A Beenleigh solicitor was exonerated on Thursday after the Supreme Court decided he had not been responsible for any misappropriation of sale proceeds where he had accepted a deposit of title deeds from a seller for a transaction in which he acted for the buyer.

Sylvia Taylor sued Compass Legal after she lost most of the $930,000 from the sale in 2003 of her Tweed Heads home to her brother for whom the law firm acted. She also lost a Tallebudgera home that was acquired from part of its sale proceeds.

Her case was that Compass Legal’s former employed business manager and in house mediation expert – who traded under the name Compass Services, occupied an office next to the law firm and shared an adjoining boardroom – had been “held out” by the solicitor as his employee or agent.

Having been introduced to Compass Services by her brother and told by him its manager (the former Compass Legal business manager) was a solicitor, she mistakenly believed “Compass” were her solicitors. Compass Legal then acted for Compass Services in the Tallebudgera purchase in the name of a trust that the latter had set up with its manager as director for the plaintiff’s benefit. Thus the plaintiff had had no legal representation in either transaction.

Murky perhaps, but no holding out, said the court. The law firm could not be responsible for the false representation by Compass Services or any dishonesty on its part of which the firm had not been proven to have had any knowledge. And not being an employee, neither was there any vicarious liability on its part.

Ultimately the court decided the naive but not-so-innocent plaintiff had been a wiling party to the investment of the sale proceeds in her brother’s doomed development project on the Tweed Heads site and that she had authorized the lawyers to make the payments they did.

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It rejected the plaintiff’s allegation – her evidence was inconsistent and contained “deliberate untruths” – that when depositing Tweed Heads deeds she had signed a blank sheet of paper that was later completed by the solicitor.

However her honour disregarded a collection of documents the solicitor prepared, unsigned copies of which were produced but which were not otherwise verified. “There are reasons to be skeptical about the authenticity of these documents and the transactions they purport to record”.

The court ordered entirely in favour of Compass Legal against the plaintiff but gave judgment for her against her sibling – who was unrepresented in the proceedings – for the $250,000 that had been promised as a deferred purchase installment.

Taylor v Gould & Ors [2011] QSC 203 Brisb Dalton J 21/07/2011


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