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Eagle Boys franchisee accuses lawyer of misappropriating $95k
As part of an unsuccessful Fidelity Fund claim, a former franchisee of an Eagle Boys pizza store who allegedly blew settlement and LawCover payments on drugs and gambling has accused his lawyer of misappropriating just under $95,000.
Naomi Neilson
Eco-Pact and former sole director Brian Meknas accused lawyer Jacqueline Saldaneri of allegedly misappropriating the money he transferred into her trust account in an attempt to keep it out of the hands of creditors who were “trying to bankrupt him”.
Eco-Pact was the franchisee of an Eagle Boys store and retained Saldaneri for an insurance claim after the store burnt down in 2013. The claim against QBE was settled sometime in 2017.
She was also asked to assist with proceedings arising from Eco-Pact’s financial difficulties and Meknas’ now-annulled bankruptcy.
Meknas claimed that after it became clear the Eagle Boys franchisor had obtained an order for substituted proceedings against him, Saldaneri allegedly advised him to “continue” to avoid service of the court and pay funds into her trust account to keep it safe and secure legal fees.
Meanwhile, Eco-Pact received a sum of $230,000 from LawCover, of which about $150,000 remained after payment of legal fees.
Its solicitor, Mark Fraser, said Meknas used the LawCover money and the QBE settlement sum on “personal expenses, purchase of drugs for his personal use, legal costs for the defence of charges brought against him for drug-related offences, and gambling”.
He was incarcerated as a result of drug offences in 2022.
In 2021, Eco-Pact commenced proceedings in the common law division of the NSW Supreme Court against the Law Society of NSW to recover $94,468 allegedly misappropriated by Saldaneri.
While the alleged total amount of $135,068 was misappropriated, Eco-Pact deducted the $40,600, which it said was repaid.
In the first set of proceedings in March 2023, Justice John Griffiths dealt with the “bulk” of the claim related to a sum of $80,000, which was said to have been paid to Saldaneri in instalments in 2015 as “trust money” for the purposes of rendering legal services.
Justice Griffiths found the sum was paid as part of an arrangement or understanding to protect the money from creditors.
He added the payments “did not occur in the ordinary course of legal practice because the ordinary course of legal practice does not include a law practice receiving money from a client for the purposes of withholding the money from creditors and/or denying them knowledge of or access to that money”, the Court of Appeal heard.
Justice Griffiths concluded the $80,000 was not trust money and could not be the subject of a default. However, he said if he was wrong, it was clear there was a default by Saldaneri.
Eco-Pact attempted to appeal, but a registrar ordered that it must provide security for costs in the sum of $35,000. A review by Justice Christine Adamson confirmed the registrar’s order.
In the most recent proceedings, heard by Justices Julie Ward, Mark Leeming and Derek Price, Eco-Pact sought a judicial review and an order to set aside the decision of the registrar.
The company argued the appeal involves a matter of “significant public interest”, and Justice Adamson failed to consider that the security for costs application was “being used to deny an impecunious party the right to litigate, and that the Law Society ought to conduct the proceedings as a model litigant would”.
However, the Court of Appeal bench dismissed the application.
On the issue of whether the registrar’s orders had the effect of blocking the appeal, the bench said Meknas chose to “put it out of his capacity to meet the costs of litigation by expending his funds largely on illicit drug taking and gambling”.
As for the Law Society’s obligations, Justices Ward, Leeming and Price said they did not preclude it from seeking security of costs.
“Conversely, in circumstances where its lawyers’ costs are paid out of the Fidelity Fund, it has a heightened interest in protecting those funds and the operation of the scheme more broadly,” they said.
The court ultimately found the “very modest amount” ordered by way of security “bespeaks a proper appreciation of the [Law Society’s] responsibilities”, and it was evident the Law Society “will have been put to the expense of costs already”.
“In those circumstances, the not disproportionate claim for security for costs is understandable,” the bench said.
Naomi Neilson
Naomi Neilson is a senior journalist with a focus on court reporting for Lawyers Weekly.
You can email Naomi at:
