BETTS and LEGAL PROFESSION COMPLAINTS COMMITTEE
[2019] WASAT 25
•8 MAY 2019
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: LEGAL PROFESSION ACT 2008 (WA)
CITATION: BETTS and LEGAL PROFESSION COMPLAINTS COMMITTEE [2019] WASAT 25
MEMBER: JUDGE T SHARP, PRESIDENT (ACTING)
MS C WALLACE, SENIOR MEMBER
MS M CONNOR, MEMBER
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 8 MAY 2019
FILE NO/S: VR 150 of 2017
BETWEEN: TREVOR STANLEY JOHN BETTS
Applicant
AND
LEGAL PROFESSION COMPLAINTS COMMITTEE
First Respondent
PAUL BLACKMAN
Second Respondent
Catchwords:
Legal practitioner - Review under s 435(1) of the Legal Profession Act 2008 (WA) - Review of decision of Legal Profession Complaints Committee to dismiss complaints - No reasonable likelihood that practitioner would be found guilty of unsatisfactory professional conduct or professional misconduct by Tribunal
Legislation:
Corporations Act 2001 (Cth), s 236, s 237, s 237(1), s 242
Criminal Code Act Compilation Act 1913 (WA), s 22, s 371
Legal Profession Act 2008 (WA), s 227, s 402, s 403, s 425, s 425(a), s 426, s 428, s 435(1)(a)
Legal Profession Regulations 2009 (WA), reg 60, reg 60(6)(b)
State Administrative Tribunal Act 2004 (WA), S 24, s 27(1), s 27(2), s 60(2)
Trustees Act 1962 (WA)
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Applicant | : | Mr J Birman |
| First Respondent | : | Mr N Pope |
| Second Respondent | : | Mr S van Dongen SC |
Solicitors:
| Applicant | : | Birman & Ride |
| First Respondent | : | Legal Profession Complaints Committee |
| Second Respondent | : | MDS Legal |
Case(s) referred to in decision(s):
Betts and Legal Profession Complaints Committee [2018] WASAT 55
Briginshaw v Briginshaw (1938) 60 CLR 336
Chinnery and Legal Profession Complaints Committee [2013] WASAT 79
Giudice v Legal Profession Complaints Committee [2014] WASCA 115
Greenwood and Legal Profession Complaints Committee [2010] WASAT 31
Kyle v Legal Practitioners' Complaints Committee [1999] WASCA 115
Legal Practitioners Complaints Committee and Trowell [2009] WASAT 42
Orbito Nominees Pty Ltd v Betts Nominees Pty Ltd [2015] WASC 431
SJX and Legal Profession Complaints Committee [2012] WASAT 154
Steinier v Sunlea Enterprises Pty Ltd [2016] WASC 81
Steinier v Sunlea Enterprises Pty Ltd in its own capacity and as TFT Drummond Cove Unit Trust [2016] WASC 81
Sunlea Enterprises Pty Ltd as Trustee for Drummond Cove Unit Trust v Pollock [2014] WASC 91
REASONS FOR DECISION OF THE TRIBUNAL:
The application
The applicant, Mr Trevor Stanley John Betts (Mr Betts), seeks a review under s 435(1)(a) of the Legal Profession Act 2008 (WA) (LP Act) of a decision made by the first respondent, the Legal Profession Complaints Committee (LPCC) to dismiss a number of complaints made by Mr Betts. The complaints were made against the second respondent, MrPaul Blackman (Mr Blackman), a legal practitioner retained in Supreme Court proceedings CIV 2705 of 2012 and CIV 3048 of 2012 brought against various defendants including Mr Betts. Mr Blackman, apartner of the firm Tottle Partners, was instructed by Mr Philippe Steinier (Mr Steinier) in respect of both proceedings.
Both Supreme Court proceedings were commenced by Sunlea Enterprises Pty Ltd (Sunlea), of which both Mr Steinier and Mr Betts were directors.
The complaints made by Mr Betts, which were dismissed by the LPCC and which are the subject of this review application, relate to the conduct of the aforementioned Supreme Court proceedings and can be summarised as follows:
(1)without the authority of Sunlea, on six occasions Mr Blackman wrongfully applied money held on trust for Sunlea for his firm's benefit and for counsel fees;
(2)without Sunlea's authority, on 17 September 2014, Mr Blackman paid $200,000 into Court to satisfy a security for costs order out of monies held on trust for Sunlea;
(3)Mr Blackman failed to comply with Mr Betts' request for an account of Sunlea's trust monies;
(4)on 30 August 2013, Mr Blackman prepared and filed an affidavit of Mr Steinier in Supreme Court proceeding CIV 2705 of 2012, with actual knowledge that its contents were false in that the financial details of Sunlea failed to disclose the asset of $431,460.41 held on trust for Sunlea by Mr Blackman;
(5)Mr Blackman failed to correct the above error in Mr Steinier's affidavit after it was drawn to his attention on 21 August 2015; and
(6)Mr Blackman breached s 227 of the LP Act by failing to give notice of irregularities in the Tottle Partners trust account.
History of the proceeding at the Tribunal
The review application was received by the Tribunal on 17August2017.
An issue arose early in the proceeding following the filing of the LPCC's bundle of documents pursuant to s 24 of the State Administrative Tribunal Act 2004 (WA) (SAT Act). The bundle of documents was divided into Part A and Part B, with Part B comprising the documents the subject of a claim for legal professional privilege by Mr Blackman. This prompted an application being made by Mr Betts on 6 November 2017 which sought, inter alia, to challenge the redaction of parts of twodocuments in Part A and sought the production of four documents contained in Part B of the bundle. The application required the Tribunal to determine, as a preliminary issue, whether the relevant documents were privileged or protected material for the purposes of the reviewapplication.
The Tribunal determined the preliminary issue on the documents and published reasons on 27 June 2018; Betts and Legal Profession Complaints Committee [2018] WASAT 55 (Betts). Ultimately the Tribunal concluded that the documents were properly the subject of legal professional privilege, and therefore Mr Betts' application seeking access was dismissed.
The Tribunal then programmed the substantive matter to be determined entirely on the documents pursuant to s 60(2) of the SAT Act.
The following documents and submissions were filed with the Tribunal to assist it in its determination of the review application:
(a)consolidated substituted s 24 bundle of documents Part A and B Volumes 1 and 2 dated 4 December 2018 (s 24 bundle);
(b)Mr Betts' consolidated bundle of documents dated 5 September 2018 (applicant's bundle);
(c)Mr Betts' written submissions dated 8 January 2019;
(d)Mr Betts' chronology dated 8 January 2019;
(e)LPCC's written submissions dated 11 January 2019; and
(f)Mr Blackman's substituted redacted submissions dated 22 January 2019.
Relevant factual background
It is useful to provide a brief overview of the relevant background facts precipitating the complaints which Mr Betts made against MrBlackman which have given rise to this review application.
Mr Steinier and Mr Betts, between September 2002 and June 2005, purchased, developed, subdivided and sold land through a number of trusts.
In 2004, Mr Steinier and Mr Betts entered into an arrangement to develop land at Drummond Cove, north of Geraldton. To facilitate the development of the land the Drummond Cove Unit Trust (DCUT) was settled. Diamo Nominees Pty Ltd (Diamo) was the trustee of DCUT.
There were 200 units issued in DCUT, half of which were owned by Orbito Nominees Pty Ltd (Orbito) as trustee for the Pilou Trust and the other half of which were owned by Betts Nominees Pty Ltd (Betts Nominees) as trustee for the Betts Family Trust.
On 13 August 2005, a Heads of Agreement (HOA) was executed between Dreamview Investments Pty Ltd (Dreamview) in its own capacity and as trustee for the Dreamview Trust, Diamo, in its own capacity and as trustee for DCUT and Sandpiper Asset Pty Ltd (Sandpiper). The HOA provided for an unincorporated joint venture in respect of the land development at Drummond Cove formed between Dreamview and Diamo with each holding a 50% interest.
The shares in Sandpiper were held equally between Diamo andDreamview.
The land at Drummond Cove was transferred to Sandpiper and it was to hold the land on trust for Diamo.
Mr Steinier and Mr Betts both became directors of Diamo on 1 September 2005. Dreamview appointed two other directors ofSandpiper.
During 2006 and 2007, a financier named Troika Capital Pty Ltd (Troika) provided loan facilities to the land development project, secured predominantly by way of mortgages executed by Sandpiper in favour of Troika.
On 13 November 2007, Dreamview retired as trustee of the Dreamview Trust and was replaced by Promenade Investments Pty Ltd (Promenade).
Diamo also retired as trustee of DCUT in 2007 and was replaced by Playstar Holdings Pty Ltd (Playstar). In 2008, Playstar was replaced by Sunlea as trustee of DCUT. All of Diamo's rights under the HOA were assigned to Sunlea.
By about 2010, the development of the land at Drummond Cove had not progressed and debts had been incurred.
In 2010, Mr Steinier formed the view that there was a proper basis on which to allege that the directors of Dreamview, and subsequently Promenade, caused Sandpiper to make substantial unauthorised borrowings and to make payments which were not for Sunlea's benefit.
On 21 June 2010, Sunlea gave a notice of rescission to terminate the HOA.
In September 2012, Mr Steinier instructed Mr Blackman to make an application in the Supreme Court pursuant to s 237(1) of the Corporations Act 2001 (Cth) (Corporations Act) for leave to commence proceedings in the name of Sunlea against various defendants including Mr Betts. The application was supported by an affidavit sworn by Mr Steinier dated 19 September 2012.
On 3 October 2012, Master Sanderson gave leave to Mr Steinier to commence legal proceedings in the name of Sunlea in its own capacity and as trustee for DCUT against 13 defendants (Master Sanderson's order) which included Mr Betts (COR 146 of 2012). Master Sanderson's order made no provision for the costs of the intended proceedings. Theorder granted liberty to apply.
Following Master Sanderson's order, Sunlea commenced the aforementioned Supreme Court proceedings as follows:
(a)CIV 2705 of 2012 on 11 October 2012 alleging causes of action for breach of contract, breach of trust or equitable fiduciary duty and statutory causes of action for unconscionable conduct and provision of financial services against 14 defendants, including Mr Betts (Sunlea proceedings); and
(b)CIV 3048 of 2012 on 20 December 2012, for a declaration it was entitled to an amount of $432,892.24 plus interest held by Troika against Troika and its administrator, Dino Travaglini (Troika proceedings).
On 21 March 2014, Allanson J ordered that Sunlea provide security for costs in the Sunlea proceedings in the amount of $200,000 (security order).
On 17 September 2014, Sunlea paid $200,000 into court to satisfy the security order.
On 3 August 2015, Orbito commenced action in the Supreme Court, being proceeding CIV 2216 of 2015, seeking the appointment of a new trustee of DCUT (Orbito proceedings).
In the Orbito proceedings, Betts Nominees issued subpoenas to various parties, including Tottle Partners. The subpoena issued against Tottle Partners sought the production of the firm's trust account records for Sunlea and Crosswest Corporation Pty Ltd (Crosswest). Ultimately Tottle Partners complied with the subpoena in relation to Sunlea and produced the documents but objected to the documents being inspected or copied by the firm Birman & Ride on the basis that Birman & Ride were representing one of the defendants in the Sunlea proceedings (Mr Pollock) and there was a risk that the documents would be disclosed to that defendant. Upon Birman & Ride no longer representing Mr Pollock in the Sunlea proceedings, Betts Nominees was allowed to inspect the relevant documents.
On 8 September 2015 Mr Pollock filed a chambers summons in the Sunlea proceedings seeking that Sunlea pay a further amount of $200,000 by way of security for costs (further security for costs application).
On 18 November 2015, Mr Steinier made an application in COR146 of 2012 for orders pursuant to s 242 of the Corporations Act authorising the trustee of DCUT to pay out of the assets of DCUT all reasonable costs of the Sunlea proceedings and the Troika proceedings. Mr Steinier also sought approval for the payment by Sunlea of the sum of $200,000 to satisfy the security order out of the funds held on trust forDCUT.
On 20 November 2015, Allanson J made an order in the Sunlea proceedings staying all interlocutory matters until further order.
On 16 March 2016, Martino J ordered, inter alia, that Sunlea as trustee for DCUT was authorised to pay out of the assets of DCUT all reasonable costs of the Sunlea proceedings and the Troika proceedings and approved the payment by Sunlea of the sum of $200,000 to satisfy the security order out of funds held on trust for DCUT.
The Orbito proceedings were discontinued with leave by way of order dated 10 May 2016.
On 5 August 2016, the further security for costs application was dismissed with no order as to costs.
In May 2017, Mr Steinier and Mr Betts entered into a settlement agreement pursuant to which Mr Steinier bought Mr Betts' units in DCUT for $280,000 and discontinued the Sunlea proceedings against Mr Betts. The Supreme Court approved the terms of the settlement.
Complaints by Mr Betts
Mr Betts made complaints concerning Mr Blackman's conduct with the LPCC in mid2015.
On 11 July 2017 the LPCC resolved to express concern in relation to complaints (1) and (4) made against Mr Blackman referred to in these reasons at [3] and otherwise to dismiss the complaints on the basis that it was satisfied that there was no reasonable likelihood that Mr Blackman would be found guilty by the Tribunal of either unsatisfactory professional conduct or professional misconduct.
The issue for determination
The LPCC dismissed the complaints made by Mr Betts pursuant to s 425 of the LP Act which provides as follows:
425.Dismissal of complaint
After an investigation of a complaint against an Australian legal practitioner is completed, the Complaints Committee may dismiss the complaint if satisfied that
(a)there is no reasonable likelihood that the practitioner would be found guilty by the State Administrative Tribunal of either unsatisfactory professional conduct or professional misconduct; or
(b)it is in the public interest to do so.
The LPCC dismissed the complaints therefore on the basis that it was satisfied that there was 'no reasonable likelihood' that Mr Blackman would be found guilty by the Tribunal of either unsatisfactory professional conduct or professional misconduct.
In reviewing the LPCC's decision, the function of the Tribunal is to conduct a hearing de novo (s 27(1) of the SAT Act), the purpose of which is to produce the correct and preferable decision at the time of the decision upon the review (s 27(2) of the SAT Act). That is, to consider each of the complaints made by Mr Betts and to determine whether there is a reasonable likelihood that the Tribunal might, on referral to it of the complaints, find Mr Blackman guilty of either unsatisfactory professional conduct or professional misconduct arising from thecomplaint.
Unsatisfactory professional conduct is defined in s 402 of the LPAct as follows:
402.Term used: unsatisfactory professional conduct
For the purposes of this Act
unsatisfactory professional conduct includes conduct of an Australian legal practitioner occurring 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.
Professional misconduct is defined in s 403 of the LP Act asfollows:
403.Term used: professional misconduct
(1)For the purposes of this Act
professional misconduct includes
(a)unsatisfactory professional conduct of an Australian legal practitioner, where 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 occurring in connection with the practice of law or occurring 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 the purpose of 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 or for the grant or renewal of a local practising certificate.
The meaning of the words 'reasonable likelihood' contained within s 425 of the LP Act, was addressed by the Tribunal in Greenwood and Legal Profession Complaints Committee [2010] WASAT 31 at [26] - [28] as follows:
26The word 'likelihood' means 'the chance or fact of being likely', and 'a thing that is likely' or a 'probability' (Shorter Oxford English Dictionary, 6th ed, 2007) and the word 'likely' means 'that looks as if it would happen, be realised, or prove to be what is alleged or suggested; probable' (Shorter Oxford English Dictionary). However, the word is qualified by the requirement that the likelihood be 'reasonable'. The word 'reasonable' means 'not greatly less or more than might be thought likely or appropriate; of a fair, average, or considerable amount' (ShorterOxford English Dictionary).
27The meaning of the phrase 'reasonable likelihood' in the context of s 425 of the LP Act is synonymous with the phrase 'reasonably likely'. The meaning of that phrase was discussed in Department of Agriculture and Rural Affairs v Binnie [1989] VR 836 at [842] (Marks J, Young CJ and Teague J agreeing) in the following passage:
The relevant expression here is 'reasonably likely' which has some analogy to 'fair probability'. It suggests the mathematical approach; the word 'reasonably' being a qualification of 'likely', alternatively, a measure in colloquial language of the likelihood.
The expression 'reasonably likely' is substantially idiomatic, its meaning not necessarily unlocked by close dissection. In its ordinary use, it speaks of a chance of an event occurring or not occurring which is real – not fanciful or remote. It does not refer to a chance which is more likely than not to occur, that is, one which is 'odds on' or where between nil and certainty it should be placed. A chance which in common parlance is described as 'reasonable' is one that is 'fair', 'sufficient' or 'worth noting'.
28Those observations are equally apt to describe the meaning of 'reasonable likelihood' in s 425 of the LP Act.
It is of course well understood that given the consequences for a practitioner of an adverse determination in the context of disciplinary action, that clear and cogent evidence will be required before a finding of either unsatisfactory professional conduct or professional misconduct is made: Legal Practitioners Complaints Committee and Trowell [2009] WASAT 42 at [63]. Therefore although the standard of proof in the Tribunal is on the balance of probabilities, the Tribunal must nevertheless feel an 'actual persuasion' of the occurrence or existence of a relevant fact when determining whether it has been made out: Briginshaw v Briginshaw (1938) 60 CLR 336at 361 - 362 (Dixon J).
In relation to each of the allegations, what is the correct and preferable decision?
Complaint 1: Without Sunlea's authority, on six occasions Mr Blackman wrongfully applied money held on trust for Sunlea for his firm's benefit and for counsel fees
Complaint 2: Without Sunlea's authority, on 17 September 2014 Mr Blackman paid $200,000 into Court to satisfy a security for costs order made on 21 March 2014 out of monies held on trust for Sunlea
It is alleged that Mr Blackman, without Sunlea's authority:
•on six occasions wrongfully applied money held on trust for Sunlea for his firm's fees and for counsel fees; and
•on 17 September 2014 paid out of monies held on trust for Sunlea $200,000 into court to satisfy a security for costs order made on 21 March 2014.
As previously noted earlier in these reasons, on 3 October 2012, on Mr Steinier's application in COR 146 of 2012, Master Sanderson made orders pursuant to s 237 of the Corporations Act granting Mr Steinier leave to commence representative proceedings in Sunlea's name against Mr Betts and other defendants. On that occasion MrSteinier was represented by Mr Davis, of counsel, who appeared on the instructions of Mr Blackman. The issue of costs in the proceeding was briefly raised by Master Sanderson on that occasion as evidenced by the following excerpt from the transcript (s 24 bundle, volume 2, pages 755 757):
THE MASTER: All right. Well, look, I've read the papers and in the absence of any answering affidavit, the material seems compelling. The orders granting leave should be made. The costs of proceeding should presumably be paid by the company.
DAVIS MR: Master, yes. That was that would be our submission. It'sa matter that there's a discretion a wide discretion in section 242 for the court
THE MASTER: Yes.
DAVIS, MR: which kicks in after leave has been taken advantage of and proceedings have been commenced.
THE MASTER: Right. So you don't need any orders at present covering that question of costs?
DAVIS, MR: Master, no. What I I have a draft minute of the orders that I propose the court to be made and we're seeking that, as Master will see, that costs be reserved.
THE MASTER: Right.
DAVIS, MR: And it can be dealt with
THE MASTER: Yes.
DAVIS, MR: afterwards
…
THE MASTER: All right. Look, I think what I should do is add liberty to apply as order 3. Whether or not it will be needed is an open question but if it's there
DAVIS, MR: Yes.
THE MASTER: that clarifies the position and allows you to come back on this originating process.
DAVIS, MR: Thank you, Master.
THE MASTER: So order 3 will be liberty to apply. Subject to that adjustment, I will make the orders in terms of the minute.
The orders issued by Master Sanderson on 3 October 2012 included, as order 2, that costs be reserved and, contained in order 3, liberty to apply (s 24 bundle, volume 1, pages 41 - 42).
The Sunlea proceedings were then commenced on 11 October 2012. On 20 December 2012, the Troika proceedings were commenced in Sunlea's name.
On 12 March 2013, Sunlea obtained judgment against Troika and Mr Travaglini and Tottle Partners received into its trust account, on behalf of Sunlea, the amount of $476, 249.73 (Troika trust money).
On 21 March 2014, Allanson J ordered Sunlea to provide security for costs in the Sunlea proceedings in the sum of $200,000 (s 24 bundle, volume 1, page 209 - 210).
On 25 August 2014, Tottle Partners received into its trust account an amount of $310, 308.20, being monies which were previously held on trust by the firm Lewis Blyth & Hooper on behalf of DCUT (LBH Funds).
It is not in contention that the following payments were made from funds held on trust on behalf of Sunlea in relation to the Sunlea proceedings and the Troika proceedings by Mr Blackman from the TottlePartners trust account:
1)$44,709.32 for Tottle Partners' fees on 22 April 2013;
2)$57,689.60 for Tottle Partners' fees on 17 October 2013;
3)$107,944.42 for Tottle Partners' fees on 8 January 2014;
4)$18,788 for the fees of counsel, Mr J Thomson SC on 5 June 2014;
5)$54,335.26 for Tottle Partners fees on 18 September 2014; and
6)$6,006 for the fees of counsel, Mr J Thomson SC on 22 May 2015.
In addition, on 17 September 2014, $200,000 was paid from the Tottle Partners trust account to satisfy the security order.
The Tribunal notes that Mr Betts also sets out as further unauthorised payments an amount of $65,000 paid to Tottle Partners on 25 November 2010 and an amount of $110,000 paid to Tottle Partners on 7 December 2012 (applicant's written submissions, para 18). However, the complaints made to the LPCC did not include a complaint in relation to those two payments. Accordingly, no findings were made by the LPCC in relation to those payments and therefore they do not form part of the Tribunal's jurisdiction on review: Chinnery and Legal Profession Complaints Committee [2013] WASAT 79 at [13]; SJX and Legal Profession Complaints Committee [2012] WASAT 154 at [17]. The Tribunal therefore does not intend to address those allegations.
Mr Blackman submitted to the LPCC in respect of these complaints that he held an honest belief that, as a result of Master Sanderson's order ([24] of these reasons), Mr Steinier was entitled to give Tottle Partners a written direction to make the payments referred to in these reasons at [53] and [54] out of trust monies held for Sunlea.
Mr Blackman submitted to the LPCC that he had consulted with senior counsel briefed in the Sunlea and Troika proceedings, being Mr Thomson SC, prior to making the payments and that Mr Thomson SC agreed with Mr Blackman's belief. That is, Mr Thomson SC shared Mr Blackman's view that s 236 and s 237 of the Corporations Act, by empowering a person to conduct representative proceedings, by implication, empowered them to do all things necessary and incidental. In this regard the LPCC had before it correspondence sent from Mr Thomson SC to Mr Blackman (s 24 bundle, Part B, documents 3, 4 and 5).
Following the complaint being made by Mr Betts with the LPCC, and correspondence being exchanged between Mr Blackman and a legal officer of the LPCC in relation to the issue, in mid-June 2015 Mr Blackman consulted with Mr C Zelestis QC.
After that consultation, on or about 18 June 2015 Mr Blackman reversed the payment made to Mr Thomson SC in the amount of $6,006 (paying those fees instead from his firm's general account).
In July 2015, Mr Blackman arranged for Mr Steinier to reimburse Sunlea's trust account in respect of the balance of all other alleged unauthorised payments. In addition, Mr Steinier subsequently brought an application seeking authorisation to pay out of DCUT assets all reasonable costs in the Sunlea and Toika proceedings ([31] of these reasons).
On 16 March 2016, in COR 146 of 2012 (Steinier v Sunlea Enterprises Pty Ltd [2016] WASC 81), Martino J held that the payments made from the Tottle Partners trust account referred to above were not authorised. His Honour's views in relation to this issue are set out below:
63When a person brings or intervenes in proceedings in the name of a company pursuant to leave granted under s 237 there are two types of costs liabilities that could be incurred by the company the legal costs and expenses, including court filing fees, incurred in commencing and maintaining the proceedings and the costs it may be ordered to pay to the opposing party. Section 242 allows the court to make orders in respect of both types of costs liabilities and also enables the court to make orders about the costs of the person who applied for or was granted leave.
64In my view where no order has been made as to the costs of the parties involved then there is no authorisation from that order for the assets of the company to be used to pay legal costs and expenses, including court filing fees, incurred in commencing and maintaining the proceedings. It is inevitable that costs will be incurred in the bringing and maintaining of the proceedings. Thisflows inevitably from the need to pay court filing fees and for the company to instruct a solicitor. However in my view it does not follow from the fact that it is inevitable that costs will be incurred that the leave to bring or maintain proceedings in the name of the company authorises the person granted leave to use the assets of the company for those proceedings. If the company will not authorise the payment of costs then the person who is given leave to commence the action can make arrangements to pay those costs or seek an order of the court under s 242. However if in the proceedings brought or intervened in the company is ordered to pay the costs of another party to the proceedings then that is a liability that is created without the need for authorisation from the company and the company is liable for those costs so ordered, even if no order has been made under s242. The court has power under s 242 to order that the company be indemnified in respect of that costs liability.
…
91For reasons I have given earlier it is my view that where no order has been made as to costs under s 242 of the Act then there is no authorisation from an order under s 237 giving leave to bring proceedings in the name of a company for the assets of the company to be used to pay legal costs and expenses in those proceedings. It is therefore my view that the payment into court of $200,000 of Sunlea Enterprises' money as security for costs was not authorised by the order of Master Sanderson. Section 242 enables the court to make at any time any order as to costs that it considers appropriate.
The LPCC's reasons for decision in respect to these two complaints are set out at paras 86 - 102 of its decision dated 11 July 2017. In essence, the LPCC was satisfied that Mr Blackman honestly believed that the payments were authorised at the time that they were made and the LPCC did not consider that Mr Blackman's errors rose to the level of conduct amounting to unsatisfactory professional conduct or professional misconduct.
Although the LPCC dismissed the complaints, it expressed concern in relation to the unauthorised payments made to Tottle Partners and to counsel and noted 'that the practitioner should have given more consideration to the issue and instead of just consulting counsel involved in the matter, the practitioner should have sought the opinion of independent counsel at the time': para 98 of the LPCC's reasons for decision.
Mr Betts in his application sets out six grounds to support this part of his review and on the basis of which he contends that the Tribunal ought to find that the correct and preferable decision is that there is a reasonable likelihood that the Tribunal might, on referral to it of the complaints, find Mr Blackman guilty of either unsatisfactory professional conduct or professional misconduct. It is useful to address each of the relevant grounds in the order that they appear in the application.
Ground of objection failure to determine that the transactions were unauthorised
The first ground relied upon by Mr Betts is that the LPCC erred insofar as it failed to determine that the transactions were unauthorised and instead misdirected itself by proceeding on the basis that the legitimacy or otherwise of the transactions was a matter of opinion.
The Tribunal does not intend to address this ground in great detail on the basis that the Tribunal considers it to be misconceived. As noted at [41] of these reasons, a review is conducted by way of hearing de novo, the purpose of which is to produce the correct and preferable decision at the time of the decision upon the review. It is not the role of the Tribunal in a review proceeding to identify whether errors exist in the decision under review. In addition, even if an error was identified, it would not necessarily lead the Tribunal to reach a conclusion that the correct and preferable decision ought to be different on review.
Further, it has been accepted by all parties in this proceeding that the relevant transactions were ultimately found to be unauthorised. The issue for determination for the Tribunal is, when considering the full context within which the unauthorised payments took place, whether there is a reasonable likelihood that on referral of the complaints, the Tribunal would find the conduct of Mr Blackman to constitute unsatisfactory professional conduct or professional misconduct. There was no need for the LPCC at first instance, nor this Tribunal on review, to ‘determine that the transactions were unauthorised'. That determination has clearly already been made in another forum and is well understood by all parties before this Tribunal ([61] of these reasons).
Lastly, and in any event, the Tribunal does not accept that the LPCC failed to determine that the transactions were unauthorised. It is clear from paras 86 98 of the LPCC's reasons for decision that they understood that the transactions were unauthorised but were satisfied that Mr Blackman held an honest belief at the time that the payments were authorised and the LPCC 'did not consider that the practitioner's errors rose to the level amounting to unsatisfactory professional conduct or professional misconduct'; LPCC's reasons for decision at para 97. In the Tribunal's view the LPCC did not misdirect itself in the manner contended by Mr Betts.
Ground of objection Mr Blackman's belief
Mr Betts contends that the complaints ought not to be dismissed because there was sufficient contradictory evidence to the position that Mr Blackman held an honest belief that Mr Steinier was authorised to make the payments. Those contradictory matters identified by Mr Betts are set out below.
Mr Blackman is a highly experienced litigation partner in a 'major city law firm' and has been responsible for the conduct of a lawyer's trust account for many years
It appears that Mr Betts is contending that given the level of experience of Mr Blackman as a litigation lawyer, he could not possibly, honestly hold the belief that the cost payments and security payment were authorised. It is implied in this submission that no experienced litigation lawyer would have honestly and reasonably held such a view.
The Tribunal does not accept that Mr Blackman's years of experience as a commercial litigation lawyer naturally leads to a conclusion that he could not honestly hold the belief that he was authorised to make the payments. It cannot be said in the context of the belief being shared by senior counsel, that it was a view no experienced commercial litigation lawyer could hold.
In any event, the question for the Tribunal is whether Mr Blackman himself held the belief, not whether on an objective analysis an experienced commercial litigation lawyer would reasonably hold the belief. Supporting the position that Mr Blackman subjectively held the belief is the fact that he sought the opinion of senior counsel before the payments were made and obtained an opinion consistent with Mr Blackman's belief. He therefore acted on that advice.
Master Sanderson's orders made no provision for Sunlea to pay the costs of the proceedings
Mr Betts contends that Master Sanderson's orders were unambiguous in their terms and clearly did not provide for Sunlea to pay the costs of the proceedings. In addition, Mr Betts contends that even though Mr Blackman was not present before Master Sanderson on 3 October 2012 he must be taken to have ‘constructive knowledge' of what was said and done on his instructions and therefore must have been aware that Mr Davis declined Master Sanderson's invitation to apply for orders in respect of costs.
It is not in contention between the parties that Master Sanderson's orders did not make express provision for the payment of costs. However, it was Mr Blackman's submission to the LPCC that he held an honest belief that on the basis of Master Sanderson's orders, which authorised the representative proceedings to be initiated pursuant to s 236 and s 237 of the Corporations Act, by implication, Mr Steinier was empowered to do all things necessary and incidental in the conduct of the proceeding. It was never contended before the LPCC by Mr Blackman that there was express provision in Master Sanderson's orders for the payment of costs. To the contrary, Mr Blackman's belief was that no express order was required for the reasons stated. On that basis, the lack of an express order does nothing to diminish the position of Mr Blackman that he honestly held that view.
In relation to the exchange which occurred between Master Sanderson and Mr Davis, the Tribunal notes that Mr Blackman was not present in Court during the relevant exchange. In addition, the Tribunal finds that there was nothing in the exchange which took place which addressed the issue of whether as a result of the orders made by Master Sanderson, Mr Steinier was empowered to do all things necessary and incidental in the conduct of the proceeding. In any event Mr Blackman was not present and there is no evidence to suggest that the exchange which occurred was conveyed to Mr Blackman or was one of which he had knowledge at the relevant time.
The Tribunal therefore does not find that this fact would lead the Tribunal to conclude that Mr Blackman did not honestly hold the belief that Mr Steinier was authorised to make the payments.
Trustees Act 1962 (WA)and theMaster Sanderson's orders in no way varied or diminished Sunlea's director's responsibilities to manage the company's affairs in accordance with the Corporations Act
It is unclear to the Tribunal the relevance of this ground in relation to whether Mr Blackman held an honest and reasonable belief as to the authorisation of making the payments as the ground is not addressed in Mr Betts' submissions dated 9 January 2019. In addition, it does not appear to be in contention that Master Sanderson's orders in no way varied or diminished Sunlea's director's responsibilities in respect of the management of the company's affairs.
Mr Blackman's belief is inconsistent with Sunlea's submissions dated 22 November 2013 prepared by Mr Thomson SC
The submissions of Mr Thomson SC were filed in response to an application for security of costs seeking a payment of $522,585 in the Sunlea proceedings. The relevant paragraph of the submissions relied upon by Mr Betts can be found at page 130 of the s 24 bundle (volume 1) and is as follows:
54. Further, even if Steinier wished to cause Sunlea to borrow against the security of assets, to procure a bank guarantee, or to enter any transaction consistent with providing security, he could not do so. Sunlea is a company which is jointly owned and managed along with Betts, and Betts has made his position against the maintenance of the present action abundantly clear. It is legally impossible (and commercially impractical) for Sunlea to provide security without Betts' consent.
In the Tribunal's view the submission made by senior counsel (and not by Mr Blackman) does nothing to detract from Mr Blackman's position that he held an honest belief that Mr Steinier could make the unauthorised payments. In the Tribunal's view, the submission is clearly stating that if Sunlea was required to raise funds in order to satisfy the security order, it would be legally impossible and commercially impracticable because any available method to raise the funds would require the consent of Mr Betts, who was opposing the provision of security for costs in the Sunlea proceedings in their entirety.
The submissions do not comment on Mr Blackman's belief that pursuant to s 236 and s 237 of the Corporations Act, the person authorised to conduct representative proceedings is, by necessary implication, empowered to do all things necessary and incidental to conducting the proceedings, including the payment of costs and satisfying orders for payment of security (if funds are available to do so).
Ultimately Allanson J ordered Sunlea to give security for costs in the amount of $200,000; Sunlea Enterprises Pty Ltd as Trustee for Drummond Cove Unit Trust v Pollock [2014] WASC 91 (Sunlea v Pollock). In his Honour's reasons, he noted that he was satisfied that Sunlea would be unable to pay the defendant's costs (if Sunlea failed in the proceeding) from its own assets and would be unlikely to borrow for the purpose because of its trustee status, excess of liabilities and the difficulty in obtaining cooperation from Mr Betts (Sunlea v Pollock at [57]). In the Tribunal's view, there is nothing in the decision of Allanson J, that expressly contradicts, or by necessary implication contradicts, the belief that Mr Blackman submits that he honestly held at the time of making the relevant payments. This was never a matter raised before his Honour. The current financial situation of Sunlea and its ability to raise funds, by whatever means, were the matters that were raised and which were directly relevant to his Honour's determination of the application.
Attempts to satisfy the security for costs order which are inconsistent with Mr Blackman's honestly held belief
Mr Betts effectively contends that given that Mr Steinier attempted to raise the funds in order to satisfy the security order by various means, including by attempting to procure the discharge of two mortgages, attempting to procure the removal of a memorial registered on the titles of land and thereby discharging a Property (Seizure and Sale) Order, and also through discussions with financial institutions, this evidences that Mr Blackman could not honestly hold the belief that the security order could be met by funds held on trust for Sunlea.
The Tribunal does not accept this contention. It was open to Mr Steinier to explore other means of satisfying the security order other than depleting the funds that were available on trust. The mere fact that he attempted to do so by those other means does not contradict the position of Mr Blackman. Ultimately those other avenues were not fruitful and thus the trust funds were used.
Mr Betts also appears to contend that senior counsel's advice, consistent with Mr Blackman's belief, must have been received between 14 August and 17 September 2014, that is, the time between when attempts to satisfy the security order were failing and the date when the security order was paid from Sunlea's trust funds.
Such a submission is not supported by any of the available evidence. Mr Blackman has clearly stated that the advice from Mr Thomson SC was received prior to making any costs payments and prior to making the security payment. The LPCC was satisfied with that position and had available to it correspondence exchanged between Mr Blackman and Mr Thomson SC in relation to the matter.
Mr Betts in his written submissions (paras 48 and 60) contends that Mr Thomson SC could not have reached the conclusion attributed to him. The submission, in the Tribunal's view, is simply not relevant to the question as to whether Mr Blackman honestly held the belief. It is his position that he did and that he sought advice from Mr Thomson SC who shared that belief. Whether or not it was reasonable for senior counsel to hold the view is immaterial. Mr Blackman has informed the LPCC of the advice that he received from Mr Thomson SC, and the LPCC was satisfied that such advice had been given.
Mr Blackman's dealings with the LPCC in relation to this complaint
In Mr Betts' written submissions at paras 66 82, there appears to be a serious allegation made against Mr Blackman that he deliberately misled the LPCC in responding to the complaint made with them by effectively concealing certain matters, taking steps in order to misrepresent the Tottle Partners trust account, and failing to provide required information. The Tribunal notes that this was not a separate complaint made to the LPCC and in respect of which it made any findings and therefore the Tribunal has no jurisdiction to consider the allegation; [55] of these reasons.
However, for completeness and to the extent that the submissions also contend that the alleged deceptive conduct of Mr Blackman is further contradictory evidence to a finding that Mr Blackman honestly held the belief that the payments were authorised, the Tribunal notes that it does not accept the submission for the following reasons:
(a)It was prudent of Mr Blackman, once the matter was raised with him by the LPCC, to make no further payments for costs from the Tottle Partners trust account pending the matter ultimately being determined by Martino J.
(b)Having informed the LPCC that none of the LBH Funds had been used to pay legal fees (the complaint at that time being limited to the LBH Funds), upon discovering without his knowledge that the amount of $6,006 had been paid to Mr Thomson SC from the LBH Funds in May 2015, it was appropriate for Mr Blackman to reverse the payment and apologise to the LPCC for providing information which was inaccurate. Nothing could be inferred that by doing so Mr Blackman was conceding that all payments made from trust monies were therefore improper and unauthorised.
(c)The allegation that Mr Blackman caused reimbursement of trust funds into the Tottle Partners trust account in order to guise or misrepresent the level of funds to the LPCC is simply unsupported on the basis that the relevant trust funds identified by Mr Betts were received earlier in the day on 10 July 2015 (s 24 bundle, volume 2, page 764) and the relevant letter to Mr Blackman from the LPCC was emailed later in the day on 10 July 2015 (s 24 bundle, volume 1, pages 109A - 110).
Finally, the Tribunal notes that the submissions of Mr Betts appear to be based on the underlying premise that Mr Blackman did not hold an honest belief in respect of Mr Steinier being authorised to make the payments and hence had to be devious in his dealings with the LPCC in relation to this complaint. However, the submission fails to take into account the fact that Mr Blackman obtained advice consistent with his belief prior to the payments being made. Therefore, in order to accept the submissions of Mr Betts that Mr Blackman never held such a belief because of his alleged attempts to mislead the LPCC, the Tribunal would need to find that either:
a)the advice was never sought from Mr Thomson SC; or
b)was sought and the advice did not support Mr Blackman's belief; or
c)the advice was sought and obtained in the terms purported by Mr Blackman but Mr Blackman nevertheless did not accept that the advice was correct.
However, it is clear that the LPCC accepted that the advice was sought before the payments were made and was consistent with Mr Blackman's belief on the basis of the privileged documents they were provided. On the basis that the advice was obtained and supported Mr Blackman, there was simply no reason for him to mislead the LPCC.
Commencement of Orbito proceedings
Mr Betts at paras 83 - 95 of the applicant's written submissions alleges that, in effect, the Orbito proceedings were commenced to replace Sunlea with Baylink Nominees Pty Ltd (Baylink) as the trustee of DCUT to enable Baylink to ratify 'the practitioner's unauthorised trust account transactions'; para 93. The Tribunal notes that no such complaint was made to the LPCC, it has not made any findings or decision in relation to any such complaint and therefore the Tribunal has no jurisdiction to consider the allegation (for the reasons articulated at [55] of these reasons).
In considering the submissions, in the limited context that Mr Betts contends that the allegation is further evidence that Mr Blackman could not possibly have held the belief that the payments were authorised at the time, the Tribunal rejects the submission for the following reasons:
(a)The reasons for the initiation of the Orbito proceedings are set out in the affidavit of Mr Steinier (s 24 bundle, volume 1, pages 774 - 775).
(b)The reason requiring a new trustee to be appointed to the DCUT appeared to be clear, certainly to Acting Master Gething, as his Honour then was, as set out in the published reasons; Orbito Nominees Pty Ltd v Betts Nominees Pty Ltd [2015] WASC 431 at [3] - [4] set out below:
The context in which the application arises is an application pursuant to the Trustees Act 1962 (WA) (TA) s 77 to remove the trustee of the Drummond Cove Unit Trust (the DCUT). The current trustee of the DCUT is Sunlea Enterprises Pty Ltd, which is jointly owned and controlled by Phillipe Fernand Leon Raoul Steinier and Trevor Stanley John Betts. It is immediately apparent on the material before me that Mr Betts and Mr Steinier are in an irreconcilable conflict. There appears to be consensus across the bar table that Sunlea ought to be removed as the trustee of the DCUT.
The plaintiff, that is the Steinier interests, assert that a company by the name of Baylink Nominees Pty Ltd should be appointed as the trustee in lieu of Sunlea, being a company controlled by Mr Steinier and his interests. The defendant, being the unit holder nominees of Mr Betts' interests, asserts that the trustee ought to be an independent insolvency practitioner. In practical terms, the issue will become what course of action is best in the welfare of the beneficiaries of the trust.
As noted in the decision, Mr Betts and Mr Steinier were in ‘irreconcilable conflict', but were agreed that Sunlea ought to be removed as the trustee of DCUT.
In any event, whether or not Mr Blackman thought it prudent to advise his client to initiate the proceeding as a potential alternative way for the Sunlea proceedings to continue, does not, in the Tribunal's view, lead to a conclusion that at the time of making the relevant payments he did not hold a reasonable belief that Mr Steinier was authorised to do so. At the time that the Orbito proceedings were initiated, the issue as to whether the payments were authorised had been raised. Therefore even if one of the reasons for the initiation of the Orbito proceedings was to ensure that the Sunlea proceedings could continue to be funded, it does not necessarily lead to a conclusion that Mr Blackman never held the honest belief that the payments were authorised at the time they were made.
Mr Betts makes further submissions in relation to the objection made by Mr Blackman, on instructions from his client, to providing access to the Sunlea trust account to Mr Betts' solicitors, Birman & Ride, as evidencing a personal interest by Mr Blackman in the trust records which could only exist if he believed that the payments were unauthorised.
The Tribunal does not intend to deal with this submission in any detail other than to note that there is no evidence to support the contention that Mr Blackman was doing anything other than acting on his client's instructions. Mr Blackman submitted that the objection, made on behalf of his client, was to avoid any prejudice to Sunlea given that Birman & Ride acted for Mr Pollock in the Sunlea proceedings.
There is no basis on which the Tribunal could find that the objection was personally made by Mr Blackman. Further, by merely making the objection on behalf of his client, the Tribunal cannot reach the conclusion that Mr Blackman therefore did not reasonably and honestly hold the belief that the payments were authorised at the time that they were made.
In conclusion, the Tribunal does not accept Mr Betts' submission that the initiation and conduct and ultimate discontinuance of the Orbito proceedings supports a finding that Mr Blackman did not honestly hold a belief that the payments were authorised at the time that they were made.
Affidavit of Mr Steinier sworn 30 August 2013
It is not in contention between the parties that Mr Blackman assisted in the preparation of an affidavit sworn by Mr Steinier on 30 August 2013 (s 24 bundle, volume 2, pages 878-1133) which omitted to disclose the Troika trust money. This matter is the subject of a separate complaint made by Mr Betts to the LPCC and will be dealt with later in these reasons. It has, however, also been raised in the context as to whether Mr Blackman held an honest belief that Mr Steinier was authorised to make the payments at the time that they were made. It is alleged by Mr Betts that the omission in the affidavit supports a finding that Mr Blackman 'never honestly believed that the unauthorised payments were legitimate' (applicant's written submissions, para 97.1).
This is a serious allegation made in respect of Mr Blackman, that is, that he intentionally attempted to mislead the Court. In the Tribunal's view, there is simply no foundation to support the allegation. In particular, the Tribunal notes the following:
(a)The financial report annexed to Mr Steinier's affidavit was prepared by Mr Steinier together with his accountant, it was not prepared by Mr Blackman;
(b)The affidavit was prepared in a brief period of time, being five weeks, and was extensive, comprising 791 pages;
(c)Mr Steinier, at the time of swearing the affidavit, was aware of the existence of the Troika trust money and was not reliant on Mr Blackman for its inclusion in the financial report;
(d)There was no evidence before the LPCC (other than a mere assertion) of an actual intent by Mr Blackman to deliberately mislead the Court; and
(e)In all of the circumstances it was open to the LPCC to find that the error was inadvertent.
In the Tribunal's view, there is simply no connection with an inadvertent error in an exhibit to an affidavit prepared by Mr Blackman's client together with accountancy support, and the question as to whether Mr Blackman held an honest belief that the relevant payments at the time they were made were authorised. Any such submitted connection simply does not exist.
In conclusion, as to this ground of objection, the Tribunal is satisfied that the matters raised by Mr Betts in his written submissions are insufficient to contradict a finding that Mr Blackman held an honest belief at the time of each relevant payment that they were authorised. This is particularly so in circumstances where advice was sought from senior counsel prior to making the payments which was consistent with Mr Blackman's belief.
Ground of objection interpretation of s 237 of the Corporations Act
Essentially Mr Betts appears to allege that the complaints evidence a lack of competency on the part of Mr Blackman, as an experienced litigation lawyer (paragraphs 7 and 8 in the Grounds for Review filed by Mr Betts). The submission seems to be twofold, firstly that Mr Blackman could not reasonably hold the belief he purports to have held, presumably on the basis that his interpretation of the relevant sections of the Corporations Act is untenable or without substance, and secondly if he held such a view he ought to be found to be lacking in competency.
The Tribunal notes that an allegation of lack of competency, as a separate complaint, was never made by Mr Betts and therefore no specific findings have been made by the LPCC in respect to such a complaint. It appears to be raised ‘in the alternative' for the first time in Mr Betts' application.
The LPCC in its reasons for decision say little on this point other than to note at para 97 that Mr Blackman's interpretation of Master Sanderson's order under s 237 of the Corporations Act 'did appear to be stretching an ordinary interpretation' but ultimately Mr Blackman's error did not amount to unsatisfactory professional conduct or professional misconduct.
Although raised in the grounds for review, Mr Betts' written submissions do little to expand on this allegation.
In any event, in the Tribunal's view the submission is without foundation for the following reasons:
(a)Simply because a practitioner holds a view which ultimately is found to be incorrect, is not evidence of lack of competency per se. It is also not evidence that the practitioner never held the belief simply because he was ultimately unsuccessful in persuading a Court of its correctness;
(b)Mr Blackman's belief was supported by senior counsel which sways against a finding that the belief evidences lack of competency. In particular, Mr Blackman clearly understood that there may be a different interpretation, which prompted him to seek advice from senior counsel. The standard of competence and diligence expected of senior counsel is higher than that expected of a general practitioner and senior counsel shared the same view as Mr Blackman. It could not therefore be found, in the Tribunal's view, that Mr Blackman did not meet the appropriate standard of competence and diligence expected of a general practitioner in the circumstances; and
(c)The decision of Martino J made no comments which would suggest that Mr Blackman's point of view was untenable or unreasonable or clearly flawed.
On the basis of the above, the Tribunal's view is that there is no evidence to support a finding of lack of competency of Mr Blackman in respect of his interpretation of Master Sanderson's order and nor is there any evidence, on the basis that his view was ultimately found to be incorrect, on which the Tribunal could find that he never honestly held that view.
Ground of objection undue reliance on the assertion as to Mr Thomson SC's support
Essentially Mr Betts contends that the LPCC placed undue reliance on the assertion made by Mr Blackman that prior to making the relevant payments he obtained an opinion from Mr Thomson SC that supported his belief that the payments could be authorised by Mr Steinier. The submissions appear to be premised on an assumption that Mr Blackman's position was not corroborated by Mr Thomson SC.
In the Tribunal's view, the premise of the submission is unfounded. There were clearly documents before the LPCC on which it relied in accepting the position that Mr Thomson SC gave the relevant advice to Mr Blackman and those documents are referred to at [30] of Betts.
In any event, to the extent that Mr Betts is inviting the Tribunal to find error in the LPCC's decision in this regard, the Tribunal repeats the comments made at [66].
Ground of objection relevance of Martino J's judgment
Mr Betts submitted that the LPCC 'misdirected itself as to the weight and effect of Martino J's decision' in Steinier v Sunlea Enterprises Pty Ltdin its own capacity and as TFT Drummond Cove Unit Trust [2016] WASC 81; para 9.2 in the Mr Betts' Grounds of Review. In particular Mr Betts notes that Martino J found the payments to be unauthorised and ratifying the payments subsequently did not authorise or excuse Mr Blackman's conduct.
Again Mr Betts is submitting that the Tribunal ought to find error in the LPCC's findings and determination, which is not the Tribunal's role.
In any event, it was clearly understood by the LPCC (as noted in paras 91 and 96 of its reasons), and as it was clearly acknowledged by the parties before the Tribunal, that the payments were subsequently found to be unauthorised. There is nothing in the findings of the LPCC that suggests that it misinterpreted Martino J's judgment as excusing or commenting in any way on Mr Blackman's conduct.
Ground of objection irrelevance of the purpose to which the unauthorised transfer of $200,000 was applied
Mr Betts again points to error being made by the LPCC by placing undue weight or reliance on the fact that Mr Blackman paid $200,000 to satisfy the security order rather than using the funds for his own fees. Mr Betts asserts that the object of the payment was irrelevant to its legitimacy (para 9.3 in the applicant's Grounds of Review).
In resolving that the complaint ought not be referred to the Tribunal, the LPCC noted that it reached the finding for similar reasons to those expressed in regard to the unauthorised payments made for Mr Blackman's fees and counsel fees but noted that the reasoning was ‘even more apposite given the payment of $200,000 was in respect of a court order'; para 102 of the LPCC's reasons for decision.
The Tribunal again repeats its comments that this proceeding is by way of a hearing de novo which does not require the Tribunal to find fault with the underlying decision.
In any event, the Tribunal does not accept that the LPCC placed undue reliance on the purpose of the payment. It was one of a number of relevant matters it took into account. Ultimately it was open for the LPCC to reach the decision it reached on the basis that it accepted Mr Blackman's position that he held an honest belief that the security payment was authorised.
There are two final matters which Mr Betts raises in his written submissions in the context of these two complaints which will be dealt with briefly by the Tribunal below.
Application of the Criminal Code
Mr Betts makes a comparison between the LP Act and its Regulations, and s 371 of the Criminal Code Act Compilation Act 1913 (WA) (Criminal Code) in relation to the offence of stealing. It is unclear to the Tribunal the relevance of the reference to the Criminal Code. Clearly the Tribunal does not have jurisdiction in relation to criminal offences. Whilst the Tribunal can, in the context of the vocational regulation jurisdiction, take into account relevant criminal convictions of a practitioner, as far as the Tribunal is aware it has never been suggested that Mr Blackman is guilty of the offence of stealing, or that he has ever been investigated or charged in respect of such an allegation. In those circumstances, in the Tribunal's view, it is highly improper of Mr Betts to raise the matter which clearly is suggestive that Mr Blackman's conduct is akin to the criminal offence of stealing.
Mr Betts goes on in his written submissions to refer to s 22 of the Criminal Code which provides that ignorance of the law is no excuse in the context of a criminal offence. The Tribunal repeats its comments made in the paragraph above. The Tribunal does not have jurisdiction to determine criminal matters. The Criminal Code does not apply to the vocational regulation jurisdiction and indeed there is no criminal matter arising in the context of the facts of this matter.
The submissions are unhelpful and the Tribunal does not intend to comment further in relation to them.
The need to test Mr Blackman's credibility
Lastly, Mr Betts makes submissions (paras 100-102 of the applicant's written submissions) that Mr Blackman's 'defence' turns entirely on his credibility and questions of credibility ought to, in significant matters of complaint, be referred to the Tribunal by the LPCC for that reason. Effectively, Mr Betts is proposing that in certain circumstances, where credibility of the practitioner is in issue, the LPCC should automatically refer the matter rather than making its own determination.
It is clear from a proper interpretation of sections 425, 426 and 428 of the LP Act, that the LPCC must, following its investigation of a complaint, either dismiss the complaint if it finds that there is no reasonable likelihood that the practitioner would be found guilty by the Tribunal of either unsatisfactory professional misconduct or professional misconduct, or take further action, which includes the possibility of referral to the Tribunal, if it finds that there is a reasonable likelihood that the practitioner would be found guilty of either unsatisfactory professional misconduct or professional misconduct.
The provisions of the LP Act do not, in the Tribunal's view, contemplate a position where the LPCC does not form a view at all in relation to a complaint and simply refers it to the Tribunal because in order to determine the complaint, credibility of witnesses may be in question.
There may be many such category of complaints which are made to the LPCC which potentially involve issues of credibility of witnesses. The LPCC could not abrogate its statutory duties to make a finding and simply refer those matters to the Tribunal. In the Tribunal's view, s 425(a) of the LP Act requires the LPCC to make a determination following its investigation of a complaint as to the reasonable likelihood of a practitioner being found guilty of unsatisfactory professional conduct or professional misconduct on referral to the Tribunal. In circumstances where the LPCC has determined that there is no reasonable likelihood of making that finding, then it is proper for it to exercise its discretion to dismiss the complaint. It is not appropriate, in the Tribunal's view, for the LPCC to refer complaints to the Tribunal simply on the basis that the practitioner or some other witness may be ultimately assessed as to their credibility.
It is a matter for the LPCC to decide whether to refer a complaint to the Tribunal pursuant to s 428 of the LP Act. The Tribunal does not accept the submission made by Mr Betts that the issue of credibility of the practitioner should dictate or influence the decision whether to refer.
Conclusion
In conclusion, the Tribunal considers that the correct and preferable decision is that there is no reasonable likelihood that Mr Blackman would be found guilty of unsatisfactory professional conduct or professional misconduct arising from complaints 1 and 2.
Complaint 3: failure to comply with Mr Betts' request for account of trust monies
Mr Betts alleged that Mr Blackman failed to produce an account of trust monies when it was requested by Birman & Ride on behalf of Mr Betts. The requests were made on 9 and 18 March and 15 April 2015 seeking trust account records for any monies received from and on behalf of Sunlea and Crosswest. At the relevant time that the requests were made, Mr Betts was a defendant in the Sunlea proceedings.
Regulation 60(6)(b) of the Legal Profession Regulations 2009 (WA) (LP Regulations) provides as follows:
(6)A trust account statement is to be furnished
…
(b)as soon as practicable after the person for whom or on whose behalf the money is held or controlled makes a reasonable request for the statement during the course of the matter; or
…
Mr Blackman's response to the LPCC was that he had never received, held or disbursed trust money on behalf of Crosswest and to provide an explanation as to the reasons why the request to access the trust account records of Sunlea was objected to (s 24 bundle, volume 1, pages 257 - 258).
The LPCC ultimately found that in the circumstances of Mr Blackman's instructions, and in the context of ongoing litigation involving Mr Betts, there was no reasonable likelihood that Mr Blackman's conduct in not providing the trust account statements to Mr Betts would amount to unsatisfactory professional conduct or professional misconduct. At para 84 of the LPCC's reasons, it noted 'a practitioner in those circumstances could reasonably conclude that the request was not being made for the purpose of Sunlea but for Mr Betts' own purposes'.
There are various reasons submitted by Mr Betts as to why the refusal by Mr Blackman to provide the account of trust monies constitutes conduct which has a reasonable likelihood of being found to constitute unsatisfactory professional conduct or professional misconduct and those grounds are set out below.
The practitioner's duty to account pursuant to reg 60 of the LP Regulations was owed to the person for whose benefit the trust monies were held and was not limited to the law practice's client
Mr Betts asserts that Mr Blackman held the monies on trust for Sunlea, and as a director of the company, Mr Betts was entitled to access the financial records. Mr Betts also submitted that Mr Blackman's duty as a trustee to account to Mr Betts as a representative of the beneficiary did not depend on the existence of a lawyer/client relationship.
The Tribunal is not persuaded by Mr Betts' contention in this regard. Regulation 60 clearly contemplates the provision of a trust account to the person for whom the trust funds are being held or controlled 'during the course of the matter'. Whilst it does not refer specifically to a lawyer/client relationship it clearly refers to access being granted to the person for whose benefit the trust funds are held/controlled and who makes a reasonable request during the course of a 'matter' (whether the ‘matter' is litigation proceedings or some commercial transaction or some other 'matter' in which the practitioner is instructed). Therefore in the Tribunal's view, any request to account contemplates it being made 'during the course of the matter', which in the context of litigation, would ordinarily be made by the instructing client. Mr Blackman's instructing client was Mr Steinier.
It is not necessary for the Tribunal to consider the question of the proper interpretation of reg 60 in the context of this review. Rather, it is for the Tribunal to determine whether, by refusing Mr Betts' requests for access to the trust account records, Mr Blackman breached reg 60 and whether as a result there is a reasonable likelihood of Mr Blackman being found guilty of unsatisfactory professional conduct or professional misconduct.
In the circumstances of the Sunlea proceedings, whereby Sunlea was pursuing claims against Mr Betts, including in respect of procuring and being knowingly concerned in breaches of trust, Mr Blackman was, in the Tribunal's view, appropriately concerned that any request to access the documents was being made by Mr Betts personally rather than by Sunlea. Mr Blackman's duty to account for receipts and payments was for the benefit of Sunlea, and not for the benefit of Mr Betts in his personal capacity.
In the Tribunal's view this was a proper ground on which to refuse access to the documents.
The Sunlea proceedings
Mr Betts contends that there was no evidence that the Sunlea proceedings may be prejudiced by the disclosure of the trust account records. Mr Betts also submitted that there was nothing in the LP Regulations or the general law to suggest that the obligation to account ceases if a conflict arises between the party seeking access to the records and the practitioner's client.
In the Tribunal's view, it was reasonably open to Mr Blackman to be concerned that the requests were being made otherwise than for the benefit of Sunlea given the context of the Sunlea proceedings in which Mr Betts was a defendant. It was also reasonable in the context of the Sunlea proceedings for Mr Blackman to form the view that the request was being made by Mr Betts in his personal capacity and not as a director of Sunlea. If Mr Blackman was correct in this view then the request was not being properly made in accordance with reg 60 of the LP Regulations. Further, the conflict which arises is between not just the 'practitioner's client' and the party requesting access, but between the very party for whose benefit the trust monies are being held and the party seeking provision of the trust account.
Records required for the management of Sunlea's business
Mr Betts contends that he together with Sunlea had a common interest in ensuring that the trust monies were being 'properly husbanded'; para 123 of Mr Betts' written submissions. Mr Betts also submitted that he had fiduciary and other obligations as a director of Sunlea which were ongoing.
It is not in contention that Mr Betts' fiduciary and other obligations as a director of Sunlea were ongoing. However, that fact in and of itself clearly did not abate Mr Blackman's concerns. That is, the concern that the request was not being made by Sunlea or for Sunlea's benefit but for Mr Betts' own personal benefit in the Sunlea proceedings. The fact of Mr Betts' fiduciary and other obligations does nothing to dissipate or address that concern.
Mr Blackman intentionally withheld the trust account records so as not to expose his unauthorised conversion of trust funds
Mr Betts alleges (applicant's written submissions, para 131) that it may 'reasonably be inferred' that Mr Blackman withheld the trust account records intentionally so as not to expose 'his unauthorised conversion of the trust funds'.
Given the findings that the Tribunal has made in respect to complaints 1 and 2, that is, that there is no evidence to suggest that Mr Blackman did not honestly hold the view at the time of making the payments, that they were authorised, the Tribunal cannot find that Mr Blackman took actions to withhold the trust account records so as not to expose the diversion of trust funds which he believed were unauthorised. If Mr Blackman believed that the use of the trust funds was authorised, and had received senior counsel advice consistent with that belief, there was simply no need to 'conceal his misuse of the trust funds' (applicant's written submissions, para 130).
The reasons for the refusal, whether Mr Betts believes there is substance in the reasons or otherwise, are as set out in Mr Blackman's response to the LPCC (s 24 bundle, volume 1, pages 257 - 258). There is simply no basis, in the Tribunal's view, to accept that the objection was made by Mr Blackman for reasons other than those provided by Mr Blackman to the LPCC.
Mr Blackman had a duty to act impartially
Mr Betts contends that Mr Blackman as trustee had a duty to act impartially at all times and not to favour the interests of one beneficiary at the expense of another and not to set up the rights of others (applicant's written submissions, para 120).
In the Tribunal's view this submission is misconceived. There was only one beneficiary, being Sunlea. Mr Betts could only seek access to the trust account records as a director of Sunlea. He was not a beneficiary in his personal capacity to whom a separate duty was owed by Mr Blackman.
Mr Betts' ability to obtain access to the trust account records through other means
The LPCC incorrectly noted in its reasons for decision (at para 85) that Mr Betts sought access to the trust account records after already obtaining them by subpoena in the Orbito proceedings. This statement is incorrect.
The LPCC in its reasons for decision (at para 84) also noted as relevant that Mr Betts could obtain access to the trust account records through other means including by way of a court order under the Corporations Act. In the Tribunal's view, whether access could be obtained through other means is an irrelevant consideration as to whether Mr Blackman breached any obligation to account under reg 60. However, the Tribunal's role as noted previously in these reasons, is not one of fault finding in the decision under review. It is to make the correct and preferable decision.
Mr Blackman did not refuse to account on the basis that Mr Betts could obtain the trust account records from other avenues (s 24 bundle, volume 1, pages 256 - 259). The Tribunal therefore does not believe that this is a relevant consideration in respect of this complaint.
Mr Blackman's justifications are 'variously misconceived, irrelevant, improper or dishonest'
A number of submissions are made by Mr Betts which attack the various reasons provided by Mr Blackman to the LPCC as to why it was appropriate to refuse access to the trust account records to Mr Betts.
The reasons proferred by Mr Blackman primarily related to the concerns regarding the Sunlea proceedings, the fact that the monies were held on trust for Sunlea's benefit (and not for the benefit of Mr Betts), that Mr Steinier was the only person authorised to give instructions to the firm and that access did not appear to be for the purposes of the proper management of Sunlea's business.
For the reasons already given, the Tribunal's view is that Mr Blackman had a proper basis on which to object to the provision of the trust account records. Whether some of the reasons he proffered had more merit than others is really immaterial.
In conclusion, the Tribunal's view is that the correct and preferable decision is that there is no reasonable likelihood that Mr Blackman would be found guilty of unsatisfactory professional conduct or professional misconduct arising from this allegation.
Complaints 4 and 5: that Mr Blackman:
(a)on 30 August 2013 prepared and filed Mr Steinier's affidavit in the Sunlea proceedings with actual knowledge that its contents were false in that the Sunlea financials failed to disclose the asset of $431,460 (Troika trust money) held on trust for Sunlea by Tottle Partners; and
(b)failed to correct the omission after it was drawn to his attention on 21 August 2015.
In respect to the first part of this complaint, in relation to the preparation and filing of Mr Steinier's affidavit sworn 30 August 2013, this complaint has effectively already been addressed at [99] and [100] of these reasons. In addition, the Tribunal notes that there is no evidence before it to support a finding that at the time of preparing Mr Steinier's affidavit Mr Blackman intended to mislead the Court.
As to whether Mr Blackman recklessly misled the Court by filing an affidavit which was inaccurate, the Tribunal would need to find that Mr Blackman's actual state of mind was that of indifference to the truth of the affidavit or that he did not care whether it was true or false; Giudice v Legal Profession Complaints Committee [2014] WASCA 115 (Giudice) at [44].
Mr Betts relies on a number of matters in relation to whether there would be a reasonable likelihood to find that Mr Blackman intentionally or recklessly misled the court. Some of those matters include the written submissions Mr Thomson SC filed in court referred to at [78] of these reasons, observations made by Allanson J in Sunlea v Pollock at [84] and the delay in satisfying the security order.
In the Tribunal's view, the submissions authored by Mr Thomson SC have no relevance to Mr Blackman's state of mind in relation to the preparation of Mr Steinier's affidavit. His submissions, as previously noted, were primarily directed at the impracticality and impossibility of Sunlea raising funds to satisfy a security for costs order by various means which would require cooperation from Mr Betts (refer to [79] of these reasons).
In addition, the observations of Allanson J in his Honour's published decision have no relevance to Mr Blackman's state of mind in preparing the 30 August 2013 affidavit. The decision was published almost nine months after the affidavit had been filed and could not possibly have any relevance to Mr Blackman's state of mind. In this regard in the Tribunal's view, the submissions made by Mr Betts are misconceived and are not evidence of Mr Blackman's intent or subjective state of mind in the preparation and filing of Mr Steinier's affidavit in August 2013.
There is no evidence before the Tribunal to support a finding that Mr Blackman's subjective state of mind at the relevant time was that he was indifferent to or simply did not care about the truth or otherwise in respect of the presentation of Sunlea's financial position. His position was that he relied on Mr Steinier, together with his accountant, to accurately prepare the financial report and they were best placed to prepare the financial records. This in and of itself, in the Tribunal's view, is insufficient to establish the subjective state of mind required in order to find that Mr Blackman recklessly misled the court.
The Tribunal will now address the separate allegation that Mr Blackman failed to correct the error in the affidavit after it was drawn to his attention on 21 August 2015. The matter was drawn to his attention on that date by way of letter from Birman & Ride (s 24 bundle, volume 1, pages 134 - 135).
Mr Blackman's position is that he sought advice from junior counsel following receipt of the 21 August 2015 letter (second respondent's written submissions, para 198).
The Sunlea proceedings were listed for a directions hearing on 28 August 2015 at which time Mr Birman informed Allanson J that one of the defendants, Mr Pollock, may be making an application in respect of whether there had been proper disclosure to the court by Sunlea in respect of DCUT's financial position at the time that the security application was heard.
Mr Blackman's position was, therefore, at this time the court had been alerted, in general terms, to the matter and there was an application foreshadowed in respect of whether proper disclosure had been made.
Mr Blackman then sought advice from senior counsel retained in the Sunlea proceeding (second respondent's written submissions, para 200).
Mr Blackman submitted that he intended to arrange for Mr Steinier to swear a correcting affidavit for the purposes of the foreshadowed application by Mr Pollock (s 24 bundle, volume 1, pages 245 - 246).
The foreshadowed application by Mr Pollock did not eventuate. Rather, the further security for costs application was filed by Mr Pollock in the Sunlea proceedings (s 24 bundle, volume 2, pages 779 - 781). It appears that the application was filed on 8 September 2015.
The Sunlea proceedings were listed for a directions hearing on 29 September 2015 and on that occasion Mr Thomson SC made the following submission:
There was one other point I should make, your Honour, and that is that there has been some issue raised about the affidavit that Mr Steinier swore in support of the security for costs application initially, and about whether or not it was accurate, insofar as it didn't disclose certain matters about in the special purpose accounts that your Honour referred to in relation to the impecuniosity and whether it did not disclose matters relating to funds held on trust by Tottle Partners.
Mr Steinier, I am instructed, will explain that omission and apologise to the court for that omission; that there will be an affidavit sworn to that effect. For the purposes of anything that is made out of that, I thought I should inform the court that there will be some explanation forthcoming. It hasn't occurred yet, although if your Honour had looked at Mr Steinier's affidavit in the (indistinct) application, there is an explanation there.
(s 24 bundle, volume 1, page 361)
On that occasion the Sunlea proceedings were stayed by Allanson J. The stay was continued at a further directions hearing on 20 November 2015.
Mr Blackman's position is that he intended to correct the omission by way of a further affidavit sworn by Mr Steinier. The initial delay in doing so, submitted by Mr Blackman, was because he was awaiting the foreshadowed application by Mr Pollock which did not eventuate. Subsequently, the Sunlea proceedings were stayed and therefore the opportunity to file an affidavit was not available.
Mr Betts contends that Mr Blackman was put on notice of the error from 21 August 2015 and ought to have immediately taken steps to correct it and apologise to the court and did not do so. In regard to Mr Blackman's obligation to do so, Mr Betts refers to Kyle v Legal Practitioners' Complaints Committee [1999] WASCA 115 at [13] set out below:
Legal practitioners owe this duty when performing any act in the course of practising their profession, not only when they are making oral submissions to the court. Lawyers may not, consistently with their ethical duties and duties to the court, prepare and file affidavits known by them to be perjured, whether the affidavits are made by their clients or other witnesses: Myers v Elman (1940) AC 282. In England, the ethical rule is that lawyers should not produce witness statements that they know to be false or where they know that the witness does not believe the statement to be true in all respects. Further, if, after filing a witness statement, a lawyer is put on enquiry as to the truth of the facts stated in the statement, the lawyer should, where practicable, check whether those facts are true.
If the lawyer then discovers that the witness statement which has been served is incorrect, the lawyer must inform the other parties immediately, Chancery Guide: February 28, 1995, par 3.7(7). In my view this rule reflects the duties that lawyers in this country owe to the court.
It was not in contention between the parties that solicitors owe an overarching duty to the court. The question for the Tribunal is whether that duty has been met by Mr Blackman in the circumstances of this allegation, and if not met, whether there is a reasonable likelihood that the Tribunal will be able to make a finding that Mr Blackman's conduct amounts to unsatisfactory professional conduct or professional misconduct.
In the Tribunal's view, it was not unreasonable for Mr Blackman, when first notified of the error, to seek the advice of counsel and to await the foreshadowed application by Mr Pollock as the appropriate opportunity to file a corrective affidavit of Mr Steinier.
In or about 8 September 2015, Mr Blackman would have been aware that no such application was going to be made. The question is, therefore, whether Mr Blackman had a duty to correct the error contained in Mr Steinier's 30 August 2015 affidavit either prior to or at the directions hearing on 29 September 2015. Certainly the court was alerted to the error by Mr Thomson SC on that occasion. The Tribunal accepts that once the matter was formally stayed, there was no opportunity to file the affidavit.
In relation to this matter, the LPCC accepted that Mr Blackman had intended to correct the error by way of affidavit evidence and due to Mr Pollock not proceeding with his foreshadowed application, and the Sunlea proceedings having been stayed, there was limited opportunity to do so. However, the LPCC considered that Mr Blackman's explanation was deficient and expressed concern that he did not otherwise follow up on the intention.
The Tribunal also accepts that Mr Blackman's intention was to correct the omission, and this intent is consistent with the submission made by Mr Thomson SC to the court on 29 September 2015. The Tribunal, however, is concerned that a three week period lapsed between 8 September 2015, when Mr Blackman would have been aware that Mr Pollock did not intend to bring the foreshadowed application, and the matter being listed for a directions hearing on 29 September 2015. During that period no action was taken to correct the omission and apologise to the court, the obligation to do so being Mr Blackman's.
However, on balance, the Tribunal's view is that the conduct does not support a finding that there would be a reasonable likelihood that Mr Blackman would be found guilty of unsatisfactory professional conduct or professional misconduct arising from this allegation for the following reasons:
a)The Tribunal accepts that Mr Blackman's intent was to correct the omission by way of filing a further affidavit from Mr Steinier;
b)The Tribunal accepts that it was appropriate that such affidavit be filed in response to the foreshadowed application from Mr Pollock which was never filed;
c)Although there was a three week period during which Mr Blackman could have filed the affidavit, the delay does not necessarily lead to a conclusion that Mr Blackman did not intend to correct the error and apologise to the court, particularly given Mr Thomson SC's submissions to the court on 29 September 2015; and
d)There was no opportunity to file the affidavit once the matter was stayed by Allanson J on 29 September 2015, such stay which was continued at a further directions hearing on 20 November 2015.
The correct and preferable decision is therefore that there is no reasonable likelihood that Mr Blackman would be found guilty of unsatisfactory professional conduct or professional misconduct arising from this allegation.
Complaint 6: the allegation that Mr Blackman breached s 227 of the LP Act by failing to give notice of irregularities in the Tottle Partners' trust account
Mr Betts also complained to the LPCC that Mr Blackman failed to give notice to the Legal Practice Board or the Trust Account Inspector of the irregularities in Tottle Partners' trust account caused by the alleged unauthorised withdrawals of the Sunlea trust monies, the subject of complaint 1 dealt with by the Tribunal above.
Section 227 of the LP Act provides as follows:
(1)As soon as practicable after a legal practitioner associate of a law practice becomes aware that there is an irregularity in any of the practice's trust accounts or trust ledger accounts, the associate must give written notice of the irregularity to
(a)the Board; and
(b)if a corresponding authority is responsible for the regulation of the accounts concerned the corresponding authority.
Penalty: a fine of $5 000.
(2)If an Australian legal practitioner believes on reasonable grounds that there is an irregularity in connection with the receipt, recording or disbursement of any trust money received by a law practice of which the practitioner is not a legal practitioner associate, the practitioner must, as soon as practicable after forming the belief, give written notice of it to
(a)the Board; and
(b)if a corresponding authority is responsible for the regulation of the accounts relating to the trust money concerned the corresponding authority.
Penalty: a fine of $5 000[.]
Firstly, Mr Betts contends that if the Tribunal finds in respect of complaints 1 and 2 that there is reason to doubt Mr Blackman's claim that he honestly believed he was authorised to draw on Sunlea's trust funds, then on that basis the Tribunal should also find in respect to this complaint, that there is a reasonable likelihood that his conduct amounts to unsatisfactory professional conduct or professional misconduct. That is, if the Tribunal does not accept that Mr Blackman honestly held the belief that the payments were authorised, he was therefore fully cognisant of the irregularities in the trust account which required notice to be given.
However, the Tribunal found that there was no evidence to support a finding that Mr Blackman did not honestly believe that the payments were authorised.
In the alternative, Mr Betts submits that when Mr Blackman did become aware, or had reasonable grounds to believe that there was an irregularity in the Sunlea trust funds, he ought to have given notice in compliance with s 227 of the LP Act and did not do so. Mr Betts submits that Mr Blackman ought to have been aware that there was an irregularity from at least 17 June 2015 when the LPCC wrote to him in relation to concerns regarding disbursement of trust funds in payment of legal fees.
The LPCC found that in order to have breached s 227 of the LP Act, Mr Blackman needed to be aware that there was an irregularity. The LPCC found that Mr Blackman was not aware because at the time that the payments were made he had a belief that they were entitled to be made (LPPC's reasons for decision, para 106).
In the Tribunal's view, there is no reasonable likelihood that it would find the alleged conduct to constitute unsatisfactory professional conduct or professional misconduct for the following reasons:
(a)At the time that the costs payments were made, Mr Blackman held an honest belief that the payments were entitled to be made ([56] - [107] of these reasons);
(b)Mr Blackman was therefore not aware of any irregularity at the time that the payments were made in order to give notice of any irregularity; and
(c)Any steps taken by Mr Blackman following the raising of the issue by the LPCC do nothing to support a finding that he did not honestly believe that the payments were authorised, or that he held a view at those times that there were irregularities in the Tottle Partners trust account which required reporting. Those steps were merely prudent in the context of the issue being raised and which had yet to be determined by Martino J.
In relation to the allegation that Mr Blackman had 'reasonable grounds to believe' that there was an irregularity in the Tottle Partners trust account, no such complaint was made by Mr Betts to the LPCC and no finding has been made in respect of it. For that reason the Tribunal has no jurisdiction to consider that allegation.
In conclusion, the correct and preferable decision is that there is no reasonable likelihood that Mr Blackman would be found guilty of unsatisfactory professional conduct or professional misconduct arising from this allegation.
Conclusion
For the above reasons, the Tribunal is of the view that the decision of the LPCC to dismiss complaints 1 - 6 made by Mr Betts was the correct and preferable decision, and should be affirmed. The application for review of the decision should therefore be dismissed.
Orders
1.The application is dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
JUDGE T SHARP, PRESIDENT (ACTING)
8 MAY 2019
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