The latest decision from VCAT’s Legal Practice List is Legal Services Commissioner v JHMcC [2011] VCAT 231, a ‘guilty plea’ to six charges of professional misconduct. A lawyer purchased a franchise to operate under the name of one of Melbourne’s leading personal injury firms — I never knew such things existed — and was responsible for 1,000 files at a time down in Traralgon.  (Don’t try that at home, by the way, kids:  I well remember multiple retainers when I was solicitor for a gentleman formerly of the profession who from an office in the suburbs of an Australian capital (not the respondent in this case, obviously), and with the assistance of only non-legal staff, had 1,000 personal injury files open at a time.  He was a most vulgar man, insistent on telling me at every opportunity how much money he made, and of the details of his expenditure of it in pursuit of hackneyed hedonism.  And he was quite often negligent, apparently regarding the excess he had to pay his indemnity insurer as a cost of business.)

Anyway, our lawyer underpaid tax and suddenly had to pay $160,000 to the tax man, putting financial stress on his business.  So, when he received payment of bills from clients, he paid the whole lot into office, wrote cheques made out to barristers for their fees which had been billed to and received from clients as disbursements, and then put them into the bottom drawer to be retrieved and delivered only when convenient to the practice’s cash flow. The solicitor pleaded guilty to six charges of professional misconduct. Charge 6 was of breach of the following fiduciary duty, which I must confess is not one I had previously heard of:

‘to apply such moneys [amounts received for disbursements] in accordance with the purpose for which they were supplied by that client’.

Judge Pamela Jenkins, presently a Vice-President of VCAT and two other members were invited to impose a fine of at least $20,000 and plumped for $25,000.  In addition, costs payable by the solicitor were fixed at $6,715.

What’s the going rate by way of penalty for lawyers successfully prosecuted for falsely attesting the execution of documents? As usual in the law of professional discipline, the cases are all over the place — what is analysed below is a collection, not a line of, authorities — but I am unaware of any case in which a lawyer’s practising certificate has been interfered with solely for purporting to sign as witness a document they did not witness the execution of or for falsely giving a certificate that advice about the document was given.  And you would have to say that a fine of a few thousand dollars and a reprimand is the going rate. Justice Kirby, then President of the Court of Appeal, adverting to the Court’s role as fixing the standards to be observed in determinations by disciplinary tribunals, overturned a disciplinary tribunal’s decision to strike off a solicitor who gave a false certificate of advice in relation to a mortgage, exacerbated the wrongdoing by oral representations to the mortgagee’s solicitor and was not frank in the disciplinary investigations.  The Court substituted a fine and a reprimand: Fraser v Council of the Law Society of NSW [1992] NSWCA 1992.

Because of the dishonesty inherent in this species of disciplinary wrong, the cases have traditionally been clear that it amounts to professional misconduct rather than to unsatisfactory professional conduct.  But the New South Wales Court of Appeal’s decision in Xu v Council of the Law Society of NSW [2009] NSWCA 430 bucks the trend and characterised one such instance as unsatisfactory professional conduct.  All of the other cases need be re-evaluated in light of the Court of Appeal’s decision.

Below are my notes of reading the cases, for a disciplinary prosecution in which I recently acted.  I was put onto some of them by readers of this blog, for which many thanks.

Law Society of NSW v Martin [2010] NSWADT 245

The practitioner had been in practice for 11 years.  He acted for a purchaser of property.  He purported to witness her signature on five related documents: a mortgage of that property granted to Oakland Investments, a Declaration by Borrower, a Loan Repayment Declaration by Borrower, an ‘Acknowledgment, Authority, Directions and Undertaking’, and an ‘Acknowledgement of Legal Advice by Borrower’.  The documents bore what appeared to be the client’s signatures.  The solicitor believed them to be signed by the client, but he did not witness the signing.

The Law Society and the practitioner agreed on the orders which were made.  The practitioner submitted that he had been trying to assist the client, that he was contrite, and that he had been tricked into signing the documents by the fraud of a mortgage broker whom he trusted.  The mortgage broker said the client would be borrowing money through her, was embarrassed because the practitioner had previously advised against obtaining mortgage finance, and when the practitioner asked when he could see her, the broker said the client was unable to attend the practitioner’s office due to work commitments, and provided to him the apparently already signed documents, which she said the client needed witnessed urgently.

In fact the broker was a fraudster.  The practitioner cooperated with the police and was audited by the Law Society.  They concluded he was an innocent victim of the fraud.  The mortgagee sued the client for the return of the funds successfully.  The solicitor paid the mortgagee’s costs of that action of $19,000.

The Tribunal noted that the fine was at the lower end of the range but did not interfere with the parties’ joint submissions as to penalty.

Result:

• Reprimand;
• Fine of $6,000 stayed 6 months;
• Costs $2,500 stayed 6 months;
• To be suspended in default of compliance.

Xu v Council of the Law Society of NSW [2009] NSWCA 430

(This was also the case which determined that it is not improper for a solicitor to retain a client’s passport pursuant to a possessory lien.) Handley AJA wrote the leading judgment, so far as the false attestation issue is concerned, and Tobias JA and Basten JA both agreed with it.

The solicitor saw a man who wanted to buy a property.  The man brought with him the contract.  The solicitor explained it to him and the man signed it.  The man took it away with him. He came back some days later and told one of the solicitor’s staff that his wife wanted to purchase along with him and that she had signed it.  The solicitor overheard that conversation, but did not thereafter see the contract.  Some weeks later, he signed a certificate that he had explained the contract to the purchasers, and that he had explained that by the certificate, they were renouncing their right to a cooling off period.  In fact, he had not explained the cooling off period to the wife. The solicitor said that he did not read the certificate, that he signed it carelessly.  In fact, the wife had been in China when her signature had been written on the contract by someone else.  The certificate had a space for the purchasers’ names to be inserted, but it was left blank.  The Court of Appeal said that was irrelevant.

Handley AJA said:

‘40 In this state of the evidence the Tribunal was entitled to find, as it did in substance (Red 18), that the solicitor’s failure to check the contract after he had learned that the client’s wife had signed it and her name had been added as a purchaser, reinforced by his signature of the incomplete s.66W certificate, was a representation (holding out) to the vendor and its solicitors. This representation, on which they were entitled to rely, was that the wife was also a purchaser and, after being properly advised, had knowingly waived her right to a cooling off period. The solicitor would have been liable for negligent misrepresentation and misleading and deceptive conduct if the vendor had suffered significant loss and brought proceedings. To that extent he has been let off lightly.

41 The findings of the Tribunal, so understood, do not establish “a substantial”, let alone “a consistent” failure to reach or maintain a reasonable standard of competence and diligence. However that conduct was within the definition of unsatisfactory professional conduct in s.496 (“conduct … that falls short of the standard of competence and diligence that a member of the public is entitled to expect”).

42 As a result of the solicitor’s acts and omissions an exchange of contracts between solicitors with a s.66W certificate failed to create a clearly enforceable contract for this simple transaction. However regardless of their consequences, these were momentary and isolated lapses.

43 A finding of unsatisfactory professional conduct, though not charged, was available to the Tribunal under s 562(6), and this Court has power to substitute that finding under ss.75A(6) and (10) of the Supreme Court Act and this should be done.

…

58 … The Tribunal’s decision that the first two charges were established should be confirmed but the finding that they constituted professional misconduct should be set aside and there should be substituted a finding that they constituted unsatisfactory professional conduct by the solicitor.

59 The solicitor’s conveyancing work in the Zhang matter was incredibly sloppy and his signing of the incomplete s.66W certificate was irresponsible. Although, by themselves, they were not acts of professional misconduct, repeated acts of this character would properly be characterised in that way. Although the acts were isolated and there is no evidence that they had been repeated in other transactions the solicitor should nevertheless be publicly reprimanded for them as acts of unsatisfactory professional conduct.

60 The fine imposed by the Tribunal for the third charge must be quashed, but the solicitor’s conduct reflected in the other charges still merits a fine which should be fixed at $1500.’

Result:

• Tribunal’s finding of professional misconduct set aside and Court of Appeal’s finding of unsatisfactory professional conduct substituted;
• Fined $1,500 (reduced from $2,500 fine imposed by Tribunal);
• Reprimanded;
• Costs (but set off against costs of passport matter in which he was successful, so no order as to costs).

Council of the Law Society of NSW v Beverley [2008] NSWADT 251

The solicitor did debt collection work for a company.  He knew its credit manager well, and had seen her signature many times.  She was on maternity leave and worked only a couple of days a week.  He also knew a commercial agent who acted for the company well.  He took instructions from and liaised with both.  The agent was sloppy with affidavits.  The sloppiness has occasioned difficulties, including adjournments.  Fearful that if he had the agent attend to the witnessing of the credit manager’s affidavit, he would not do it properly and by virtue of the credit manager’s part-time status the problem would not be cured in time, the solicitor emailed a draft affidavit to the credit manager and asked her to sign it and send it back undated and unwitnessed.  Upon receipt of such a document, he dated it and signed as witness.  He relied on it in obtaining a debtor’s bankruptcy.  Unbeknown to him, though, the credit manager had advised the commercial agent to accept a compromise and not proceed with the bankruptcy.  The solicitor became personally liable to pay solicitor-client costs of $47,000 in those proceedings.

The solicitor had been a sole practitioner for 20 years at the time of the wrongful conduct, practising exclusively in commercial debt recovery.  He had retired from law in favour of real estate about a year after the conduct, but wished to return to a different area of law, namely insolvency.  He had an income of $30,000 to $40,000 a year at the time of the hearing.

He was found guilty of professional misconduct.

Result:

• Reprimanded;
• Fined $2,500
• Costs $3,500.

Law Society of NSW v Georgas [2008] NSWADT 82

A woman, her husband, and his parents were listed as borrowers on a loan document for $600,000.  The solicitor purported to witness the signatures of each borrower on the loan agreement and on the mortgage.  The borrowers purported to certify, by writing their signatures on another page of the loan agreement that they had obtained from the solicitor legal advice on the nature and effect of the loan contract and all securities to be granted, that they understood the nature and effect of the documents and that they understood the obligations and risks involved in signing the documents, and that they did so freely voluntarily and without pressure from any person.

The solicitor said that he had conducted a file review and realised that there were signed original mortgage documents on the file ‘and nothing had been done about them’.  He recalled that about 6 weeks previously, he had attended in his reception to an Indian family of two adults and two elderly parents, to witness mortgage documents.  He did not want to appear silly by ringing them to check that it was them whom he had attended on, and that he relied on his memory of the attendance to sign, belatedly, as witness.  He could not be sure that the Indian family in question had been the borrowers, because his practice was mainly conveyancing and he did many similar transactions.  There was no pressure of time to complete the transaction at the time when the solicitor signed as witness.  He could have had them rewrite the signatures.

More than three months later, the woman came to the solicitor’s office and told him that he had not witnessed her signature.  The solicitor said she admitted nevertheless that it was her signature and that she wanted to proceed with the loan, and that her concern was that her in-laws were included on the documents.

The woman contended that her signature had been forged, but the Tribunal declined to make that finding.

The Tribunal found that the conduct was professional misconduct within the Allinson test – disgraceful and dishonourable, but that it was at the lowest end of the scale.  In view of the fact that the solicitor recognised the error of his ways, and was unlikely to offend again.

Result:

• Reprimand;
• Fined $1,000;
• Costs to be assessed.

Legal Services Commissioner v Flynn [2007] NSWADT 186

The practitioner had been admitted for about 5 years when the relevant conduct occurred, in June 2002.  The matter proceeded as a plea, with the Commissioner and the practitioner filing affidavits, neither requiring the other for cross-examination.  The solicitor made full and frank admissions from the outset, acknowledging the wrongfulness of his conduct.  He said at the relevant time ‘my singular focus, perhaps obsessively so, became to acquire and process as much work as possible.  It was at this point that I began to be absent from the office on a more regular basis as a result of taking instructions from all over Australia and, although I found that my levels of stress were increasing significantly, I thought I could simply work through it’.  He had lost $100,000 and foregone a lot of fees when a complex case he punted was lost.  His practice was affected by changes to the law in 2002 in relation to civil liability. He had been working at least 76 hours a week, sometimes only sleeping 4 hours a night.  His marriage had been under strain. In 2006, he sought psychological, and subsequently medical assistance in relation to his mental state.  His prognosis was good, and he had decided not to take on cases except from clients in his local area.

The solicitor had drawn a will, and a power of attorney and enduring appointment of guardian in favour of the client’s daughter.  He had seen his clients in his office in Northern NSW, but sent the documents to Northern Queensland where he claimed to have witnessed them (though it is unclear whether the will was one of these documents).

Subsequently, the solicitor acted in the face of a conflict of duties in the transfer of the client’s home to the attorney.  The Protective Commissioner successfully obtained an order to manage her affairs.  Through the Commissioner, the client lodged a caveat over her former property, claiming a beneficial interest.  The solicitor gave advice to the attorney registered proprietor about having the caveat removed.  Then the solicitor paid his bill out of trust, having obtained permission to do so from the client, when by virtue of the protective order, she was not competent to give such permission.

The Protective Commissioner had sued the practitioner for their costs of the protection application.  The solicitor had paid those costs in the sum of $63,000.

Result:

• Reprimand;
• Fined $4,000 stayed 3 months;
• To be suspended in default;
• Costs $2,500.

Legal Services Commissioner v Turner [2007] VCAT 1986

This was a decision of Judge Bowman.  The barrister signed a bank guarantee in three places, witnessing it as a legal practitioner, allegedly employed by the complainant who was the guarantor. The document contained a certification that he had explained the effects of the guarantee to her and that she appeared to understand it.  In fact, none of those things were true, and he had not witnessed the complainant’s signature.  He was a close friend of the complainant’s husband. Unbeknown to him, their relationship was rocky. But the husband assured the barrister that all was well. The barrister thought he was obliging both his friend and the complainant in doing what he did.  He signed it in a social situation.

The barrister was a practitioner of 20 years’ standing.  He had many impressive character witnesses and had done many good works.  He was deeply remorseful. The barrister ‘admitted his guilt’ from the outset, and cooperated completely and frankly with the Commissioner and the Tribunal.  He had a young daughter and a mortgage.

Result:

• Reprimand;
• $5,000 fine stayed 3 months;
• $5,030 costs.

Legal Services Commission v Nguyen [2005] LPT 007 (PDF)

This was a decision of Queensland’s Legal Practice Tribunal, presided over by Chief Justice de Jersey.  The solicitor was a 35 year old with a busy suburban practice, who did a lot of community work.  This was his first ethical breach resulting in a disciplinary finding.  He purported to witness his firm’s client’s signature on a first home transfer concession form and lodged it with the revenue authorities. In fact, he did not witness the writing of the signature and did not check with the client that it was hers.  Initially, he claimed that the signature was the client’s, but later conceded that it must have been written by someone else within his firm.  Two counts of misconduct were found to be established: the false witnessing and the submission of the document to the revenue authorities.

Result:

• Reprimand;
• Fined $4,000 stayed 3 months;
• Costs to be assessed.

Law Society of NSW v Shad [2002] NSWADT 236

The solicitor purported to witness the signature of the wife of a man he had known for more than two years.  Someone other than the wife signed the wife’s signature on a guarantee associated with a mortgage, a second mortgage and guarantee by companies of which she was director and shareholder, and a mortgage of a third property of which she was co-owner with her husband, and a guarantee.  The securities were associated with a loan of $910,000 from the Bank of Melbourne.

The solicitor had met the man’s wife only once, about two years before he witnessed signatures on the controversial documents. He had no recollection of what she looked like, except that she was Asian. The man, Mr Maniam, attended at the solicitor’s office and introduced his companion as ‘Jan Maniam’.  The solicitor assumed that she was the wife.  He explained the documents to the couple for 20 minutes, and then, as there were many documents to be signed, he excused himself after he had witnessed each of the man and the woman sign their signatures once.  He returned after they had finished, and signed the documents as witness.  In doing so, he represented that the document had been signed in his presence when it had not been, and that the signatory of what purported to be the wife’s signature was the signature of the wife, who was personally known to him.

The solicitor had been a sole practitioner for 25 years and had established a successful practice in the fields of conveyancing, estates and wills, employing 27 people.  He worked 12 hour days and conducted about 20-30 interviews a day.  He called 19 character witnesses by affidavit, including solicitors, barrister, senior churchmen, a law agent, and the principal of a real estate agency.  He did charitable work for the Church.  He readily acknowledged the foolishness of his conduct.  He had for a long time regretted the matters and said he would continue to do so for the rest of his life.

The prosecutor relied on a letter under cover of which the solicitor sent the mortgages to the lender’s solicitor.   In it the solicitor described them as having been duly signed and stamped.  The Tribunal said:

‘Although technically the description may be regarded as misleading, in the Tribunal’s view it does not warrant separate consideration as aggravating the misconduct evidenced by the false attestation.  This letter should properly be seen as bound up with the false allegations, it being remembered, of course, that with the letter came the very mortgages which included them.’

He was found guilty of professional misconduct.  He was also found guilty of professional misconduct in swearing a false affidavit with intent to mislead the Stamp Duties Office, and he produced a contract which had in fact been prepared in 1992 but backdated to 1987 and which he had deliberately prepared in accordance with the standard form current in 1986.  In litigation, he gave a false affidavit in relation to the same matters, and the Tribunal disbelieved the solicitor’s plea that the dishonesty was inadvertent.

Result (with no apportionment between the two charges):

• Fine $35,000
• Costs to be taxed.

Law Society of NSW v Andreone [1999] NSWADT 14

The solicitor, of 28 years’ standing, purported to witness a signature on an affidavit and take an oath when he was not present when the affidavit was signed and the oath was not taken in the proper manner.  It was an affidavit of documents. The representative of the client had signed the affidavit and faxed it to the solicitor.

The solicitor prepared a statement of claim for a client who instructed him to commence proceedings but failed to file them for years.  He frequently told her that they were filed and proceeding well.  There was similar conduct in another two matters as well.  In one of them, the solicitor made time recording entries which were false to suggest he had been to court when he had not.

The solicitor failed to commence proceedings for another client within the limitation period and then applied to extend the time without instructions from the client and without having advised the client of the failure.

The solicitor failed to file a document within time, with the result that an application was made to strike his client’s proceedings out.  The solicitor failed to advise the client, obtained adjournments several times without instructions, and consented to the strike out and an adverse costs order without instructions to do so.

Result:

• Reprimand;
• Fined $25,000;
• Ordered to be paid costs to be taxed.

Matter of M / In the matter of Lynette Robyn McLardy [1998] 3 LPDR 23 (I have a copy)

This was a decision of the NSW Legal Services Tribunal.  The solicitor acted for the wife in Family Court proceedings.  The court ordered the husband to transfer a property to the wife.  The solicitor posted a transfer for the husband’s signature to his solicitor.  The husband said she was not to send further correspondence to his solicitors.  She re-sent the transfer directly to him for his signature.  She received it back from the husband, signed but not witnessed.  The solicitor repeatedly tried to have the husband re-sign the form in her presence as witness.  She even dropped in at his house several times.  Under pressure from the wife who needed the signed transfer in order to settle a loan, the solicitor signed as witness.  The form contained a representation on behalf of the witness that the transferor had signed in the witness’s presence, and that he was personally known to her.  The solicitor said she knew the husband’s signature, but acknowledged that the husband had never made any representation to her that he had signed the transfer.

The solicitor had many good works to her credit, and many glowing character references.  She was remorseful and had admitted her wrongdoing from the outset.  The conduct was characterised as fraudulent.  It appears to have been accepted that specific deterrence was not necessary, but general deterrence required a fine rather than just a reprimand and a costs order.

Result:

• Reprimand;
• Fine $2,000 stayed for four months, in default of payment: suspension until paid;
• Costs: $3,433.

Fraser v Council of the Law Society of NSW [1992] NSWCA 1992

The solicitor applicant had been struck off the roll of practitioners at first instance, and successfully appealed.  The Court of Appeal substituted a reprimand and a fine of $7,000.  The solicitor had worked from a cubicle within a conveyancing company at Woollongong.  An employee of the Wagga Wagga office of the conveyancing company rang him. He knew and trusted this employee.  The employee told him that two clients of the conveyancing company urgently needed a certificate of advice.  He was told that a lawyer whose abilities he respected had already been given the advice the subject of the certificate, but had declined a certificate from the lawyer because he did not hold a practising certificate and could not establish that he held professional indemnity insurance.  The solicitor signed the certificate, falsely representing that he had personally advised the clients, whom he had never met.  Later, the mortgagee’s solicitor rang, and the solicitor told him that he had signed the certificate and held a full practising certificate.  The mortgagee’ solicitor telephoned again, and specifically enquired whether the solicitor had explained the mortgage documents by phone or in person.  The solicitor said ‘You have got the certificate of explanation.  You can rely on that.’  Pressed by the mortgagee’s solicitor about his personal attendance, the solicitor said:

‘You’ve got the certificate of explanation. You can rely on that and that’s all that need’s to be said.’

When investigated by the Law Society, the solicitor said he had difficulty remembering the case, but felt sure that this particular transaction was conducted by telephone.  At the disciplinary hearing, the solicitor resisted a finding that he had engaged in fraud, but later came to recognise that that was an appropriate characterisation of it.  The Law Society pressed for a substantial fine. The disciplinary Tribunal struck him off.

Result:

• Fine $7,000 stayed;
• Costs on a solicitor-client basis to be paid by solicitor.

A 27 year old solicitor working in family law twice lied about the existence of a document, and then forged it.  That was just one and a bit years after a harrowing admission application in which the Board of Examiners split on whether she should be admitted, as a result of what VCAT’s Deputy President McNamara referred to as ‘allegations of plagiarism’ at the College of Law, and a want of frankness in their disclosure.  The Board had given the solicitor a stern warning at the end of the hearing.  For the forgery, the solicitor was fined $3,500 and reprimanded, the Commissioner’s submission that a year’s suspension was warranted being dismissed as ‘disproportionate’: Legal Services Commissioner v SJJ, McNamara DP, 14 April 2011.  If followed, this decision suggests once again that interference by VCAT with a practising certificate requires quite profound dishonesty.

As to the fine, it may be that $3,500 was a significant fine for this solicitor: her financial circumstances were described as ‘exiguous’, but she was employed as a solicitor by a respectable Melbourne firm at the time of the penalty hearing, looked set to remain so employed by her supportive employer, and her circumstances seem to have been principally affected by the size of her mortgage.  The general deterrence of a fine of this sum would be enhanced if its appropriateness in the context of the solicitor’s ability to pay it were explained in greater detail.  That way, solicitors weighing up the risks of forging a document against its perceived desirability (yes, that is the theory of general deterrence) would be able to remember back to the report of the case in question and think ‘Well if he was fined $5,000 and had an annual disposable income of $25,000 living in a modest home, I must be looking at a fine of something like $20,000 since my disposable income is four times his, and I live in a home twice as large as my family actually needs.’

One infers that the solicitor chucked a sickie.  Challenged to produce a medical certificate by her law firm employer, she twice asserted the existence of such a document, and then forged one and gave it to her employer, representing that it was authentic.  The fraud detected, she was summarily sacked, and her employer lodged a complaint.

The solicitor argued in response that the complaint should be dismissed as vexatious, and made allegations of bullying by her boss, his wife, and others at the firm.  Her counsel admitted at the hearing that objectively they could not be made out.  The reasons contain no suggestion that the solicitor gave evidence that despite the fact that she had not been bullied, she believed that she had been bullied. Her counsel submitted that ‘it could have been perceived subjectively by his client as being the situation’. She told the Legal Services Commissioner that she was seeing a psychologist weekly when in fact she was not.

There was psychological evidence suggesting that the solicitor was suffering some of the symptoms necessary for a diagnosis of depression, following a relationship break up, and that ‘at some point’ during her employment, her judgment ‘may have been impaired’. She had sought counselling before the lies about the medical certificate and its subsequent forgery. But the psychological evidence was predicated on a false history that included workplace bullying (see [11]).

There was evidence that the solicitor’s commitment to her mortgage was a substantial financial burden.  Patrick Over for the Commissioner brought the Tribunal’s attention to other disciplinary cases involving the forgery of documents: Young v Law Society of NSW [2001] NSWADTTAP 38 and Council of the Law Society of NSW v Russell in which fines of $10,000 and $13,000 were imposed in circumstances where the lawyers demonstrated complete insight into the wrongness of their conduct and genuine contrition.  They involved the forgery of letters of administration and of a statutory certificate.  Our solicitor’s forgery was described as ‘of vastly lesser quality’ than those in Mr Over’s two cases, apparently in part because no client was known to have been affected.  Though Deputy President McNamara said:

‘The forging of any document is the start of a slippery slope. A medical certificate today, letters of administration tomorrow. In its disciplinary role the legal system cannot trivialise or wink at any sort of forgery whatsoever.’

But then the Deputy President said that but for the ‘hiccups’ with the application for admission he would have been inclined to keep the penalty to a reprimand.  The penalty was elevated to a fine of $3,500 because of the ‘previous black mark’. So there you go: don’t forge documents because if you do, assuming you fess up somewhat and express a degree of contrition, you might get reprimanded.

In Fraser v Council of the Law Society of NSW [1992] NSWCA 72, which is part of the subject of this post, President Kirby made some comments on the relationship between the jurisdiction to strike a practitioner off the roll and a finding or admission of dishonesty, that is, fraud.  The Court of Appeal unanimously overturned the decision of a disciplinary tribunal striking off the roll a solicitor with an otherwise unblemished record  for fraudulently giving a certificate of advice to a mortgagor, then not being frank about it towards the mortgagee’s solicitor and in the disciplinary investigation, and having difficulty accepting, in the disciplinary tribunal that what he had done amounted to fraud. Kirby P said that a finding of fraud is not a prima facie indicium that a lawyer ought to be struck off; everything depends on the circumstances:

‘By his affidavit the appellant acknowledged that the provision of the false certificate: “… was wrong and that I ought not to have done it.” The affidavit sought to explain the provision of the certificate by reference to the reported urgency facing the mortgagors, the assurance that proper explanation had been given by Mr McConnell and the confidence which the appellant had in Mr McConnell’s ability and integrity.

In respect of the telephone call from the mortgagee’s solicitor, the appellant agreed with the solicitor’s affidavit. He also agreed that he had been evasive. He explained that he was trying to assure the solicitor that the certificate had been given after a proper explanation to the mortgagors without telling him a lie by affirming expressly either a face-to-face interview or a telephoned explanation by himself.

In questioning by the Court, the appellant baulked at the suggested that, by what he had done in giving the certificate, he had been engaged in a fraud, specifically upon the mortgagee. His resistance to the charge of “fraud” appeared to rest upon the following bases:

1. That nobody had in fact suffered any damage from what he had done;

2. That he had not intended to cause damage to anyone and indeed had only acted as he did because of an emergency and to help the mortgagors in their predicament;

3. That he had received no fee or benefit whatsoever for himself for what he had done; and

4. That he was convinced that the mortgagors had been given, by Mr McConnell, as accurate and thorough an explanation as they could hope for.

However, as he was pressed each of these defences fell away. Ultimately, the appellant came to acknowledge, as was clearly the fact, that he was guilty of fraud. Cf Demetrious v Gikas (above) at 564. The acknowledgment occurred in the following passage of questioning by members of the Court:

“HANDLEY JA: Q: Sitting in the witness box, you realise what you did was not only a foolish and wrong but that it was fraudulent? A: I baulk at the world fraudulent. I look, if you want a yes or no answer, I suppose I would have to say yes. But I really don’t, the word ‘fraud’, I don’t believe I was party to any fraud.

Q: What is it about your conduct at the time and what you did that gives you difficulty in seeing it as fraudulent?

A: Well, the situation is I have never met the Livingstones and quite frankly I have gone to such extraordinary lengths to help these people. Why would I do such a thing? It really is incomprehensible that I should do such a thing as I have done.

CRIPPS JA: The fraud is directed to the mortgagee’s solicitor.

KIRBY P: And the mortgagee.

CRIPPS JA: p: Why do you not think it was fraudulent towards them? A: I believe, I feel uncomfortable with the word ‘fraud’.

HANDLEY JA: Q: The Court, I think, understands that, but apart from being uncomfortable I am trying to find out whether you recognise it, looking in the mirror, that is what you did. If you don’t I would like you to explain to me that what you did was not fraudulent? A: I don’t like the use of the word ‘fraudulent’ but I believe it was. It was an action which led to money passing hands, yes, so in that sense it is right but there was no benefit to me. If anything, it has been nothing but detriment to me and it has cost me dearly and my family dearly and it has destroyed my reputation.

Q: I will ask you the question again, do you now recognise that what you did  was fraudulent or do you have a reason why you think that what you did was not fraudulent?

A: I believe that my action was fraudulent.”

It was suggested in cross-examination that, although the appellant received no fee for the false certificate, he enjoyed certain economic advantages from his consultancy with the Title Conveyancing Company. Hence, it was suggested, he derived indirect benefits from his misconduct. He denied that he gave any consideration to any such benefits. He asserted complete independence of action when advising clients referred to him by the Title Conveyancing Company. I would be prepared to accept that his conduct was not motivated by any perception of direct or indirect gain but was intended to be of help to Ms Goode and, as he believed, to the mortgagors facing the urgent necessity to obtain a
certificate to replace that of Mr McConnell which had been rejected.

…

3. The appellant acknowledged both before the Tribunal and in this Court that he had acted wrongly. He came to acknowledge that he had acted fraudulently. So far as the suggestion of moral blindness is concerned, it is perhaps understandable that the appellant should baulk at the acknowledgment of fraud. He was confronted, in a public courtroom and in the presence of members of his profession with an assertion of particularly disgraceful conduct. I am prepared to accept that he did not intend to act disgracefully. He had rationalised in his own mind the propriety of what he was doing, its moral justification and its justification so far as the mortgagors were concerned. He failed to consider the position of the mortgagee, the potential position of the mortgagors and his own  duties as a solicitor and officer of the Court. I accept the appellant’s expression of contrition. I believe that, whatever doubts might earlier have existed, he came in the solemn circumstances of the appeal hearing at least, to a full realisation of the gravity of his misconduct, of its seriousness for legal purposes and of its offence to professional standards and to moral principle. Just as a failure to appreciate the full measure of error is relevant to exclusion from the company of the legal profession, so such realisation (even belated) is a consideration relevant to restoration to that company. Cf In the Matter of the Application of Noel Norman Dennis, Court of Appeal, unreported, 12 December 1988, per Samuels JA.

I can understand the force of the contention that a person who acknowledges fraud is, by that acknowledgment, excluded from the company of the legal profession. But fraud manifests itself in a multitude of ways. For example in the law of insurance, fraud was formerly, without more, a reason to justify denial of indemnity by an insurer: whatever the nature of the fraud or of its consequences in the particular case. This stern rule was justified by the duty of the utmost good faith owed by the insured to the insurer. In the review of this area of the law, it was concluded that the courts should have the power to adjust more delicately the rights of the parties in cases: “… where the loss of the insured’s claim would be so seriously disproportionate of the harm which the insured’s conduct has or might have caused.” See the Law Reform Commission (Cth), Insurance Contracts (ALRC 1982) 118. This view was adopted by the legislature. See Insurance Contracts Act 1984 (Cth), s56(2).

The duty of this Court is to protect the public, to uphold the standards of the legal profession and to mark the disapprobation of the conduct of legal practitioners who engage in fraud of whatever kind. Such duty raises legal and social considerations somewhat different from fraud in insurance claims. Insureds come from all backgrounds. Solicitors enjoy special privileges and submit to special duties as a consequence. However, fraud clearly manifests itself in  a multitude of different ways. The fraud to which the appellant admitted in this case was potentially serious. But in the event, it had serious consequences only for the appellant himself. I do not believe that fraud as such, admitted or proved, requires in every case, without more, the removal of the name of a solicitor from the roll. It is necessary to examine in each case the nature of the fraud involved. Many acts of fraud will indeed require removal from the roll. In other cases, a less drastic determination will be appropriate.’

Justice of Appeal Cripps’s comments were similar:

‘I have had the opportunity of seeing Mr Fraser give evidence in the witness box. I accept his evidence. He acknowledged, as he always has, that his conduct did not measure up to the standard required of solicitors and asked the Court to accept that his conduct amounted to “temporary lapse which arose out of the belief that he was not acting against the interests of any party”. It was put to Mr Fraser that he knew when he gave the Certificate and when he answered questions by Mr Morton a couple of days later with respect to that Certificate, his conduct was fraudulent. He did not deny that he had behaved badly and that his conduct was deceitful. However, he was reluctant, at first, to concede that his conduct should be characterised as fraudulent. Later, he acknowledged that what he had done amounted to a fraudulent representation to the mortgagee (see Demetrios v Gikas Dry Cleaning Industries Pty Ltd (1991) 22 NSWLR 561). Mr Fraser’s refusal to acknowledge that his conduct was fraudulent was relied on by Mr Garling, on behalf of the Law Society, as demonstrating a failure to understand and appreciate the seriousness of his conduct and that his ignorance should be treated as ignorance of “general principles applicable to common activities of a solicitor” (see Law Society of New South Wales v Moulton [1981] 2 NSW LR 736 at 741).

In fairness to Mr Fraser, it must be borne in mind that before the Tribunal and before this Court he did not dispute that his conduct was deceitful and that it fell short of professional standards. I do not think his reluctance to label his conduct as fraudulent has the significance the Law Society submits. Mr Fraser believed that Mr and Mrs Livingstone had been told by Mr McConnell what he would have told them had he interviewed them. It was not as though he was representing to the mortgagee that Mr and Mrs Livingstone had had the mortgage explained to them when he knew they never had or had no reason to suppose they had. He believed the mortgage had been properly explained. His professional misconduct was representing that he was the person who had explained the mortgage. When answering questions under cross examination, he was disputing the degree of culpability of his conduct. I do not regard his reluctance to make a concession that he was guilty of fraud as demonstrating ignorance of his obligation. Rather, I think, it was conduct borne of a reluctance to continue to debase himself publicly.’

Justice of Appeal Handley’s approach was perhaps less forgiving.  He cited the following decisions relating to disciplinary approaches to fraudulent conduct:

‘These include In Re Salwey (1894) 15 NSWLR 117 30 where the solicitor was struck off for fraud and perjury although the fraud was not against a client. The Court however indicated that if after the lapse of some years the respondent was able to bring forward testimonials of good character he might possibly induce the Court to restore him to the Roll. In Re Coleman (1905) 5 SR (NSW) 272 the solicitor, at a client’s request, wrote to a mortgagee suggesting 35 that a stock mortgage be back dated and the amount of the advance falsely inflated to protect one creditor of the client to the detriment of another. The suggestion was not acted on. The solicitor was suspended from practice for twelve months. In Re Daly (1907) 7 SR (NSW) 561 the solicitor had made false and fraudulent representations to counsel to induce the latter to accept a brief without payment of the fee in advance. He later gave false evidence to the Full Court which the Court rejected and categorised as perjury. He was suspended from practice for eighteen months, and the Chief Justice said (564): “The respondent is apparently a young man, who has not long been practising his profession. If he had had a longer experience it may be that we should have felt it to be our duty to strike his name off the Roll. We have decided to take a more lenient course, believing that this will act as a warning to him.” In Re Drew (1920) 20 SR (NSW) 463 the solicitor prepared letters which he knew were to be signed by his client and fraudulently back dated. They were never used. The Full Court ordered that he be suspended from practice for six months. Finally in Re a Solicitor (1935) 52 WN(NSW) 182 the Full Court found that the solicitor was a party to providing sham bail and had failed to realise until very late in the proceedings that he had done anything improper. He was suspended from practice for six months. Compare Cahill v Law Society (1988) 13 NSWLR 1.’

Update: So far, I have had the following responses to my musing, which seems to excite you all more than I could have imagined:

‘Thats easy, fraud is directly aimed at unlawful appropriation – dishonesty may be indirectly so.’

‘Fraud v dishonesty – my thought: does fraud require there to have been a victim, where dishonesty doesn’t?’

‘Have a look at para. 10 of Brooking’s judgment in Magistrates Court of Victoria at Heidelberg Vic Full Court 2000 Buchanan, Charles and Brooking (on perversity with the mental element and an updated ignoratia lex…….   Huge philosophical literature on all terms, and therefore the differances between them.  Thanks for your blog’ and

‘Would fraud be dishonesty employed for a financial or material gain? I think of fraud as a subset within dishonesty.’

Original post:

Who knew that sitting there on the Legal Services Commissioner’s website is an explanation of his thinking about the difference between unsatisfactory professional conduct and professional misconduct? Not me, but I quote:

‘The sort of conduct that amounts to unsatisfactory professional conduct is where the lawyer has failed to meet professional standards. Professional misconduct, on the other hand, is behaviour involving fraud, dishonesty, breach of trust or conflict of interest. The aim of an investigation is to see whether it can be proved that such conduct took place.’

Very useful to know. I am writing a paper on fraud at the moment, with the aim of covering the whole concept and all of its legal ramifications in one hour.  Being in that frame of mind prompts me to ponder what the difference is between ‘fraud’ and ‘dishonesty’.

Under the Legal Practice Act, 1996, the distinction between what was then called ‘misconduct’ and what was then called ‘unsatisfactory conduct’ of the kind constituted by a breach of a conduct rule or of a provision of the Act, depended on whether the breach was wilful or reckless, in which case it was misconduct, or not, in which case it might amount to unsatisfactory conduct.  That distinction was abandoned in the Legal Profession Act, 2004, but continues to be used by VCAT’s Legal Practice List as a guide to determining whether a breach of the rules or the Act amounts to the more or less serious of the categories of disciplinary wrongdoing, now known as ‘professional misconduct’ and ‘unsatisfactory professional conduct’.  The meaning of ‘reckless’ in this context has long been governed by an unreported decision of JD Phillips J, Zaitman and Law Institute of Victoria, Supreme Court of Victoria, 9 December 2004.

It was summarised in the biggest Victorian lawyers’ discipline case in recent years, Victorian Bar Inc v CEM QC [2006] VCAT 1417, and the relevant passage is a much easier way to work out what ‘reckless’ means in this context than a consideration of Zaitman’s Case which does not give up its essence easily.  The whole passage is set out below, but the take home point is that:

‘in order to establish recklessness, it is necessary to show that [the lawyer] appreciated the risk that their conduct in a particular instance might possibly amount to a breach of the rule, and knowing that risk, proceeded, intending to take that risk. In circumstances where [the lawyer] holds a bona fide belief that their conduct does not amount to a contravention of the rule, it cannot be reckless for [him or her] to proceed.’

MISCONDUCT : “WILFUL OR RECKLESS CONTRAVENTION”

113 Each of the charges prosecuted before us alleges that, in the Federal Magistrates Court proceeding before Bryant CFM which had been determined on 1 October 2003, counsel had “wilfully or recklessly … contravened” a particular rule of the Victorian Bar Rules of Conduct (“the Rules of Conduct”).

114 Thereby each charge alleges misconduct as defined by section 137 of the 1996 Act.
115 Section 137, so far as is relevant to this prosecution, defines “misconduct” as follows:

(a) misconduct by a legal practitioner or firm in the course of engaging in legal practice, including -

(i) wilful or reckless contravention of this Act, the regulations or practice rules that apply to the practitioner or firm or any other Act that relates to legal practice.

116 Section 161 provides that a legal practitioner or firm charged only with misconduct may be found guilty instead of unsatisfactory conduct.

117 Section 137, so far as is relevant to this prosecution, defines “unsatisfactory conduct” as follows:

(b) contravention of this Act, the regulations or practice rules that apply to the practitioner or firm or any other Act that relates to legal practice, not amounting to misconduct;

118 The interpretation of the meaning of “wilful or reckless contravention” in relation to “misconduct” was considered in the judgment of Mr Justice J D Phillips in Aaron Zaitman and Law Institute of Victoria delivered 9 December 2004 (unreported) and has been followed by the Tribunal from the date of its delivery.

119 In short compass Zaitman, a solicitor of some years experience in commercial matters, acted for both parties in loan transactions in a conflict of interest situation.

120 Zaitman was charged with misconduct by breach of the Practice Rules.

121 He professed ignorance of the requirements of the rules. His Honour held practitioners were bound as a matter of professional duty to keep themselves abreast of the rules and it would be counter-productive to allow a claim of ignorance of the rules to constitute a defence to a charge of misconduct.

122 In the course of his judgment his Honour discussed the mental element relevant to a charge of wilful or reckless misconduct.

123 In this case we are not concerned with wilful contravention of the rules. The Bar do not suggest such finding be made against [the respondent QC].

124 We consider the “Memorandum of Contention” provided to us by the Bar once the issue was raised for consideration accurately summarises his Honour’s judgment in relation to the meaning of “reckless”:

a. that the definition required that the contravention itself – not merely the conduct said to constitute the contravention – be wilful or reckless (pp 50-51);

b. that a contravention should be held to be wilful in the case of a practitioner who “knows that it is a contravention of the Act (or the rules or regulations, as the case may be) for him to do or to fail to do some particular thing, intentionally to do that thing or fail or omit to do it” (p 51); and

c. that “the word ‘reckless’ should be taken as requiring no more than that the solicitor be shown to have acted, not in the knowledge just described, but with reckless indifference, not caring whether what he does, or fails or omits to do (as the case may be) is a contravention of the Act, the rules or the regulations” (p 51).

3. As to the concept of recklessness, his Honour elaborated as follows (p 52):

It is implicit in what I have just said that, while the solicitor, who does not knowingly act in contravention, must be shown to have foreseen that what he was doing might amount to a relevant contravention, there is no need to go further and establish that the solicitor foresaw the contravention as “probable”; it is enough that he foresaw it as “possible” and then went ahead without checking. … [I]t will be enough if the solicitor … is shown to have been aware of the possibility that what he was doing or failing to do might be a contravention and then to have proceeded with reckless indifference as to whether it was so or not.

125 In final submissions to us (7.44) the Bar referred to the above passage and submitted:

What JD Phillips J meant, in other places in his judgment, by “reckless indifference” should be seen in the light of this passage. It is not confined to a situation where the practitioner is cavalier about his or her obligations under the rules. It extends to a situation in which the warning lights are visible but the practitioner does not check. When an obligation arises to check, and what constitutes sufficient checking, will depend upon the circumstances.

126 In paragraph 7.45 the Bar enumerated a number of circumstances culminating in a submission in paragraph 7.46 “In these circumstances it is submitted that the Respondent did not do enough to check whether she was on a safe course apropos the Bar Rules”.

127 We agree that as a general proposition [the respondent QC] did not do enough to check before making very serious allegations against [a solicitor for the QC's client's opponent in litigation] Joseph.

128 In Zaitman’s case that was a very relevant fact, however, on the facts of the case before us, particularly as they crystallized at a late stage of the hearing, the facts differed quite markedly in material respects.

129 [The QC's counsel] presented their final submissions before [the Bar's counsel]. At the conclusion of those submissions [the Bar's counsel] sought an adjournment for the purpose of finalising the Bar’s final submissions.

130 [The Bar's counsel] said (T 1669 L 3-11):

It will be no secret that one of the critical issues that we wish to consider before finalising our submission is the extent to which on particular allegations the evidence sustains wilfulness or recklessness or merely a breach of the Bar rules, or neither. And the Tribunal will also understand that it has been impossible to address those sorts of questions without first hearing and then considering the specific justifications and responses which the two respondents have given.

131 [The Bar's counsel] commenced his submissions the following morning. He said (T 1674 L 12-23):

In all cases the Tribunal will find and will already be well aware there is an objective requirement of reasonableness written into the rules. In some cases that is supported by an (indistinct) the barrister in fact had a particular belief. In cases of that kind what the barrister’s belief was is a question of fact for determination by the Tribunal but that will necessarily be heavily influenced, if not governed, by the evidence that the barristers themselves have given in this case. We don’t, on our submissions, contend that the barristers’ beliefs in this case were other than what they have stated them to be to the Tribunal. [Tribunal underlining]

132 We mention the above matters to refer further to the judgment of J.D. Phillips J in Zaitman’s case where his Honour further elaborated on the meaning of reckless:

[T]he word ‘reckless’ should be taken as requiring no more than that the solicitor be shown to have acted, not in the knowledge just described, but with reckless indifference, not caring whether what he does or fails or omits to do (as the case may be) is a contravention of the Act, the rules or the regulations. The solicitor must, I think, have appreciated the possibility that his conduct (whether it be act or omission) might amount a breach of the Act, the rules or the regulations; for otherwise it is difficult to say that he acted with the necessary reckless indifference. To put it another way, the solicitor must, I think be shown to have known of the risk and intended to take that risk.

Then at P 53 his Honour said:

If a solicitor, having addressed the possibility of a contravention decides bona fide (albeit on what turns out to have been a mistaken view of the facts) that which he is doing or is about to do does not amount to a contravention, then such contravention as follows cannot in the circumstances be said to be ‘wilful’ – but nor can it be called reckless, on the basis of the foregoing.

133 It would seem to follow that the above passage makes it clear that in order to establish recklessness, it is necessary to show that counsel appreciated the risk that their conduct in a particular instance might possibly amount to a breach of the rule, and knowing that risk, proceeded, intending to take that risk. In circumstances where counsel holds a bona fide belief that their conduct does not amount to a contravention of the rule, it cannot be reckless for counsel to proceed.

134 We repeat that the Bar having taken time to consider the “specific justifications and responses which the two Respondents have given” in relation to the issue of wilfulness or recklessness stated “we don’t … contend that the barrister’s beliefs in this case were other than what they have stated them to be to the Tribunal”.

135 In our view in order to establish recklessness it must be proved that a counsel appreciated a risk that his or her conduct in a particular instance might possibly amount to a breach of a rule yet proceeded with the conduct. That mental element to be proved by the Bar is an essential element of recklessness.’

The answer is, at least in NSW — Yes. In Legal Services Commissioner v MB (No 3) [2009] NSWADT 313, a tribunal presided over by Deputy President Haylen gave the following reasons for punishing the respondent solicitor for gross-overcharging with a fine of $6,500:

‘The Tribunal accepts that the fine should be at the lower end of the range and so determines to impose a fine of $6,500. In arriving at this level of fine, the Tribunal has taken into account the large amount of costs to be met by the respondent practitioner and has formed the view that, in this case, the level of costs are a relevant consideration in assessing the overall penalty to be imposed upon the respondent. There appeared to be some debate arising from the discussion in Meakes as to the appropriateness of such an approach but in another context, the Court of Criminal Appeal has expressed the view that the level of costs is a relevant consideration in setting the level of a fine. In the Environment Protection Authority v Barnes [2006] NSWCCA 246 Kirby J, speaking for the court, rejected a submission for the appellant that the penalty imposed was a miniscule proportion of the maximum penalty applicable, stating that the individual fines which totalled $4,500 were accompanied by a costs order of approximately $16,000 and that the costs “were an important aspect of the punishment of Mr Barnes”. At para [88], his Honour stated:

Returning to the penalty imposed upon Mr Barnes. As a matter of first impression, the fines imposed appeared unduly lenient, suggesting error. However, the fines were part only of the penalty. Mr Barnes was obliged to pay substantial costs. Her Honour made it clear that, but for that fact, the fines she would have imposed would have been much higher.

Although Barnes involved the imposition of a criminal penalty, there is, in principle, no reason to depart from that approach when dealing with the very serious issue of professional misconduct and the level of fines that might be imposed on practitioners.’

Update: See now Doulman v ACT Electronic Solutions Pty Ltd [2011] FMCA 232.  A solicitor accepted instructions from a fellow solicitor to recover fees allegedly owing by a client.  The proposed plaintiff was a company which the fellow solicitor had until shortly before the retainer been authorised to represent.  The solicitor, acting honestly, accepted these instructions from the fellow solicitor at face value: the proposed plaintiff was well known to him.  He found out only far down the track that the proposed plaintiff had been sold by the fellow solicitor before the instructions were given so that the solicitor had instituted litigation and bankrupted the defendant when he had no instructions to do so from the company.  The proceedings were a nullity.  Everything had to be unravelled.  The solicitor was ordered to pay the costs of this exercise on a party-party basis: he should have done a company search or sought written confirmation of the fellow solicitor’s authority to bind the company. There is a one-paragraph note of the case at ALJ vol 85 no 9 (September 2011) at 537.  Thanks to the Law Institute Library through the LIJ’s ‘In Reference’ page for bringing the case to my attention.

Original post: I had to look hard recently at the cases about lawyers’ obligation to have proper instructions before commencing proceedings on behalf of others. Pretty obvious really, but the grey area exists where lawyers receive instructions from agents of the client, especially where the agent is specifically authorised to retain solicitors, but not specifically authorised to commit their principal to litigation.  Victorian disciplinary tribunals have dealt with such conduct by meting out penalties ranging from a fine of $1,000 in 2011 money to recommending that the practitioner be struck off the rolls.  As this astonishing divergence of dispositions attests, everything depends on the precise facts and the motivations of the practitioners.

Further to this related post, what follows is my case notes of the three Victorian disciplinary decisions I am aware of dealing with this form of conduct warranting discipline.  Are you aware of any similar cases in Victoria or elsewhere?

Legal Services Commissioner v IAB [2011] VCAT 110, (Members Butcher, Shattock and Campbell)

The Legal Practice Act, 1996 applied.  The solicitor was charged with misconduct at common law within the meaning of paragraph (a) of section 137 of the Legal Practice Act 1996’.  Because the matter did not ultimately proceed as a contest, the facts do not emerge from the judgment as clearly as they might otherwise have.

The solicitor commenced proceedings for the recovery of compensation for motor vehicle property damage from the negligent parties on behalf of two clients without speaking to them, writing to them, clarifying what, precisely, their instructions were, obtaining full instructions from them regarding the damage to the motor vehicle or their insurance cover, advising what damages they could recover, giving any advice about the litigation process, the likely cost of it and the likely period of time it would take, advising about their existing rights and obligations to their insurers, or advising them of their possible liability for costs and the risk that they could be found liable to pay costs to other parties.

Ligeti Partners for the defendant specifically enquired of the solicitor whether he had actual instructions from the plaintiff (not the putative client’s claims handler, Elite Claims Management).  The solicitor responded ‘We clarify that we have instructions to act on behalf of the plaintiff to commence proceedings.’  He counsel conceded in VCAT that was an ‘unfrank truth’.  VCAT said it was ‘an outright lie deliberately intended to mislead another legal practitioner’.  The solicitor’s counsel conceded that the solicitor’s motivation was to generate fees for himself.

The solicitor’s scheme was such that ‘had the insurers for the at fault drivers paid without query, the activities would never have been discovered.  In such cases the rights of [the putative clients] would have been used without their knowledge for the financial benefit of the respondent.’

The solicitor requested of Elite Claims Management that they provide him with backdated signed authorities which was obviously very naughty.

The solicitor’s practising certificate was already suspended, and he had a string of ‘priors’.  He was ordered not to apply for a practising certificate for a further period of 5 years after the suspension ended in 2014.  Further he was referred to the Supreme Court with a recommendation that his name be struck off the roll of practitioners, (and was ultimately struck off by consent).

Victorian Lawyers RPA Limited v RABH [2000] VLPT 12 (Full Legal Profession Tribunal presided over by Judge Murdoch, 1 August 2000)

Mrs Chetcuti had a crash in her husband’s car.  She blamed the other driver.  Her husband and the other driver were both insured by RACV.  Her husband only had third party cover, subject to a $400 excess.  RACV said Mrs Chetcuti was to blame, and asked Mr Chetcuti to pay his excess.

Mrs Chetcuti was at all times her husband’s agent.

The Chetcutis consulted Road Accident Recovery and Settlement Service.  Its people told her on several occasions that there would be no costs payable by her if she won her claim and that if she lost, her costs would be $475.  She executed the following authority:

‘I/we ….. hereby authorise Road Accident Recovery and Settlement Service and solicitors appointed to act as my/our agent in relation to the abovementioned accident, to effect repairs to my/our vehicle and take whatever action necessary to settle my/our loss.

I/we agree to pay any fees and disbursements to Road Accident Reocvery and Settlement Service and/or the appointed solicitors which may be incurred in relation to any claim made on my/our behalf, irrespective of the outcome.’

The Tribunal found:

‘(d) We consider that the authority to act, signed by Mr and Mrs Chetcuti, for the recovery service (as set out in paragraph 3 (vi) above) does not constitute an authority for the commencement of court proceedings by the complainant or her husband. The wording of the relevant parts of the authority is ambiguous in that respect, as we suspect was intended by the draftsman. In our view, for a written authority to commence court proceedings to be valid and effective, a plain statement of authority to commence proceedings should be set out in the authority and not left to a possible implication which might be drawn from the words used.’

But the Tribunal found that the solicitor should be treated as having had authority to commence the proceedings because Mrs Chetcuti said that in engaging the recovery service she understood that court proceedings might be issued, she was not opposed to that course, and upon becoming aware of the proceedings, she cooperated in their prosecution.  By her conduct, she ratified her solicitor agent’s conduct.

When she signed it she did not know there would be a court case.  But she read the document carefully at home, thought the recovery service would fight RACV on her behalf, and go to court if necessary.  A solicitor retained by the recovery service (apparently someone other than the respondent in the disciplinary case) told her it was not worth going to court because of the small amount involved, but the recovery service convinced her that it was.

Five months after the authority had been signed, the recovery service purported to retain the solicitor on behalf of the Chetcutis.  About a fortnight later, the solicitor prepared and filed a Magistrates’ Court complaint naming Mr Chetcuti as plaintiff seeking recovery of $1,342.  The solicitor thought that one of the recovery service’s people had told Mrs Chetcuti about costs, but there is nothing in the reasons to say other than that this was an assumption as opposed to something anyone had told him.  Initially, the solicitor said he did not know what he would have done had Mr Chetcuti lost, but he later said he would have charged his costs to the recovery service.

Almost two and a half months into the proceeding, the solicitor wrote to Mrs Chetcuti on a Tuesday advising her of a trial the following Tuesday. It was by this communication that the solicitor first informed the Chetcutis of his involvement and of the commencement of the proceedings. On Thursday, he had a telephone conversation with her about the need to get an independent witness to court.  After the telephone conversation, the Chetcutis were ignorant of a counterclaim against her and had had nothing explained to them about the solicitor’s costs.  He charged scale on a party party basis.

The matter went to a defended trial. It was there that she learnt of the counterclaim. Mr Chetcuti won and the counterclaim was dismissed.  He was awarded $1,342 plus $938 costs, a total of $2280.  The solicitor took solicitor-client costs of $1,771, and sent the balance of $509 to the recovery service. The recovery service took fees of $100 (a discount of $250 on their normal fee) and sent Mr Chetcuti a cheque for $409.  So Mr Chetcuti was $809 better off, plus the value of the use of $400 for almost 10 months, than he would have been by not litigating, but about $800 short of the money necessary to fix his car.  Plus, if the repair service’s representations had been made good, she would not have had to pay costs and fees of $1,871.

The solicitor gave evidence which was not believed, namely that he telephoned Mrs Chetcuti about a week before commencing proceedings to advise her of that proposal.

The Tribunal found that the solicitor:

(i) did not confer with the complainant (Mrs Chetcuti) or her husband;

(ii) did not attempt to clarify precisely what instructions (if any) that he had from the complainant or her husband;

(iii) did not advise the complainant or her husband of their rights;

(iv) did not advise the complainant or her husband of their obligations relative to insurance with RACV;

(v) did not advise the complainant or her husband of the implications of commencing court proceedings for recovery of damages where there was an insurance company involved and where there may be a counterclaim;

(vi) did not bring the fact that he was commencing the proceeding in the name of the complainant’s husband to the knowledge of the complainant or her husband;

(vii) did not give any advice to the complainant or to her husband that explained the nature of his retainer by the recovery service or the costs that may be incurred and deducted from any monies recovered;

(viii) did not explain to the complainant or her husband the implication of costs to them arising from the fact that the amount of the claim ($1341.78) meant that even if that amount were recovered, it would be reduced substantially by actual costs to him not recovered by any possible court order;

(ix) made admissions of ownership and agency without instructions from Mr Chetcuti; and

(x) failed to provide costs disclosure statements.

Accordingly, it found that the solicitor had engaged in professional misconduct at common law, pursuant to the following charge:

‘purporting to act as the legal practitioner for the complainant and her husband and commencing civil legal proceedings in the Heidelberg Magistrates’ Court -

 The solicitor was also found guilty of misconduct in the form of a substantial or consistent failure to reach a reasonable standard of competence and diligence, and of misconduct constituted by failing to give costs disclosures in wilful or reckless disregard of s. 86 of the Legal Practice Act, 1996.  I have been told by a barrister retained by the Legal Services Commissioner in a similar case that the disposition was a penalty of $15,000 and an order to pay the RPA’s costs of $5,000.

Legal Ombudsman v DB & Co Pty [1999] VLPT 6 (a full Legal Profession Tribunal presided over by Judge Murdoch)

10 days after an accident which was clearly the fault of the other driver, the complainant signed a form prepared by Accident Cost Recovery Service Pty Ltd.  It referred to the complainant’s comprehensive insurance policy held by the complainant and said:

‘I hereby authorise Accident Cost Recovery Service Pty Ltd to arrange for an assessment of damage to the above vehicle arising from this collision, to negotiate the settlement of my claim and enter into correspondence on my behalf in relation to this matter and where necessary instruct solicitors on my behalf for the purpose of negotiation of settlement of my claim, provided that no legal costs are incurred without my prior knowledge…’

Two months later, the solicitor received instructions from the Cost Recovery Service to issue straight away.  A fortnight later, the solicitor issued.  Concurrently with sending it by post to the Court for issue, the solicitor wrote to the complainant care of the Cost Recovery Service though he had her residential address.  She did not receive it.

A defendant contacted the solicitor a fortnight after issue and almost a fortnight later again, the defendant’s solicitor served a defence.  More than three weeks later – almost 2 months after the receipt of instructions to issue proceedings – the solicitor spoke to the complainant for the first time.  He did not tell her that proceedings had been issued. It appears the solicitor had got the name of the owner defendant wrong and advised it would apply to amend the name at hearing.  The solicitor notified the client of the 24 October 1997 trial on 2 October 1997. This was the first letter she received from him. ‘She sought an explanation from the practitioner’s office and she was told that it would not cost her any money.  She was not told that the proceeding had been commenced in her name and she believed that it was merely a procedure to find out who was responsible for the damage to her car.

Three days before trial, the owner defendant’s solicitors advised they intended to seek the striking out of the claim against it. The solicitor did not tell the complainant that the proceedings were being defended and would have to be adjourned.  Two days before the trial, on 22 October 1997, the solicitor wrote to the owner defendant’s solicitor and said ‘we have received instructions to seek an adjournment of this matter to enable our client to involve her insurer’, knowing that the statement was false in that he had received no such instructions.  On trial eve, the solicitor obtained the adjournment by an application which the complainant did not authorise, but with costs against the complainant of $644.  A week later, on 30 October 1997, the solicitor wrote advising of the Court’s orders, and demanded that she pay him the adverse costs.  He asked the repairer to pay the adverse costs, but the repairer refused.  He asked FAI to pay the costs, the complainant having made a belated claim on her policy.

On receipt of the 30 October 1997 letter, ‘she telephoned him and told him that she had not asked him to do anything for her.  She told him that she would make a claim on her insurance policy and he agreed that she should do so.’

Ultimately, FAI accepted the claim, agreed to pay the cost of repairs, but not legal costs.  Though the complainant never instructed FAI to pay her damages to the solicitor, they did so.  The solicitor gave $644 back to the complainant, illegally appropriated $1050 for his fees without authority, and after 16 months disbursed the balance of $1342 to the repairer.

The solicitor’s evidence at the hearing was not accepted, suggesting that he lied.  The Tribunal found:

‘We are satisfied from the evidence of the complainant and from the admissions of the practitioner that he issued the proceeding without instructions from the complainant to do so and that he never advised her with regard to costs of the proceeding or at all in relation to the proceeding. Furthermore he did not give her any advice with regard to the comprehensive insurance policy held by her and the possible effect upon it of the proceeding which he proposed to issue and did issue. We are also satisfied that there was no sound or proper basis for him to assume, as he asserted he did, that the complainant had been informed of his involvement by ACRS.

We accept the complainant’s evidence that she did not at any time instruct the practitioner to act as her solicitor in connection with the proceeding or in respect of any matter arising from the proceeding. In particular we are satisfied that she did not instruct the practitioner to apply for the adjournment of the proceeding on 24 October 1997 and that he did so of his own volition, having informed the complainant of the need to adjourn the matter as he was aware that the complainant could not prove her claim against the second named defendant.’

He was found guilty of 5 counts of professional misconduct (apparently at common law):

1. Purporting to act, and commencing proceedings without any or any proper instructions;
2. Doing those things without:

(a) first speaking to her;
(b) clarifying with her precisely what his instructions were;

(c) obtaining full instructions from her relating to the collision, the damage to her motor vehicle or her insurance cover;
(d) advising her what damages she could recover;
(e) advising her in any way about the nature of the litigation process, the likely cost of it, the likely period of time it would take;
(f) advising her in any way of the consequences to her of embarking upon litigation, especially as to her rights and obligations vis a vis her insurer, FAI;
(g) advising her of liability for costs to him and the risk that she could be found liable to pay costs to other parties.

3. Carrying on his practice with deliberate or reckless disregard for the rights and obligations of the complainant and with deliberate or reckless disregard for his professional responsibilities and duties to her as her supposed legal adviser and solely for the purpose of generating profit for himself.  The particulars were:

(a) the practitioner acted upon the referral of ACRS and upon the contents of the form (document D) knowing that if the proceeding was issued in the name of the complainant that she would be at risk for costs;

(b) he knew or ought to have known that if the complainant signed the form (which she did) then she would do so without legal advice and with the advice of a panel beater;

(c) he knew or ought to have known that when the complainant signed the form it was unlikely that she intended it to convey instructions to him to issue legal proceedings in her name on the basis of the form;

(d) he knew or ought to have known on any proper reading of the form it did not provide the basis of any instruction to him to issue proceedings in the name of the complainant;

(e) he knew or ought to have known that if the complainant signed the form when she was comprehensively insured then the complainant would prejudice her rights pursuant to her policy of insurance with FAI, yet he proceeded nonetheless;

(g) having commenced proceedings in the name of the complainant he sought an adjournment of a hearing of the proceedings and purported to do so on the instructions of the complainant;

(h) having commenced proceedings in the name of the complainant he sought an adjournment of a hearing of the proceedings without instructions from the complainant and subjected her to an inevitable order to pay the other party’s costs of the adjournment; and

(i) he deducted his profit costs and disbursements from moneys received by him and held in his trust account in her name knowing that he had no instructions to do so.

4.  Continuing to act for the Costs Recovery Service and/or the repairer and purporting to act for the complainant when it was clear there was a conflict or potential conflict of interest between the two.  (What the conflict was is not described in the reasons.)

5.  Knowingly misleading the owner defendant’s lawyer by the letter saying he had instructions to apply for an adjournment.

I am told by one of the counsel who appeared in the matter that the penalty was a $25,000 fine.  That was a pretty significant penalty 11 years ago.

In Legal Profession Complaints Committee v PJO’H [2011] WASAT 95 (S), delivered on 20 February 2012 and not yet on Austlii, the Tribunal helpfully reviewed the penalties awarded in the gross overcharging cases over the years before suspending the respondent from practice for 6 months (the Committee wanted 18).  Two other things are notable about the case.  First, the Complaints Committee’s costs of the matter were $134,000 and were described as reasonable.  Second, the practitioner drafted his character witnesses’ evidence himself.  Didn’t go down well.  The decision was the work of a tribunal of three presided over by Justice Cheney.  Here’s the Tribunal’s survey:

‘In Re Veron; Ex parte Law Society (NSW) [1966] 84 WN (Pt 1) (NSW) 136, the practitioner was struck off following findings of some 65 instances of overcharging clients in respect of personal injury actions. The overcharging was found to be deliberate and there were related charges proved against the practitioner involving dishonesty or fraud in respect to the practitioner’s dealings with his clients and their money.

The court noted that the charges were not only grossly excessive, but were also arbitrary when compared with the work actually done.

Practitioners were also struck off in the decisions in Veghelyi v The Law Society of New South Wales (Unreported, Supreme Court of New South Wales Court of Appeal, 6 October 1995) (Veghelyi) and New South Wales Bar Association v Amor-Smith [2003] NSWADT 239 (Amor-Smith). In Veghelyi, the practitioner was found guilty of grossly overcharging in 11 matters. He was also found guilty of wilful breaches of the Legal Profession Act 1898 (NSW) concerning the handling of client monies, including the payment of costs from trusts without authority. In Amor-Smith, the overcharging related to a single retainer, but involved charges which the Tribunal found to have been nearly five times a reasonable and fair amount for the services provided. The practitioner had aggressively pursued recovery of his fees notwithstanding his appreciation of the excessive nature of the charges.

In Re A Legal Practitioner of the Supreme Court of Western Australia (Unreported, WASC, Library No 970032, 12 February 1997) (BC9700434), the Full Court suspended a Practitioner for five years following findings of six separate instances of overcharging in respect of personal injuries matters. The disciplinary Tribunal, which had transmitted a report to the Full Bench, had concluded that the overcharging had arisen from the system of practice adopted by the practitioner over a long period of time and that the practitioner had been substantially motivated by self-interest. The Full Court noted a history of prior complaints about the practitioner.

In NSW Bar Association v Evatt [1968] 117 CLR 177, a barrister was found to have knowingly assisted and facilitated a systemic course of action by two solicitors (including Mr Veron, the subject of proceedings referred to above). Mr Evatt was found to have knowingly shared in the proceeds of the extortionate charges by charging and being paid excessive fees, and the High Court concluded that the findings demonstrated the practitioner was unfit to be a barrister and ordered that he be disbarred.

In Law Society of Australian Capital Territory and Roche [2002] ACTSC 104, the practitioners were found guilty of systemic overcharging of personal injuries clients through the use of a standard form costs agreement that imposed a standard hourly rate for all fee earners, regardless of whether or not they were legally qualified, standard charges for disbursements, and entitled the practitioners to charge an uplift of up to 30% of their professional fees for ‘care, skill and consideration’. The solicitors’ conduct was described as ‘extortionate’ [67] and as ‘an exercise in calculated greed’ [89]. A period of 18 months suspension from practice was imposed. The Court regarded as a significant mitigatory factor that the practitioners offered to (and were subsequently ordered) to make substantial payment to establish a compensation for the benefit of their clients who had entered into the standard costs agreement.

Those decisions demonstrate the very serious view taken by the courts or other disciplinary authorities in relation to significant overcharging by legal practitioners.

A decision in which suspension was not ordered is NSW Bar Association v Meakes [2006] NSWCA 340. The disciplinary Tribunal in that matter had imposed a public reprimand, having concluded that the practitioner was guilty of gross overcharging by charging a client in excess of 66% more than a reasonable fee and had characterised that conduct as unsatisfactory professional conduct. The Court of Appeal disagreed with that characterisation, and concluded that the gross overcharging amounted to professional misconduct. Tobias JA said at [85] that ‘At its highest, the respondent’s conduct was dishonest; at its lowest, it was highly irresponsible’. The Court of Appeal declined, however, to alter the penalty imposed by the Tribunal given that six and a half years had passed since the conduct occurred, the finding of professional misconduct would seriously reflect on the practitioner’s reputation, a refund had been made to the client, and the practitioner would pay the costs of the appeal.’

A South Australian solicitor has been struck off for a panoply of wrongs, one of which included failing to pay counsel’s fees: Legal Practitioners Conduct Board v Wharff [2012] SASCFC 116.  On this subject, broadly construed, see also: Council of the Law Society of NSW v PJB [2012] NSWADT 153,  Council of the Law Society of NSW v ML [2012] NSWADT 146, and Council of the Law Society of NSW v HI [2012] NSWADT 203 (where the NSW solicitor was struck off).  See also Legal Services Board v G-J [2012] VSCA 68 (re the Quistclose trust which may arise when a client pays solicitors moneys for the specific purpose of paying counsel’s fees), Victoria Lawyers RPA Limited v M O Lawyers Lawyers Pty Ltd TO217 of 2002, 31 October 2001 and Law Institute of Victoria Limited v SO & GS,TO555 & TO556 of 2005 10 November 2005, and Legal Services Commissioner v JHMcC [2011] VCAT 231 noted in this post.

In Wharff,  A Full Court of the South Australian Supreme Court (Kourakis CJ, Blue and Stanley JJ) said:

‘A solicitor who engages a barrister or solicitor agent undertakes a personal liability, either in honour or in contract as the case may be, to pay the barrister’s or agent’s fees, unless otherwise agreed.[3]  Where a legal practitioner undertakes such a personal liability, it is unethical to ignore his or her obligation, and hence a wilful or persistent refusal or failure to pay fees can amount to unprofessional conduct.[4]‘

The full passage is as follows:

‘Failure and refusal to pay barrister’s and agent’s fees

15. In December 2001, the practitioner engaged Mr Hamwood, a barrister, to appear in the Family Court in Brisbane.  On 12 December, Mr Hamwood rendered an account for $1,980.  The practitioner never paid that account or any part of it.
16. In late 2001 or early 2002, the practitioner instructed Mr McKell, a solicitor, to act as his agent in two matters in New South Wales.  Mr McKell rendered accounts which the practitioner never paid.  On 21 March 2002, the practitioner spoke and wrote to Mr McKell.  He said that he would pay the outstanding costs by the end of March.  On that basis, Mr McKell undertook further work in one of the matters, but the practitioner failed to make any payment.
17. Each of Mr Hamwood and Mr McKell complained to the Board.  In December 2002, the Board published their complaints to the practitioner and sought a response within 14 days.  Despite several reminders, the practitioner did not respond to the complaint by Mr Hamwood until March 2003, when he gave a limited response and sought two weeks in which to provide a more substantive response. Despite further reminders, he did not provide the more substantive response in relation to Mr Hamwood or his response in relation to Mr McKell until March and April 2004.
18. A solicitor who engages a barrister or solicitor agent undertakes a personal liability, either in honour or in contract as the case may be, to pay the barrister’s or agent’s fees, unless otherwise agreed.[3]  Where a legal practitioner undertakes such a personal liability, it is unethical to ignore his or her obligation, and hence a wilful or persistent refusal or failure to pay fees can amount to unprofessional conduct.[4]

    ---

    [3]    Rhodes v Fielder, Jones and Harrison [1918-19] All ER 846 at 847 per Lush J (Sanke J agreeing); Re Robb (1996) 134 FLR 294 at 310 per Myles CJ, Gallop and Higgins JJ.

    [4]    Rhodes v Fielder, Jones and Harrisons [1918-19] All ER 846 at 847 per Lush J (Sanke J agreeing); Law Society of New South Wales v McCarthy [2002] NSWADT 58 at [46] per Malloy, Robinson QC and Kirk; Law Society of New South Wales v Graham [2007] NSWADT 67 at [29] per Karpin ADCJ, Pheils and Fitzgerald.

    ---

19. The practitioner not only failed to meet his professional obligation to pay Mr Hamwood and Mr McKell, but he compounded his failure by failing to respond satisfactorily to communications from the complainants and the Board.  It is evident that there was no bona fide dispute concerning the practitioner’s liability to pay the fees because his counsel submitted to the Tribunal that the only reasons the fees were not paid was because he did not have the financial resources to pay them.  However, the fees were incurred within the first 12 months of the practitioner’s practice on his own account, he continued to practice thereafter for over a year without paying the fees, he did not advance to the complainants or the Board while he was practising an inability to pay the fees as his reason for not having paid them, and he had induced Mr McKell to continue to act on the basis of a promise to pay the fees within 10 days.’

In Peeke v Medical Board of Victoria [1994] VicSC 7 at p. 6, Marks J commented in a judgment substituting a reprimand for the inferior tribunal’s 6 month suspension that a reprimand should not be regarded as a trivial penalty:

‘I have mentioned that the Board referred to a reprimand as trivialising a serious lapse in professional standards.  I am not able to agree with the Board that a reprimand is a trivial penalty.  It may be inappropriate or inadequate in many circumstances, but a reprimand, to a professional person, has the potential for serious adverse implications.’

Sometimes the particular circumstances of the case will suggest that a finding of misconduct will suffice.  Sometimes a reprimand will be necessary.  Sometimes only a different penalty will be appropriate.  Sometimes a reprimand and a fine may be appropriate.  In truth, the fines, which seem to be the penalty of choice in most minor to mid-range disciplinary cases in Victoria, are not the main concern for most of my clients.  The publicity is the main concern, and these days, everything seems to be published on Austlii which is very different from disciplinary decisions less than a decade ago.  Often enough, a reprimand will be enough to express the profession’s denunciation of wrongful conduct accompanied as it is these days by publication on Austlii.  That was so even before the Austlii phenomenon.  In Peeke, Marks J said at p. 7:

‘the plaintiff is now 65 years of age.  His experience before the Board and here make it almost certain that there will be no repetition of that conduct which has brought him here and that in the future he will be very strict in his relationships with patients.’

The sentiment has been reiterated more recently in A Practitioner v The Medical Board of Western Australia [2005] WASC 198 at [62]; Medical Practitioners Board of Victoria v Swieca [2009] VCAT 419 at [52] (a tribunal of three presided over by Deputy President Dwyer); LSC v Moore [2010] VCAT 742 at [44] (Member Butcher); in LSC v Long [2011] VCAT 1164 at [24] (Deputy President Macnamara) and in LSC v Sapountzis [2010] VCAT 1124 (Member Butcher) as well as in a recent decision of VCAT which is yet to hit Austlii.

The proposition is usually now expressed as ‘a reprimand is not merely a slap over the wrist’, language which derives from the decision in Swieca at [52]:

‘A reprimand should not be considered a ‘slap over the wrist’ for Dr Swieca. In this regard, we adopt and endorse the views of Marks J in Peeke v Medical Board of Victoria [fn: at p. 6]. A reprimand certainly does not trivialise a serious lapse of professional standards, and has the potential for serious adverse implications for the medical practitioner. A finding of professional misconduct, combined with the reprimand, is a serious form of censure and condemnation for Dr Swieca’s conduct.’

The Tribunal in Sapountzis determined to impose a reprimand in circumstances where a practitioner had failed for a long time to honour an undertaking to pay another practitioner’s costs in circumstances where the respondent had eventually paid up $8,500 in satisfaction of the undertaking which she would not recover from her client and a further $8,000 for advice and representation, including in the disciplinary hearing.

The Tribunal was right to take into account the costs of the prosecution: Environment Protection Authority v Barnes [2006] NSWCCA 246 at [88] (Kirby J speaking for the Court) applied by analogy in LSC v Bechara [2009] NSWADT 313 (a tribunal of three presided over by Deputy President Haylen) at [15].

The financial effects of a penalty are relevant to its appropriateness, too: Burgess v McGarvie [2013] VSCA 142 at [67] per curiam.  I am as guilty of the next person of publishing posts predicated on the proposition that there is ‘a tariff’ for certain kinds of offences.  This kind of analysis can be too simplistic if the financial circumstances of the professional and the consequences of an alternative sanction are not known.  The fine which may be appropriate to a very wealthy practitioner ought to be very different from that given to an indigent practitioner.  So too ought suspension be more cautiously approached where the consequences would likely spell an end to a career, as is sometimes the case with sole practitioners.

In Buzzo Holdings Pty Ltd v Loison [2007] VSC 31, Kaye J said:

’26 I turn then to the question of the period of disqualification. The senior member correctly characterised Buzzo’s conduct as being so serious that it could not be tolerated, and that it was necessary, by his disposition, to send a clear and unambiguous message to the industry and to the community at large. No issue could be taken with those views. However, in determining the length of the period of the disqualification the senior member referred to his previous decision in the AMC Investment case and stated that the situation in the present case was “far worse” than that in the AMC Investment case. He noted that the incident of 3 February 2004, while isolated, could nonetheless have easily ended up in death, and referred to the failure of Buzzo to render any practical assistance to Scandolera after he had given him the drink. With those matters in mind he imposed the disqualification of nine years on Buzzo.

27 It is apparent from the foregoing that the senior member, in his reasons, relied significantly on the period of disqualification imposed in the AMC Investment case as providing a yardstick for the period of disqualification to be imposed in the present case. In my view, in doing so the senior member fell into error. First, if it was at all relevant to use a yardstick, then clearly the AMC Investment case was inappropriate for that purpose. Indeed it was noted by the senior member during discussion with counsel that the AMC Investment case involved a continued pattern of dishonesty by the licensee and the manager of the licensed premises over a period of two months. In his decision in that case the senior member had observed that that conduct involved selling stolen liquor from the licensed premises, and thus using the licensed premises for criminal purposes. On any view, the AMC Investment case was very different to the present case, and was an inappropriate case to use as any form of comparison with the case before the senior member.

28 However, and more importantly, it was in my view inappropriate and erroneous for the senior member to rely so significantly on the period of disqualification in another case in order to determine the appropriate period of disqualification in the instant case. What was relevant for the senior member was to tailor the period of disqualification to fulfil the objectives which he had correctly identified earlier in his reasons, namely, the protection of the public, the deterrence of Buzzo, the maintenance of industry standards, and the preservation of community confidence in the industry. Each case essentially depends on its own circumstances. The decision in the AMC Investment case would not inform or assist at all in determining how each of those objectives are to be fulfilled, when determining the period of disqualification in the instant case. In short, the AMC Investment case had little relevance to the exercise to be performed by the senior member, namely, determining, on the facts and circumstances of that case, the period of disqualification which was required for the purposes which he had already set out in his reasons.

29 The use of precedents in setting periods of disqualification is a concept more commonly used in criminal sentencing, than in determining the appropriate disposition by a tribunal exercising the protective jurisdiction contained in the Liquor Control Reform Act. Even in the field of sentencing the use of precedents has only a limited value.^[12] However, in the present case it operated, in my view, to distract the senior member from the task which was before him. In doing so his reasons do not reveal that he appropriately gave weight, not only to the fact that the incident in question was isolated, but also to other matters including the length of time in which Buzzo had served in the industry without any prior incident, the steps taken by Buzzo since the incident to protect his customers from future abuse, and the effect of the criminal proceedings against Buzzo as a particular deterrent to him. The reasoning of the senior member does not reveal how he considered a nine year period of disqualification necessary in order to deter someone of Buzzo’s antecedents. It is true that earlier in his reasons the senior member had stated that common sense is something that is learnt over a long period of time. However that generalisation, if valid, could only be applied in determining the period of disqualification, by taking into account the particular circumstances of Buzzo himself. In addition, although it is difficult to assess what length of disqualification is necessary to maintain industry standards and public confidence, nonetheless the reasons by the senior member do not address that issue at all. On the contrary, as I stated, the senior member seems to have felt it necessary to measure the culpability of Buzzo by comparison to the culpability of the licensee and the manager in the AMC Investments case, and to extrapolate from that an appropriate period of disqualification. It is not evident to me, nor would it be to Buzzo, why it was necessary to disqualify him for such a lengthy period of time, in order to maintain industry standards and public confidence in the industry.’

See also Dental Practice Board of Victoria v Hassed [2006] VSC 485 at [45] – [46] per Hargrave J and Chiropractic Board of Australia v Hooper [2013] VCAT 1346 at 31 per a Tribunal of three presided over by Member Davis.

These principles in relation to the relevance of parity were drawn to my attention by a VCAT member in a recent case which will not appear on this blog because I do not blog my own cases.

Friends, I need your help, again.  Certain promises I made to write about and present on the civil and disciplinary consequences of making allegations of serious wrongdoing (e.g. fraud) without a proper foundation are coming home to roost.  I’m looking at:

• disciplinary sanction of lawyers via Legal Services Commissioner, etc. prosecution;
• personal costs orders against lawyers;
• costs consequences for parties (common law in relation to exercise of the unfettered discretion re solicitor-client rather than party-party costs and displacing the presumption that costs follow the event where allegations of fraud are not made out, and Civil Procedure Act 2010 (Vic.)); and
• what is a ‘proper foundation’?

My miserable situation in this season of sun, frivolity and child-minding is a need to work out what these consequences are so that I can provide learned disquisition.  In the process I have learnt something about Dr Peter Clyne, the protagonist of Clyne v NSW Bar Association (1960) 104 CLR 186; [1960] HCA 40.  What a wonderful addition to my knowledge of the rogues’ gallery of which I consider myself a connoisseur; I even bought his autobiography on eBay today but his ‘How Not to Pay Your Debts’ is still available.  The Hikers described his conduct during the course of an ‘orgy of litigation’ between his client, the husband, and the wife as ‘irresponsible’, ‘mischievous’, ‘objectionable’, indefensible, ‘inexcusable’, and, rather wonderfully I think, ‘monstrous’.  A unanimous Dixon Court confirmed the good doctor’s striking off.  You can read about his life afterwards, including as a Magistrate in Zambia, here, and possibly less reliably, here.

So here is a general call-out for good authorities on these questions, especially decisions which really assist in understanding what a ‘proper factual foundation’ is, since many authorities relate to allegations which are so obviously unsustainable that they do not really illuminate where the line lies between the merely poor and the truly discreditable argument (Clyne), or proceed on the basis of admissions (AM v Legal Practitioners Disciplinary Authority [2010] NTSC 02), or are fantastically complicated (the case just referred to and Victorian Bar Inc v CEM QC [2006] VCAT 1417).  I would also be very grateful for any detailed commentaries on this aspect of the conduct rules for solicitors and barristers alike, and Australian decisions in relation to costs (since many of those cited by Dal Pont are Canadian or English).

Eleven and a half years after a 2002 car accident south of Port Headland a radiologist has been found guilty of the Westralians’ version of professional misconduct (‘improper professional conduct’) but not of conduct which peers would regard as disgraceful or dishonourable, for failing to render medical assistance.  The decision is Medical Board of Australia v Dekker  [2013] WASAT 182.  It makes a bold assertion of general application without identifying or discussing any authority about the factual scenario in question, which must surely occur regularly all over the world and — one would have thought — be much pondered:

’39 It is improper conduct in a professional respect for a medical practitioner who is aware that a motor vehicle accident has or may have occurred in their vicinity and that anyone involved has or may have suffered injury not to make an assessment of the situation, including the nature of any injuries and needs of persons involved, and render assistance, by way of first aid, when the practitioner is physically able to do so, notwithstanding that the practitioner immediately reports the matter to police or other emergency services. It matters not that there is no existing professional relationship between a medical practitioner and the persons involved in the accident. Because saving human life and healing sick and injured people is a core purpose and ethic of the medical profession, and because members of the profession have the knowledge and skills to do so, the failure by a medical practitioner to make an assessment and render assistance when he or she is aware that a motor vehicle accident has or may have occurred in their vicinity and that people have or may have been injured, when the practitioner is physically able to do so, would, notwithstanding that the practitioner reports the matter immediately to police or other emergency services, reasonably be regarded as improper by medical practitioners of good repute and competency, and there is a sufficiently close link or nexus with the profession of medicine.’

Civil liability in tort has been imposed on a doctor who refused to attend upon an emergency involving a non-patient: Lowns v Woods [1996] Aust Torts Reports 81-376 (NSWCA).  But in that case the then proximity-based test for establishment of a duty of care was satisfied by a number of factors which included that:

• a request was made for assistance in respect of what the doctor understood to be a medical emergency which he was willing to provide (but only on the condition that the patient be brought by ambulance to his practice);
• he was specifically told that ‘We need a doctor.  We have already got an ambulance’;
• he was able to do so: he was at work, available, competent at administering the requisite treatment, and could have done so promptly being only 300 m away from the patient;
• to attend involved no threat to his person;
• he was not incapacitated so as to make giving treatment more difficult: he was not drunk, or ill, or tired; and
• there were statutory provisions which made it misconduct to fail to render assistance to a person in urgent need of medical attention without reasonable excuse.

See Kylie Day’s ‘Medical Negligence – the Duty to Attend Emergencies and the Standard of Care: Lowns v Woods” (1996) 18(3) Sydney Law Review 386.

The tortious duty was squarely founded on the fact of a request in a professional context for treatment of the kind in which the doctor practised. Public policy was expressly acknowledged as relevant to the determination of the tortious liability. Since the existence of a professional obligation was a matter that told in favour of the development of a new category of duty of care, civil lawyers ought not be entirely blase about the latest apparent development of the disciplinary law courtesy of the Westralians.

The chronology goes like this.  The accident occurred on 27 April 2002.  It was dark.  Dr Dekker was in her ute coming back from the Roebourne tip with her neighbour, Roy Abell.  After the accident, there was much controversy about the facts.  At the criminal trial, Abell would give evidence for the prosecution. By the time of the disciplinary hearing, however, the Medical Board accepted the doctor’s version of the accident, and the disciplinary prosecution proceeded with the benefit of an unduly skeletal set of agreed facts.  There were disputed allegations too.

What follows is a fair summary of the facts as they appear to have been determined by the disciplinary tribunal, from the perspective of the doctor.  (What injury was in fact suffered by the occupants of the other car, and the characteristics of its occupants and of the vehicle itself are distractions, since they were unknown to the doctor at the time she made the decision to drive off and seek assistance rather than see if she could provide it herself.)

The doctor was stationary at a t-intersection, in a side road which ended at the highway.  She saw a vehicle coming along the highway from her right.  For some reason, everyone seems to have agreed that it was travelling at excessive speed, though it was agreed to be 50 – 60 kph.  It was on the wrong side of the road and was coming straight for her.  She drove forward into the top of the T to avoid collision.  The other vehicle passed behind her ute.  She heard a noise which she suspected was a crash and suspected that the vehicle had ended up in a ditch.  She did not get out of her ute to investigate, and neither did Abell.  He suggested they go straight to the police, which they did, advising of the likelihood of an accident with the intention that they arrange and provide assistance.

She supposed that the passengers of the vehicle had suffered badly. She had no torch, no mobile phone, no first aid kit, no medical equipment.  The police station was nearby.  How close is for some reason not stated in the reasons.  Nor is it stated whether Roebourne had an ambulance, but it appears to have one now.  What use this particular radiologist would have been in dealing with victims of road trauma was not the subject of discussion either.

Precisely what the Tribunal determined the doctor’s state of mind to be immediately after the near miss is not very clear from its reasons.  It is not clear that her evidence that she was physically shaking, screaming, and unable to think coherently was challenged or not accepted.  But the Tribunal did find that her passenger had said to her that he thought that the other driver had rolled the car and and did find that her instinct as a doctor was that if that was so, there would be bad injuries in the other car. Those findings were based on statements which the doctor made to the police shortly after the near miss.  Those statements also included the proposition that ‘I know it was a waste of time so I go to police so they can get help’. Whether the Tribunal accepted the truth of that statement is not revealed by its reasons.  If it did, what ‘it was a waste of time’ was understood to mean is also unclear, especially since the doctor’s English was self-evidently quixotic, if not poor.  As we will see, the Tribunal did seem to accept, at least, that the practitioner was ‘in a state of shock’, ‘petrified’ and ‘freaked out’.

The doctor was tried for and convicted on a not guilty plea of dangerous driving causing death in a trial at the Karratha District Court in December 2005.  She was fined $10,000 and was disqualified from driving for 2 years.  She wished very much to appeal and went to lawyer after lawyer until she found the one who would go on to win the appeal for her on an application made well out of time.  This decision was set aside in February 2009: Dekker v WA [2009] WASCA 72 on the basis that the Crown had proceeded on a case which was unsupported by the objective evidence, which suggested that the other vehicle was out of control before the doctor took off from the T intersection.

Meanwhile, for reasons which I do not know, the doctor was the subject of another criminal prosecution, on a charge of dangerous driving causing bodily harm, in the WA Magistrates’ Court, in February 2008.  What the result was, I do not know.

On 6 August 2009, it appears that the doctor was disciplined by the State Administrative Tribunal for the same instance of failing to stop and render assistance. In that proceeding, it appears that the doctor agreed that she should have stopped and rendered assistance. She was reprimanded and ordered to pay the costs of the Medical Board of WA in the sum of $35,000.  That decision features in none of the commentary about this decision nor in the decision itself.  It seems likely that this decision must have been set aside on appeal.

Then in October last year, the disciplinary prosecution with a 2006 matter number was heard in the State Administrative Tribunal of Western Australia by a tribunal of three doctors presided over by a District Court Judge, his Honour David Perry.  The tribunal gave its reasons in November.  As to the doctor’s state of mind, it said this:

’43 The fact that the practitioner was “in a state of shock”, “petrified” and “freaked out” after the “near miss” incident is hardly surprising in a case where a person is involved in an accident or in a near­miss situation. However, the practitioner was not simply ‘a shocked and distraught woman’, to quote [her counsel]‘s submission, but rather a member of the medical profession who had gone through a no doubt frightening near­miss experience, but was thankfully physically unharmed, and was aware that another vehicle had or may have crashed in her vicinity. Because she is a member of the medical profession, and therefore a person with medical knowledge and skills to save life and to heal the sick and injured in the community, her professional duty required that she overcome or at least put aside the shock and provide assistance to the occupant or occupants of the second vehicle. Although the practitioner’s ‘shock’ may be relevant in relation to penalty, it does not have the consequence that her conduct would reasonably be regarded as anything other than improper (or, had she not immediately reported the matter to police or other emergency services, disgraceful or dishonourable) by professional colleagues of good repute and competency.’

Now there are a lot of radiologists who, if they did not have some damn good pain killers to hand, I would prefer to go fetch the cops and the ambos rather than poking around in a ditch in the dark, especially if they could not think, and were shaking with freaked-outedness.  It may be that this radiologist had the skills to justify the rather broadly stated conclusion that she had ‘skills to save life and to heal the sick and injured’ relevantly to the various scenarios which might have been envisaged by the doctor, but the factual foundation for this assertion is not clearly articulated in the reasons.  So the reader is left puzzled by the absence of analysis of why it would have been better for a freaked out woman who was presumably good at interpreting x-rays to investigate, in the dark, an accident which she thought may have happened, in circumstances where if she did so she would be delaying calling an ambulance, rather than driving the short distance to the police station to get help.  The Tribunal dealt with those issues in this way:

’40 … Although it was dark and the practitioner did not have a torch with her, there is no reason why she could not have used the headlights of her vehicle to illuminate the scene. Although the practitioner did not have any medical equipment or a first aid kit with her, her knowledge and skills as a medical practitioner would have enabled her to make an assessment of the condition of the occupant or occupants of the second vehicle and render first aid to them if necessary.

41 Furthermore, the fact that she did not own or have a mobile telephone with her at the time and the fact that the police station to which she drove to report the incident was only a short distance away did not discharge her professional duty to make an assessment and render assistance at the scene. Notwithstanding these circumstances, the practitioner’s conduct would reasonably be regarded as improper by professional colleagues of good repute and competency. In order to save life, first aid may need to be rendered immediately. Any delay in providing first aid after a traumatic injury, even a delay of a short period, could result in death. Furthermore, even if it were necessary to leave the scene of the accident to call for assistance from emergency services, it was necessary for the practitioner to determine the number of persons who were injured, to assess their injuries and needs to the greatest extent possible in the circumstances, and to see if they were trapped, in order for appropriate emergency services to be dispatched.

42 … Whether the passenger actively encouraged her or merely suggested that they go to the police station, it could not possibly have the effect that the practitioner’s conduct would not reasonably be regarded as improper by professional colleagues of good repute and competency. Given that saving of human life and healing sickness and injury is at the core of the profession of medicine, a medical practitioner must adhere to their duty irrespective of what others may suggest or encourage.

…

44 Finally, as noted earlier, the practitioner did not give evidence that ‘violence towards women was a common occurrence and this was known to [her]‘, as suggested in Mr Morrissey’s submission. The practitioner did refer to alcoholism, drug use and violent behaviour as a common occurrence in the locality. However, she conceded in cross­examination that these were not matters about which she was thinking at the time when she made the decision to leave the scene after the ‘near miss’ incident.

45 … even if the practitioner had been thinking of these issues [the prevalence of violence towards women, alcoholism, drug use and violent behaviour in the locality], they would not have absolved her from her professional obligation to make an assessment and render assistance to the occupants of the second vehicle. Furthermore, contrary to [her counsel]‘s submission, it was not reasonable to expect that the occupant or occupants of the second vehicle ‘would have been agitated and might have posed a risk to the [practitioner's] personal safety’, given that the practitioner was aware, by instinct as a doctor, that they had suffered ‘a bad injury’. Of course, if the occupant or occupants of the second vehicle had threatened violence towards the practitioner, the practitioner would have discharged her professional obligation and could have driven to the police station.’

Like the saga associated with Robert Hughes’s accident in North Western Australia which resulted in a defamation action by the crown prosecutor in the dangerous driving case brought against him, this saga has gone on for a long time.  Hughes commented unkindly that ‘Western Australian justice is to “justice” as Western Australian culture is to “culture”.’

The Dekker saga has obvious parallels with that other extraordinary saga associated with a professional’s involvement in a road accident, that associated with Adelaide solicitor Eugene McGee, which even a Royal Commission did not bring to finality.

I suspect this is not the last episode in the Dekker saga.  Apart from anything else, the matter is stood over until later this month for argument in relation to penalty.

Clyne v New South Wales Bar Association (1960) 104 CLR 186; [1960] HCA 40 is a unanimous decision of the Dixon Court confirming the striking off of a Sydney barrister, Peter Clyne, for making unfounded and serious allegations on behalf of a husband against the wife’s solicitor in matrimonial litigation for the admitted purpose of getting the wife’s solicitor out of the case.  Those allegations were in fact made in a private prosecution by the husband of the wife’s solicitor for maintenance. Reading the decision, one might think that striking off the rolls was a relatively harsh penalty by today’s standards for the conduct recorded, especially since his client succeeded at committal in having the wife’s solicitor presented for trial.  And also if one believes Mr Clyne’s autobiography where he asserted:

‘Particulars given by the New South Wales Bar Association made it quite clear that it was not part of the charge to say that my advice to prosecute was wrong, or improper.  Indeed, as I have mentioned before, the advice to prosecute Mann was given in writing, by the eminent and respected Sydney QC, Mr Newton, who later became (and still is) a judge of the New South Wales District Court; and no one has ever criticized Mr Newton for his advice.’

But Mr Clyne had done it before and been sternly warned (see CLR 202) and was unrepentant to the moment he was struck off. Further, he was absolutely one out of the box (he will be the subject of a further blog post) and was no doubt regarded as an excrescence on the legal system to be excised at almost any cost.  He went on to irritate the authorities as a professional tax evader and unashamed advocate of tax evasion, writing many books on the subject and others (e.g. Adventures in Tax Avoidance, How Not to Pay Any Taxes, Guilty But Insane) while living a decadent lifestyle which hopped, first class, between hotels in Sydney and his native Vienna.  Like George Herscu, one of the villains in White Industries v Flower & Hart, Clyne spent time in jail, and only avoided spending more time by fleeing America without a passport while on appeal bail.  He seems to have been intelligent and to have had enough charm to be married to a Welsh entomologist who also wrote many rather different books (e.g. Silkworms, All About Ants, and Plants of Prey).  But his autobiography (Outlaw Among Lawyers; the Peter Clyne Story, Cassell Australia, 1981) reveals a thoroughly dishonest if colourful character with very little if any regard for the law.Mr Jacombe and a woman were engaged in ‘an orgy of litigation’ involving more than 20 proceedings arising out of their matrimonial or quasi matrimonial affairs.

Most were commenced by the husband, but the wife petitioned for divorce on the basis of adultery, and for alimony pending the determination of that petition.  The wife also sought an accounting in equity for monies allegedly owed to her, and a property law suit for the division and sale of the matrimonial home.

They had first separated about two years before the final separation, at which time the wife had commenced proceedings in equity for an account of her share in jointly owned property.  The same year, they reunited at which time the wife signed a deed, witnessed by an independent solicitor who ‘may be presumed to have explained to her the effect of the deed’, acknowledging that she had no beneficial interest in any property held in either party’s name except a half interest in the matrimonial house, Lynton Manor.  Three months later, she also made a statutory declaration which was ‘on its face a very curious document’.  (197)

Mr Jacombe defended the divorce case on the basis that there was no marriage to annul, since the wife was married at the time she purported to marry him. (194)  (In his autobiography Mr Clyne said:

‘Jacombe v Jacombe was not merely a lawsuit.  It was a tornado of litigation; and I was one of the things that the tornado swept away.  Murray Stephen Jacombe was a very successful financier who married a ballet dancer in Estonia in the late forties and brought his wife and daughter out to Australia in the early fifties.

…

Life has its ironies! The Privy Council finally upheld Mr Jacombe’s arguments and ruled that his marriage was null and void; and then he got lonely, married the lady again, and as far as I know they are still happily married, laughing about the bad old days.’)

Mr Jacombe changed his solicitors, who briefed new counsel (Mr Clyne), mid-orgy.  Mr Clyne decided that the best thing to do would be to launch a private prosecution of the wife’s solicitor for the indictable criminal offence of maintenance.  The prosecutions were:

‘admittedly devised as a means of intimidating that solicitor into ceasing to act for’ the wife (p. 188).

‘In opening the proceedings before the magistrate the appellant deliberately used the occasion to make a savage public attack on the professional character of that solicitor.  He made that attack in extravagant terms, alleging fraud, perjury and blackmail.  He knew that he had no evidence to substantiate such allegations. At the end of his opening, he invited the man whom he was prosecuting for a crime to defend himself before any evidence had been given against him, and intimated that, if he were to cease to act for his client, the criminal proceedings would have achieved their object and could be discontinued.’  (p. 188)

‘What was said later in court by the appellant suggests that it was hoped that Mr Mann would, rather than face trial on a criminal charge, agree to cease to act as Mrs Jacombe’s solicitor.  But it is not easy to believe that this hope was very seriously entertained. No self-respecting solicitor would react in such a way to such a threat, and, in the light of what happened, it is probably true to say that the general idea was to make a vigorous public attack on the professional character of Mr Mann and hope for the best.  At any rate, it is quite clear that the prosecutions were undertaken with no other object in view than the elimination of Mr Mann from the proceedings between Mr and Mrs Jacombe, and the whole enterprise seems to have been irresponsible and mischievous.’ (p. 191)

‘What was said later’ seems to be a reference to this:

‘I say, if Mrs Jacombe or Mr Mann undertakes to allow her consult [sic.] an independent solicitor this matter could be settled within 48 hours.  We have taken the course which may seem desperate and unusual because we can see no other way of avoiding litigation which is going to go on and on in a number of courts simply because a solicitor wants to make money’.

Five allegations were in substance made by Mr Clyne. (193) First, that he was in financial difficulties because he undertook to pay large sums as a result of his partner’s defalcations, providing a motive for the commission of the offence of maintenance.  The Court characterised this as a statement that the solicitor was in such financial difficulties as would induce him to commit a crime. (193)

The only evidence he had was that of a policeman who said that the wife’s solicitor had told him more than eighteen months previously that if the defalcations of about £13,000 were at any stage shown to be a liability of the partnership, then the solicitor would have no alternative but to meet them.  No inference that the solicitor was, eighteen months later, in financial difficulties, could be drawn, the Court said, no doubt because there was no evidence that the defalcations had been found to be liabilities of the partnership and no evidence that the solicitor had had to meet them and no evidence that doing so put the solicitor in financial difficulties.  The fact that the husband had subpoenaed the solicitor’s financial records and that the solicitor had not produced them in response did not assist the barrister.  Most obviously, one might think, an unresponded-to subpoena yields no evidence, but the Court also said that the only person through whom any documents which were ultimately produced in response to the subpoena could be adduced was the solicitor who was not a compellable witness. (193)

The second allegation was that the application for alimony was procured upon an affidavit prepared by the solicitor which he knew to be false when sworn by the wife, so that the solicitor had been an accessory to perjury.  She said ‘I have no income, no money in the bank and no means whatsoever.’  The only evidence to establish the falsity of those propositions was that she had £11 in the bank, and had received the payments from Mr Mann which were the subject of the maintenance allegation. There was no evidence that the wife knew them to be materially false, and no evidence that the affidavit was in fact prepared by the solicitor as opposed to a clerk in his office. (194)

The third allegation was that the solicitor was deliberately protracting litigation to serve his own ends because he refused to give particulars in the divorce case.  The husband had sought particulars of whether it was alleged that the person he said was still married to the wife when she purported to marry the husband was dead or whether it was alleged that he was divorced.  The husband did not take out a summons to compel the production of these ‘particulars’.  But the request was not for particulars at all.  It was a request for evidence which did not need to be acceded to.  The allegation was that the wife and the husband were married.  It was the husband’s case that they were not, and it was for him to prove it.  The allegation that the non-response ‘made costs for’ the solicitor to the disadvantage of the wife was logically unsound because, as the Court said ‘Why should [the husband] not be left to destroy her prima facie case, if he could, by cross-examination or otherwise?’  But there also seems to have been no evidence as to the wife’s instructions to Mr Mann in relation to this question and the extent to which they were fully informed.

The fourth allegation was that the solicitor had refused or neglected to negotiate with the husband’s camp a settlement of the proceedings so as to ‘extract as much money as possible out of [the wife]’.  The primary basis for this allegation  was the non-response to a letter which offered not to resist the proceeding so long as the wife acquiesced to the orders relating to alimony and custody which he wanted.  In default, he said, he would resist the suit by reference to evidence which might result in the suit failing and would be most material to the question of alimony and custody and there would be ‘scandal and publicity’.  (195) This allegation too was logically flawed, according to the Court, since ‘any responsible solicitor, whose client brought him that letter in the circumstances of this case, would certainly advise his client to ignore it, and would himself either not answer it at all or, if he did answer it, would say little more than that his client was not be to intimidated’. But Mr Clyne had no evidence that the letter had even been shown by the wife to the solicitor, let alone any evidence of what was said between them about it. (196)

The fifth allegation was that the solicitor was conducting for the wife hopeless litigation without expectation of receiving any payment directly from her.  The Court dealt with each proceeding separately:

• It said that the petition for divorce and alimony in the meantime had not been demonstrated to be obviously hopeless, so the allegation was simply logically wrong.  (196)

• The suit for the division and sale of the home was not obviously hopeless for the reasons suggested either, so the allegation was once again simply logically wrong.  But again, Dr Clyne had no evidence as to the instructions the wife had given her solicitor, and no evidence at all that the solicitor even knew of the husband’s allegations which Mr Clyne asserted made the wife’s case hopeless. (196 – 197).

• The equitable suit for an accounting was not demonstrated to be hopeless either despite the accord and satisfaction defence, the acknowledgements in the deed, and the statutory declaration, which provided the husband with a prima facie defence.  As the Court put it, ‘but it is a far cry from saying this [that there was a prima facie defence] to saying that a solicitor, who acts for a wife in a suit which cannot succeed unless a deed between her and her husband is set aside, is acting purely in his own interests or is in any way guilty of misconduct.’  It was clear that the wife was challenging the deed and once again, Mr Clyne knew nothing of the instructions given by the wife to her solicitor.

Marvellously, in the circumstances, Mr Clyne said of the wife’s solicitor that her equity suit ‘was brought utterly without any foundation or responsibility’.  (198)

The main allegation of maintenance to which these five allegations were an adjunct seems to have been based principally on evidence that the solicitor had made out some cheques in favour of the wife.  The Court said:

‘It is impossible to say that the making of a payment by a solicitor to a client for whom he is conducting litigation is proof that he is “unlawfully maintaining” that litigation. He may be paying money which he owes to the client. He may be making a loan to the client: there is no reason why he should not do so.’ (192)

Stating the law, the Court said at 200 – 201:

‘a member of the Bar enjoys great privileges both de jure and de facto. In particular his privilege in relation to defamatory statements made by him in court is not qualified but absolute. It is perhaps worth while to quote yet again the oft-quoted words of Lopes L.J. in Royal Aquarium and Summer and Winter Garden Society v. Parkinson (1892) 1 QB 431 . His Lordship said :

“This ‘absolute privilege’ has been conceded on the grounds of public policy to ensure freedom of speech where it is essential that freedom of speech should exist, and with the knowledge that Courts of justice are presided over by those who from their high character are not likely to abuse the privilege, and who have the power and ought to have the will to check any abuse of it by those who appear before them.” (1892) 1 QB, at p 451.

The last thing we would wish to do would be to say anything which might be thought to curtail this freedom of speech, which public policy demands. Cases will constantly arise in which it is not merely the right but the duty of counsel to speak out fearlessly, to denounce some person or the conduct of some person, and to use such strong terms as seem to him in his discretion to be appropriate to the occasion. From the point of view of the common law, it is right that the person attacked should have no remedy in the courts. But, from the point of view of a profession which seeks to maintain standards of decency and fairness, it is essential that the privilege, and the power of doing harm which it confers, should not be abused. Otherwise grave and irreparable damage might be unjustly occasioned. The privilege may be abused if damaging irrelevant matter is introduced into a proceeding. It is grossly abused if counsel, in opening a case, makes statements which may have ruinous consequences to the person attacked, and which he cannot substantiate or justify by evidence. It is obviously unfair and improper in the highest degree for counsel, hoping that, where proof is impossible, prejudice may suffice, to make such statements unless he definitely knows that he has, and definitely intends to adduce, evidence to support them. It cannot, of course, be enough that he thinks that he may be able to establish his statements out of the mouth of a witness for the other side. This was explained to the appellant, who should have known it before, by Manning J. in certain proceedings in April 1957, to which we shall refer in a moment.’

The Court made no reference to any formal conduct rule which had been breached.  It seems likely from pp 199 – 200 that the conduct rules relating to a proper foundation were at the time of Mr Clyne’s address unwritten.

The Law Society of NSW wants a solicitor who persistently delayed in paying counsel struck off. The NSW equivalent of VCAT has found the professional misconduct established: Council of the Law Society of NSW v Andreone (No. 1) [2014] NSWCATOD 49, and a hearing on sentencing is pending.  In this case, clients had paid bills which included claims by the solicitor for counsel’s fees by electronically depositing monies into the firm’s office account — probably at the firm’s direction, as the Tribunal found.

The Tribunal found without reference to authority that those payments were trust monies to the extent that they satisfied the claims by the solicitor for counsel’s fees, the solicitor not having paid the counsel at the time of their receipt.  In other words, the solicitor held the monies on trust for the barristers. But it seems that the Tribunal considered the solicitor’s misappropriation of trust monies and the failure to pay the fees as separate instances of professional misconduct.  In other words, the mere failure to pay the fees, given its intentionality and persistence, amounted to professional misconduct.  This is what the Tribunal said:

‘MISAPPROPRIATION – BARRISTERS’ FEES

64. The funds listed in para 56 were provided by or on behalf of clients to the law practice for payment of barrister’s fees as detailed in para 56. The barrister’s fees were included as disbursements in bills to the clients but had not been paid by the Firm, so the funds provided by the clients in payment of the bills were, to the extent of the amounts of the barristers’ fees, trust money paid to the Firm for payment to the barristers.

65. The funds (total $74,593.75) were by 5 payments. The Respondent says in his Reply they were paid by the clients by electronic funds transferred to the office account. But there is evidence in the Firm’s records that two of the payments were by a single cheque, which the Firm deposited to the office account.

66. The evidence is that the Counsel’s fees had not been paid by the Firm when each of the amounts were received. The funds were for payment of Counsel’s fees and were therefore trust funds. If they were paid to the Firm other than by direct transfer, then the decision to deposit the funds in the office account was a misappropriation by the Firm.

67. If the funds were paid by the clients by direct electronic funds transfer to the office account, that raises a question of how the 3 payments of funds over the period 21 August 2009 to 9 November 2009 by 2 different clients were all paid by electronic transfer to the office account of the Firm, instead of to the trust account.

68. At pages 60-61 of the Affidavit of Anne-Marie Foord there is a copy of the bill for one of the clients: “The Owners – Strata Plan No. 58068″. The cover page of the bill is a printed format, which includes a “payment slip”. Under the invoice number, total amount due, and due date, is an instruction, “Please turn over for how to pay”.

69. There is no copy of the reverse side of the payment slip in evidence.

70. On all the evidence, it appears that the instruction for direct payment on the reverse side of the payment slip identifies the account to which the funds were to be directly deposited using the account number of the office account, rather than the trust account. In other words, the Firm instructed the clients to pay the money to the office account, even where they were or included trust money. The Tribunal is comfortably satisfied that by that method or other means the clients who made those 3 payments were instructed by the Firm to pay them to an account of the Firm that was the Office Account.

71. At pages 66 – 68 of the affidavit of Anne-Marie Foord there is evidence that on 17 August 2009 the law practice received into its office account a payment $15,416.50 part payment of costs and disbursements. The disbursements included Counsel’s fees of $12,980.00 for Mr Jackman. On 9 November 2009 Settlement funds of $630,719.37 were received from the Owners SP 62254 into the trust account and on the same day $119,280.63 of those trust funds were transferred to the office account for the balance of costs and disbursements. But none of Mr Jackman’s fees of $12,980.00 were paid. The receipt of $15,416.50 into office account and transfer of $119,280.63 from the trust account to the office account were a misappropriation of the client’s trust money to the extent of Mr Jackman’s fees of 12,90.00

72. In relation to the transaction on 21 August 2009, there is evidence at page 59 of the affidavit of Anne-Marie Foord that the Firm included Fees of Mr Jackman of $4,400.00 in its bill and received the full amount of the bill ($5,875.87) by direct deposit into its office account. It did not pay Mr Jackman. The receipt of the trust money to pay Mr Jackman into the office account, apparently at the direction of the Firm, was a misappropriation of those trust funds of $4,400.00.

73. The 2 amounts in para 47 dated 2 September 2009 were $43,257.50 for Mr Jackman and $13,956.25 for Mr Young. There is evidence at pages 60-65 of the affidavit of Anne-Marie Foord. The fees of Mr Jackson and Mr Young and the applicable GST were included in the bill to the client of 28 August 2009 for a total of $116,778.98 of which the fees of Mr Jackman and Mr Young (including GST payable to them) was $57,231.75. The client paid precisely that amount by cheque as part payment of the bill on 2 September 2009. On the evidence that payment was for payment of the 2 barristers, and was trust money for that purpose. But neither of the barristers were paid. Instead the Firm deposited that cheque into the office account. That was a misappropriation of the trust funds paid by the client for payment to the barristers.

74. The $74,593.75 of trust money to pay barristers’ fees was misappropriated because instead of using it to pay the barristers, the Firm deposited it into the overdrawn Office Account, thereby using it to reduce the Firm’s debt to its bank. We are comfortably satisfied that the Respondent was aware that the cheque was or included trust money and knowingly caused it to be deposited to the office account. Similarly the direct deposits by the clients to the office account were a result intended by the Respondent by causing the provision of direct deposit payment instructions on the bills to the clients that specified the number of the Office Account instead of the Trust Account. His conduct in relation to each amount was dishonest and fraudulent. It was prohibited by the Act and under the criminal law. It was clearly professional misconduct

FAILURE TO PAY COUNSEL’S FEES

75. With regard to the Counsel’s fees listed in paragraph 56, the Tribunal is comfortably satisfied that the Respondent and the Firm failed to pay each amount of Counsel’s fees.

76. There are numerous decisions establishing the personal duty of a solicitor to pay fees of a barrister retained by the solicitor on behalf of a client. It has also been established that “wilful or persistent refusal to pay Counsel’s fees can amount to professional misconduct on the part of a solicitor” (Re: Robb (1996) 134FLR294 at page 310; Law Society v McCarthy (2003) NSWADT 58 at para 43; and Council of the Law Society of NSW v Beazley [2012] NSWADT 153).

77. In Law Society of NSW v Davidson [2007] NSWADT 264, the solicitor delayed for periods of 1 – 4 months the payment of barrister’s fees and consultant’s fees for a total of 6 different people. The Tribunal found that the delays were: “Not a mere matter of oversight or misapprehension as to the solicitor’s obligation to pay those disbursements”. It found that the delays were deliberate. It found that he: “Failed to pay third parties within a reasonable time”. It held: “… persistent delay in the payment of moneys due to third parties constitutes professional misconduct”. It held that the solicitor was guilty of professional misconduct in relation to the delayed payment of each of the 6 persons.

78. In Council of the Law Society of NSW v Beazley [2012] NSWADT153, in the particular circumstances of the failure of Mr Beazley to pay barrister’s fees, the Tribunal held that his conduct was neither professional misconduct nor unsatisfactory professional misconduct. The solicitor there had not signed the costs agreement for an appeal. He had sent it to the client for signing.

79. Here there were failures to pay 5 amounts of counsel’s fees billed to clients all in about August & September 2009. That is a pattern. It is now approaching 5 years since the bills, but the Respondent has paid no part of the barristers’ fees. His failure to pay is wilful and persistent.

80. The Tribunal finds that the 5 occasions of failure to pay barrister’s fees constituted professional misconduct as it was unsatisfactory professional conduct involving substantial failure to maintain a reasonable standard of competence and diligence.

81. The deposit of these amounts of trust money to the office account in each case also constituted a breach of s. 254(1) of the Act (the requirement to deposit trust money to a trust account). The failure to use the trust money to pay the relevant barristers’ fees was in each case a breach of section 255(1) (the requirement to hold trust money exclusively for the person on whose behalf it is received and to disburse it only in accordance with a direction given by the person).’

A Western Australian disciplinary case, Legal Profession Complaints Committee v CSA [2014] WASAT 57 is interesting in a number of ways. A criminal lawyer was the manager of a strata corporation.  She owned two units and the complainant the third. The complainant affixed an airconditioner to a wall which impeded on a common area.  She sought legal advice.  Her lawyers wrote a letter of demand to the complainant and charged a few thousand dollars.  The complainant did not fix the problem within the 14 days demanded, so the lawyer sued in the Magistrates’ Court.  The case was settled on the basis that the airconditioner would be relocated and the lawyer withdrew the proceeding without seeking costs.  When the complainant sold the third unit, the lawyer demanded that the complainant pay her the few thousand dollars her lawyers had charged her for the advice and the letter of demand.  She did so by a letter of demand drafted for her by another lawyer, though the involvement of this second lawyer only emerged at the disciplinary hearing. When the complainant did not pay up, she sued for them in her personal capacity.  The suit was found to have no legal foundation, but the lawyer said that she mistakenly thought that it did have a legal foundation, and that civil proceedings were not her thing. The case says:

1.  The suit was an abuse of process because there was no legal foundation for suing for the recovery of ‘pre-litigation’ legal costs.

2.  The lawyer’s conduct in threatening to bring and then bringing a suit which was an abuse of process was common law misconduct but was also a breach of a rule which prohibited lawyers from claiming on behalf of a client costs in a letter of demand for recovery of a debt because she was acting for herself in writing the letter (even though no legal letterhead or reference to her status as a lawyer was involved).

3.  There is no defence of honest and reasonable mistake in professional discipline.

4.  It is inappropriate for a disciplinary tribunal to make what the prosecutors described as ‘an incidental finding of dishonesty’ in relation to statements made during the investigation in respect of which no charge had been laid in the disciplinary proceeding.  Any such allegation ought to be the subject of a separate process (though the Tribunal then went ahead and found that the allegation was not made out on the Briginshaw standard anyway).

The conduct rule the lawyer was found to have breached,  r. 18(1), said:

‘A practitioner must not, in a letter of demand for debt written on behalf of a client to another person, claim costs from the other person unless the client has a right to recover those costs.’

The disciplinary tribunal found that the rule had been breached because, when she wrote a letter of demand on her personal letterhead for payment of what she considered to be a debt owing to her personally and unconnected with her practice, she wrote that letter on behalf of a client.  Who was the client?  She was!  This must have come as a surprise to the solicitor, but I suppose the upside is that she can sue herself for negligence and recover the damages from her professional indemnity insurer. WASAT’s reasoning was:

’58 Although the practitioner was acting in a personal capacity, both in issuing the letter of demand and in commencing and prosecuting the Magistrates Court proceeding, she was, in effect, her own ‘client’ for the purposes of these rules. For reasons set out earlier, the practitioner attempted to further her matter against Mr A and Ms A by ‘unfair … means’ (contrary to r 16(1) of the Conduct Rules; the Committee does not allege that the means were ‘dishonest’). For reasons set out earlier, in her letter of demand dated 8 December 2011, the practitioner claimed costs from Mr A and Ms A when she had no right to recover those costs (contrary to r 18(1) of the Conduct Rules). Moreover, in our view, the fundamental intent of r 16(1) and r 18(1) of the Conduct Rules is to ensure that lawyers act fairly and appropriately in relation to legal matters and proceedings in which they are involved. In our view, it would be contrary to the intent of the Conduct Rules for a lawyer to be subject to the stated ethical requirements when acting for another person, but not when acting for themselves. Indeed, as the Tribunal observed in [Legal Profession Complaints Committee and A Legal Practitioner [2013] WASAT 37]] at [28]:

“The case is all the stronger when it is the practitioner’s own case which he [or she] is seeking to advance by such means.”

The case cited as authority for that proposition is another decision of WASAT presided over by a Deputy President, Judge Parry, who also presided over the tribunal in this case, and cites no authority in support.

The lawyer argued that though she now recognised that the case she commenced against the complainant seeking legal costs she paid for the drafting of a letter of demand to the complainant was misconceived, she honestly believed that it had a proper legal foundation at the time she demanded that the complainant pay her those costs.  In fact, she said, the letter of demand had been drafted by another lawyer.  But the Committee said there is no defence of ‘honest and reasonable mistake’.  Neither party drew the Committee’s attention, it would seem, to Legal Services Commissioner v RMB [2010] VCAT 51, the subject of this blog post.

Finally, the Tribunal very appropriately declined to make findings about conduct of the practitioner in the course of the investigation which was not the subject of a charge:

‘Committee’s application for an ‘incidental’ finding of dishonesty

88 The Committee requested an ‘incidental’ finding that the practitioner sought to deliberately mislead it in correspondence which she wrote in relation to the investigation of Mr A’s complaint. The practitioner said in correspondence that the letter of demand dated 8 December 2011 to Mr A and Ms A was ‘drafted by another lawyer’ and ‘prepared after advice’. When the Committee asked the practitioner to provide a copy of the ‘advice’, the practitioner said that it was contained in the penultimate paragraph of the letter from BPC to Mr A and Ms A dated 17 February 2011.

89 In her first witness statement in this proceeding, the practitioner said on two occasions, that she wrote the letter of demand and that she considered the penultimate paragraph of the letter from BPC to Mr A and Ms A to be ‘advice’. However, as noted earlier, in cross ­examination, the practitioner said that the letter of demand was drafted by a lawyer from ‘minor assistance that is offered through Legal Aid’ (T:57.8; 25.03.14). The practitioner maintained that, although the letter of demand was drafted by another lawyer, she wrote it.

90 In our view, it would be inappropriate to determine, as an ‘incidental’ finding in this proceeding, that the practitioner sought to mislead the Committee in its investigation. Such an allegation is a serious and substantive allegation of professional misconduct in its own right. In fairness to the practitioner, if it is alleged that she sought to mislead the Committee in its investigation, then that allegation should be made in a substantive application to the Tribunal which the practitioner can respond to.

91 However, and in any case, we are not comfortably satisfied, in according with the Briginshaw approach, that the practitioner sought to mislead the Committee by her statement in correspondence that the letter of demand was ‘drafted by another lawyer’ and ‘prepared after advice’. The practitioner’s evidence to the Tribunal was that the letter was in fact ‘drafted’ by a lawyer from the ‘minor assistance’ facility but ‘written’ by her. This is generally consistent with her statements in her correspondence with the Committee. It appears that, having obtained a ‘draft’ of the letter from a lawyer at the ‘minor assistance’ facility of Legal Aid, the practitioner then typed it, signed it and sent it to Mr A and Ms A. In that sense, she ‘wrote’ the letter of demand, even though it was ‘drafted’ by another lawyer. Although the penultimate paragraph of [her first lawyers' letter of demand] is not ‘advice’ that the practitioner had a legal entitlement to demand payment of $2,022 from Mr A and Ms A or that she had an arguable cause of action so as to commence and prosecute proceedings for payment of that amount by them, we do not feel an actual persuasion on the evidence that the practitioner sought to deliberately mislead the Committee into thinking that she had any other ‘advice’ beyond the penultimate paragraph in [her first lawyers' letter of demand].’

By the way, the bit about suing herself was a joke.

In Australian Communications and Media Authority v Today FM (Sydney) Pty Ltd [2015] HCA 7, the High Court considered when an administrative agency can make a determination of the commission of a crime.  The case arises out of the sorry saga of two Today FM presenters impersonating the Queen and Prince Charles in inquiries of the hospital in which the Duchess of Cambridge was a patient.  ACMA conducted an investigation and published a preliminary report expressing the ‘view’ that Today FM had used its broadcasting service in the commission of an offence under the Surveillance Devices Act 2007 (NSW).  Commission of an offence in the course of use of a broadcasting service was a breach of the licence and carried with it the possibility of its revocation: s. 8(1)(g) Australian Communications and Media Authority Act 2005 (Cth). The Court said of ACMA’s ‘view’: No worries; full steam ahead, overturning a unanimous decision of a bench of the Full Federal Court presided over by its Chief Justice, and restoring the trial judge’s conclusions.

There are no doubt implications for Legal Services Commissioners and other disciplinary investigators where misconduct is defined to include the engaging in of criminal offences.  Under the uniform legislation to come into force in Victoria and NSW this year, Legal Services Commissioners will become decision makers and have the power to impose fines for professional misconduct.  I have blogged before about various cases in which a related question has arisen, of the appropriateness of administrative tribunals making determinations of the commission of offences, not with criminal consequences but with penal disciplinary consequences.

Today FM sought to enjoin ACMA from publishing a final report to similar effect.  It argued that either ACMA was not entitled on the proper construction of the Act to make a finding of the commission of an offence and that only the judiciary could do so, or if that is what the Act purported to empower ACMA to do, it was unconstitutional.  The High Court rejected the argument, distinguishing ACMA from ICAC on the basis that the latter was primarily an investigative body the statutory scheme associated with which contemplated that other agencies would make judgments about guilt of crimes and corrupt practices.  Balog v Independent Commission Against Corruption (1990) 169 CLR 625 at 635-636 was thereby distinguished.

A plurality judgment given by French CJ, Hayne, Kiefel, Bell and Keane JJ said:

There were protections in the statute for the reputation of persons the subject of such determinations, as Gageler J pointed out in his separate, concurring judgment:

VCAT’s latest decision to come to my attention, of Member Elizabeth Wentworth, involved another solicitor who did not lodge tax returns over an extended period. He was suspended from practice for 12 months, but the suspension was suspended provided he did not breach certain conditions in the three years after the orders.  If he does, then the Commissioner may apply for the suspension of the 12 month suspension to be lifted so it comes into operation. Member Wentworth decided to leave what exactly would happen in the case of a breach to the discretion of the any future Tribunal constituted to consider it rather than providing automatically for the suspension of the suspension to be lifted.  Legal Services Commissioner v GB [2015] VCAT 254 is interesting to me for six reasons:

1. The Tribunal reiterated the importance of delay as a mitigating factor in relation to penalty: ‘Delay is a mitigating factor which the Tribunal must take into account and which, in most cases, significantly reduces the penalty,’ citing the Court of Appeal’s decision in Stirling.

2. The Tribunal drew a distinction between ‘findings’ of professional misconduct, and ‘orders’ which were limited to the disposition.  This represents admirable care in the formulation of orders which is likely to minimise confusion about the time in which to appeal (since, subject to leave, s. 148 of the VCAT Act 1998 permits appeals on questions of law from orders, including ‘interim orders’) and the status of such findings for the purposes of litigation estoppels.

Often, the liability hearing and plea hearing in professional discipline cases are separate, and held weeks or months apart so that the time for appeal of a finding of professional misconduct (if it were truly an ‘order’ for the purposes of s. 148) would pre-date the receipt of the decision, especially if reserved, on the matters the subject of the plea hearing.

The Tribunal’s approach reflects the law.  The only ‘orders’ the Legal Profession Act 2004 contemplates VCAT making in a disciplinary prosecution are those described in s. 4.4.16, which are predicated on a ‘satisfaction’ that ‘the practitioner is guilty of unsatisfactory professional conduct or professional misconduct’.   In Victoria v Turner [2007] VSC 362 VCAT found, under a different but conceptually similar statute, that a document headed ‘order’ made by VCAT making findings that the State had discriminated against Ms Turner in one respect, dismissing the case in all other respects, and adjourning the hearing to determine the appropriate penalty.  The Chief Justice decided that the finding of discrimination was not an ‘order’ at all for the purposes of s. 148, but a ‘finding’ which is unappeasable, so that the application for leave to appeal was incompetent.  The State should have waited until the orders proper, which would have articulated the penalty (if any), before appealing.  The potential for documents which are not orders in the s. 148 sense but which are entitled ‘orders’ to create confusion is evident from the fact that a Master of the Supreme Court initially granted leave to appeal the finding of discrimination.

3. The Commissioner amended the charge mid-hearing, with the practitioner’s consent, to plead non-intentional misleading in the alternative to the original charge, which squarely alleged fraud, and there was then a contest about whether the misleading statement was intentional, which the practitioner prevailed in.  Nevertheless, because the practitioner pleaded guilty to a statutory form of professional misconduct regardless of the outcome of the contest, he was still found guilty of professional misconduct on the rolled-up charge which also carried other allegations of wrongdoing.

4. Though the practitioner was found guilty of s. 4.4.3(1)(b) professional misconduct (defined to mean ‘conduct … that would, if established, justify a finding that the practitioner is not a fit and proper person to engage in legal practice’), no one argued and the Tribunal did not consider that he should not now be allowed to practise, strongly suggesting that the correct interpretation of the test for that kind of misconduct is to be assessed as at the time of the conduct and that a finding of that kind of misconduct is consistent with a recognition that the unfitness for practice has passed in the period between the conduct and the hearing (another advantage, from contrite practitioners’ point of view, of investigative and prosecutorial delay).

5. Though Member Wentworth seemed in effect to suggest that suspended suspensions of the kind ordered by the Court of Appeal in Stirling’s Case are conceptually problematic, observing that if suspension is necessary for the protection of the public it should ordinarily be imposed absolutely, she accepted the practitioner’s counsel’s ‘compelling submissions’ that it was the most appropriate sanction in this particular case, and the Commissioner himself proposed the ‘suspended suspension’ orders.

6. The Tribunal declined to make an order that the suspended suspension come into effect immediately upon one of the breaches of the conditions to which the the suspension of the suspension from practice was subject, saying:

59. In addition, in my view, it is potentially problematic to bind a future Tribunal to a particular disposition. So much depends on the circumstances that may arise in the intervening period, including the circumstances of any breach of the relevant conditions.
60. …
61. In the particular circumstances here, an order in similar terms to that in Stirling is appropriate, in my view, with one deviation from the orders drafted by Counsel for the Commissioner. The order as made, gives any future Tribunal the discretion as to whether or not to revoke the suspended order period, even if it is satisfied that there has been a material breach of the conditions.
62. … 
63. There will accordingly be a ‘head suspension period’ of 12 months, which shall be wholly suspended for three years (the suspended order period), reflecting the fact that [GB’s] conduct is less blameworthy than that of the practitioners referred to in the cases above. A number of conditions are imposed. If [GB] fails to comply with any of the specified conditions during the suspended order period of three years the Commissioner may make an application to the Tribunal to revoke the suspended order period. The orders also allow the Tribunal to impose a longer period than 12 months if it thinks appropriate.

Legislation regulating lawyers typically deals with directors of incorporated legal practices like Victoria’s Legal Profession Act 2004’s s. 2.7.11 as follows:

‘Each of the following is capable of constituting unsatisfactory professional conduct or professional misconduct by a legal practitioner director–

(a) unsatisfactory professional conduct or professional misconduct of an Australian legal practitioner employed by the incorporated legal practice;

(b) conduct of any other director (not being an Australian legal practitioner) of the incorporated legal practice that adversely affects the provision of legal services by the practice’.

A recent decision from Sydney illustrates how disciplinary tribunals approach applications to discipline innocent co-directors of wrongdoer-directors in incorporated legal practices.  Trusted non-legal practitioner directors do not necessarily need to be supervised in everything they do by legal practitioner directors unless there is a special reason to.

In the NSW case, there was a special reason: the co-director did not renew his practising certificate which lapsed on 30 June 2011.  He had failed (to the innocent co-director’s knowledge) to comply with earlier disciplinary orders requiring that he be mentored.  Contrary to his promises to the by-then-sole-legal-practitioner-director, he caused the firm to incur an unfunded liability to a valuer retained on behalf of a client in litigation.  The valuer was instructed by the wrongdoer director in August 2011.  The Tribunal found the remaining legal practitioner director guilty of unsatisfactory professional conduct, but on the basis that her failure to supervise the by-then non-legal practitioner director caused the firm to incur a debt which it was unlikely to be able to pay if the litigation in respect of which it was incurred did not succeed.  The decision is Council of the Law Society of New South Wales v Loris Hendy [2016] NSWCATOD 20.

One thing which is puzzling is exactly on what basis it was said that a firm contracting personally to pay valuers, and then not paying them because it did not have the money to do so, was said to be conduct warranting discipline which the practitioner had an obligation to prevent by supervision.  After all, had the firm caused the client to contract directly with the valuers, or made clear to them that the firm would not be personally liable, they presumably still would not have been paid.  Presumably the client was always up for the disbursements, whether there was a successful outcome or not, since that is fairly standard.  And so, presumably, if the client had any money, the firm would have sued the client.  And presumably the firm believed on the basis of senior counsel’s advice that the client would succeed in the litigation and that the valuer would get paid out of the favourable costs award, and that, even if that did not occur, the firm would be in a position to meet the valuer’s fees.  Certainly, there was no finding to the contrary.

In the Victorian solicitors’ conduct rules in place from 2005 until recently, r. 26 said:

‘A practitioner who deals with a third party on behalf of a client for the purpose of obtaining some service in respect of the client’s matters, must inform the third party when the service is requested, that the practitioner will accept personal liability for payment of the fees to be charged for the service or, if the practitioner is not to accept personal liability, the practitioner must inform the third party of the arrangements intended to be made for payment of the fees.’

Compare r. 35 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015. To similar effect was r. 35 of the New South Wales Professional Conduct and Practice Rules 2013 (Solicitors’ Rules).  None of those were in force, of course, in NSW in 2011 when the non-legal practitioner director of the firm caused it to incur the fees, and I do not know what the rules which were in force in NSW at that time said.  At any rate, there was no reference to any such conduct rule in the Tribunal’s reasons. Assuming some similar rule was in place, it is notable that the legal practitioner director was not apparently disciplined for allowing the firm to contract the liability, but for not meeting it, or perhaps for allowing it to be contracted in circumstances where there was no guarantee that it could be satisfied if things went pear-shaped.

There are numbers of cases about the misconduct of solicitors who fail to pay counsel’s fees for no particularly good reason.  I have listed them at the end of this post.  It seems to be well established by authority that such conduct is misconduct at common law or pursuant to the generally worded statutory definitions of unsatisfactory professional conduct and professional misconduct. Couldn’t agree more, and long may such cases accumulate.  But this was a bit different.

The facts in more detail are as follows.  A man and a woman effectively practised in partnership for 9 years, but through the vehicle of an incorporated legal practice of which they were both directors.  The man caused the firm to commence proceedings on behalf of a client, acting on a no-win no-fee basis.  The woman was not involved in those proceedings, but the man’s conduct of them was guided by senior counsel.  The woman agreed to the firm acting in those proceedings on that basis only on condition that the firm would not become personally liable for the client’s disbursements.

The man abandoned practice mid-way through the proceedings, apparently at least partly as a result of disciplinary problems he was having. But he remained as a non-legal practitioner director, though he was ‘inactive’.  Later, he was struck off.  Shortly after failing to renew his practising certificate, in his capacity as a non-legal practitioner director of the firm, the man, despite being ‘inactive’, retained valuers on behalf of the client as experts in the proceedings, and caused the firm to promise personally to pay them.  It must have been apparent, the Tribunal found, that the cost of the multiple valuations would be substantial.  In fact, they cost about $50,000, and, of course, the client’s case did not succeed.

The valuers complained to the Legal Services Commissioner about the woman as legal practitioner director of the firm, in respect of the firm’s failure to pay the debt and the judgment.  The woman conceded that the firm owed the debt, advised that she had been financially ruined by the man’s abandonment of practice, her marriage had failed as a result of financial stress, and she had been driven out of practice altogether.  She said the client had not paid, the firm did not have the monies to pay, and she personally did not have the monies to pay, though, she said ‘I am doing everything in my power to meet [the debts of the firm]’.

The Tribunal did not find that the woman’s conduct warranted professional discipline merely by virtue of having been the sole legal practitioner director.  After all, the Tribunal reasoned, the man was a lawyer of considerable experience, the litigation seemed to be under the general supervision of senior counsel, and the man had been the woman’s trusted business partner for nearly a decade, and had repeatedly assured her, essentially, that the firm was not in the gun for the valuer’s fees.

Rather, the Tribunal was satisfied that the woman had failed to comply with NSW’s Legal Profession Act 2004‘s obligations on legal practitioner directors to have proper management structures.  In this case, the failure was a failure on the part of the legal practitioner director to supervise the non-legal practitioner director.  Not just because the lawyer has to minutely supervise the non-lawyer in every aspect of what they do, for all time, but rather because there was a specific reason why the woman should have supervised the man more: she knew that he was not complying with the requirement of a previous disciplinary tribunal that he submit to mentoring, and also, presumably, because she knew of the conduct which caused him to be disciplined in the first place (causing the firm to fail to pay certain taxes).

The woman admitted in cross-examination that, had she acted ‘affirmatively and properly’ in some way unspecified by the Tribunal’s reasons following the man’s non-renewal of his practising certificate, the problem which arose probably would not have arisen.  From that point on, she was sunk, and the interesting question of how the Tribunal would have reasoned but for that concession is left a mystery.

The Tribunal reasoned:

’21  The Common Law test for professional misconduct propounded in Allinson v General Council of Medical Education and Registration [1894] 1 QB 750 and followed in a multitude of cases in this state is also helpful: conduct which would reasonably be regarded as disgraceful and dishonourable by professional brethren of good repute and competency.

22           Although the solicitor’s breach of the two sections of the Act is capable of constituting professional misconduct (s498(1)(a)), in our opinion her conduct falls far short of the test propounded in Allinson. In effect, her conduct is confined to a lack of adequate supervision of an employee to whom she had given explicit instructions and whom she had some reason to trust. This occurred over a relatively short period. On that basis, we are not satisfied that professional misconduct is established.

23           However, having particular regard to the fact that the solicitor knew that [the man] had not honoured his undertaking to the ADT regarding mentoring, we do find her guilty of unsatisfactory professional conduct. We are satisfied that a reprimand (which is the sanction sought by the Council), is appropriate.’

An incomplete list of recent cases about non-payment of debts by lawyers:

Rhodes v Fielder, Jones and Harrisons [1918-19] All ER 846 at 847 per Lush J (Sanke J agreeing)

Victoria Lawyers RPA Limited v M O Lawyers Lawyers Pty Ltd TO217 of 2002, 31 October 2001Law Society of

New South Wales v McCarthy [2002] NSWADT 58 at [46] per Malloy, Robinson QC and Kirk

Law Institute of Victoria Limited v Parsons & Singer, TO555 & TO556 of 2005 10 November 2005

Law Society of New South Wales v Graham [2007] NSWADT 67 at [29] per Karpin ADCJ, Pheils and Fitzgerald

Legal Services Commissioner v McCristal [2011] VCAT 231

Legal Practitioners Conduct Board v Wharff [2012] SASCFC 116

Council of the Law Society of NSW v Beasley [2012] NSWADT 153

Council of the Law Society of NSW v Ling [2012] NSWADT 146

Council of the Law Society of NSW v Isaac [2012] NSWADT 203 (where the NSW solicitor was struck off)

Council of the Law Society of NSW v Xenos [2012] NSWADT 283

Council of the Law Society of NSW v Narayanasamy [2014] NSWCATOD 18.

In general, in relation to the nature of the trust which arises when a client provides, see also Legal Services Board v Gillespie-Jones [2013] HCA 35.

Professor Dal Pont’s excellent text Lawyers’ Professional Responsibility (5th ed., 2013) suggests at [23.145] that mental illness will rarely provide a defence to a disciplinary prosecution, the purpose of which is protective rather than punitive.  He argues, in part, that the public needs protection just as much from the mentally ill who do bad things as from the mentally flourishing who do wrong.  But that reasoning does not have any application where there is not a temporal proximity between the moment of determining liability and the moment at which the putative wrongdoing occurred. In my experience the glacial pace of disciplinary investigations usually mean that the time for setting sanctions is years after the conduct in question.  Very often, I find myself acting for practitioners whose minds are flourishing much more than at the time of their wrongdoing.

I always thought (or perhaps more accurately, hoped) that Dal Pont was a little pessimistic about the possibility of mental impairment being relevant to the determination of the question of whether unsatisfactory professional conduct or professional misconduct is.  True, there are some decisions broad statements in which support that position, but the authorities are a bit all over the place, and there are so many different kinds of conduct warranting discipline and so many fact scenarios that it seemed to me that the law must be more nuanced than some of those broad statements suggested.

Last year, VCAT’s Legal Practice List last year ruled, contrary to the position advanced by Victoria’s Legal Services Commissioner, that evidence of mental impairment was relevant to the question of whether conduct was professional misconduct or unsatisfactory professional conduct, and heard evidence from a psychologist during the liability phase of the hearing.  The two species of conduct warranting discipline arising from a breach of the rules have traditionally been delineated by enquiring whether the breach was innocent or whether it was deliberate or reckless, so that it clearly incorporates a subjective enquiry. VCAT’s decision to hear the psychological evidence on the question of liability was, as I have learnt in the course of penning this post, consistent with that in New South Wales Bar Association v Butland [2008] NSWADT 120.

Now the Supreme Court of NSW has reviewed the authorities and published a useful decision in the matter of BRJ v Council of the New South Wales Bar Association [2016] NSWSC 146 (Adamson J), making clear that mental illness may be relevant to the question of liability, as well as to the question of penalty where it is of course of critical relevance, citing Robinson v The Law Society of New South Wales (Supreme Court of New South Wales, Court of Appeal, unreported, 17 June 1977), a decision I have not come across before. Essentially, Justice Adamson said, it all depends on whether there was a mental element to the kind of conduct warranting discipline which is charged.  Conduct described as a failure to maintain standards of competence and diligence is not something to which the practitioner’s mental impairment is relevant.  In charges which rely on the practitioner having a particular state of mind do require analysis of the degree to which the practitioner’s state of mind was flourishing.  Professional misconduct at common law is determined by what competent and reputable peers would think of the conduct.  What they would think is affected by the degree to which the practitioner’s mind was flourishing at the relevant time.

Unfortunately for the barrister who was the subject of the disciplinary hearing under appeal in this case, all this meant that though the Tribunal and the Court accepted that her conduct was caused by her psychiatric illness, she was nevertheless properly found guilty of unsatisfactory professional conduct constituted by failing to maintain standards of competence and diligence and acting in the face of a conflict between self-interest and duty to her client.  The test for such unsatisfactory professional conduct does not enquire into the mind of the practitioner, the Court found.  Accordingly, the psychiatric causation was legally irrelevant.

See also this sister post, about the disciplinary Tribunal’s and the Supreme Court’s willingness to allow the practitioner to change her plea, once after the liability hearing but before the delivery of reasons and once on the eve of the hearing of the appeal.

The respondent was a barrister.  She was suffered the mental illness anorexia nervosa.  She often turned up late to court for rostered duty as a Legal Aid lawyer assisting litigants in domestic violence cases, over a period of about 18 months almost five years prior to the disciplinary hearing in the Administrative Decisions Tribunal.  She also rented out her granny flat to her client who had a forensic interest in having and maintaining secure accommodation. Planning issues associated with the flat meant that the client’s occupation of it was far from secure.  Then she sought to evict the client, while continuing to represent her.  Her interests in obtaining rent and evicting her tenant conflicted with her duty to advance her client’s interest in obtaining and maintaining stable accommodation.

The respondent’s final position before the disciplinary tribunal was that:

(a) she did do the things alleged;

(b) but for her psychiatric illness that conduct would properly be found to amount unsatisfactory professional conduct of the species she was charged with; but that

(c) by virtue of the relationship between her illness and her conduct, she should not be found guilty.

The respondent argued by reference to expert evidence that ‘it is likely that her cognitive functioning was impaired by [anorexia nervosa].  In addition, the physical symptoms of the condition caused or contributed to the Respondent’s lateness [to court].’

The Tribunal actually found that the respondent’s psychiatric illness ’caused her lateness for court’, which makes the decision particularly interesting.  It found that ‘she did not appreciate that her physical disabilities were causing her to be late for court’.  It also found that ‘the respondent’s judgment and cognition were affected by the anorexia nervosa with the result that she did not have sufficient comprehension of her conduct nor the ability to properly reason in relation to her conduct [relating to the granny flat]’.

The result was that the Tribunal found, in its reasons, that the respondent engaged in unsatisfactory professional conduct, as pleaded, but determined to take no further action and to order that its findings not be published on the disciplinary register.  It could make such an order in relation to the disciplinary register because it found that the disciplinary action arose wholly or partially from infirmity, injury or mental or physical illness (the test in s. 577 Legal Profession Act 2004 (NSW): c.f. s. 4.4.30 Legal Profession Act 2004 (Vic.)).  The Tribunal also anonymised references to the barrister, and closed the Tribunal’s file to inspection by the public. It imposed no sanction on the respondent.

The Tribunal did not spend a lot of time explaining why, given that the wrongful conduct was actually ’caused by’ the practitioner’s mental illness, she should be found to have engaged in unsatisfactory professional conduct constituted by acting in breach of the rule proscribing conflicts of interest and duty.  After all, if you kill someone without lawful authority but without appreciating the wrongfulness of that act, you are not found to have done wrong.  The reasoning seems to have been that the species of unsatisfactory professional conduct pleaded was that the barrister had ‘fallen short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer’.  Presumably that was taken to mean a reasonably competent lawyer with flourishing mental health, so as to provide an objective test.

As the Tribunal observed at [101]: ‘where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence (in s 497(1)(a)), the practitioner’s mental condition may not be relevant.’  In respect of one of the conflict of interest charges, the Tribunal obviously considered it was applying that test (which might have been mandated by the formulation of the charges), because it found that ‘Members of the public are entitled to expect a barrister to act in the interests of their clients. They are also entitled to expect that a barrister will not exploit the client’s position (which in many cases, as here, is a relatively vulnerable one) for the barrister’s own advantage. The barrister’s conduct fell short of the standard of diligence required.’ (My emphasis.)  No argument is recorded as having been advanced that acting in the face of a conflict which the practitioner’s reasoning was such that she could not appreciate has nothing whatsoever with acting as diligently as the public would expect of practitioners.

There is another thing which is worth noting about the species of unsatisfactory professional conduct on which the Tribunal’s attentions appear to have been focused.  It is that the relevant definition of unsatisfactory professional conduct differs from most other species of unsatisfactory professional conduct which state that various conduct is ‘capable of’ amounting to unsatisfactory professional conduct.  Not all such conduct, in other words, necessarily rises to the level at which it is properly described as unsatisfactory professional conduct. Falling short of the standards of competence and diligence the public is entitled to expect of a reasonably competent lawyer seems automatically to be, rather than be ‘capable of being’, unsatisfactory professional conduct under the Act.  It may be that any conduct which is said to be unsatisfactory professional conduct under one of the ‘capable of being unsatisfactory professional conduct’ definitions would warrant an enquiry into the mental state of the practitioner at the relevant time.

Appropriateness of not making a declaration that the barrister was guilty of unsatisfactory professional conduct

The Tribunal did not make a declaration that the respondent had engaged in unsatisfactory professional conduct, consistently with cases such as Victoria v Turner [2007] VSC 362.  The Act provided for VCAT to make certain orders if satisfied that unsatisfactory professional conduct had been established, and not for making a finding of such conduct by way of an order (compare this careful decision of VCAT).

The question dealt with by the Supreme Court on appeal was whether the Tribunal was correct to find that the barrister was guilty of unsatisfactory professional conduct given that her conduct was actually found as a matter of fact to have been ’caused by’ her mental illness.  It is interesting that the Court entertained such an appeal, since it was directed to a finding rather than to any of the Court’s orders.  No doubt that is because the appeal provision provided for an appeal from ‘an order or other decision’ of the disciplinary tribunal.