act in that: 1. There was a failure by CLS to deliver trust money or trust property where there has been dishonesty; 2. Seabroook is an associate within the meaning of s7(1)(a)(v) of the Act in that he was an employee and/or consultant to CLS; and 3. The failure arises from an act or omission of an associate (Mark Seabrook) that involves dishonesty.

4 4 The default occurred in the relevant jurisdiction within the meaning of section 371 and Schedule 2 of the Act in that at the relevant time, Seabrook, Gould and the default were all in Queensland. The default occurred on or about 1 August [5] The letter of claim then went on to particularise the losses suffered by the appellant, including as a consequence of the sale of the Staatz Court property by the mortgagee. [6] On 3 September 2008, the manager of the Fund wrote to the appellant s solicitors: I refer to your letter of 27 August 2008 and the claim by Silvia Pamela Taylor for $657, It is noted that you comment in your letter that The default occurred on or about 1 August I refer you to Section 742 of the Legal Profession Act which provides that although the claim may be made under the Act, the law governing the liability of the Fidelity Fund and the reimbursement, is the law as in force immediately before the commencement. The Legal Profession Act commenced on 1 July The previous law was the Legal Profession Act 2004 which commenced on 1 July Section 609 of that Act is a similar transitional provision providing that the law determining the liability of the fund is law at the time of the default. The claim is subject to the provisions of the Law Society Act of which the relevant part is Section 24. This Section at paragraph (3) has the requirement that notification must be given to the Society within twelve (12) months of the claimant becoming aware of stealing or fraudulent misappropriation. The Section does not give any discretion to the Council of the Society in regard to the time limit. Your client s claim will be referred to the Committee of Management which supervises the admission rejection of claims against the Fidelity Fund. At this time, I am unable to give any indication of the date when the claim will be considered by the Committee. [7] The appellant s solicitors responded on 17 September 2008, setting out their arguments in respect of a contention that the appellant s claim was governed by the LPA 2007 and as to why the time allowed for claim under that legislation ought be extended. The appellant s solicitors advanced an alternative argument concerning the relevant time limit, if the relevant legislation was, in fact, the Queensland Law Society Act 1952 ( the QLSA ). [8] On 13 November 2008, the manager of the Fund wrote to the appellant s solicitors as follows: I refer to your client s claim for $657, The Committee of Management considered the claim at its meeting today.

5 5 The Committee rejected the claim on the grounds that it is out of time. The claim is subject to the Queensland Law Society Act 1952 as it is based on a transaction in August In the claimant s statutory declaration there are comments to the effect that she was aware by December 2003/January 2004 that settlement of the sale of her property at 49 Kennedy Drive had not produced the result she expected. These comments are at paragraphs 134, 137 and 139 of her statutory declaration. The claimant should have, on the basis of that information, notified the Society of a potential claim, at the latest, by January The Committee did resolve that the matter of the settlement of 49 Kennedy Drive be referred to the Legal Services Commissioner as a complaint on the grounds that there does not appear to be an authorization for or explanation for the distribution of at least part of the proceeds from the sale of the property. If your client is dissatisfied with the decision of the Committee in regard to her claim, she may appear to the Supreme Court for a review of the decision. [9] This is the decision which is the subject of the appeal in the present proceeding. Questions for preliminary determination [10] The questions which are presently required to be determined are: 1. Whether or not s 24(3) of the QLSA is the law governing the liability of the Fund [in respect of the appellant s claim] by virtue of s 742(2)(b) of the LPA 2007; 2. Whether or not s 25 of the QLSA applies to the appellant s claim; 3. If yes to question 2, whether or not the proceedings are invalid or a nullity for failure to satisfy s 25; 4. Whether or not ss 375 and 392 of the LPA 2007 apply to the appellant s claim. The legislation [11] The Fund, in general terms, is a statutory fund, created and maintained by contributions levied from solicitors, to provide a reimbursement scheme for clients of dishonest solicitors. 1 The Fund has been established consecutively under the QLSA, the LPA 2004, and the LPA LPA 2007 [12] As at the date of the appellant s claim, the Fund was constituted under and governed by the provisions of Chapter 3, Part 3.6 of the LPA (This legislation is still in force; amendments made to Part 3.6 since the date of the appellant s claim are not relevant for present purposes.) 1 Re Wan [1997] 1 Qd R 216, per Fitzgerald P at 217.

6 6 [13] The main purpose of Chapter 3, Part 3.6 was said, in s 355, to be to establish and keep a fund to provide a source of compensation for defaults by law practices arising from, or constituted by, acts or omissions of associates. [14] It is appropriate to assume for present purposes (and this approach was not contested in argument) that the matters complained of by the appellant fall within the meaning of the word default in this part (as defined in s 356). [15] Section 359 of the LPA 2007 provided: 359 Establishment of fidelity fund (1) The Legal Practitioners Fidelity Guarantee Fund established under the Queensland Law Society Act 1952, section 12, and continued in existence under the Legal Profession Act 2004, section 147, is continued in existence under this Act. (2) The fund continued in existence under subsection (1) (the fidelity fund) continues to be vested in the law society. (3) Subject to section 366, the law society must manage and administer the fidelity fund. [16] Subsequent provisions regulated the financial management of the Fund, including payments into and out of the Fund. Relevantly, s 364(a) of the LPA 2007 provided: Subject to this Act, the following may be paid out of the fund as required: (a) the amount of all claims, including costs and interest allowed or established against the fund under a relevant law;... [17] The term relevant law was defined in Schedule 2 of the LPA 2007 to mean, inter alia, the LPA 2007, the LPA 2004, or the QLSA (as in force at any time before the commencement of the LPA 2007). [18] Claims on the Fund were regulated by Division 4 of Part 3.6. Sections 374 and 375 provided: 374 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) The claim must be made in the law society approved form. (3) The law society 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.

7 7 375 Time limit for making claims (1) Subject to section 377, a claim does not lie against the fidelity fund unless the prospective claimant notifies the law society of the default concerned (a) within 6 months after the prospective claimant becomes aware of the default; or (b) within a further period allowed by the law society; or (c) if, on appeal to the Supreme Court against the refusal of the law society to allow a further period for the claim, the court allows a further period for making the claim within the period allowed by the court. (2) The Supreme Court or law society may allow a further period mentioned in subsection (1) only if satisfied that (a) it would be reasonable to do so after taking into account all ascertained and contingent liabilities of the fidelity fund; and (b) it would be appropriate to do so in the particular case having regard to matters the Supreme Court of law society considers relevant. [19] Section 381 provided that the QLS may decide a claim by wholly or partly allowing or disallowing it. The legislation then set out provisions regulating the disallowance or partial disallowance or reduction of the claim by the QLS. [20] A claimant dissatisfied with the decision by the QLS to wholly or partly disallow a claim or a decision to reduce the amount allowed under a claim was given a right of appeal to the Supreme Court under s 392. That section relevantly provided: (3) On an appeal under this section (a) the appellant must establish that all or part of the amount sought to be recovered from the fidelity fund is not reasonably available from other sources, unless the law society waives that requirement; and (b) the court may, on application by the law society, stay the appeal pending further action being taken to seek recover of that amount from other sources. (4) The Supreme Court may review the merits of the law society s decision. (5) The Supreme Court may (a) affirm the decision; or (b) if satisfied there are reasons for varying or setting aside the law society s decision

8 8 (i) (ii) (iii) vary the decision; or set aside the decision and make a decision in substitution for the decision set aside; or set aside the decision and remit the matter for reconsideration by the law society under a direction or recommendation of the court. [21] Payments from the Fund were governed by Division 8. Section 395 provided: 395 Payments for defaults (1) The fidelity fund is to be applied by the law society for compensating claimants in relation to claims allowed under this part for defaults to which this part applies. (2) An amount payable from the fidelity fund in relation to a claim is payable to (a) the claimant; or (b) another person at the claimant s direction. [22] Finally in relation to the LPA 2007, but importantly for present purposes, it is necessary to refer to the transitional provisions contained in Chapter 9 of the LPA Specifically in relation to claims against the fund, s 742 provided: 742 Claims for acts or omissions happening before commencement (1) If a person made a claim against the fidelity fund as it existed before the commencement of this section in relation to an act or omission that also happened before the commencement (a) the claim is to be dealt with under the repealed provision; and (b) the law governing the liability of the fidelity fund, and the amount of the reimbursement, is the law as in force under the repealed provision. (2) If the person did not made [sic] a claim against the fidelity fund as it existed before the commencement in relation to an act or omission before the commencement (a) the claim may be made under this Act; but (b) the law governing the liability of the fidelity fund, and the amount of the reimbursement, is the law as in force immediately before the commencement. (3) If section 397 applies, the amount of a reimbursement may be dealt with in the same way as a payment from the fidelity fund after the commencement. (4) In this section

9 9 repealed provision means either of the following as was in force at the time of the relevant act or omission (a) the Queensland Law Society Act 1952, part 3, as in force immediately before the commencement of previous section 609; (b) the Legal Profession Act 2004, chapter 2, part 7. [23] The commencement for the purposes of s 742 was 1 July [24] It was not in issue before me that s 742(2) is the provision which is relevant to the appellant s claim on the fund. LPA 2004 [25] The provisions relating to the Fund were contained in Chapter 2, Part 7 of the LPA [26] By and large, the provisions relating to the Fund in the LPA 2004 were replicated in the LPA It is not necessary to list the differences they are immaterial for present purposes. It is sufficient to note the following in relation to the LPA 2004: (a) Section 147 provided for the Fund established under the QLSA to be continued in existence under the LPA 2004; (b) (c) (d) (e) Section 146(1) provided that a default of a law practice is taken to have happened when the act or omission giving rise to, or constituting, the default happened ; Section 163 imposed a time limit on claims in terms virtually identical to those subsequently found in s 375 of the LPA Section 163 provided that a claim does not lie against the fidelity fund unless the prospective claimant notifies the law society of the default concerned within six months after the prospective claimant becomes aware of the default, or within such further period allowed by the law society, or within such further period as may be allowed by the Supreme Court on an appeal; Like s 381 of the LPA 2007, s 168(1) of the LPA 2004 provided that the QLS may decide a claim by entirely or partly allowing or disallowing it ; Section 181(1), in terms virtually identical to those contained in s 395 of the LPA 2007, provided that the fidelity fund is to be applied by the law society for compensating claimants in relation to claims allowed under this part for defaults of law practices to which this part applies. [27] The LPA 2004 also contained transitional provisions. Relevant for present purposes is s 609(2): (2) If the person did not made [sic] a claim against the fidelity fund as it existed before the commencement in relation to an act or omission also before the commencement, the claim may be made under this Act but the law governing the liability of the fidelity fund, and the

10 10 QLSA amount of the reimbursement, is the law in force immediately before the commencement. The commencement for the purposes of that provision was 1 July The relevant law in force immediately before that date was contained in the QLSA. [28] The provisions in the QLSA governing claims on the Fund were quite different from those later enacted under the LPA 2004 and the LPA [29] The Fund, which was established under s 12 of the QLSA, was vested in the QLS and was required to be held on trust for the purposes set out in the legislation. [30] Section 24 of the QLSA provided, inter alia, as follows: 24 Application of fund (1) Subject to the provisions of this Act, the fund shall be held and applied for the purpose of reimbursing persons who may suffer pecuniary loss through stealing or fraudulent misappropriation committed by a practising practitioner, or by the practising practitioner s clerk or employee, of any money or other property entrusted to the practising practitioner or to the practising practitioner s clerk or employee in Queensland... (a) in the course of the practising practitioner s practice; or (b) on account of any trust of which the practising practitioner is the sole or a joint trustee; or (c) on account of any trust of which the practising practitioner is the sole or a joint trustee and in respect of which he or she acts as a practising practitioner. (2) Every action against the society in relation to the fund shall, subject to this Act and rules made by the council, be brought in the Court. (3) No person shall have any claim against the fund in respect of any stealing or fraudulent misappropriation unless notice of such claim is given in writing to the council or committee of management within 12 months after the claimant has become aware of the stealing or fraudulent misappropriation.... [31] Section 25 provided: 25 Council may settle claims without action (1) The council may receive and settle any claim against the fund at any time after the commission of the stealing or fraudulent misappropriation in respect of which such claim arose, but no person shall be entitled, without leave of the council, to commence any action or other proceeding against the society in relation to the fund unless and until the

11 11 claimant has exhausted all relevant rights of action and other legal remedies available against the practitioner in relation to whom the claim arose and all other persons liable in respect of the loss suffered by such claimant. (1A) However, any person who has been refused the leave of the council as aforesaid may apply to a Judge in chambers against the refusal by the council of such leave, and the Judge may make such order as the Judge may deem fit. Limitations of right of action to recover moneys from fund (2) Subject to subsection (3), no person shall be entitled to recover from the society out of the fund by action or other proceeding as aforesaid an amount greater than the amount of the actual pecuniary loss suffered by the person less the amount or value of all moneys or other benefits received or receivable by the person from any source other than the fund in reduction of such loss.... (6) A person who has made a claim under this Act against the fund and who is dissatisfied with the decision of the council in respect of the claim may apply to the Supreme Court or a Judge thereof for the determination in a summary manner of any question of law or of fact arising under the claim and for a declaration of the rights of the claimant. (7) The court or a Judge shall not be bound to determine any such question if there is any substantial dispute of fact or if for any other reason in its, his or her opinion it ought not be determined in a summary manner but may direct that the applicant proceed by action against the society. [32] I turn now to consider the specific questions for determination. Question 1 whether or not s 24(3) of the QLSA is the law governing the liability of the Fund in respect of the appellant s claim by virtue of s 742(2)(b) of the LPA 2007 [33] The competing submissions of the parties can be stated relatively simply. [34] The appellant, quite properly, conceded the applicability of s 742(2)(b) to her claim. She said, however, that this section meant that the law governing the liability of the fund in respect of her claim was that found in the LPA [35] The respondent, on the other hand, invoked s 609(2) of the LPA 2004, saying that this had the effect of making the appellant s claim subject to the law governing the liability of the Fund under the QLSA. [36] The important difference is this: if the appellant is correct, then the relevant time limit is under s 163 of the LPA 2004; if the QLS is correct, then s 24(3) operates, and if it is ultimately proved that the appellant did not give the requisite notice within 12 months of becoming aware of the stealing or fraudulent misappropriation she may be disentitled from making claim on the fund. [37] The appellant argued that her position was not caught by the previous transitional provision. It was argued that, as provided for in s 742(2) of the LPA 2007, her claim was made under the LPA 2007 and that s 742(2)(b) meant that the law

12 12 governing the liability of the fund with respect to her claim made under the LPA 2007 were the provisions contained in Chapter 2, Part 7 of the LPA It was argued that s 609(2) did not have any operation in relation to her claim because hers is a claim under the LPA 2007 and not under the LPA [38] This submission is, in my view, untenable. Having conceded that, by the operation of s 742(2) of the LPA 2007, the law governing the liability of the fund with respect to her claim was that found in the LPA 2004, the appellant cannot then pick and choose as to which provisions in the LPA 2004 do and do not apply to her claim. Section 609(2) clearly operates to identify the governing law relevant to claims and has the effect of providing: (a) (b) That the appellant s claim may be made under the LPA 2004; notably, this does not exclude the prospect of her claim being made under the LPA Indeed there is no issue that the terms of the later statute are applicable in this regard; and The law governing the liability of the fund with respect to her claim is the law under the QLSA. [39] The more appropriate inquiry, and the one which is directly raised for answer under this question, is whether s 24(3) of the QLSA was a law governing the liability of the Fund. If it was, then it is applicable to the appellant s claim by virtue of the successive operation of s 742(1)(b) of the LPA 2007 and s 609(2) of the LPA [40] The appellant submitted in this regard that s 24(3) should be construed as a law governing the making of a claim, not a law governing the liability of the Fund. In other words, it was submitted that the limitation in s 24(3) was procedural only, rather than a substantive law which governed the liability of the Fund. [41] Issues concerning procedural provisions and substantive provisions commonly arise when considering the retrospective operation of legislation. 2 [42] The distinction between procedural and substantive issues was explained in the joint judgment of Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ in John Pfeiffer Pty Ltd v Rogerson, 3 in which their Honours said (omitting citations): 97 As already indicated, the choice of law rules traditionally distinguish between questions of substance and questions of procedure. There is much history that lies behind the distinction, but search as one may, it is very hard, if not impossible, to identify some unifying principle which would assist in making the distinction in a particular case. But, as the majority said in McKain: Though the dividing line is sometimes doubtful or even artificial, the need to distinguish between substantive law and procedural law is clearly recognised for a number of forensic purposes. 98 Some statutes of limitation have traditionally been held to be procedural on the basis that they bar the remedy not the right; other limitation provisions have been held to be substantive. But all 2 3 The authority commonly cited in this regard is Maxwell v Murphy (1957) 96 CLR 261. (2000) 203 CLR 503 at [97] [100].

13 13 limitation provisions can affect whether a plaintiff recovers. Questions of what heads of damage are allowable have been held to be substantive; but questions of quantification of damages have been held to be procedural. But all questions about damages can affect how much a plaintiff recovers and, thus, statutes such as the NSW Compensation Act, which is in issue in this case, alter the rights of plaintiffs and, also, the obligations of defendant. 99 Two guiding principles should be seen as lying behind the need to distinguish between substantive and procedural issues. First, litigants who resort to a court to obtain relief must take the court as they find it. A plaintiff cannot ask that a tribunal which does not exist in the forum (but does in the place where a wrong was committed) should be established to deal, in the forum, with the claim that the plaintiff makes. Similarly, the plaintiff cannot ask that the courts of the forum adopt procedures or give remedies of a kind which their constituting statutes do not contemplate any more than the plaintiff can ask that the court apply any adjectival law other than the laws of the forum. Secondly, matters that affect the existence, extent or enforceability of the rights or duties of the parties to an action are matters that, on their face, appear to be concerned with issues of substance, not with issues of procedure. Or to adopt the formulation put forward by Mason CJ in McKain, rules which are directed to governing or regulating the mode or conduct of court proceedings are procedural and all other provisions or rules are to be classified as substantive. 100 These principles may require further elucidation in subsequent decisions but it should be noted that giving effect to them has significant consequences for the kinds of case in which the distinction between substance and procedure has previously been applied. First, the application of any limitation period, whether barring the remedy or extinguishing the right, would be taken to be a question of substance not procedure (which is the result arrived at by the statutes previously referred to). The application of any limitation period would, therefore, continue to be governed (as that legislation requires) by the lex loci delicti. Secondly, all questions about the kinds of damage, or amount of damages that may be recovered, would likewise be treated as substantive issues governed by the lex loci delicti. [43] In my view, s 24(3) of the QLSA is not merely procedural. By its terms, it clearly goes to the substance of a person s entitlement to make a claim on the Fund. A claimant s entitlement to make claim on and be paid from the Fund was created under the QLSA, and existed independent of any common law right to recover compensation which the claimant might have against the defaulting solicitor arising out of the same act or omission relied on by the claimant to make claim against the fund. The QLSA established a substantive right for claimants to claim against a resource pooled from funds generated from within the legal profession. It was, and is, a fund of last resort. The right to claim against that fund is an essential element of a claimant s claim, as is a consideration of the total assets of the fund and its actual contingent liabilities. To adapt an observation of Keane JA, albeit made in a different statutory context, in Phipps v Australian Leisure and Hospitality Group Ltd, 4 s 24(3) went to the substantive entitlement of a claimant to recover moneys 4 [2007] 2 Qd R 555 at [17] [18].

14 14 from the Fund. Disconformity with s 24(3) meant that a claim against the Fund simply could not succeed because no liability could be established to pay money out of the Fund. [44] It therefore follows, in my view, that s 24(3) of the QLSA was and is the law governing the liability of the fund in respect of the appellant s claim by virtue of s 742(2)(b) of the LPA Question 2 whether or not s 25 of the QLSA applies to the appellant s claim [45] Section 25(1) could not, I think, be clearer in its terms. It relevantly provides that... no person shall be entitled, without leave of the council, to commence any action or other proceeding against the society in relation to the fund unless and until the claimant has exhausted all relevant rights of action and other legal remedies against the impugned practitioner and all others liable in respect of the loss suffered by the claimant. [46] The appellant accepts that she has not exhausted all relevant rights of action and other legal remedies against the practitioner and other persons. She submitted, however, that s 25 of the QLSA was not a law governing the liability of the Fund and was therefore of no application to her claim which was deemed to be made under the LPA It was submitted that s 25 of the QLSA is a law relating to the settlement of claims by the council and rights of appeal, but does not govern the liability of the fund. [47] It is appropriate again to refer for comparison to the judgment of the Court of Appeal in Phipps v Australian Leisure and Hospitality Group Ltd (supra). That case concerned the construction of certain provisions of the Workers Compensation and Rehabilitation Act In particular, it concerned s 237, which specified, by its terms, the only persons entitled to seek damages for an injury sustained by a worker and s 250 which relevantly provided that a claimant may seek damages for the injury only if the insurer gives the claimant a notice of assessment. The Court was also required to consider s 275, which required a claimant, before starting a proceeding in court, to give a notice of claim for damages. [48] In the course of his judgment, Keane JA said: [18] The first point to be made here is that neither s 237 nor s 250 of the Act purports to prohibit the Court from continuing to entertain a claim brought contrary to those provisions. What those provisions do is ensure that an action brought in disconformity with those provisions cannot succeed because the fact of the disconformity means that no liability can be established in the action against the defendant. While the disconformity exists, the defendant can be under no liability in damages to the plaintiff. [49] The situation in the present case is, if anything, even stronger. Section 25(1) contains a positive disentitlement to the commencement of any action or other proceedings unless the conditions referred to in that section are satisfied. I think it is clear that s 25 of the QLSA applies to the appellant s claim.

15 15 Question 3 if yes to Question 2, whether or not the proceedings are invalid or a nullity for failure to satisfy s 25 [50] As I have already mentioned, the appellant concedes that she has not exhausted all relevant rights of action and other legal remedies available against the practitioner in relation to whom the claim arose and all other persons liable in respect of the loss suffered by her. She submits, however: (a) (b) She was given leave (constructively) by the QLS to commence the present proceeding because the QLS, by the terms of its decision dated 13 November 2008, advised her that if she was dissatisfied with the decision she may appeal to the Supreme Court for a review of the decision. Alternatively, she should now be given leave nunc pro tunc. [51] Counsel for the QLS submitted that the inclusion of this sentence in the letter of 13 November 2008 could not constitute the granting of leave by the QLS under s 25 of the QLSA. It was submitted that, as the claim had been made under the LPA 2007, the QLS decision to disallow the claim was made under s 381 of the LPA 2007, and that the QLS was then bound by s 390, which provided: After the law society makes a decision mentioned in this division about a claim, the law society must give the claimant an information notice about the decision. It was submitted that the final sentence in the letter of 13 November 2008 was included for the purposes of satisfying the information notice requirements under the LPA As at 13 November 2008, s 10 of the LPA 2007 provided: 10 Information notices (1) An information notice is a written notice to a person about a decision relating to the person stating (a) the decision; and (b) the reasons for the decision; and (c) if the person may appeal under this Act, that the person may appeal against the decision to a stated court or entity and the day by which the appeal must be started. (2) A provision under this Act may provide that an information notice relevant to the provision must include other stated information. (3) If a person may appeal within a number of days after the day an information notice is given to the person, a defect in the notice does not affect the person s right to appeal in relation to the matters dealt with in the information notice. [52] The QLS also relied on the fact that the principal proceeding is an appeal ostensibly brought pursuant to ss 375 and 392 of the LPA It was submitted, however,

16 16 that s 25 of the QLSA was a substantive law governing the liability of the fund and, as such, was applicable to the claimant s claim by s 742(2) of the LPA [53] In short, the position which the QLS would now seek to maintain is that, having advised the claimant of a right of appeal (for the purposes of complying with the notice provisions of the LPA 2007), the QLS now says that the appeal is incompetent. Such an outcome would be curious, to say the least. [54] It is to be noted that the express reason given by the QLS for refusing the claimant s claim was that the claim was out of time because it was subject to the Queensland Law Society Act 1952 as [the claim] is based on a transaction in August I note also that this is consistent with the terms of the initial response by the QLS to the claim on 3 September 2008, which I have quoted above, and which expressly invoked s 24(3) of the QLSA. The QLS has been charged with the administration of the Fund, and management of claims made against the Fund, for many years. One can justifiably expect that the officers within the QLS responsible for management of claims have more than passing familiarity with both the substantive and the procedural requirements relevant to claims made under the various relevant pieces of legislation. It would be perverse in the extreme to conclude that an entity charged with the administration of a fidelity fund should be required to manage claims in such a way as to lead claimants into error. There is nothing in s 25(1) of the QLSA which requires a person to seek the leave of the council of the QLS. What is required is that the leave be granted. There is nothing in s 25(1) to prevent the QLS from giving such leave on its own motion. [55] To the extent that the QLS relied on the definition of information notice for the purposes of justifying the inclusion of the final sentence in the decision of 13 November 2008, it is again to be noted that it was the QLS s own position that the substantive law which applied to the claim was the QLSA and not the LPA It follows that the QLS could not then properly have referred to rights of appeal under the LPA Contending, as it did, that the appellant s claim was governed by the substantive law contained in ss 23 and 25 of the QLSA, the only proper interpretation to give to the final sentence of the letter of 13 November 2008 is that it was referring to the rights of a dissatisfied claimant to apply to the Court under s 25(6) of the QLSA. It is notable in that regard that the particular sentence does not, in terms, refer to the LPA It is, in my view, equally capable of being construed by reference to s 25(1) of the QLSA. [56] For the reasons that I have given, the letter of 13 November 2008 would be internally inconsistent, and quite misleading in its terms, if the subject sentence did not refer to the legislation expressly invoked by the QLS, namely the QLSA. I would therefore construe that sentence as constituting a grant of leave to the appellant for the purposes of s 25(1) of the QLSA. [57] In view of my finding on that point, it is unnecessary for me to express a conclusion as to whether such leave under s 25 ought be granted nunc pro tunc. The possibility of such leave being granted nunc pro tunc was adverted to in Re Wan (supra), although, on the facts of that case, the Court did not consider it appropriate for such leave to be granted. The present case is quite different, particularly in view of the fact that, by the terms of the letter of 13 November 2008, the QLS effectively invited the appellant to institute an appeal against the decision of the QLS. In those circumstances, I would have been much more favourably disposed to the notion of

17 17 granting leave nunc pro tunc, but as I have said it is unnecessary for me to express a concluded view on the matter. [58] I therefore conclude that the present proceedings are not invalid or a nullity for failure to satisfy s 25. Question 4 whether or not ss 375 and 392 of the LPA 2007 apply to the appellant s claim [59] It would be apparent from the foregoing that my view is that, whilst this claim has been made under the LPA 2007, the substantive law applicable to the claim is that found in the QLSA. It follows that neither s 375 nor s 392 is apposite for application to the present claim. [60] True it is, as counsel for the QLS pointed out, that the form of the originating application by which this appeal was brought invoked both s 375 and s 392. That is understandable, in view of the position advanced by the appellant that her claim was governed by the substantive law contained in the LPA If she had been correct in that regard, then the appeal procedures referred to in ss 375(1) and 392 would have been quite apposite. For the reasons I have given, however, I consider that the relevant substantive law is in the QLSA. [61] In view of my finding that the letter of 13 November 2008 contained the leave necessary under s 25 of the QLSA for the appellant to bring proceedings against the QLS, it seems to me that the appropriate way to proceed is to treat this matter henceforth as an application by the appellant pursuant to s 25(6) of the QLSA. I have already mentioned that there are disputes of fact which will require judicial determination, and the matter is not appropriate for summary determination. There will therefore be a need for directions to be made pursuant to s 25(7) of the QLSA. I will hear counsel further as to the necessary directions in that regard. Conclusion [62] The questions referred for preliminary determination are answered as follows: 1. Section 24(3) of the Queensland Law Society Act 1952 (Qld) is the law governing the liability of the Fund in respect of the appellant s claim by virtue of s 742(2)(b) of the Legal Profession Act 2007 (Qld). 2. Section 25 of the Queensland Law Society Act 1952 (Qld) applies to the appellant s claim. 3. The current proceedings are neither invalid nor a nullity. 4. Sections 375 and 392 of the Legal Profession Act 2007 (Qld) do not apply to the appellant s claim. [63] I further order and direct that the present proceeding continue as an application pursuant to s 25(6) of the Queensland Law Society Act 1952 (Qld). [64] I will hear the parties as to further directions and as to costs.