Council of the Law Society of Tasmania v Jovanovic
[2005] TASSC 84
•1 September 2005
[2005] TASSC 84
CITATION: Council of the Law Society of Tasmania v Jovanovic [2005] TASSC 84
PARTIES: COUNCIL OF THE LAW SOCIETY OF TASMANIA v
JOVANOVIC, Jeannette
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: M278/2001
DELIVERED ON: 1 September 2005
DELIVERED AT: Hobart
HEARING DATE: 5, 11 July 2005
JUDGMENT OF: Tennent J
CATCHWORDS:
Professions and Trades - Lawyers – Misconduct, unfitness and discipline – Other matters - Power of the courts to control activities – Possibility of unauthorised access to client files.
Legal Profession Act 1993 (Tas), s119(1)(d).
Weaver v Law Society of New South Wales (1979) 142 CLR 201; Neville Jeffress Advertising Pty Ltd v Patrick Barlow (No 2) A81/1993, referred to.
Aust Dig Professions and Trades [137]
REPRESENTATION:
Counsel:
Applicant: D F M Zeeman
Respondent: D R Wallace
Solicitors:
Applicant: Butler McIntyre & Butler
Respondent: Wallace Wilkinson & Webster
Judgment Number: [2005] TASSC 84
Number of paragraphs: 39
Serial No 84/2005
File No M278/2001
COUNCIL OF THE LAW SOCIETY OF TASMANIA
v JEANETTE JOVANOVIC
REASONS FOR JUDGMENT TENNENT J
1 September 2005
Relevant History of Proceedings
On 11 September 2001 the Council of the Law Society of Tasmania ("the Society") filed an originating application in which it sought orders, inter alia, for the appointment of a manager of the practice of a legal practitioner, Jeanette Jovanovic, ("the respondent"). The same day orders were made for the appointment of that manager. On 12 September an amended originating application was filed by the Society.
On 14 September 2001 the application came before a judge of this Court. Orders were made, inter alia, terminating the appointment of the manager. A further order in the following terms was also made without opposition by the respondent, namely:
"The respondent deny her husband entry into her office at No. 95 Elizabeth Street, Hobart."
There was no time limit on that order, although the parties were given liberty to apply. On 29 October 2004 the Society applied by interlocutory application to set aside that further order and to have substituted for it the following order:
"That until further Order the Respondent deny her husband entry to her legal offices beyond the reception or foyer part of any such legal office premises she occupies."
That application came about as the result of the respondent moving the location of her legal office. On 15 November 2004 the order of 14 September 2001 was discharged, the interlocutory application was adjourned to 1 February 2005 and an interim order was made which provided:
"That until 5pm 01/02/05 the respondent deny her husband entry to her legal offices beyond the reception or foyer part of any such legal office or premises she occupies."
That order was ultimately continued until further order or the determination of the Society's application. The Society's application, which was in effect for an indefinite order in substantively the same terms as the interim one, was listed for hearing.
Substantive application
The Society seeks that there be an indefinite order by which the respondent is required to deny her husband entry to her legal office beyond the reception or foyer part.
The proceedings brought by the Society were initially brought by reference to the Legal Profession Act 1993 ("the Act"), s119(1)(d). Section 119 provides:
(1) The Council may apply to a judge for an order to be made under this section in respect of a legal practitioner if it is satisfied –
(a) that the legal practitioner has died or cannot be located; or
(b) that the legal practitioner is unable to attend properly to the practice; or
(c) that a default order has been made in respect of the legal practitioner; or
(d) that it is necessary to do so for the protection of money or other property belonging to a person.
(2) On the hearing of an application in respect of a legal practitioner, a judge may make any or all of the following orders:
(a) an order authorizing the Council to serve a notice in writing –
(i)on the manager of an authorised deposit-taking institution in which a firm or legal practitioner corporation keeps a trust financial institution account prohibiting the authorised deposit-taking institution from permitting a withdrawal from, or any other dealing with, that account (other than the deposit of money into that account) unless the judge otherwise directs; or
(ii)on a person who holds on behalf of that firm or legal practitioner corporation any property (other than money in that trust financial institution account) prohibiting any dealing with that property unless the judge otherwise directs;
(b) an order appointing a person as manager of the practice of that legal practitioner;
(c) an order authorizing the Council to suspend the legal practitioner from practising as a legal practitioner for such period as is specified in the order;
(d) an order quashing or varying a notice served by the Council under section 109;
(e) any other order it thinks appropriate.
(3) Without limiting the generality of paragraph (e) of subsection (2), an order made in respect of a legal practitioner under that paragraph may be an order –
(a) in respect of the remuneration of a manager appointed pursuant to subsection (2)(b); or
(b) that the remuneration of the manager is payable –
(i) out of the estate of that legal practitioner; or
(ii) by the Trust out of the Guarantee Fund; or
(c) that the manager be indemnified wholly or in part by the Trust against liability arising in the course of the management of the practice of that legal practitioner; or
(d) as to the ownership of money and other property received by the manager in the course of the management of that practice.
(4) A person appointed as manager pursuant to an order made under subsection (2)(b) –
(a) must be a legal practitioner; and
(b) is to be appointed for such period as is specified in the order or such further period as the judge making the order may determine.
(5) If the Council serves a notice pursuant to an order made under subsection (2)(a), the provisions of section 109(2), (3) and (4) apply to that notice as if it were a notice served under section 109." [My emphasis]
When the matter came on for hearing on 5 July 2005, counsel for the Society indicated that the application was being made pursuant to the inherent jurisdiction of the Court to control the behaviour of its officers, rather than s119. He referred to Weaver v Law Society of New South Wales (1979) 142 CLR 201 at 207, where Mason J said:
"Disciplinary proceedings under the Legal Practitioners Act and in the exercise of the Supreme Court's inherent jurisdiction are not criminal proceedings, they are proceedings sui generis. When the court is called upon to examine the conduct of solicitors as officers of the court it is as much concerned to protect the public from misconduct on the part of solicitors as it is to ensure … ."
He relied on that passage as authority for the proposition that the Court had inherent power to control the behaviour of solicitors as officers of the Court.
When submissions were ultimately made, counsel for the Society relied on both s119 and the Court's inherent jurisdiction.
The Society sought to rely on two affidavits, one sworn by the Executive Director of the Society, Martyn Hagan, on 29 June 2005 and the second sworn by a police officer, Michael Aaron Ashwood, on 29 June 2005. While the first of these affidavits was read into evidence without objection, the second was not. Counsel for the respondent objected to par4 of that affidavit. The objection being upheld, counsel for the Society sought an adjournment to enable him to call as a witness the husband of the respondent.
Mr Jovanovic appeared in answer to a subpoena a few days later. The Court then heard oral evidence from both Mr Hagan and Mr Jovanovic.
For the respondent, counsel read into evidence affidavits of the respondent sworn on 11 November 2004 and 4 July 2005, subject to the second sentence in par9 of the second affidavit being struck out after an objection. The respondent also gave some oral evidence.
Facts
The respondent is a legal practitioner, having been admitted to practice as a practitioner of this Court in 1982. At the time these proceedings were commenced and for some considerable time before that, she was a sole practitioner and practised from premises at 95 Elizabeth Street, Hobart. Her husband, Jon Jovanovic, is not a legal practitioner. In 1999 and 2000 the Society became aware from correspondence it received from Jon Jovanovic that he was using the same street and post office box address, and telephone and fax numbers as the respondent, but on a letterhead under his own name.
At the time, Jon Jovanovic was a director of a company D W & I M Tapping Pty Ltd ("the company"). It is now in liquidation. In July 1999 the Society received a complaint relating to the respondent. There was an allegation that she prepared a mortgage over property owned by her and her husband at Lenah Valley to secure a loan of $39,000 from the company to her husband, and then attempted to defeat the security by attempting to lodge with the Land Titles Office a transfer of her husband's interest in the Lenah Valley property to her free of the mortgage.
The respondent told the Society in September 1999 that this loan had been made in the latter part of 1996. In relation to the mortgage she said:
"… I recall being requested by my husband to sign a mortgage document. My husband had in his possession a form of mortgage I had prepared. This was adapted by him to suit the purposes of the company. To this extent I had assisted in the preparation of the mortgage.
My husband had in the past worked as a law clerk and had a knowledge of commercial matters."
In February 2003, Jon Jovanovic wrote to the Court. He sought an appointment for the purpose of having the restriction on his entry to his wife's legal office lifted. He wrote:
"I am seeking access to my office situate at 95 Elizabeth St and access to my wife's office situate in the same building, because, firstly, there is no valid reason why I should be denied access, secondly I was not given the opportunity to rebut, inter alia, the Law Society’s mendacity by omission, and thirdly because I need the resources therein as I am involved, currently, in some ten (10) Supreme Court matters … ."
His application to have the order varied was subsequently refused.
In September 2003, the Society advised the respondent that it proposed to recommence its investigation into a number of matters relating to her, one of which was the subject of the 1999 complaint. In response to that, the respondent told the Society in November 2003 that her previous advice to the Society about this matter had been inaccurate. She told the Society that she did not prepare any mortgage, that she did not sign any mortgage and that the company at no stage held any security over the Lenah Valley property and was incapable of doing so. She asserted she was out of the country when the company drew funds in favour of her husband and he drew the form of mortgage and signed it.
In her affidavit sworn on 4 July 2005, the respondent said in relation to her husband's access to her office that he "had assisted me with running messages and answering phones and general matters in my practice …" and "would and was permitted to work with my staff and undertake tasks ..." such as those. She went on to say that in August 1996 while she was absent in China, her husband had accessed her office and a file there of the company relating to a mortgage given by people named McDonald in favour of the company. At the time her husband was a director of the company and entitled to access the file. He photocopied the mortgage on that file and amended it by hand.
The respondent further said in that affidavit that she knew of no other occasion when her husband had accessed any file in her office, whether a company file or otherwise. She maintained that the premises she now occupied were leased by her, she was able to control who entered and that as an officer of the Court, if she thought any person, including her husband, was a risk to her clients and/or their confidentiality, she would exclude them from her premises. She said it was unlikely that her husband would enter her premises other than in their ordinary domestic relationship.
By an application dated 1 September 2004, the Society applied to the Disciplinary Tribunal relating to certain complaints against the respondent. The application made no reference to the matter the subject of the 1999 complaint to which the Society had made reference in its letter to the respondent of September 2003. The evidence of Mr Hagan about this was somewhat confusing but suffice to say that the complaint of September 2004 to the Disciplinary Tribunal was dismissed in March 2005. Further, Mr Hagan told the Court that there were no outstanding complaints against the respondent before the Society.
Mr Jovanovic was interviewed by police on 6 September 2001, that is some five days before the Society applied to the Court for a manager to be appointed to his wife's legal practice and before the Society sought an order restricting his right of entry to her legal office. In the course of that interview, he was asked questions about the company and about the preparation of a mortgage document. In his oral evidence to the Court, Mr Jovanovic acknowledged that the police asked him about the McDonald mortgage document and he identified that the document was that annexed to his wife's affidavit in these proceedings and that the handwritten amendments on it were made by him.
He agreed in his oral evidence that he was asked "Who drew up that document" and that he replied "Well it was a document that umm that was in my wife's office". Counsel for the Society then put what purported to be a number of questions put by police officers to Mr Jovanovic and his replies in the course of that interview. Mr Jovanovic did not acknowledge their accuracy, his responses varying from "I can't recall" to "if that's what's written there". He did say, however, that he would have told the police the document was in a filing cabinet which contained mortgage documents prepared by his wife for the company. He freely admitted accessing that filing cabinet.
The police interview was not put into evidence and Mr Jovanovic was not asked in Court if indeed he had accessed any files in his wife's office other than those of the company.
On 18 April 2005, Jon Jovanovic was convicted of three counts of stealing involving some $140,000. The thefts related to money invested with the company and occurred while he was a co-director of the company. His co-director was also convicted of dishonesty offences relating to the same dealings. Mr Jovanovic was sentenced to sixteen months' imprisonment of which eight were suspended. The sentence was backdated to 11 February 2005. He has recently been released from prison.
Arguments for the Society
Counsel submitted that the basis for the Society's application was to ensure that the clients of the respondent's firm were protected from unauthorised access to their files. He referred to the Rules of Practice 1994, rr5 and 11, made pursuant to the Act, which provide as follows:
"5 (1) A practitioner may only carry on another business apart from a practice and share premises with another business if –
(a)the conduct of that business is kept separate from the practice as far as practicable; and
(b)the carrying on of that business is not likely to lead to a contravention of the Act or these rules.
(2) A practitioner is taken to be carrying on another business if that business, although conducted by another entity, is carried on substantially under that practitioner's direction or control.
…
11 (1) A practitioner must not disclose any information obtained in the course of handling a client's matter without the consent of the client other than to the administrator of a scheme relating to legal assistance in accordance with rule 16.
(2) A practitioner must disclose to a client –
(a)any interest that the practitioner has in any transaction in which he or she is acting for that client; and
(b)any matter which may reasonably be regarded as a conflict of interest on the part of the practitioner.
(3) Unless the client otherwise instructs, a practitioner must cease to act for a client if –
(a)that practitioner has an interest in the transaction in which the practitioner is acting for that client; and
(b)that interest is adverse to the interests of the client."
Counsel submitted that r11 prevented not only disclosure of material but access to such material by unauthorised persons. In the present case there was evidence that:
·Mr Jovanovic had not been an employee of the respondent's firm since 1989;
·since that time the respondent should not have allowed him access to her files;
·Mr Jovanovic had shared the respondent's office (same street and postal address, same phone and fax number);
·Mr Jovanovic sought an order from the Court to give him access to the respondent's office saying he needed to use the resources there;
·Mr Jovanovic had had access to client files (albeit he or the company of which he was then a director were the client) to obtain a precedent mortgage; and
·Mr Jovanovic had, in 1996, unrestricted access to the respondent's legal office.
Counsel submitted that there was also evidence that Mr Jovanovic was interviewed by the police about his access to files in his wife's office on 6 September 2001. The Society acted quickly following that interview to obtain orders from the Court which it applied for on 11 September 2001. This was not a case where the Society was aware of the level of possible access for a long period of time and did nothing.
Counsel submitted that the issue now was not what Mr Jovanovic might or might not have actually had access to by way of his wife's client files, but that, as a non-employee, he had been free to have unimpeded access. The respondent did not in 1996 exercise any level of control over her husband's access to her files, he has since been convicted of serious crimes of dishonesty and there has been nothing in any material put to the Court to suggest that any level of control now exists. Indeed, since these proceedings began, Mr Jovanovic has clearly sought to maintain his right of unimpeded access to his wife's office.
Counsel submitted it was not a question of the respondent's integrity, but her failure to voluntarily exercise control.
Arguments for the respondent
Counsel for the respondent submitted that what the Court was now dealing with was the originating application of the Society in which a final order was being sought. In those circumstances findings of fact needed to be made. On the evidence available to the Court, the only findings it could make were the following:
·In August 1996 the respondent was absent from her practice overseas.
·Her husband, at the time, had an office in the same building.
·He was a director of a company for whom his wife had acted.
·In August 1996 he accessed a file relating to work done by the respondent for the company.
·He was entitled to that file and to have access to it.
·He copied a mortgage out of that file to use as a precedent.
·At the time he had permission to enter the premises.
·The Society was aware of access by him to company files.
·The respondent knows of no other occasion when her husband has had access to her files.
Counsel argued that the Society's approach to this matter was flawed if it suggested that Mr Jovanovic could only access the office were he an employee. He pointed to the situation of children of practitioners and legal practice students, both of whom frequently had access to practitioner's offices but were not employees. In this case, Mr Jovanovic was the husband of the respondent, he was occasionally entitled to enter her office premises and from time to time he assisted with office duties. He entered in 1996 with permission, express or implied, and only accessed what he was entitled to.
Counsel submitted that if the sole basis of the Society's application was the 1996 access, then there was no way in which the Court could be satisfied on the facts before it of the matter referred to in the Act, s119(1)(d), namely that it was necessary for the protection of money or other property belonging to a client for there to be an order. What the Society was really looking for, he suggested, was an injunction restraining Mr Jovanovic from entering his wife's legal office and these proceedings were a back door method of trying to achieve that.
If, however, the Society were relying on the inherent jurisdiction of the Court, then in reality what it was seeking was an injunction quia timet, that is, an injunction to restrain some threatened act being done which, if done, would cause substantial damage in a situation where money would not be an adequate remedy. Counsel referred to the decision of Zeeman J in Neville Jeffress Advertising Pty Ltd v Patrick Barlow (No 2) A81/1993 where, at 10 his Honour said:
"The principles relating to the grant of such an injunction are clear and well established. Such an injunction will not be granted unless the plaintiff has established that what the defendant proposes to do "will cause immediate and substantial damage" to the plaintiff's property or business … although it has been suggested that the principle may not be absolute … .
What is not entirely clear is the meaning of 'substantial damage'. In Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees' Union (1979) 42 FLR 331 at 348 Deane J referred to the lack of precise meaning conveyed by that expression which might mean 'considerable, solid or big' or 'real or of substance as distinct from ephemeral or nominal'."
Counsel argued that in the present case there must be a real or substantial need to protect against anticipated problems. He also submitted that the conviction of Mr Jovanovic for offences of dishonesty did not mean he had a propensity to meddle. The order being sought was draconian and impacted on the personal liberty of the respondent.
In reply, counsel for the Society submitted in relation to the matter of Jeffress (supra), that Zeeman J went on to say at 11:
"It is inappropriate to determine whether an injunction ought to be granted by reference to the size of the detriment which might by suffered by the plaintiff if it were not granted. What is a small matter to one plaintiff may be a large matter to another. Legal rights and their enforcement ought not to be judged in this way. If there is a sufficient degree of apprehension that unless restrained a defendant will do something which amounts to a real interference with the plaintiff's rights then there is a sufficient basis upon which to grant an appropriate injunction."
Counsel referred to par15 of the affidavit of Martyn Hagan, where he said:
"The Society is concerned for the clients of the Respondent in that, given Jon Jovanovic's past use and access to the Respondent's office, his stated desire in 2003 to be able to continue to have access to that office together with his conviction for offences of dishonesty involving the Company it is necessary for an order to remain in place preventing the Respondent from allowing Jon Jovanovic to have access to her office where she operates her firm."
It was submitted that statement provides a sufficient basis for the application.
Conclusion
There is no doubt on the facts before the Court that in 1996 Mr Jovanovic accessed the respondent's legal office in her absence, removed a copy of a mortgage she had prepared between the company of which he was then a director and people by the name of McDonald and used it as a precedent to prepare a mortgage, I infer, between him and the company. The evidence before the Court is such that an inference can be drawn that Mr Jovanovic, over many years, has had unrestricted access to his wife's legal office and that, at least in 2003, he was seeking to continue to be able to do that. However, there was no evidence at all, either directly or from which a convincing inference could be drawn, to the effect that Mr Jovanovic then, before or since, accessed any other client file in the respondent's office save the company's.
There is no evidence the respondent has ever attempted to stop her husband accessing her office and in fact she says he was helping out with general office tasks. It cannot be disputed that Mr Jovanovic has recent convictions for dishonesty such that he has just served a period of imprisonment and remains the subject of a suspended sentence of imprisonment for the same offences. The convictions relate to dealings of dishonesty with funds held by the company of which he was a director.
However, there was no evidence at all Mr Jovanovic had ever done anything to interfere with the property or money of any person other than the company, that is, there was no evidence he had acted to interfere with the property or money of any client of the respondent other than the company. All I have is Mr Hagan's statement contained in par15 of his affidavit set out at par32 above.
While the statement was not challenged, I still need to be satisfied, having regard to either s119 or the inherent jurisdiction of the Court, that the basis for the Society's concerns is sound. That is, that either there is a need for protection of a person's property or money, or there is, in the words quoted by counsel for the Society from Jeffress (supra) at 31 "a sufficient degree of apprehension that unless restrained a defendant will do something which amounts to a real interference with the plaintiff's rights ...".
I am of the view the Society has failed to satisfy me as to either. I should say that this is not a case where the substantive proceedings begun in 2001 were doomed to failure from the start. It is the passage of time and lack of any evidence of recent or ongoing activities which has contributed to its failure. This is particularly so given the Society made it clear that the respondent's own integrity was not being impugned.
Orders
The orders I would propose to make in the circumstances are as follows:
1That the order of the Court whereby the respondent was required to deny her husband entry to her legal office be discharged.
2 That all outstanding applications in these proceedings be dismissed.
I will hear counsel as to any issues arising as to costs.
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