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ACT CIVIL & ADMINISTRATIVE TRIBUNAL
COUNCIL OF THE LAW SOCIETY OF THE ACT v LEGAL PRACTITIONER RN (Occupational Discipline) [2016] ACAT 122
OR 37/2015
Catchwords: OCCUPATIONAL DISCIPLINE – Legal profession – Trust monies – Online conveyancing firm – Whether payment made at the commencement of the proposed solicitor/client agreement for part of costs is trust money – Whether system that pays the sum directly to an office account or to a trust account and then to office before written direction is professional misconduct or unsatisfactory professional conduct by the principal of the firm
OCCUPATIONAL DISCIPLINE – Legal profession – Delay in arranging return of signed transfer for stamping in acting on sale of land-whether within tolerable range of human error –Whether principal guilty of unsatisfactory professional conduct for such error of employed solicitor – Whether employed solicitor had taken timely steps to arrange for mortgagee to attend on settlement –Whether failure to do so with consequent loss of sale was unsatisfactory – Whether if so principal also guilty of unsatisfactory professional conduct
OCCUPATIONAL DISCIPLINE – Legal profession – Duty of frankness and candour – Whether solicitor breached obligation in responses to the applicant
OCCUPATIONAL DISCIPLINE – Legal profession – Contract – Cash purchase of property – Failure to arrange registration of release of mortgage –Whether retainer included agreement to arrange registration – Agreement to do work necessary to change ownership – Registration necessary to change ownership – Failure to tell clients until enquiry – Whether failure to complete retainer without requiring payment of a further fee is unsatisfactory professional conduct – Risk to clients – Error not within tolerable range of human error – Error constitutes unsatisfactory professional conduct
OCCUPATIONAL DISCIPLINE – Legal profession- Failure to act competently and diligently in respect of advice re stamp duty insurance and first home buyers allowance – Failing to advise concerning potentially adverse contract conditions prior to exchange or cooling off period–Failing to get a search of the body corporate records
OCCUPATIONAL DISCIPLINE – Legal profession – Whether alteration of licence agreement without instructions –Whether respondent at fault where employee allows licence agreement to be amended without instructions
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 82Legal Profession Act 2006 ss 213, 222, 223, 229, 386, 387, 389 419, 423A
Subordinate Legislation: Legal Profession Regulation 2007 s 62
Legal Profession (Solicitors) Rules 2007 rr 1.1, 1.2, 39(1)
Cases cited: Adamson v Queensland Law Society Inc [1990] 1 Qd R 498Allinson v General Council of Medical Education and Registration [1894] 1QB 750Briginshaw v Briginshaw (1938) 60 CLR 336Council of the Law Society of the ACT v Legal Practitioner RH [2015] ACAT 40Council of the Law Society of the ACT v Legal Practitioner RH (No. 2) [2015] ACAT 68Council of the Law Society of the ACT v Legal Practitioner P4 [2015] ACAT 35Legal Practitioner RH v Council of the Law Society of the ACT [2016] ACAT 94Legal Services Commissioner v McGregor [2012] VCAT 1742Queensland Law Society Inc v Whitman [2003] QCA 438
List of Texts/Papers cited: Butterworth, Riley's Solicitors Manual
Tribunal: Senior Member B Meagher SCMember W Pearcy
Date of Orders: 8 November 2016Date of Reasons for Decision: 8 November 2016
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ACT CIVIL & ADMINISTRATIVE TRIBUNAL OR 37/2015
BETWEEN:
COUNCIL OF THE LAW SOCIETY OF THE ACTApplicant
AND: LEGAL PRACTITIONER RN
Respondent
TRIBUNAL: Senior Member B Meagher SCMember W Pearcy
DATE: 8 November 2016
ORDERThe Tribunal finds that:
1 The respondent is guilty of unsatisfactory professional conduct by failing to
comply with sections 222(1) and 223(1) of the Legal Profession Act 2006 in
respect of trust monies as specified in Grounds 1, 2, 11a and 13 (second) of the
amended application.
2 The respondent is guilty of unsatisfactory professional conduct in charging a
client extra fees for registering documents on completion of a purchase and in
failing to attend to such registration promptly in breach of her obligation to act
fairly and with competence and diligence as specified in Grounds 7 and 9b of the
amended application.
3 The respondent is guilty of unsatisfactory professional conduct in failing to
conduct a purchase of a strata title unit in NSW with diligence and competence
as specified in Ground 10 of the amended application.
4 Other than Grounds 3, 4 and 9a which were withdrawn, the remaining grounds of
the amended application are not made out.
The Tribunal orders that:
1 The application be adjourned to a date to be advised for directions as to the filing
and service of any further evidence and submissions concerning penalty and
costs and for a date to be fixed for further hearing in respect of penalty and costs.
………………………………..Senior Member B Meagher SC
Delivered for and on behalf of the Tribunal
REASONS FOR DECISION
1. The applicant filed an application for disciplinary action dated 4 September 2015
against the respondent pursuant to section 419 of the Legal Profession Act 2006
(the LPA). A response was filed on 22 December 2015. An amended application
dated 8 August 2016 was subsequently filed.
2. A hearing was held over four days from 22 to 25 August 2016 and at the end of
the hearing the parties were invited to file written submissions.
3. Directions had been given for the filing of affidavits and, apart from documents
contained in tender bundles, the evidence before the tribunal consisted of the
affidavit evidence and oral evidence given on cross examination by some
deponents.
4. The respondent conducts an online conveyancing service. The applicant received
five complaints about this service and the application relates to those five
complaints. Whilst there are some factual disputes, the main issues concern
whether facts that are not disputed constitute professional misconduct, or
unsatisfactory professional conduct.
5. The amended application is ordered by reference to the five complaints. There
are a number of paragraphs setting out mostly factual matters and 17 grounds
alleged to warrant findings of professional misconduct or unsatisfactory
professional conduct.
Preliminary matters
6. It is proposed in these reasons to use the initials of the complainants and other
persons referred to (except the representatives of the parties) in order to protect
their privacy and to minimise identification of the respondent consistent with
section 423A(1) of the LPA. It is also proposed to follow substantially the
structure of the application in deciding the issues arising.
7. Before dealing with each complaint, it is useful to identify the evidence and the
nature of the grounds. There was an introductory submission by the applicant
concerning the credit of the respondent and we will explain our approach to that
submission. Additionally, we address a submission that complaints concerning
the same type of conduct could be dealt with globally. For each complaint we set
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out the facts that emerge from the application and the evidence that supports
those facts. In doing so, we identify the facts that are in dispute and make
findings about them. Facts that are not disputed have been treated as either
agreed or unchallenged, and we make findings of such facts.
The Evidence
8. The applicant relied on the following affidavits and documents:
(a) The affidavit dated 18 January 2016 of Robert Reis, the Professional
Standards Director of the applicant. He exhibits two large folders of
documents identified as RAR 1. As this folder is referred to throughout the
hearing and this decision it is helpful to explain the contents as Mr Reis has
done in his affidavit. He was not cross examined and there were no
objections to his affidavit. RAR 1 contains the following documents:
(i) The respondent’s file in respect of complainant DK is in volume 1 at
pages 1-120. From other material it is apparent that the respondent
provided this file to the applicant during an investigation. The events
therein took place between May 2011 and 10 November 2011.
(ii) The respondent’s file in respect of complainants N1 and N2 is at
pages 121-282 and concerns events that occurred between 22
December 2010 and 18 January 2012. This was also obtained from
the respondent.
(iii) The respondent’s file concerning complainant AS is at pages 283-
441. These events occurred between May 2011 and September 2011.
This was also obtained from the respondent.
(iv) The respondent’s file in respect of complainant ST is at pages 442-
552 in volume 2. From information learned during the hearing this
was the hard copy of the file given by the respondent’s firm to ST
and in turn given by her to the applicant. These events occurred
between July 2009 and October 2009.
(v) The balance of volume 2 contains correspondence between the
respondent and the Law Society or its lawyers. It is divided
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according to complaint and by reference to correspondence with
Phelps Reid who currently act for the applicant, having taken over in
January 2014.
(b) Affidavits of complainant CD dated 8 March and 3 August 2016. CD was
not cross examined. She is a former employee of the respondent. The
respondent objected to some parts of the affidavit mainly concerned with
trust account matters. These matters were dealt with by concession on both
sides. CD’s evidence was also tangentially relevant to the complaint of DK
and to the question of adequate supervision by the respondent.
(c) An affidavit of ST dated 19 January 2016. This relates to a complaint by
ST as a client of the respondent. Some parts of her affidavit were objected
to and not admitted. She was cross examined on the phone. There was no
suggestion of her credit being in issue and we accept her evidence as far as
it goes.
(d) An affidavit of DK of 19 January 2016. He is a former client of the
respondent and was not cross examined. His evidence was not
controversial and is accepted.
(e) An affidavit of AS of 16 January 2016. He is also a former client and
complainant. He was not cross examined. Some parts of his affidavit were
rejected or not pressed, because they set out the effect of documents that
spoke for themselves. Again, we accept his evidence.
(f) An affidavit dated 29 July 2016 of Kathryn Riley, a solicitor employed by
the solicitors for the applicant. She was not cross examined and her
evidence is accepted. It attached screen shots of the respondent’s web
pages at various times. It related to the trust account allegations described
below.
(g) Affidavits of Stephen Jones of 14 April 2016 and 3 August 2016. He is an
expert Queensland conveyancing solicitor. He was not cross examined. His
evidence was about the standards expected of lawyers engaged in
Queensland conveyances and relates to the complaints of ST and DK.
(h) Affidavits of Michael James of 15 March 2016 and 1 August 2016. He is
an expert ACT and NSW conveyancing solicitor. He gave evidence about
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the standards that ought to apply in relation to the matters that are the
subject of the complaints of AS, N1 and N2. He was not cross examined.
(i) An affidavit of N1 dated 22 August 2016. He is a complainant and former
client of the respondent. He attended and was cross examined in person.
We had some reservations about his evidence.
(j) An affidavit of N2 dated 22 August 2016. She also attended and was cross
examined. Again, we had some reservations about her evidence.
(k) A tender bundle which became Exhibit A1. It contained correspondence
between solicitors for the parties; documents obtained on subpoena from
solicitors for the other party in conveyances for N1 and N2, ST, AS and
DK; from the Bank of Queensland (BOQ) in respect of ST; some sample
files and spreadsheets relevant to the trust account allegations and other
miscellaneous documents.
(l) A sample folder, Exhibit A2. This related to the trust account allegations
and was supplemented by a helpful explanation by Mr M Kalyk, junior
counsel for the applicant led by Mr N Beaumont SC. Mr C Erskine SC,
counsel for the respondent, added explanations from his client’s
perspective. As will be seen, the facts necessary to establish these counts
were conceded. We treated the explanations as evidence only to the extent
that they amount to an agreement about the system, or are admissions
against interest. Otherwise they are submissions. As will be seen, this
became academic because of the concessions made.
9. The respondent relied on the following material.
(a) Her affidavits of 12 July 2016; 13 July 2016 and 11 August 2016.
Mr Erskine SC did not read parts of the 12 July affidavit which dealt with
matters the subject of concessions made afterwards. The paragraphs read
were 1 - 41, 16 - 49 (first sentence), 52 - 53, 57 - 64, 65 -76, 77 - 84, 89 -
114. The respondent was cross examined in person.
(b) An affidavit of EC, a solicitor formerly employed by the respondent and
who handled the ST conveyance. He was not cross examined.
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(c) An affidavit of Stephen Gibson an expert Queensland conveyancing
solicitor whose evidence related to the ST matter.
(d) Tender Bundle Exhibit R1 consisting of two volumes. Volume 2 was not
pressed. The material in volume 1 that was not pressed after objection was
at pages 1 - 5, 8 - 13, 47, 53 - 146 and 150 - 151. The material that
remained included documents from BOQ and a ruling of the NSW Law
Society concerning receipt of fees in advance.
An overview of the grounds
10. The grounds can be grouped into four categories as follows:
(a) Failing to comply with trust account obligations in respect of initial costs
payments of $350 – Grounds 1, 2, 11(a) and 131(the second 13)2 in the
application.
(b) Attempting to mislead and failing to act with candour in respect of four
complaints – Grounds 6, 8, 13 (the first 13) and 15.
(c) Failing to treat clients fairly and in good faith – Grounds 9, 12 and 14.
(d) Breaching standards of competence and diligence Grounds 5, 7, 10 and 16.
Credit of the respondent
11. In written submissions counsel for the applicant asserted that “From almost the
first answer the Practitioner gave ... the evidence was consistently unreliable, at
best discreditable and at worst deliberately false.” Extensive transcript references
to the respondent’s evidence were given in support of the assertion. During the
hearing we paid careful attention to the evidence of the respondent. We have also
carefully read the written submissions and the related transcript references. It is
not useful to explain the transcript references in detail, but where it is necessary
to mention them in order to explain our reasons in respect of each complaint, we
do so.
12. Having said that, the members of the Tribunal, independently of each other, had
a completely different impression of the respondent’s evidence. She remained
unfailingly courteous and displayed grace under quite hostile cross examination.
We did not get the impression that she was not being candid and while she may
1 There are two Ground 13s2 Ground 13 also referred on a breach in respect of the sum of $240
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be mistaken about some matters, bearing in mind that the complaints date back as
far as 2009 and most were in 2011, that is understandable. Our conclusion was
reaffirmed by reading the transcript references provided by counsel for the
applicant. This conclusion is most important in considering complaints made by
the applicant of lack of candour.
Complaint of CD
13. The first complaint is that of CD a former employee of the respondent. The first
two grounds alleged to arise from her complaint are as follows:
Ground 1: Failure to deposit trust monies into trust in breach of s222 (1) of the act.
From 1 January 2009 to around 16 April 2012, the practitioner systematically breached s222 (1) of the LPA by failing to deposit the $350 payments into the trust account of the respondent’s firm.
Ground 2: Wrongful transfer of funds from trust to office.
From around 17 April 2012 to the present date, the practitioner breached s223(1) of the LPA by transferring the $350 payments from the firm’s trust account to its office account.
14. Grounds 3 and 4 were withdrawn by the applicant on the first day of the hearing.
Grounds 1 and 2 were conceded by the respondent also on the first day of the
hearing. The concessions were to the fact of breach, not to how it should be
categorised in terms of conduct. The underlying facts in support of Ground 1 are
set out in paragraphs 1.1-1.11 of the application. The facts supporting Ground 2
are set out in paragraphs 1.12-1.14. The applicant amended paragraph 1.14 by
deleting subparagraphs (a) and (b) and, in (c), deleting the words ‘in any event’.
15. Ground 11(a), which arises from the complaint of AS, is in the same terms as
Ground 1, as is the second Ground 13 which arises from the complaint of N1 and
N2.
16. The parties agreed that it is appropriate that these later grounds be treated as part
of Ground 1 because they are examples of the general allegation made in Ground
1. This seems to us to be appropriate.
17. The references to the $350 payments are dealt with in paragraph 1.1 of the
amended application. It is there alleged that during the relevant time the
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Practitioner’s usual and almost invariable practice had been to require clients of
the online conveyancing service to make an upfront payment of $350 at the time
of registering via the website. The reference to ‘registering via the website’ is
explained in paragraph 1.2. It was also explained at length by Mr Kalyk, junior
counsel for the applicant, by reference to a folder of documents that was tendered
and is Exhibit A2. The explanation occurs at pages 38 to 105 of the transcript of
proceedings dated 23 August 2016. Mr Erskine SC explained the process from
his client’s perspective at pages 105 to 111 on the same day. There followed a
discussion about what were the agreed facts that supported the concession set out
at pages 111-114 of the transcript.
18. There was some disagreement about details that were irrelevant. The parties
agreed that the Tribunal should act on agreed facts and not make findings about
the irrelevant matters.
19. Also, because the respondent was concerned about her intellectual property, the
Tribunal was asked to omit detail in its reasons that might unnecessarily reveal
commercial in confidence matters.
20. Apart from the agreement, the Tribunal is satisfied of the basic process from
evidence including Exhibit A2, the affidavit of Kathryn Riley where she deposes
that she had done web searches and captured screen shots as to what transpired,
and RAR 1.
21. The respondent’s website for the online conveyancing service has a page for
prospective clients. They obtain a quote by providing basic details such as name,
address, property details and the like. The quote is given as a lump sum inclusive
of GST. It includes some disbursements that are identified, but not otherwise. If
the client wants to accept the quote, he or she must register by approving a fees
agreement. They are also asked to make an initial payment. The payment during
the relevant period was $350.
22. The client in a typical case provides credit card details and clicks on a link to a
bank portal. A payment to the practitioner’s firm is processed. In due course the
practitioner’s account shows the sum as having been paid and the amount is
debited to the client’s credit card. The practitioner issues a tax invoice. An
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example of one is in RAR 1 at page 555. It says it is, “part payment of
professional costs and disbursements of and incidental to acting on your behalf.”
This was the form of invoice for a period until mid-April 2012 after the CD
complaint was made. During this period the fees agreement usually contained a
clause 4a that provided, “We require a payment of $350 of our fees and
disbursements when you register for our conveyancing services. We will provide
you with a tax invoice for this amount upon payment.”
23. All money was paid into an office account not a trust account.
24. After the complaint in about November 2011 and February 2012, the word
‘retainer’ was inserted in the fees agreement so that 4a read, “We require
payment of $350 as a retainer for our services when you register on our website.
We will provide you with a tax invoice for the retainer upon payment”. Clause 4b
then provided, “We will deduct the balance of your fees …. (i.e. less the retainer
payment)… on settlement.”
25. The tax invoice then said, “Retainer payment for your behalf.”
26. The fees agreement provided for part payment if the agreement was terminated
early.3
27. There was a special provision in a vendor’s auction transaction that provided for
a refund from the $350 payment if the auction was not successful.
28. Mr Erskine SC, on instructions from his client, said that when there was a
conflict the practitioner refunded the $350 amount.
29. It had been argued on behalf of the respondent that the $350 payment was not
trust money because some work had been done by the time the money was
received and the definition of trust money was not satisfied. This argument was
later conceded to be incorrect.
30. The use of the word ‘retainer’ was intended to create a debt so that the payment
was not trust money. The true position was that, whatever it was called, there
was still an obligation on the respondent to account for the money if a sale did
not proceed and to deduct it from the cost of future work. As senior counsel for
3 see RAR 1 page 558
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the applicant submitted, a non-refundable up-front payment of a debt to retain the
services of the practitioner would be uncommercial and this payment was not
truly a debt because it was refundable in a number of circumstances.
31. Also, after the complaint in April 2012, the respondent arranged for the initial
payment to be deposited to her trust account. It is common ground that payments
were later transferred to the respondent’s office account before a final bill was
rendered and without written direction from the client.
32. Section 222(1) of the LPA4 provides:
Certain trust money to be deposited in general trust account
(1) As soon as practicable after receiving trust money, a law practice must deposit the money in a general trust account of the practice.
33. Trust money is defined as follows:
“trust money” means money entrusted to a law practice in the course of or in connection with the provision of legal services by the practice, and includes—
(a) money received by the practice on account of legal costs in advance of providing the services; …
34. As submitted by the applicant and conceded by the respondent, the initial
payment although generating a tax invoice and, after mid-April 2012 having a
description as a retainer, was always money that carried with it an obligation to
be refunded in different circumstances. The concession was correctly made and
the practitioner did breach section 222(1) of the LPA.
35. Likewise in respect of Ground 2 it was conceded that there was no written
direction from clients to transfer trust money from the trust account to the office
account before the matter had progressed substantially. This breaches section 223
of the LPA and section 62 of the Legal Profession Regulation 2007. They
provide as follows:
4 We were given historical extracts of the legislation for the periods 2 February 2009 -21 February 2009. No submission was made about what version of the legislation we should consider. We have checked the changes from 1 July 2006 when it commenced and there are no relevant changes. In any event the period in question extends from 1 January 2009 until the date of the application. The extracts quoted are from the extracts provided
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223 Holding, disbursing and accounting for trust money
(1) A law practice must—
(a) hold trust money deposited in a general trust account of the practice exclusively for the person on whose behalf it is received; and
(b) disburse the trust money only in accordance with a direction given by the person.
(2) Subsection (1) applies subject to an order of a court of competent jurisdiction or as authorised by law.
(3) The law practice must account for the trust money as required by regulation.
Legal Profession Regulation 2007
62 Withdrawing trust money for legal costs—Act, s 229 (1) (b)
(1) This section prescribes, for the Act, section 229 (1) (b) the procedure for the withdrawal of trust money held in a general trust account or controlled money account of a law practice for payment of legal costs owing to the practice by the person for whom the trust money was paid into the account.
(2) The trust money may be withdrawn as set out in subsection (3) or (4).
(3) The law practice may withdraw the trust money—
(a) if—
(i) the money is withdrawn in accordance with a costs agreement that complies with the legislation under which it is made and that authorises the withdrawal; or
(ii) the money is withdrawn in accordance with instructions that have been received by the practice and that authorise the withdrawal; or
(iii) the money is owed to the practice by way of reimbursement of money already paid by the practice on behalf of the person; and
(b) if, before effecting the withdrawal, the practice gives or sends to the person—
(i) a request for payment, referring to the proposed withdrawal; or
(ii) a written notice of withdrawal.
(4) The law practice may withdraw the trust money—
(a) if the practice has given the person a bill relating to the money; and
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(b) if—
(i) the person has not objected to withdrawal of the money not later than 7 days after being given the bill; or
(ii) the person has objected not later than 7 days after being given the bill but has not applied for a review of the legal costs under the Act not later than 60 days after being given the bill; or
(iii) the money otherwise becomes legally payable.
(5) Instructions mentioned in subsection (3) (a) (ii)—
(a) if given in writing—must be kept as a permanent record; or
(b) if not given in writing—either before, or not later than 5 working days after, the law practice effects the withdrawal, must be confirmed in writing and a copy kept as a permanent record.
(6) For subsection (3) (a) (iii), money is taken to have been paid by the law practice on behalf of someone if the relevant account of the practice has been debited.
36. The concession in respect of Ground 2 was correctly made.
Are such breaches professional misconduct or unsatisfactory professional conduct?
37. Professional misconduct is defined in section 387 of the LPA as follows:
What is professional misconduct?
(1) In this Act:
"professional misconduct" includes—
(a) unsatisfactory professional conduct of an Australian legal practitioner, if the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence; and
(b) conduct of an Australian legal practitioner whether happening in connection with the practice of law or happening otherwise than in connection with the practice of law that would, if established, justify a finding that the practitioner is not a fit and proper person to engage in legal practice.
(2) For finding that an Australian legal practitioner is not a fit and proper person to engage in legal practice as mentioned in subsection (1), regard may be had to the suitability matters that would be considered if the practitioner were an applicant for admission to the legal profession under this Act or for the grant or renewal of a local practising certificate.
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38. Unsatisfactory professional conduct is defined by section 386 as:
What is unsatisfactory professional conduct?
In this Act:
"unsatisfactory professional conduct" includes conduct of an Australian legal practitioner happening in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner.
39. These two definitions are supplemented by section 389(1) which provides:
Conduct capable of being unsatisfactory professional conduct or professional misconduct
Without limiting section 386 or section 387, the following conduct can be unsatisfactory professional conduct or professional misconduct:
(a) conduct consisting of a contravention of this Act...
Applicant’s submissions
40. In summary, the applicant submitted:
(a) The sustained practice over several years of not depositing money which is
plainly trust money into trust and then, from April 2012 onwards,
transferring it into an office account without complying with the Act, is
professional misconduct and it is not open to characterise it any other way.
(b) A contravention of the Act is capable of constituting professional
misconduct as section 389 provides.
(c) Because of the way conduct is defined, connected instances of misconduct
can be dealt with together and there is no need for separate findings on
Grounds 1 and Grounds 2.
(d) A global finding may be made where there is a continuing course of
conduct arising from a single source.5 We understood that the submission
included the proposition that where there are several instances of poor
conduct they may, if they have a single theme, be combined so that a single
finding of professional misconduct may be made.
5 Council of the Law Society of the ACT v Legal Practitioner P4 [2015] ACAT 35 at [6] and [7]
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(e) The trust account is sacrosanct and even where the motivation of a
practitioner is innocent, he or she may be guilty of misconduct if the
provisions are not complied with.6
(f) We were helpfully referred to authorities that explain the relevant test at
common law. It is still operative because the statutory definition is not
exhaustive. It was submitted, and we accept, that the common law test is
that set out in Allinson v General Council of Medical Education and
Registration [1894] 1 QB 750. A number of Australian cases that adopt it
are set out in Riley’s Solicitors Manual at 33030.1 (footnote 2). The test is
whether the lawyer has behaved in a manner that would reasonably be
regarded as disgraceful or dishonourable by professional brethren of good
repute and competency.
(g) In this case, the character of the initial payment as trust money is and
always was, clear.
Respondent’s submissions
41. Mr Erskine SC submitted:
(a) The respondent’s conduct is properly characterised as unsatisfactory
professional conduct.
(b) A failure to comply with the legislative requirements does not
automatically constitute professional misconduct.
(c) There is no suggestion of defalcation or other obvious dishonourable
conduct by the respondent.
(d) No complaint has been made that the practitioner did not in fact account for
the payments of $350. There was no complaint that she used the money for
any purpose other than for what was intended, or that she used it for any
reason other than that for which it was given. It can be inferred that in
every case the client was rightly charged for the services of the practice.
The error was in doing so earlier than allowed.
(e) The lack of action by the applicant to stop the practice pending these
proceedings and ever since it received the CD complaint in 2011, leads to
an inference that no real risk was apprehended by the applicant. The 6 Legal Services Commissioner v McGregor [2012] VCAT 1742 at [34]
15
inference is made stronger by the time taken by the applicant to pursue the
matter.
(f) Regular trust account audits were conducted throughout the relevant period
and no irregularity identified.
(g) The case relied on by the applicant of Legal Services Commissioner v
McGregor [2012] VCAT 1742 at [34] that speaks of the sanctity of the
trust account, is distinguishable because in that case there was a deficit in
the trust account and funds of other clients were threatened.
(h) There is a ruling of the NSW Law Society which shows that the issue is not
without difficulty.
(i) The respondent had sought a ruling from the applicant under section 213 of
the LPA but one was not given. The request is at page 15 of RAR 1.
Applicant’s submission in reply
42. It was submitted that we should give no weight to the submission that the Society
did not take earlier steps to prevent the practice. The conduct is what it is.
Consideration
43. We agree with the applicant that trust obligations must be strictly complied with.
The case relied on of Legal Services Commissioner v McGregor [2012] VCAT
1742 is distinguishable as submitted by the respondent. In any event ultimately
each case turns on its own facts.
44. Whilst we agree that it is appropriate to make a single finding in respect of the
conduct described in Grounds 1 and 2, we do not see the repetition of the conduct
as adding to its seriousness per se. Unlike the case of P4,7 the respondent did not
engage in a number of discreditable acts motivated by a wish to avoid repaying a
debt owed. Rather, she engaged in a continuous course of incorrect conduct
based on a mischaracterisation of money. The fact that the Society delayed action
to stop the conduct does not change its quality, but may be seen as reflecting the
reality of the degree of risk and seriousness of the conduct. The issue of whether
the initial payment was trust money is not as obvious as the applicant submitted.
7 Council of the Law Society of the ACT v Legal Practitioner P4 [2015] ACAT 35
16
The applicant did not, as did the NSW Law Society, issue a direction explaining
the potential confusion and how it should be answered.
45. The conduct in our view is unsatisfactory as it is ultimately the responsibility of
the practitioner to know what trust money is and to comply with the legislative
requirements about its treatment. The risk is that the practitioner may become
personally financially embarrassed and, notwithstanding best intentions, the
money could be lost. Whilst there were reasons to be confused about the correct
categorisation of the money, when the full picture is understood, it is clear that
the money is trust money. In any event, if there was a doubt it would have been
prudent to treat it as trust money.
46. It is true that the respondent’s breach was systemic and thus occurred repeatedly
and also true that the breach is capable of being treated as either professional
misconduct or unsatisfactory conduct.
47. The money was used as the tax invoice might suggest, as though it was a
payment for a debt, and that is what clients are likely to have assumed. However,
as is clear, it was for a future debt - it was part payment of work to be done and
refundable in certain circumstances.
48. It seems that no one other than a former employee complained about it. This may
be explained by the likelihood that the client got a tax invoice which has the
character of a debt, but also because, it seems, no client was in fact
disadvantaged. There was no suggestion that the respondent acted to obtain
money she shouldn’t have, or that where refunds were to be provided, they were
not. An inference can be drawn that the respondent acted as she should in
handling her responsibilities, but offended the legislation because the money
went into the office account prematurely.
49. Ultimately, it is a matter of judgment as to whether such conduct is
dishonourable. In our view, taking into account the above submissions, the
conduct is unsatisfactory professional conduct because it breaches the legislative
requirements and creates a potential but unrealised risk to clients. Whilst the
continued mischaracterisation of the money after the complaint and the incorrect
transfer from the trust account after April 2012 reflects a continued stubborn
17
adherence to what is now conceded to be an incorrect view, it was not a secret
and did not involve dishonest or sharp dealing. Thus, it is not professional
misconduct because in our view it involves no actual loss or dishonesty. The
purpose was made known to the clients before they paid. The fact that it was
systemic does not change its character so as to compound the fault exponentially
when repeated but rather, the conduct involved one fault of the same degree of
seriousness being repeated. It is to the credit of the respondent that, with good
legal advice, she finally conceded the point. It is regrettable that she did not get
that advice earlier. It would have saved her considerable stress and expense.
Conclusion
50. The conduct alleged in Grounds 1, 2, 11(a) and the second ground 13 is made out
and taken together, amounts to unsatisfactory professional conduct.
The Complaint of ST - Grounds 5 and 6
51. Ground 5 is an allegation of “Negligent conduct of a conveyance”. It says that in
breach of Rule 1.2 the practitioner failed to conduct ST’s matter with
competence and diligence.
52. The rule is in the Legal Profession (Solicitors) Rules 2007, which have since
been replaced. A breach of a rule is not necessarily a disciplinary offence but
may be evidence of it. In any event, in order to make the findings sought, the
Tribunal must have regard to the Act and the definitions of unsatisfactory
professional conduct and professional misconduct.
53. The undisputed facts are set out below.
54. ST retained the respondent’s firm in July 2009 to act on the sale of a property in
Queensland. An employee of the firm, EC, had the conduct of the matter.
55. EC was an admitted solicitor with a restricted practising certificate.
56. The contract of sale provided that time was of the essence. This means that if a
party is not ready on the date for completion the other party may terminate. It
should be noted here that in the ACT and NSW this is not usually the case.
18
57. The contract was entered into on 3 August 2009. Settlement under the contract
was due to take place on 14 September 2009. On 13 September the solicitors for
the parties agreed to defer settlement to Monday 21 September 2009.
58. To effect settlement the buyer’s solicitor must prepare transfer papers and send
them to the vendor’s solicitor who has them signed and sent back in time for
them to be stamped so that a registrable transfer of title is available at the
settlement date.
59. ST complained that the required work was not done in proper time by EC and
there was a real risk that the settlement might fall though because of this delay.
60. It is common ground that in fact, the work was attended to in time and that the
settlement was not affected by such events.
61. ST wished to buy a property in Tasmania and needed the funds from the sale of
the Queensland property to do so.
62. There is a degree of uncertainty about when the transfer was received by EC and
whether it was sent by him in time, but the post did not arrive. It is important to
try to ascertain from the evidence what the true facts were and not what they
were said to be by ST, EC or the respondent, after the event. This has some
bearing on Ground 6 which complains that the respondent was not frank and
attempted to mislead the Society about this and about another issue with the sale.
63. The other issue arises from the fact that the sale fell through because ST’s
mortgagee, the Bank of Queensland (BOQ) was not ready to settle on
21 September 2009 and the buyer terminated. The complaint is that EC did not
give BOQ the time it needed to be ready.
64. BOQ needed two clear business days to arrange to settle, assuming that the client
had authorised it. It is alleged that EC did not notify BOQ until 17 September
which was the Thursday before the settlement date (a Monday) and that was too
late. The respondent says that this is not clear.
65. It is trite and common ground that the relevant standard of proof in disciplinary
proceedings is that referred to in Briginshaw v Briginshaw (1938) 60 CLR 336.
The usual extract referred to is from the judgment of Rich J at 350 as follows:
19
In a serious matter...the satisfaction of a just and prudent mind cannot be produced by slender and exiguous proofs or circumstances pointing with a wavering finger to an affirmative conclusion. The nature of the allegation requires as a matter of common sense and worldly wisdom the careful weighing of testimony, the close examination of facts proved as a basis of inference and a comfortable satisfaction that the tribunal has reached both a correct and just conclusion.
66. Mr Beaumont SC drew our attention to the distinction made by Dixon J at 362 8
between establishing on what date an act occurred that may be part of the
conduct that may be of a serious nature and the ultimate conclusion that it was.
67. It is alleged that the buyer’s solicitor (JCJ) sent the transfer to the respondent’s
firm on 20 August 2009. There does not appear to be a letter of that date with the
transfer document on the file9 of the respondent, but there is a copy of one on the
buyer’s solicitors’ file at Exhibit A1 page 120. There is, at RAR 1 page 534, a
different letter dated 20 August 2009 that is about settlement figures with no
transfer enclosed. There does not appear to be a copy of that letter on the JCJ file.
On 1 September 2009, however, JCJ asks for the transfer.10 On 16 September
2009, JCJ refers back to its 20 August 2009 letter and says it sent the transfer
with a letter of 20 August 2009 and it needs to be returned as a matter of
urgency.11
68. At page 130 of Exhibit A1 there is a phone record of EC saying on 2 September
2009 that he doesn’t have the signed transfer yet. It is not clear whether he is
8 The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences. Everyone must feel that, when, for instance, the issue is on which of two dates an admitted occurrence took place, a satisfactory conclusion may be reached on materials of a kind that would not satisfy any sound and prudent judgment if the question was whether some act had been done involving grave moral delinquency. Thus, Mellish L.J. says: "No doubt the court is bound to see that a case of fraud is clearly proved, but on the question at what time the persons who have been guilty of that fraud commenced it, the court is to draw reasonable inferences from their conduct" (Panama and South Pacific Telegraph Co. v. India Rubber, Gutta Percha, and Telegraph Works Co.[39])9 RAR 1, pages 442 – 552. This a copy of the hard copy of the file given back to ST by EC and then given to the applicant10 Exhibit A1 page 128 and RAR 1 page 50711 RAR 1 page 497
20
referring to the transfer sent by JCJ which may have been signed by the buyer.
There is reference to it being signed by the buyer in the applicant’s chronology,
but that would not have then been necessary. It may be JCJ are being told that
EC hasn’t got the document from them, which is consistent with the 20 August
letter not being on the hard copy of the file. It may mean he had received the
transfer and sent it on to ST, but was yet to get it back signed by ST. He is again
reminded on 4 September 2009.12
69. The applicant, in its written submissions asserts that EC lost the 20 August letter
as the respondent asked for another in 2012, but it is possible that EC never had
it.
70. What is clear is that the signing of the transfer documents was delayed past a
time that was comfortable and this made ST panic. In any event, that was
remedied in time.
71. There is no clear proof that EC did get the letter of 20 August at that time, or at
all. Having said that, it is admitted by the respondent in her response at 2.7. It is
evident that EC was asked to get the signed transfer back on a few occasions and
was alerted to the problem on 2 September by phone. It is possible he had got the
transfer and sent it and that it got lost, but he still was being reminded to follow it
up by JCJ.
72. Apart from the contemporaneous letters, there have been attempts to reconstruct
the events by EC and the respondent. To the extent that there are no
contemporaneous documents to establish that their description or admissions are
correct, it is difficult to be sure they are. That is because, assuming that they are
doing their best, they may mis-remember or may assume events from other
established events.
73. In her response to the complaint of ST, the respondent assumed that the transfer
had been received and sent to the client by post in August. This is what she says
at 2.10 of the response. She was first involved in reconstructing events when
responding to the Queensland Law Society (QLS) to whom ST had first
complained. In cross examination she said she relied on what EC had told her.
12 Exhibit A1 page 132; RAR 1 page 499
21
Her response to QLS is at RAR 1 page 706 and is dated 21 December 2009. QLS
dismissed the complaint. It was revived in the ACT and she next sought to
explain the events after speaking to EC in January 2012.13
74. In paragraph 2.10 of her response, the respondent says that EC had on
3 September placed the scanned transfer on ST’s e-file that she could access
online. It is said that later, ST told EC that she was having difficulty
downloading from her computer and before then, EC didn’t know ST hadn’t got
the document.
75. In her affidavit of 13 July 2016, the respondent corrects what she previously said
and attaches an email dated 2 September 2009 from EC to ST that shows that the
transfer had not been received by EC as at that date and so, could not have been
sent to ST in August.
76. EC does not shed any light on this in his affidavit as he now cannot recall.
77. The respondent was cross examined on this topic. Her evidence is set out at page
145 and following of the transcript of 24 August 2016.
78. Submissions were made about the credibility of the respondent generally, and
specifically in respect of this and other matters. We deal with the submission
concerning this matter when dealing with the Ground relating to lack of candour.
In any event, even assuming some doubt about the credit of the respondent, she
was not handling this matter and is in the same position as the tribunal in trying
to reconstruct what happened.
79. From the above, it is probable that by 2 September EC had the transfer from JCJ
as he posted it on the e-file. There is no evidence that he chased its return by ST
until 17 September.
80. Stephen Jones, a Queensland solicitor asked to give expert evidence by the
applicant, opines in his affidavit that EC should not have been so tardy and
should have followed it up with his client earlier. We agree.
13 RAR 1 page 693
22
81. It is clear that EC knew he should have done this as he had emailed ST well
beforehand on 7 August 200914and then on 2 September15. He indicates that
action should proceed once the contract became unconditional on notification by
the buyer that her property had sold before 4 September in accordance with
special conditions 2 and 3 of the contract.16 This happened when JCJ sent a letter
of 4 September.17 EC had adverted to the need to get the transfer signed in his
email on 2 September to ST. In both emails he adverts also to the release of the
mortgage. He uploaded the transfer to the e-file on 2 September.18 It is not clear
whether what he uploaded was a transfer prepared by JCJ or one he did, but one
that appears to have been prepared by JCJ is at RAR 1 page 477.
82. What follows from this is that he knew what was required but did not follow
through.
83. When the emergency arose on 16 or 17 September he got the problem fixed. He
should have not let the problem arise.
84. This mistake seems to us to fall within the description of human error that on its
own would not be elevated to unsatisfactory professional conduct as explained in
Legal Practitioner RH v Council Of The Law Society of the ACT [2016] ACAT
94 at [119] and the extract from Riley there quoted, namely,:
These standards are not to be determined by reference to lawyers who are without fault, but of the reasonably competent lawyer. As such, the standard of reasonableness invoked by the definition aims to distinguish between conduct that falls within a tolerable range of human error and bad professional work which falls below reasonable standards of competence and diligence.
85. We have taken into account the opinion of Mr Jones on this issue and while we
agree with him that it is an error, in our judgment it is not outside a tolerable
range of human error.
86. Even if it were unsatisfactory professional conduct by EC, we still have to
determine whether the respondent herself was at fault. If EC did not know better
14 at RAR 1 page 46315 at page 46416 RAR 1 page 54617 Exhibit A1 page 132; RAR 1 49918 RAR 1 page 461
23
and it was evident that he was in need of greater supervision, then she might be.
However, that he did know better is evident from what he told ST in his earlier
emails. Mr Jones argues that EC must have been too inexperienced, but that
ignores what he told ST about what was required and ignores his competence in
getting it fixed. There is evidence from EC, who was not cross examined, in his
affidavit of 12 July 2016 about his experience at paragraphs 4-7 and 10. Also the
respondent in her affidavit of 12 July 2016 gives evidence of training at
paragraphs 17-26 and of supervision at paragraphs 27-32. She also confirms
EC’s experience at paragraph 70. The respondent’s credit is in issue generally
but we have accepted it in general terms and have noted that we found her
demeanour to be impressive. In any event, we are satisfied that in this matter EC
did know what to do but did not do it.
87. This is more important in relation to the other complaint by ST namely that the
sale fell through because EC did not arrange for BOQ to be ready to release its
mortgage.
88. Obviously, the loss of the sale was a significant adverse event for ST. There is an
issue as to when EC first asked BOQ to attend. There is no evidence on the BOQ
file of when EC contacted BOQ19. It is evident that ST had arranged for the
release and signed the form on 3 September,20 which had been sent to its
Buderim branch. A limit was removed by BOQ and it was ready to settle on 23
September (two days too late). It required two clear days’ notice.21
89. There is no evidence to suggest EC did anything to arrange for the bank before
17 September less than two clear business days before settlement was due. Even
then BOQ was not ready until 23 September. BOQ had a loans officer that they
had difficulty with during this time.22
90. When asked, the respondent aided by EC, replied to QLS in December of that
year asserting that notice had been given on 17 September. In her complaint ST
said that BOQ told her it was first contacted on 17 September. This assertion was
19 part of Exhibit A1 pages 200-204 and RAR 1 pages 173 to 21320 Exhibit R1 page 173,202 21 R1 page 19322 R1 page 198
24
not questioned by the respondent and it was consistent with what she had said
when first asked. EC, in his affidavit, now can’t recall.
91. Mr Gibson, a Queensland expert conveyancer asked to comment by the
respondent, raised the problem that the date was not clear and if it was before
17 September, EC had not done anything wrong. Thus the respondent’s counsel
submitted that we couldn’t be sure and in such circumstances should not
conclude that there was unsatisfactory professional conduct by EC.
92. It seems to us that more probably than not, EC did not give notice until
17 September. The fact that BOQ was not ready until later, the activity on the file
on that date and not before, and the first recollection in December of that year, all
lead to this conclusion.
93. In any event, as the tardiness of BOQ shows, there was no good reason not to
have done it much earlier. By 4 September EC knew the contract was
unconditional and knew in plenty of time that settlement was to be on 21
September. He knew he had to do it, as he said in two emails at RAR 1 pages 463
and 464.
94. It seems to us that the failure to contact the bank until 17 September or earlier
was unsatisfactory conduct by him. But we refrain from making an adverse
finding about his conduct because he is not a party and has not been heard about
such a conclusion. It would be unfair to now ask him to justify his conduct
bearing in mind the time that has elapsed. For the purpose of this matter, as
against the respondent we assume that it was unsatisfactory
95. The question remains whether the respondent is guilty of such conduct because
of EC’S lapse. Mr Jones concludes that she is, based on her subsequent attempts
to justify the events. We do not accept that either the respondent or EC thought it
was good practice to allow this to occur. Clearly EC had planned to get it done in
plenty of time. As explained in respect of the delay in having the transfer signed,
EC was generally competent and knew what to do but failed to do it on this
occasion. The subsequent arguments to shift blame to BOQ and away from the
respondent are not inconsistent with this and we are unpersuaded by Mr Jones’
argument in this regard. Mr Erskine SC submitted that the expression in the
25
Jones affidavit is unpersuasive as it was quite sweeping and overstated. Mr Jones
was not cross examined, nor was Mr Gibson. We agree that the opinions of
Mr Jones are expressed in unequivocal terms and may be contrasted with the
report of Mr James whose evidence was relied on by the applicant in respect of a
NSW and an ACT conveyance. Mr James appeared to be more even handed in
his report and was thus persuasive. In any event we accept the basic contentions
of Mr Jones in respect of the ST complaint and only differ from him in his
conclusion based solely on the subsequent justification by the respondent as to
her understanding of what is required and what she would regard as good
practice.
Quality Control
96. The applicant also seeks to establish that there were inadequate systems for
quality control. This submission was made in the context of the ST complaint.
97. First, there is a general proposition that given the number and types of errors in
all four matters this must be inferred.23 Mr Erskine responds by pointing out that
these matters represent less than 1 in 1000 of the conveyances in the practice.
This is in paragraph 10 of the respondent’s affidavit. We don’t know how that
number was calculated but accept that in the absence of evidence to the contrary,
it cannot be inferred that such failures are common. Each alleged failure is
different and involves different employees. The complaints, apart from that of
ST, all relate to incidents in 2011. During part of that time we know that CD
came and went and we were told that MS, an employed solicitor, suddenly left.
We are unpersuaded by the general submission. In the case of EC, on the face of
it, he knew what was required and for whatever reason on this occasion, did not
do it. It is not established that this should have been foreseen by the respondent.
98. In its written submissions the applicant asks the tribunal to draw a negative
inference because no document was produced to show that the on-line system
had embedded prompts, or step by step instructions, or that there were manuals
setting out steps or that spot checks were conducted as was deposed in the
respondent’s affidavit. She was asked by the Society to produce files showing
these systems and did not do so. When cross examined24 as to why she had not,
23 this is in the applicants written submissions 120-12224 Transcript of Proceedings 26 August 2016 page 175ff
26
she explained that she was concerned to protect her intellectual property. We
understood her to be referring to manuals and similar ‘how to’ instructions. Her
response was described in submissions as ‘incredible’. We can see that there
would be intellectual property in manuals and the like. Also, we can see from the
files in this matter that explanations are given to clients of the conveyancing
steps and timing which appear to be of a common type. Whilst we cannot be
certain how this occurs, it appears that there are auto prompts for standard letters
which in turn explain correctly what is to happen next. We do not think the
respondent’s explanation that there is intellectual property in her systems which
she wishes to protect, is incredible. It is then complained that she changed her
story to say there was no documentary evidence of spot checks. We do not agree
that this is a fair reading of what the respondent said. It is likely that spot checks
are not documented and that is what she was dealing with in her answer. It is not
a change of story, but a change of question from systems generally to spot
checks.
99. The only positive evidence of inadequate supervision was in the affidavit of CD,
who was not cross examined. She said she saw no instance of the respondent
supervising in the short time she was employed there. The evidence is of limited
assistance as it is expressed as a negative conclusion and is based on a short
period of observation with no certainty that the opportunities to observe exclude
it as having happened during that period. As we do not generally see the
respondent as a discredited witness we accept that she did have systems in place.
The errors, occurring here, were by a trusted employee who appears to have
known what he was supposed to do and when, but just did not do it.
100. In the circumstances we are not comfortably satisfied that the failure of EC
occurred because of a corresponding failure by the respondent.
Conclusion Ground 5
101. It follows that we do not accept that Ground 5 is established.
Ground 6
Lack of Candour
102. This asserts that the respondent breached her obligation under Rule 39.1 of the
Solicitor’s Conduct Rules to be open and frank because in her letter of 17
27
January 2012 to the applicant, she represented that she had to hand the full file
for ST’s matter and had a proper basis for submitting that the full file did not
support the complaints of ST.
103. It is now common ground that EC gave ST the hard copy of her file soon after
the sale fell through in 2009. It is also said that the hard copy file was given to
the applicant and is in RAR 1 as discussed above.
104. Reading the letter shows that the respondent did not, in words, say she had the
full file. It may be inferred that she thought she had the documents needed to
support the statements she made in the letter. In fact, there does not appear to be
much more that has come to light, even though based on Mr Gibson’s report, the
possibility of there being more material was later raised.
105. It is common ground that the respondent was looking at a soft copy file when she
wrote the letter. She gave evidence that she did not then know that the hard copy
of the file had been handed to ST and said she thought the file was still in the
office somewhere, but in the wrong place. She had again spoken with EC and
was answering the complaint two years after the complaint to the QLS had been
made and dismissed.
106. We have been referred to the transcript of the respondent’s cross examination at
pages 149-151. Her answer – that it might be too much information as to why
she hadn’t explained that she was looking at the soft copy file – taken out of
context, may seem flippant. Mr Erskine SC in his submissions explains that she
was operating a computer based business and she was seeing this through the
eyes of a computer savvy person speaking to less technologically focussed
people.
107. It is useful to explain briefly the reason for the rule and the nature of the
obligation on practitioners to assist the Society when a complaint is made. There
is a short summary in Riley at [35,045] – [35.045.20]. There it is said that the
duty does not mean a practitioner must disregard their own interests. The need
for such cooperation is obvious. The Society has an onerous and difficult task
and without being able to rely on a practitioner to help, would struggle to know
what occurred when investigating a complaint. In any event, in any context it
28
would normally be dishonourable to intentionally or recklessly mislead. The
nature of the duty has been compared to the duty that a lawyer owes to a Court to
be candid.25 There is a tension between defending one’s actions and cooperating
with the Society. It is human nature to defend oneself from accusations of
misdeeds. The case law is full of examples where the self defence was overstated
and led to further grief.
108. It would be fair to say that the respondent did seek to defend herself. Her
conclusion that there was no negligence was incorrect. She is not criticised for
this, but for saying she knew this from having read the file, meaning the whole
file.
109. The only basis we can see that could make this complaint arguable is if it could
be shown that the respondent was impliedly saying that she reasonably believed
on proper grounds that there was no negligence, when she did not in fact believe
this, or was reckless about saying so.
110. It might be thought to be unduly optimistic to assert that there was no negligence,
but given the tardiness of BOQ even when they were notified, the contrary was
not unarguable. Indeed at the hearing, Mr Erskine SC submitted that we couldn’t
say that there had not been adequate notice to BOQ.
111. The criticism of her for using the word ‘file’ without qualification is of itself
without any force. If it was shown that her version of the file showed that she
was not negligent and the ‘full’ version showed she was and she knew this, then
it would be deceptive. It was not sought to show anyone was misled and the
25 See Council of the Queensland Law Society Inc v Whitman [2003] QCA 438 at [6] and [7] where the Queensland Court of Appeal said:
“ [6] ...The Tribunal observed: "When faced with such a request or inquiry from their professional body, a solicitor is in much the same position as when dealing with the court. A solicitor has a duty to be truthful even to his own detriment, not just a duty to be truthful, but a positive duty to be full and frank and for his answers to be candid as well as truthful." [7] Especially bearing in mind that the end purpose of the Law Society's investigation is protection of the public, and not the quasi-criminal prosecution of an allegedly errant solicitor directed to the possible imposition of a penalty (see Adamson v Queensland Law Society Inc [1990] 1 Qd R 498, 504, and Mellifont pp 28, 30), one could not gainsay that observation, which is consistent with the high standard of candour and general fidelity expected of practitioners”:
29
complaint can only be that irrespective of the context, she intended to be
misleading or was recklessly so. This complaint is not made out on the evidence.
Credibility
112. Apart from the specific matters above, we have reviewed the cross examination
in respect of the ST matter set out at pages 144 to 153 of the transcript and find
nothing there that alters our view of the credit of the respondent.26
Conclusion Ground 6
113. We are not satisfied that this ground is made out.
Complaint of DK - Grounds 7, 8 and 9
Grounds 7 and 9 - Negligent conduct of a conveyance - failure to treat client fairly
114. The undisputed facts here are that in May 2011 DK retained the respondent by
her website to act for him and his wife in relation to the purchase of a property in
Pelican Waters Queensland.
115. The retainer was for a set fee which was to include work involved in changing
ownership of the property, but did not include the registration fees for the
transfer and any other necessary documents such as a release of mortgage.
26 The cross examination first sought to demonstrate that a correction by the respondent to her affidavit concerning whether the transfer had been posted in August by reference to an email showing it had been posted on the website in early September was illogical. She agreed and said she was confused. We understood that she had based her belief that the mail had been sent in August on what she was told by EC and if she had read the email more carefully she would have realised that it was unlikely. She later realised that. We accept her explanation that she was confused. Indeed she is in only a slightly better position than the applicant and the Tribunal in trying to reconstruct the events so her confusion is completely credible.
Next she was asked about her state of mind concerning whether she had the whole file or not in early 2012. The questions elide a date in January when she answered the applicant about what she asserted the file showed and April when she wrote to the applicant saying that they didn’t have the whole file. A fair reading of the events is that she thought she had the full file in January-or assumed what she was looking at was all that was useful- but when she tried to find the hard copy to send to the applicant she realised that she did not. We don’t see this as affecting the respondent’s credit.
30
116. The retainer agreement did not specify that the respondent would attend to
registration.
117. The conveyance settled in June 2011 and DK and his wife provided the whole of
the purchase price of $750,000 in cash with no incoming mortgagee.
118. In Council of the Law Society of the ACT v Legal Practitioner RH [2015] ACAT
40, upheld in Legal Practitioner RH v Council of the Law Society of the ACT
[2016] ACAT 94 it was held that the respondent’s retainer included the duty of
getting the title registered. That involved a cash purchaser as well, and the
respondent sought to impose an extra charge for it. This was said to be
unsatisfactory professional conduct. Here, the respondent has conceded Ground
9(b) which is said to be a breach of the obligation to treat the client fairly and in
good faith. Ground 9a is not pressed by the applicant.
119. The problem that arose in this case seems to stem from the approach that it was
not the firm’s job to attend to registration.
120. Because the settlement took place on the Sunshine Coast, the respondent’s firm
arranged for agents to attend the settlement. Settlement instructions were given.
A copy is at page 72 of RAR 1. The document is hard to understand. It seems the
respondent’s firm already had the transfer. No reference is made to the release of
mortgage which would be required as the vendor had a mortgage. This is obvious
from the settlement statement as the main cheque was payable to Westpac. No
mention is made of the title deed, but later27 there is reference to records being
electronic rather than paper, so there may not be a physical document handed
over. It was suggested in cross examination that the release of mortgage was not
obtained that day. There is no evidence that it was not. There is no
correspondence afterwards trying to recover it.28 According to the respondent, the
agent sent the documents to Canberra and registration would occur thereafter. If
a purchaser has an incoming mortgage, the mortgagee attends to registration.
This is the case for most purchases. But this case involved a cash purchase.
During the hearing, the respondent said the agents were based in Brisbane. They
appear to have an office there and also in Maroochydore. If it was intended to
27 Affidavit of DK dated 19 January 2016, Annexure B28 There is one at RAR 1 page 39 and it was signed on 8 June 2011
31
arrange registration it would have made sense to have the agents attend to it
rather than send the documents to Canberra only to have them sent back again. If
registration was to be left to the client, the documents might be sent back to
Canberra, but it would be expected that the client would be told they had arrived
and needed to be acted on. Instead, the respondent’s firm belatedly asked the
client for the filing fee for the transfer, asked for the wrong money and then later
again, arranged for the release to be lodged.
121. In responding to the complaint that the release had not been lodged for some
months, the respondent said that there was no real risk to the client. Mr Jones in
his report draws attention to the dangers posed by indefeasibility of title under
the Torrens system. He is right, although here it seems the respondent had the
transfer and the release and the mortgagee, whose mortgage remained on title,
was not a person of straw but a bank against which the client had a personal
equity. Although it was undesirable to allow the title to remain uncorrected for so
long, the respondent is right in saying that in this case, there was no great risk.
122. The uncontested facts are that the settlement occurred on 14 June 2011. At this
time MS, a solicitor employed by the respondent, had the conduct of the
purchase. However another employee, ME who was a paralegal, became
involved on 10 June as her email to the client dated 10 June at page 28 of RAR 1,
indicates. At some time after that MS left. CD became an employee after the
settlement but left after five weeks. She started on 27 June and left on 8 August
2011.29
123. DK was not cross examined. He said he got a letter, Annexure B to his affidavit
dated 14 June 2011, reporting on settlement. It was possibly placed on his web
file as promised in the earlier email telling him the matter was settled. The letter
says “We are attending to registration of your purchase with the Queensland
Department of Lands.”
124. Nothing further occurred until 26 July 2011 when the respondent’s firm wrote
apologising for delay in registration of the transfer without mentioning the
mortgage. This is at RAR 1, page 31. DK was asked to pay $50 for this and a
registration fee which was wrongly calculated. He sent the registration fee soon
29 She was not cross examined. See affidavit of 8 March 2016 at [6]
32
afterwards and heard nothing, so he rang and emailed in the week of 25 August
2011.30 He was told that more money was needed for the filing fee by AW,
another paralegal working for the respondent.31 He sent the further money and
the transfer was registered, but the mortgage remained.32 He heard nothing
further so sent an email on 12 October 2011 and drew attention to his name being
misspelt.33 He had no reply and so complained on 17 October.34 The release and
name correction were done on 18 October 2011.
125. Mr Jones says this is unsatisfactory. The respondent has explanations for why
things did not go as planned. We will refer to them in more detail in dealing with
the lack of candour complaint. They could theoretically relieve her of direct
responsibility, if they were good excuses and are correct. Assuming they are, in
our view, that does not assist her in this case. The system, whereby the
documents were sent back to Canberra and not acted upon, is at fault. It may be
because registration was not seen as part of the retainer, although here the
respondent’s firm promised it would be done, albeit for a further small fee, and
seemed to accept that it should take that responsibility. The delay, the lack of
explanation, the mistakes and the overlooking of the mortgage are all indicative
of incompetence. We accept that this is not the usual standard and that there are
countless uneventful conveyances carried out by the respondent competently. In
a complaint about which Mr James reports, he concludes that the number of
errors must make the respondent responsible. In this transaction we come to the
same conclusion. Eventually the problems were fixed without loss to DK.
Conclusion
126. Ground 7 is made out. The conduct we find amounts to unsatisfactory
professional conduct.
127. Ground 9b which asked for extra money to register the transfer is conceded and
is also unsatisfactory professional conduct as explained in paragraph 118.
128. Ground 9a was withdrawn.
30 Annexure C to his affidavit31 Also Annexure C32 Annexure E33 RAR 1 page 4034 RAR1 page 619
33
Ground 8 Lack of Candour
129. There are two complaints. The respondent’s first response to the complaint of
DK was dated 10 November 2011. It is at RAR 1, page 622. It is a short letter
and addresses the things that needed to be done and asserts they have been done.
The assertion is confirmed by a letter from DK which is at RAR 1, page 623,
thanking the Society for getting it done. The applicant says that the respondent’s
letter to it is misleading because it skates over the delay, which is part of DK’s
complaint.
130. There was cross examination about this issue. It could be said that the letter
implies prompt action by saying that we have attended to registration.35 Mr
Erskine submitted that such an implication is a long stretch. It is a true statement,
but does not assert anything about the length of time taken to attend to
registration. The complaint already set this out and the response did not
challenge it. We agree with Mr Erskine’s submission. The applicant seeks to read
too much into the response. We are not satisfied this was a breach of the
respondent’s obligation.
131. The same letter was criticised for misstating the time it took to correct the name
change. In fact, the evidence bears out that this was acted on immediately, but
not finalised for a time. Thus the letter is not misleading.
132. Implication of promptness is alleged in the way the letter dealt with the
registration of the release of mortgage. We don’t agree the letter is misleading
when read in context. The word ‘once’ may be capable of being seen as implying
no delay, but in the context of a response to the complaint, it is not misleading.
We listened carefully to the cross examination of the respondent on this issue and
although criticism is made of the respondent in respect of her answers, we
believe she was doing her best and accept her explanations in this regard. We
have considered whether she could have given more information in her initial
response so as to meet the obligation to be frank. If a more detailed letter was
sought, as happened later, we can see how there could have been more material
provided. Here, the response is directed to showing that the failures complained
of had been addressed, rather than when or how they occurred. We do not see
that there is a failure in respect of frankness in the context.35 see paragraphs 3.30-3.31 of the complaint
34
133. In a later response letter dated 9 July 2015, there is reference to CD being in part
to blame. Clearly, she was not with the firm at the time of settlement. She could
well have taken over from MS and been involved for a short time during the
period that registration was not attended to. However, the respondent now says
she was wrong about this and CD was not involved. She explained that she went
through a difficult time with MS gone without much notice and CD starting but
leaving after five weeks. The Society’s application says that this letter incorrectly
asserts that CD was handling the matter at the time of settlement. The letter could
be interpreted to mean that, but it could also be interpreted to be less specific,
saying that CD was involved during the time when registration was not being
affected. This is troubling. The respondent was not cross examined specifically
about one explanation for this statement namely, that she was angry with CD for
complaining to the Society about the trust payments and wanted to get back at
her. It would be unfair to ascribe that motivation to the respondent in the absence
of cross examination about it. During addresses, Mr Beaumont SC submitted that
if the Tribunal thought the statements were not intentionally misleading, then we
should find them to be recklessly so. By this we understand that it is submitted
that the respondent turned her mind to the question of whether what she was
saying was true and decided to say it anyway, without caring whether it was. We
listened carefully to the cross examination of the respondent and did not form the
impression, that she was intentionally trying to mislead the applicant or the
tribunal, or that she was being reckless. With the benefit of hindsight, it can be
seen that the letter should have been more carefully expressed. The point that it
was making does no more than provide an explanation, and as we have found
above, does not excuse her. Whilst in relation to the second letter we have had
some reservations, bearing in mind the Briginshaw test we are not comfortably
satisfied that in this response, the respondent breached the obligation of
frankness and candour.
Conclusion on Ground 8
134. We are not satisfied that Ground 8 has been made out.
35
The AS Complaint - Grounds 10, 12 and 13 (Ground 11a is part of Grounds 1 and 2)
Ground 10 - Failure to act with competence and diligence
135. The facts below are taken from the application and are verified by an affidavit of
AS of 25 January 2016. AS was not cross examined and we accept the facts as
stated by him. Whilst the respondent adds some comments regarding them in her
response and affidavit, she accepts that were many shortcomings in the handling
of this conveyance. Her responses do not challenge the matters of fact but seek to
demonstrate the experience of her staff and the steps she had taken to train and
supervise them.
136. AS retained the respondent’s conveyancing firm in May 2011 to act for him in
relation to a purchase of property in Mortdale NSW. The property was a strata
unit.
137. On 3 May the firm sent an email to AS saying it would do various things
including obtaining a strata search, explaining the contract and advising about it.
In the email he was told that various grants and concessions were available to
him as a first home buyer.
138. The contract was exchanged on 6 May 2011 and it contained a cooling off period
of five days. No advice about that, or the contract, was given to AS in that
period.
139. No strata title search was done before exchange, during the cooling off period, or
at all.
140. The employed solicitor, MS, handling the matter arranged for draft advice to be
obtained from a paralegal contractor based in the Philippines and that was
provided to the firm on 10 May. The advice suggested that the firm should check
various matters that could have affected AS adversely. They were to check
whether tenants were in occupation and whether AS required vacant possession;
to ask AS whether the cooling off period might be waived; amend a deposit
clause that favoured the vendor and check whether there was an agent involved
and if not to delete a special condition dealing with it. It can be seen that these
matters needed to be checked before the contract cooling off period expired.
36
141. A strata search would have revealed that there was a separate title for the garage
which was not provided for in the contract. This was later pointed out by the
vendor’s solicitor and was remedied.
142. No advice was given that there was no stamp duty payable or that AS, who was a
first home buyer, was entitled to a grant from the NSW Government and how to
obtain it.
143. No advice was ever given to AS about the terms of the contract.
144. AS then sought advice about paperwork concerning his finance, but received no
response.
145. On 3 June MS emailed AS and told him he had to pay stamp duty of $9235 and
asked him whether he had adequate insurance for the unit. The email was wrong
as there was no duty payable and the unit was covered by the Owners
Corporation insurance.
146. The mistake was repeated in an email to AS of 14 June 2011 sent by ME, a
paralegal employed by the respondent.
147. Fortunately AS knew the correct position and told the firm by email dated
14 June 2011. He also asked for the strata report and certificates so he could
apply for the first home buyers grant.
148. AW, another employee employed by the respondent, sent him a First Home
Grant Plus Form.
149. Settlement occurred on 17 June 2011. He was sent a report and a bill for $785
(after credit for an initial payment of $350). Unknown to AS at the time, the
invoice included $240 for the non-existent strata report and purported to be for
services that included advice about the contract. He says he then paid it. In fact it
was paid at settlement.36
150. He asked again for the strata report and certificates by email dated 3 July 2011.
151. On 4 July he was told by email by AW that there was no strata report and asked
whether he still wanted it, or instead wanted a refund of $240.36 see Annexure B to his affidavit
37
152. On 5 July, AS emailed the firm and complained about delays, lack of advice,
incorrect advice and asked for the $240 to be repaid.
153. He did not receive a reply and complained on 25 July 2011 to the NSW Legal
Services Commission. It was forwarded to the applicant on 27 July. It was sent to
the respondent by the applicant on 3 August. AS says he understood from RAR 1
pages 684-687 that it had been sent by email. However page 684 shows the
complaint was addressed to a DX box and was not sent by email. In her
evidence, the respondent explained that she did not have a DX box and did get
the letter, but not for at least two days after 3 August 2011.
154. AS received a refund of the $240 on 5 August and also got a certified front page
of the contract that he had complained about not having received.37
155. On 6 September 2011 the respondent wrote to AS, apologised and paid him
another $242 because he had not been given the contract advice.38
156. The admitted shortcomings by her staff were considered by Michael James, a
Canberra solicitor, with extensive conveyancing experience in ACT and NSW. In
a report attached to his affidavit dated 15 March 2016 he explains in even handed
and persuasive terms that these errors were below the standard expected. He was
not cross examined. He says that, while he accepted the need to use paralegals
and employed solicitors, the failure to obtain the strata report, the failure to
provide any contractual advice and not picking up the separate title for the
garage, individually and collectively, raise a concern as to competence and
diligence of the respondent. He then concludes that whether it is lack of
supervision, lack of protocols, or training, or a quality control system, there was
a failure by the practitioner to meet the requisite standard. Whilst we accept as a
general matter that the respondent did attend to training and supervision and had
triggers for staff to follow, for whatever reason the number of errors of such
potential significance must, in respect of the AS complaint, lead to the
conclusion that she is responsible for such errors and she is guilty of
unsatisfactory professional conduct in respect of this complaint.
37 see Annexure C to his affidavit38 see Annexure D of the AS affidavit
38
Conclusion - Ground 10
157. We find that the practitioner failed to conduct the AS matter with competence
and diligence and such failure is unsatisfactory professional conduct.
Ground 11 - Trust
158. We have already included Ground 11(a) as part of Ground 1. Ground 11(b)
assumes that the respondent received $240 specifically for payment for the strata
report and it was not used for that purpose. Whilst the language of the refund
letter from the respondent might justify this characterisation, it does not fit with
what happened. In fact, the client was charged an “all up” fee, as he was quoted.
The work to be done was not all done and he did not get the report. Thus they
had overcharged him. It was not a payment by him earmarked for the report, but
part of a larger bill which was payable. A refund was appropriate for failing to
get the report. In our opinion this was not trust money. Little attention was given
to this in submissions. If we are wrong in this conclusion, we do not see it as
adding in any significant way, to the gravity of the conduct covered in Grounds 1
and 2.
Ground 12 - Lack of fairness or good faith, Rule 1.1
159. This ground is contained in the application at 4.38-4.41. It asserts that in paying
itself the full $785 on settlement, the respondent’s firm acted unfairly because
the payment included $240 for a non-existent strata report and $242 for non-
existent advice, and the client had to complain to the applicant to get the refund
belatedly.
160. The respondent said in her evidence that she had sent the refund of $240, before
she saw the complaint. She explained that whilst the letter from the applicant was
dated two days earlier than the letter of refund, she had in fact sent the refund
before she saw the complaint. She was properly challenged by Senior Counsel in
cross examination. We accept her evidence particularly as the complaint letter
was addressed to a non-existent DX. Further, her paralegal had already offered
the refund but had failed to act on the request in a timely fashion.
161. The sum of $242 was not a number that was calculated mathematically, but a
discretionary amount that the respondent thought was a fair sum to compensate
AS for not having received the advice. Whilst it is true that by the time of this
39
second payment the respondent had the complaint, there is no evidence that she
knew until then that the work had not been done. In fact, the finding against her
in Ground 10 assumes she did not know. We do not see this as unfair treatment.
To the extent that this complaint could be sustained, it does not add to the gravity
of the finding in Ground 10.
Conclusion
162. In our opinion Ground 12 is not made out.
Ground 13 (No 1) - Lack of Candour
163. This ground relies on two matters. The first complains that the first substantive
response by the respondent to the complaint, being an email dated 22 August
2011, was misleading in saying that the $242 amount had been repaid to AS
weeks ago. It was refunded on 5 August, which is more than two weeks before,
and whilst it implied that this was before the complaint was received, as we have
found in paragraph 157 we accept that this is correct. Thus, we do not agree with
this aspect of the ground.
164. The second issue relates to a letter of 6 September 2011 about the lack of advice
about the contract. By this time MS had left the firm. The respondent says she
searched the work station of MS and found that he drafted legal advice on 10
May, but for reasons unknown, had not sent it. This is said to contain two
misrepresentations, namely, that MS had drafted it and not the off-shore
paralegal, and that it had been finalised by MS. This is said to be incorrect
because MS had not drafted the advice and the advice had not been finalised. The
respondent in cross examination said she thought MS had looked at it, and that in
the normal course, he would settle it before it was sent. We have not seen the
work station and cannot tell from its appearance whether it could be said that the
document found was an unamended draft from the paralegal, or whether MS had
been making changes, or had done something to adopt it in whole or in part. The
advice is in RAR 1 at pages 429-431. It has MS’s name at the bottom of it. There
is an email from the paralegal at page 432 enclosing an advice. It may be that it is
the document at pages 429 -431, or it may be that those pages were added to by
MS by inter alia, placing his name on it. We cannot tell. The respondent was
cross examined about it. She said she had assumed he had done it when she
looked. She was not clear now whether he drafted it, but he may have settled it.
40
165. The point seems to be whether she said it because it was to her advantage as was
put to her in cross-examination.39 We do not believe it can be so described fairly.
The complaint the respondent was addressing was the lack of advice. She
admitted none had been given and she could not see why not.
166. Whether MS had drafted, settled, or not applied himself to either task, made no
difference to the admission that the advice should have been given and was not.
167. We have accepted the evidence of the respondent in general and here, we are not
satisfied that there was any attempt to deceive, or that to the extent that the
statement is inaccurate, that it was material. In fact we are not satisfied that it is
necessarily inaccurate other than that the word ‘settled’ would be a more accurate
description of the process than ‘drafted’.
Conclusion Ground 13
168. We are not satisfied that this ground is made out.
Complaint of N1 and N2 - Grounds 13(second) 14, 15 and 16
Ground 13 (Second) Trust Money
169. This ground has been found to be part of Ground 1 and is included in the
findings on that Ground and Ground 2 and 11a.
Ground 14 and 16 - Fairness and Competence -Amending a licence agreement without instructions
170. The facts set out here are taken from the application and the documents,
particularly RAR 1, and are not in issue except where we draw attention to any
contested matter.
171. In December 2010, N1 and N2 retained the respondent to act on the sale of an
ACT property. Two potential sales had fallen through but by 4 August 2011, the
respondent received instructions from the clients’ real estate agent.
172. On 18 August 201140 the buyers’ solicitor by email asked for early possession41
for $550 per week from 1 September with completion to be on 16 September
39 Transcript of Proceedings 24 August 2016 page 18740 RAR1 page 21941 this was expected. RAR1 page 223
41
2011. The letter said that there was no compliance certificate42 and that the
buyers would not pay rent if settlement was delayed by not being able to provide
a compliance certificate on completion.
173. The respondent’s firm sent a copy of that email to N1 and N243 seeking
instructions. N1 confirmed that they had the compliance certificate.44 He appears
to have agreed to these matters. The respondent had sent special conditions by
email on 18 August at 2.35 pm to the buyer’s solicitor, Exhibit A1 p 211.
174. AW a paralegal, employed by the respondent, sent a draft licence agreement by
fax at 3.47 pm on 19 August.45 It was also sent by email at 4.09 pm (Exhibit A1 p
213). It required the buyer to pay a fee of $175 for drafting the agreement.
175. There is a further copy of the Licence Agreement at RAR1 p 209-21046 which
has an unsigned handwritten amendment saying “The buyer is not required to
pay the licence fee for any period in which the completion is delayed other than
for the sole default of the buyer.” Also $175 is crossed out and $87.50 is
handwritten in its place.
176. At some point, thought to be shortly after 18 August 2011 by N1, he and N2
attended the office of the respondent and signed the contract. The contract is
thought to have had annexed the licence agreement. N1 says it was in the form
that did not have the amendment. In any event he and N2 deny in their affidavits
dated 22 August 2016 that they agreed to the amendment about delay.
177. AW sent an email to N1 and N247 saying that the buyers won’t pay the $175 fee.
N1 responded on 23 August telling her to pay half of it being $87.50.48 It was not
made clear during the hearing, but the request by the buyers’ solicitor concerning
the fee of $175 was made by an email dated 22 August at 2.56 pm [see Exhibit
A1 page 214]. It included the request to change the licence agreement to add
words about no licence fee being payable if the settlement were delayed. A good
42 this was mentioned as being sorted at RAR 1 228 on 4 August and that it was obtained on 15 August RAR 1 page 223
43 RAR 1 page 21644 RAR 1 page 21445 RAR 1 page 211-21346 RAR1 page 21147 RAR 1 page 19748 RAR 1 page 197
42
reason is given for such a change, namely, the buyer would be at the mercy of the
seller if they chose to delay and the occupation fee was above market. AW sent
the email at RAR1 197 on 22 August at 3.27 pm to N1 and N2 asking about the
$175 fee but not the amendment. N1’s response also at RAR197 was sent at 9.31
am on 23 August 2011. The buyers’ solicitor agreed by email
178. Contracts were exchanged on 23 August 2011. The amendment concerning the
sum of $87.50 must have been inserted on that day as no instructions were given
until then. The email from N1 on that day says nothing about the other
amendment.
179. From the file, which is part of RAR 1, it is not possible to tell how this happened,
or who wrote on the amendment, or when. It would not even be clear it happened
then, except that correspondence after settlement between the respondent’s firm
and the buyers’ lawyer makes it clear that it was so amended and then exchanged
with that amendment.
180. Settlement was due on 16 September 2011. Unexpectedly, the client’s mortgagee
was not ready to settle then, so completion was delayed.
181. The sale finally settled on 26 September 2011.
182. The adjustments on settlement prepared by AW, allowed for rent until 16
September, but not until 26 September.
183. N1 protested this with the respondent and went to the buyers’ house to demand
the shortfall (roughly $785) from the buyer and had to be told not to do it.
184. There is in evidence, as an annexure to the respondent’s affidavit, a file note and
a draft statutory declaration by AW. The file note is an answer to a question
posed by the respondent as prepared for her by a consultant with the firm BW, a
senior and extremely experienced retired solicitor49. The draft and unsworn
declaration is at RAR 1 page 823. The note is RH28 of the respondent’s affidavit
of 12 July 2016. The information provided by AW is given in December 2012.
185. In her note which is in answer to a leading question, she says that she remembers
speaking to N1 on the phone and that he agreed to the change regarding the
49 See paragraph 23 of the respondents affidavit of 12 July 2016
43
occupation fee at the same time as he agreed to the change to the $175 fee. In her
draft statutory declaration she says the request about the $175 was on 22 August
and it was agreed and that on 23 August she had the phone discussion with N1
about the licence fee amendment. She does not say she gave him any advice, nor
does she say she didn’t.
186. She wasn’t called and her explanation is not deposed to by her in an affidavit. N1
and N2 were cross examined.
187. They were asked to recall the events for their affidavits earlier this year. There is
no indication that they had done so before that and after their initial complaints.
188. N1 was in our opinion an unconvincing witness. He answered questions with
questions and parried with the questioner in a manner that appeared evasive,
even if there was nothing to evade. English was not his first language and he may
well have been at a disadvantage because of that. In fairness to him, we do not go
so far as to make adverse findings about his credit, but if the only evidence was
what he remembers now and was based on his affidavit and his oral evidence, we
could not be comfortably satisfied that what he says is right. N2 was more
responsive in her answers, but she clearly remembered little and she was not
involved in the crucial communications about the issue. It was put to her that
they were seeking to get from the respondent the sum of $5000 they did not get
because earlier sales fell through. It was no doubt to be implied that was their
motivation in making the complaint. There certainly was a claim of this at RAR
1, page 626. N2 did not agree.50 It was not expressly put to her that this was their
motivation or that she and N1 were not being truthful because of this.
189. A copy of the license agreement as exchanged was sent to the agent on
31 August 2011 and was uploaded to the website that N1 and N2 had as their e-
file. It was not explored as to whether they looked at it. Presumably if they did,
they would have known of the amendment earlier. There is no evidence on the
file of them being told expressly before or after exchange until after settlement
190. AW says that in her email she remembers being told the bank was ready so there
would not be any delay by the sellers. RH 31 is an email dated 8 September
50 Transcript of Proceedings 23 August 2016 page 75
44
saying that the firm had been told there was no mortgagee. However, the bank
communications start well before that. One such communication occurred on 22
August 2011.51 RH 31 seems to be an example of the left hand not knowing what
the right hand had done already.
191. N1 says the alteration to the licence agreement was clearly against his interest
and he would not have consented to it. In the abstract, it was not as good as the
original clause and so was against his interest to that extent. He had no reason to
think the sale would not proceed on time and he had already lost two buyers. The
amount of delay, if any, would not have resulted in any significant loss. We
cannot conclude that he did not consent just because the amendment was capable
of being against his interest. Nor could we conclude that he would not have
consented if he had been told and advised about it (assuming that he had not been
told or advised). We do not accept his statement now that he would not have
consented if he had known of the proposed amendment then. But clearly he
should have been given the opportunity.
192. There was no explanation for AW not giving evidence, and there is an inference
that can be drawn that she would not have assisted the respondent if called.
193. The strongest evidence that N1 and N2 had not been told of the amendment is
their immediate reaction when they found out. They said that the agreement was
in the form of the unaltered licence agreement. They disagreed with the
explanation given to them and N1 went to the buyers’ house to collect the
shortfall in rent. He seems to have convinced the respondent’s firm as she, or
someone on her behalf, wrote to the buyers’ solicitor asking for it after
settlement.52
194. It could be argued that N1 was told but did not take it in, or did not understand it.
All his communications, however, show he was sharp and had not misunderstood
anything else. Also, it would have been logical for AW to have asked him at the
same time as she asked about the $175 fee, but inexplicably she appears to have
overlooked it.
51 see RAR 1 page 19852 see RAR 1 page 140
45
195. We have to be comfortably satisfied that he was not told and did not agree to, or
get advice about, the amendment.
196. Whilst there are reasons to refrain from making a positive finding, the fact that
N1 and N2 complained immediately and took steps that showed they believed
they had not agreed, as well as the absence of any evidence to the contrary,
including the failure to call AW and AW’s omission to ask about the amendment
when she asked about the $175 fee, persuade us that instructions were not sought
to amend the agreement.
197. Mr James in his report makes it clear that this is below the requisite standard.
198. He says that the respondent is responsible for this failure for the same reasons as
he said so in respect of the AS complaint. However, the two cases are quite
different and Mr James does not advert to the fact that in this case, there is one
failure rather than several failures and the unusual nature of the conduct. It is one
thing to fail to do a number of basic things, such as get a strata report or advise
about the contract before it is exchanged, or before the cooling off period. It is a
much less foreseeable event that a paralegal would amend a contractual
document without instructions. Moreover, the fact that AW asked for instructions
about the $175, but overlooked the clause regarding the licence fee, shows that
she knew to get instructions, but for no good reason failed to do so on this
occasion.
199. There is no evidence that the respondent knew this had happened, or might have
anticipated such an unusual event.
200. We accept that failing to get instructions to amend a contractual document,
particularly if it could be adverse to the interest of the client, would be a breach
of the obligation of fidelity if done knowingly, and would also be incompetent,
but we are not persuaded that in this case this is the fault of the respondent.
201. This ground also involves Ground 16 which says it is not competent to do this
without advice. Clearly the same position applies. If N1 was told, which we have
found he was not, then he still should have been given advice. He was not given
advice because he was not told at all. The assumption that he was told at all is not
46
made out, so the occasion for advice does not arise. In any event, the
responsibility issue still arises.
Conclusion Grounds 14 and 16
202. We are not satisfied that these grounds are made out.
Ground 15 - Lack of Candour
203. The first complaint is that the respondent misled the applicant by not revealing
that there were no instructions to amend.
204. The letter from the respondent is dated 18 January 2012. It is at RAR 1 pages
649-651.
205. The letter needs to be read as a whole. The respondent’s firm did explain what
the reasoning was on several occasions after the problem arose. When they did,
they did not advert to the possibility that the licence had been amended without
instructions. The letter accurately sets out what the file revealed in some detail. It
explained the reason why the settlement was delayed. In order for us to be
satisfied that the respondent’s response lacked candour we have to find that the
respondent, when writing the letter, knew or believed that there had been no
instructions or advice. As can be seen from the discussion relating to the finding
that there were no instructions, there is reason to think otherwise. We accept the
evidence of the respondent that she believed there was consent and it is clear that
she did not advert to the possibility that there was not when she wrote the letter.
206. We are not satisfied that the complaint in paragraph 5.21 of the application is
made out.
207. The second complaint is that the letter represents that the explanations referred to
occurred before exchange. We do not read it as saying that. It certainly does not
do so expressly, and when read in conjunction with the file, it is clear that the
respondent is doing no more than she could, unless she positively knew
something that was not on the file, namely, that there were no instructions. We
do not find that the representations alleged in 5.23 of the application are made
out at all. If we are wrong and they could be inferred, we find that it has not been
established that the respondent knew, or believed, that there were no instructions.
This complaint is not established.
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208. The next complaint relates to letters from the respondent and her solicitor dealing
with the AW notes and draft statutory declaration referred to in paragraph 5.25.
The letters complained of are a letter of 6 August 2015 and a letter of 21 August
from the respondent’s solicitor. They are at RAR 1 pages 775-800C and 812-
813.
209. Essentially, the respondent was responding to a draft application to the tribunal.
The matter had got to the stage where it was clear that an application was going
to proceed. The investigation phase had been exhaustive and continued over
many years. The circumstances that the respondent was dealing with were not the
usual first response where the applicant knows nothing and relies on the
respondent to give it as much information as she can. It is clear that she did do
that in the letter of 18 January 2012. She was then at an advanced pleading stage
and was responding to the whole application. The applicant knew what was on
the file and what was not. In this context the respondent proffers the statement
that she has documentary evidence. She does not say she has contemporaneous
documentary evidence, but the applicant argues it should be read that way even
though it had the chronology and documents from the file since 2012.
210. Whilst there may be excuses for the delay of over five years and the unusual
course of asking the respondent to give the applicant an advance pleading, it
needs to be taken into account in considering the complaint.
211. The complaint relates to part of a very long letter which escapes complaint
otherwise.
212. Mr Erskine SC submitted that the reference to documentary evidence would
never have misled anyone and certainly not at the stage that the matter had
reached. In order to ascribe intent to deceive we have to conclude that it might
have done so. It did not in fact deceive and inevitably prompted more
information which was provided.
213. We agree with Mr Erskine SC. This complaint is not made out.
214. It is also complained that the omission of the leading question by the
respondent’s solicitor was an attempt to mislead as the leading question might be
seen as improper in seeking to influence the answer. Whilst the question could
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have been better expressed so that it was not leading, it is a long bow to conclude
that it was an attempt to influence the answer. The respondent said she does not
know why her solicitor cut bits out. She was challenged about this in cross-
examination but we accept her evidence. It is unlikely that her solicitor was
seeking to mislead. We are not satisfied that the response was in fact deceptive,
or was so intended to be.
215. The last complaint relates to the explanation given about miscalculating the
payment of commission to the agent.
216. The agent had written a letter saying it had no funds and then that it had $1000
and asking for the balance. The letter was obviously misread by the respondent’s
office and the client was told about it in a reporting letter. How anyone could be
misled by the respondent’s clumsy explanation of these events is hard to
understand. The claim is not established. We are not satisfied in the context that
this is misleading in fact, or that it was intended to be.
Credit issues
217. The respondent was cross examined about this complaint. It was submitted that
she was not truthful. Attention was directed to her answers about AW and what
may be seen as inconsistent answers, or answers that sought to distance her from
blame. It is fair comment that the respondent was putting her best foot forward.
To the extent her answers may have an appearance of inconsistency; we saw this
as an inevitable product of the delay between the events and the hearing. Whilst
there was some confusion and possibly mistakes in her recollection, the clear
conclusions we have drawn are that she appreciated that instructions were
necessary and believed AW that they had been obtained. It would not be a
surprise that such instructions would have been given as there was unfairness if
the agreement was not amended to some extent and two prior sales had fallen
through. Further, the clients would have believed that there would be no delays
on their part
Conclusion on Ground 15
218. This ground is not made out.
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Summary of Conclusions
219. We are satisfied that Grounds 1, 2, 11a and 13 (second one) together constitute
unsatisfactory professional conduct. We also are satisfied that Grounds 7 and 9
constitute unsatisfactory professional conduct and, as they arise because of the
issue about the responsibility to attend to registration, it is appropriate to treat
them globally. Finally, we also find that Ground 10 is unsatisfactory professional
conduct, but it arises from a separate problem, namely, a failure to oversee the
conduct of a matter when MS had departed part the way through, so that there
were a series of mistakes in respect of the matter. We are not satisfied that the
remaining grounds are made out.
220. We should record our appreciation of the assistance given by the legal
representatives of the parties. Both senior and junior counsel for the applicant
provided helpful oral explanations and submissions as well as extensive written
submissions and other material. The solicitors for the applicant provided in a
helpful way numerous documents that were easily referenced. The hearing was
also made much easier by the sensible and informative approach of the
respondent’s counsel and the paperwork provided by her solicitor.
221. It is necessary to reconvene the matter to deal with what penalties should flow
from these findings and the matter will be listed for directions to fix a date and
time for any evidence and submissions to be filed and served in respect of
penalty, costs and any consequent orders.
………………………………..Senior Member B Meagher SC
Delivered for and on behalf of the Tribunal
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HEARING DETAILS
FILE NUMBER: OR37/2015
PARTIES, APPLICANT : Council of the Law Society of the ACT
PARTIES, RESPONDENT/: Legal Practitioner RN
COUNSEL APPEARING, APPLICANT N Beaumont SC and M Kalyk
COUNSEL APPEARING, RESPONDENT Mr C Erskine SC
SOLICITORS FOR APPLICANT Phelps Reid
SOLICITORS FOR RESPONDENT Snedden Hall & Gallop
TRIBUNAL MEMBERS: Senior Member B Meagher SC andMember W Pearcy
DATES OF HEARING: 22, 23, 24 and 25 August 2016
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