Council of the Law Society in the ACT & The Legal Practitioner
[2011] ACAT 49
•20 July 2011
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
COUNCIL OF THE LAW SOCIETY IN THE ACT & THE LEGAL PRACTITIONER (Occupational Discipline) [2011] ACAT 49
OD 8 of 2010
Catchwords: Occupational Discipline – Legal Practitioners – application to strike out complaint notice as disclaiming no cause of action – evidence filed by complainant – no evidence from practitioner – evidence from complainant to be accepted for purposes of the application to strike out – application refused
List of Legislation: ACT Civil and Administrative Tribunal Act 2008
ss 32 and 56
Legal Profession Act 2006 (ACT)
ss425 (3) (e)
List of cases: King v. Higgins [2009] ACTSC 153
Re Cameron [1996] 2 Qld R 218
Tribunal:Mr C.G Chenoweth, Member
Date of Orders: 20 July 2011
Date of Reasons for Decision: 20 July 2011
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) OD 8 of 2010
BETWEEN:
COUNCIL OF THE LAW SOCIETY IN THE ACT
Applicant
AND:
THE LEGAL PRACTITIONER
Respondent
TRIBUNAL: Mr C. G Chenoweth, Member
DATE: 20 July 2011
ORDER
1. The application to dismiss the notice of complaint is refused.
………………………………..
Mr C.G Chenoweth
Member
REASONS FOR DECISION
The Council of the Law Society of the Australian Capital Territory ("Society") has instituted proceedings against the legal practitioner "L" ("the Solicitor") in the form of an amended application for disciplinary action dated the
3rd March 2011 ("the Application"). The Application is made pursuant to section 425 (3) (e) of the Legal Profession Act 2006 ("LP ACT"). The Society is the body given statutory responsibility to make applications of this nature where it considers that legal practitioners have failed to reach appropriate standards. As this matter has not been finally decided, these reasons will not refer to individuals by name.Background
The circumstances giving rise to the application are as follows. The Solicitor practiced in partnership with another solicitor and together they constituted "the Firm". It appears that both members of the Firm provided services to, and had contact with, an elderly client (“the Father”), who was gravely ill and in the hospice in Canberra. A will was prepared by the Firm and signed (it appears from the account of 7 September 2007, on 25 August 2007) under which the Solicitor was appointed as the executor of the Father’s estate. The only beneficiary of the will was the Father’s daughter, ("the Daughter"). She usually lived in London, but she had visited and stayed with her father prior to and up to his death. The Daughter had a power of attorney from her father.
The condition of the Father continued to deteriorate. On or about
20 August 2007, the Father told the Daughter that he wanted to give her his money that had come from her grandmother's estate, and also money that he had received from a compensation claim. The Firm made arrangements for the transfer of that money into the Daughter's account shortly thereafter.
The Accounts
Prior to the death of the Father on 2 September 2007, the Firm had rendered an account to him dated 29 August 2007, account number 6598 for $4,405.95. That account was not paid by him prior to his death. A further account dated
7 September 2007 and numbered 6644 for $888.03 was prepared by the Firm.
The Firm sought funds from the Daughter both in order to pay the outstanding accounts of the Father and (although the matter appears to be in dispute) to pay for the costs of a potential legal action by the executor against the former domestic partner of the Father. On 23 August, the Daughter had $5,000 debited from her Victoria Teachers Credit Union account, which was deposited in trust account of the Firm (annexure “D” to Exhibit 5). The receipt for this sum is dated 29 August 2007 (annexure “E” to Exhibit 5). On the same date that the first account was prepared and the transfer from the Daughter was receipted, the Firm withdrew the sum of $4,405.95 in payment of the first account given to the Father. The balance of the money remaining in trust was later withdrawn in part payment of the second account.
The Legal Action
The Solicitor in his capacity as executor of the estate of the Father instituted proceedings against his former domestic partner, seeking repayment of money that the Father had provided for the improvements to the house of the partner when it was a joint residence. The Solicitor as executor also sought return of other items including a motor-vehicle. This action was ultimately compromised on the basis that the claims were being withdrawn and each side would pay their own costs. The Daughter as the beneficiary of the estate alleges that the Solicitor had agreed to act as her solicitor and give legal advice to her in relation to this claim, and that the settlement was without her instructions.
Application to Strike Out
The Solicitor has lodged an application dated 25 May 2011, seeking that the Tribunal strike out the Application pursuant to section 32 and/or section 56 of the ACT Civil and Administrative Tribunal Act 2008 ("ACAT Act").
This application does not require any definitive findings at this stage as to whether or not the Solicitor has been guilty of professional misconduct or unsatisfactory professional conduct.
Section 32 of the ACAT Act is headed "Frivolous and Vexatious Applications." It provides as follows:
1. This section applies if --
(a) the tribunal considers an application is frivolous or vexatious; or
(b) (not relevant)2 . The tribunal may, by order, do one or more of the following:
(a) refuse to hear the application;
(b) dismiss the application;
(c) direct that the person who made the application not make a subsequent application to the tribunal of the kind stated in the direction;
(i) within a stated period of time; or
(ii) without the leave of the tribunal.
3. The tribunal may make an order under subsection (2) on its own initiative or on application by a party.
4. (Not relevant.)Section 32 therefore allows the Tribunal to refuse to hear the Application, and to exercise other related powers.
Section 56 of the ACAT Act is the general power given to the Tribunal to hear applications jointly with other applications, make orders either with the consent of the parties or as the Tribunal considers necessary or convenient, or amend or set aside a tribunal order.
The use of the term "frivolous or vexatious" has a pejorative note to it. It has the implication that an application has been made for no good reason at all, or for a purpose designed to harass or annoy. The term is also used to describe a cause of action which has no reasonable prospect of success.
Counsel for the Solicitor has referred to the comments of Fitzgerald P in the case of Re Cameron [1996] 2 Qld R 218 at 220. These comments indicate that the proceedings may be regarded as vexatious if there is a lack of reasonable grounds for the application sought to be made. See also the comments of the A.C.T. Court of Appeal in King v. Higgins [2009] ACTSC 153.
While counsel for the Solicitor submitted that the application be dismissed on the basis that there were no reasonable grounds to support it on the evidence filed by the Society, there was no suggestion that the Society had acted other than in accordance with its statutory obligations, and for reasons which it considered appropriate and necessary having regard to the responsibility that it holds. The Society's application may fail for want of evidence, but that does not of itself indicate that the Society has acted inappropriately in bringing the matter before the Tribunal. The Society has statutory responsibilities for the protection of the public and the maintenance of appropriate standards, which it must exercise in appropriate cases, having regard to the gravity of instituting proceedings against a practitioner.
Basis for Consideration
I proceed to consider the strike out application on the basis of determining the question as to whether the material filed by the Society on its face, and without testing or evaluation through cross-examination of the witnesses, could constitute a case as described in its Application. If no such case is disclosed by the material, then the application to strike out should be granted.
It was common ground between counsel for the Solicitor and the Society that an application of this nature must be evaluated by accepting at face value the affidavit material that has been filed. Accordingly, the affidavits for the Society were read and accepted into evidence for purposes of this application, although I note that counsel for the Solicitor has reserved his position in relation to objections on the affidavits should the matter proceed to a full hearing.
The following affidavits were formally read and admitted into evidence for purposes of the application:
·The Daughter, dated 5 April 2011: Exhibit 1.
·The Daughter’s mother, dated 5 April 2011: Exhibit 2.
·A friend of the Daughter, dated 6 April 2011: Exhibit 3.
·A solicitor, dated 14 April 2011: Exhibit 4, and
·The Law Society’s solicitor, dated 21 June 2011: Exhibit 5.
No evidence had been filed by the Solicitor at this stage.
The Application – Grounds
The Application has three clauses alleging professional misconduct. Clause 1 alleges that the sum of $5,000 paid in by the Daughter to the trust account of the Firm on 23 August 2007 was withdrawn from the trust account without her authority, and without having provided a request for payment, giving her notice or providing a bill of costs.
Clause 2 of the Application alleges that the Solicitor has been guilty of failing to treat his client, the Daughter fairly and in good faith in relation to the settlement of the claim in the Supreme Court after having given an assurance that he would not do so without her instructions, and by failing to account to her for the sum of $5000 paid into the trust account and failing to give an itemised bill of costs notwithstanding her requests.
Clause 3 of the Application alleges that as an alternative to clause 2, the conduct complained of breaches the standards of frankness, fair dealing, competence and diligence to be expected of a solicitor in circumstances of the relationship between the Daughter and the Solicitor as described in the attached statement. This is particularised by the same matters as are set out in paragraph 2.
Grounds for Striking Out
The application to strike out made by the Solicitor the 25 May 2011 seeks firstly
·an order that the whole of the Application be struck out pursuant to section 32 and/or section 56 of the ACAT Act: or
·alternatively, an order that clause 1, clause 2 and the parts of clause 3 dealing with the payment of money into the trust account be struck out. This would leave only the allegation that the settlement of the Supreme Court claim without instructions and in breach of an assurance given constituted a breach of standards of frankness, fair dealing, competence and diligence to be expected of a solicitor: or
·an order that clause 1 and the parts of clauses 2 and 3 dealing with the withdrawal of the money from trust account be struck out. This would leave allegations in the same terms as the preceding clause of the application that by settling the claim in the proceedings without instructions and contrary to an assurance that he would not do so, the Solicitor had failed to treat his client fairly and in good faith
It will be seen from the way in which the application to strike out has been drafted that the issue of the withdrawing of money from the trust account, and whether the Supreme Court proceedings were settled without instructions, need to be considered as two separate issues – as does the Application itself.
I do not consider it necessary at this stage to have to consider the differences between the allegation of the breach of standards alleged between paragraphs 2 and 3 of the Application. This is a matter upon which counsel may wish to address, and there may be authorities to which I have not been referred which draw distinctions between these two categories. As both paragraphs 2 and 3 of the Application cover the same ground (although alleging that they may constitute different obligations), if I am satisfied that either one of those paragraphs could on the evidence at this stage be sustained, I do not propose to strike out the other paragraph but leave the matter for argument at a hearing.
In relation to clause 1 of the Application, the evidence of the Daughter indicates, in paragraphs 15 and 16 of her affidavit, that the Father wished to transfer his money into her control as owner as a gift, for her own benefit. There is no indication that this gift was subject to the Daughter paying any outstanding accounts of his, nor any evidence that he told her of any outstanding accounts that he may have had. Indeed, the account rendered by the Firm and which was paid from the funds that she deposited was not prepared until after the date of the discussion between father and daughter and the transfer of funds.
Paragraph 16 of the Daughter’s affidavit indicates that the transfer from the account of the Father to the account of the Daughter had been facilitated by the Firm. It was following this transfer to her that on the 23 August 2007, when the money must have become her property, that she was asked to deposit money into the trust account of the Firm. It becomes a serious question to be tried as to what the responsibilities of the partners of the Firm and specifically those of the Solicitor were in relation to the money that they received from her.
Annexure "F" to the affidavit of the Law Society solicitor shows that $4,405.95 of this money deposited by the Daughter on 23 August 2007 was withdrawn on 29 August 2007 in payment of the costs of the Father, as set out on the account of that date. Paragraph 16 of the affidavit of the Daughter’s affidavit indicates that the reason given to her for the request for money was (in part) to pay her father’s costs, but this was before the bill had been drawn. There is no indication that the amount was disclosed, or her consent sought to payment being made on 29 August.
The Daughter attended at the office of the Firm on 4 September 2007, at which the Solicitor was present. (Paragraph 25 of her affidavit). There is nothing in her affidavit to support the proposition that authority had been given for the withdrawal of funds from the Firm's trust account. There is no written document that has been produced to date.
Counsel for the Solicitor argued that as the Daughter had a power of attorney from her father, the payment that was made into the Firm's trust account on
23 August was a payment on his behalf from his resources, as a necessary step to completing his affairs before his death. She was only acting as his agent and attorney to settle his debts before death. The difficulty with this proposition is that the evidence of the Daughter indicates that prior to her making the payment, the Father's funds had been given to her as her own. She had made the payment from own resources.
While the chain of events alleged by the Society may be disputed at a full hearing, I am satisfied that there is evidence upon which the Tribunal could find that clause 1 of the Application is upheld, subject to whatever is filed on behalf of the Solicitor and the testing of evidence. I therefore dismiss the application to strike out to the extent that it seeks the striking out of clause 1 of the Application on this ground, and also clause 2 (iii) and (iv) and clause 3 (iii) and (iv).
It remains to be considered whether the Application should be struck out on the other ground that there is no evidence that the Solicitor settled the court case in breach of his undertaking to consult and obtain instructions from the Daughter before doing so.
Counsel for the Solicitor pressed upon the Tribunal the proposition that the Solicitor could not act as executor and the solicitor for the Daughter at the same time. He pointed to the potential conflict of interest that may arise between a solicitor’s obligation to his client, and his obligations to the Supreme Court in acting as executor and obtaining probate. Reference was made to the difficulty facing an executor if one of a number of beneficiaries sought to direct him as to the way in which probate should be sought, or the administration of the estate should be conducted.
It is clear that for an executor to accept instructions or direction from one beneficiary where there are a number of beneficiaries to be considered could amount to a breach of the executor’s obligation. In the present case, there was only one beneficiary, with whom the Solicitor had had discussions about the issues that would arise. While it may be undesirable for the executor of an estate to also act as the solicitor for the sole beneficiary (a question on which I express no opinion), it cannot be said that for an executor to also act as solicitor must invalidate either the obligations as a solicitor or the obligations as executor.
Counsel pressed that in such a situation, the obligations of the executor would be to the Court as the ultimate body to which all legal practitioners owe their obligations. While in general terms this proposition appears correct, there is nothing to which the Tribunal has been referred on this application which indicates that if a legal practitioner who is the executor also acts as solicitor for the sole beneficiary, then the latter relationship with its attendant obligations is invalidated. It is a question of the evidence that can be brought to show that the professional reputation of solicitor and client has been established.
In paragraph 25 of her affidavit, the Daughter refers to the conversation in which she specifically raised the question of the need for her to obtain independent legal advice. The evidence is that the Solicitor assured her that he would look after her interests and there was no need for her to obtain independent legal advice. While the words of the Solicitor quoted in the paragraph do not specifically state that the Solicitor is "her solicitor in the matter", to a lay client it could be reasonably inferred that such a relationship existed. Clearly, this is what the Daughter thought.
Annexure D to the affidavit of the Daughter exhibits an e-mail from the Solicitor which advises her that “the matter WILL NOT be settled unless and until I have your instructions.” (His emphasis). It is this document that is the basis upon which the Daughter says in paragraph 40 of her affidavit that the breach of obligation occurred because the matter had been settled without her instructions. On the face of it, this evidence could make out the ground that the Society relies upon in grounds 2 and 3 in relation to the settlement of the court action.
I am satisfied that the application to strike out clause 1 and clauses 2 (i) and (ii) and 3(i) and (ii) of the Application has not been made out. Coupled with my findings in relation to clauses 2 (iii) and (iv) and 3 (iii) and (iv) of the application to strike out, this means that the whole of application to strike out fails and is dismissed.
It is not appropriate for any order for costs to be made at this stage, and
I decline to do so. The question of costs should be considered in the course of the full hearing of the Application.
………………………………..
Mr C.G Chenoweth
Member
PUBLICATION DETAILS
TO BE PUBLISHED
To be completed by Tribunal Staff
PART A FILE NO:
APPLICANT:
RESPONDENT:
COUNSEL APPEARING: APPLICANT:
RESPONDENT:
SOLICITORS: APPLICANT:
RESPONDENT:
OTHER: APPLICANT:
RESPONDENT:
TRIBUNAL MEMBER/S:
DATE/S OF HEARING: PLACE: CANBERRA
DATE/S OF DECISION: PLACE: CANBERRA
PART B
RECOMMENDATION:
FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION ( )
COMMENTS:
11