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Barry Lane
27 April, 2007  
Yarraside lawyers in the merde

Clarinda Molyneux QC’s brush with VicBar … Fondness for prerogative relief fouls another of the Katzenjammer Kids ... Why Ziggy Ziegler’s mammoth claim went down the gurgler

imageVictorian lawyers haven’t been doing too brilliantly in the personal litigation department.

Clarinda Eleanor Molyneux QC did manage to have a modest success before Justice Philip Mandie in having one of the 24 charges of misconduct brought against her by Victorian Bar Inc permanently stayed – see HH’s decision here.

Of the 24 charges, the Bureau de Spank (VCAT) dismissed 10 but found four of them proved in the sense that it found Ms Molyneux guilty of unsatisfactory conduct, which is an alternative and lesser offence to the charged offence of misconduct. VicBar effectively withdrew 11 of the charges.

In essence, the case against Clarinda was that in representing the same clients before the Federal Magistrates Court (coram Diana Bryant CFM) and the Federal Court on appeal (coram Justice Peter Heerey) she made “statements, allegations or suggestions” without reasonable grounds for believing that there was sufficient evidence to support them.

imageIn response, Clarinda (seen here) claimed that at all times she acted on instructions from her clients and that there was evidence available to support the “statements, allegations or suggestions” complained of.

All stops were pulled out by VicBar, which was represented by Dr Chris Jessup QC (as he then was), Justin O’Bryan and Simon Pitt. Doc Jessup took five days to open the prosecution case. Clarinda was represented by Jack Rush QC and Rachel Doyle.

The hearing of the first 14 charges commenced on April 10, 2006 and lasted 20 days. Clarinda was cross-examined for two days.

On July 14, 2006, the bureau handed down its reasons, which comprised 186 pages. On August 22, it got out the cat o’nine tails and reprimanded Molyneux in relation to the four offences of unsatisfactory conduct found proved.

Finally, on November 20, 2006 the bureau ordered her to pay 10 percent of VicBar’s costs of the proceeding up to and including October 30, 2006 which, given the team arrayed against her, would have amounted to a little more than loose change.

* * *

Perkins v The Victorian Bar Inc [2007] VSC 70 saw the return of the Katzenjammer Kids, Perky and Gabe, the subject of an earlier dispatch.

imageOn this occasion, Justice Tim Smith in the Supreme Court tossed an application by Perky (pic) for relief in the nature of certiorari and mandamus in relation to findings and orders of the Bureau de Spank on December 21, 2004 – see The Victorian Bar Inc v Perkins [2004] VLPT 6.

HH found that in choosing to seek prerogative relief when he should have pursued a right of appeal afforded by s.170 of the Legal Practice Act 1996, Perky’s application was an abuse of process.

The KKs have been tripped up by this little hurdle before when they sought to challenge a magistrate’s decision in Kuek v Victorian Legal Aid [2001] VSCA 80 by seeking remedies in the nature of prerogative relief.

The Court of Appeal said that Gabe should have pursued the right of appeal afforded by s.109 of the Magistrates’ Court Act 1989.

* * *

Finally, there is the case of Peter “Ziggy” Ziegler, who struck-out in his long-running litigation against Village Roadshow seeking up to $220 million in allegedly unpaid remuneration, bonuses and commissions after Village unceremoniously terminated his retainer in March 2003.

After 71-days of trial, which began on March 30, 2005 and ended on September 2, 2005, Justice David Habersberger, in a mammoth judgment of 355 pages not only dismissed Ziggy’s claim but gave Village judgment on its counterclaim to the tune of $12 million.

Ziggy, who has qualifications in law and accountancy and was an academic and tax partner at Ernst & Young before being hired by Village to head its tax loophole department, got snared in a loophole of his own.

When taken on by Village in 1993, Ziggy contracted with the company through a corporate interlocutor called Orrong Strategies Pty Ltd. Ziggy and his wife Andrea were Orrong’s only directors and shareholders.

No doubt Ziggy had no intention of paying personal income tax at the rate of 48 percent (plus Medicare levy) on his base starting pay of $300,000 plus performance bonuses (including five percent of any of Village’s tax refunds, five percent of any finance raised by him for Village projects and five percent of any tax “savings” made by Village) and other perks.

There was the better option of the corporate tax rate of no more than 30 percent less deductions, plus splitting opportunities with Her Indoors.

In its defence, Village claimed that Ziggy breached s.314 of the Legal Practice Act 1996, which precludes people who do not possess a practicing certificate from recovering legal fees if they “engage in legal practice”.

imageAlthough Ziggy (pic, centre with lawyers) had a corporate practicing certificate, he was not employed by Village. It was Orrong which was “retained” by Village, not Ziggy, and Orrong didn’t have a paid-up corporate practicing certificate.

Ziggy went to considerable lengths to persuade Habersberger that the “lawyerly” things he did for Village didn’t make either him or Orrong Village’s lawyer, and in that regard they were successful.

Anyone can brief counsel, give legal advice and call themselves “Chief Tax Counsel” or “Director, Fiscal, Legal and Strategic Objectives”, especially if they have qualifications in accountancy and law.

Even assisting in claiming legal professional privilege on Village’s behalf when the plods from the ATO marched in on August 6, 2002 and seized documents belonging to Village, Ziggy and others, did not of itself amount to “engaging in legal practice”.

What appeared to be critical to HH’s analysis on this issue was that none of the invoices delivered by Orrong to Village charging for Ziggy’s services purported to charge Village for legal services performed by Ziggy.

HH found that the retainer was payable by Village whether or not Ziggy briefed counsel, gave legal advice or did any other lawyerlike things he did.

I feel an amendment to the Legal Practice Act 1996 coming on.

However, something that seems to have evaded Ziggy’s loophole-focused attention was the existence of some pesky provisions in the Corporations Law 2000 and the Corporations Act 2001 – the “related party financial benefit provisions”.

As part of his remuneration package Ziggy, who was a director of Village at the time, negotiated an arrangement with Village whereby he (through Orrong) was to receive a portion of the profits of certain films produced and financed by Village.

Because Ziggy forgot to have those arrangements and his various bonuses formally signed off by Village’s shareholders, as required by the legislation, regrettably those schemes were unenforceable.

That finding put paid to any hope of Ziggy recovering his claim, most of which resulted from allegedly unpaid profits on films and termination and other bonuses.

Dear oh me, what a fine old mess.