Council of the Law Society of the Act v; Legal Practitioner “D1” (John Patrick Davey) (Occupational Discipline) - [2014] ACAT 17

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

COUNCIL OF THE LAW SOCIETY OF THE ACT v
LEGAL PRACTITIONER “D1” (John Patrick Davey) (Occupational Discipline) [2014] ACAT 17

OR 13/13
Catchwords: OCCUPATIONAL DISCIPLINE – LEGAL PRACTITIONER – unsatisfactory professional conduct – failure to provide payment summary of statement to employee: whether the failure is conduct happening the connection with the practice of law – failure to respond to the Law Society – defence of incapacity – whether conduct fell short of the standard of competence and diligence expected of a legal practitioner
Legislation:ACT Civil and Administrative Tribunal Act 2008, s.54
Legal Profession Act 2006, ss. 107, 386, 387 and 419

Subordinate
Legislation:Legal Profession (Solicitors) Rules 2007, r. 39.2

Cases: Briginshaw v. Briginshaw (1983) 60 CLR 336

Council of the Law Society of the ACT v Legal Practitioner
“D2” [2014] ACAT 6
In the matter of DP and the Legal Practitioners
Act 1970 [2005] ACTSC 78

Tribunal: Mr C.G. Chenoweth - Senior Member

Date of Orders: 28 March 2014
Date of Reasons for Decision: 28 March 2014

AUSTRALIAN CAPITAL TERRITORY
CIVIL AND ADMINISTRATIVE TRIBUNAL NO: OR 13/13

RE:COUNCIL OF THE LAW SOCIETY OF THE AUSTRALIAN CAPITAL TERRITORY
Applicant
AND:LEGAL PRACTITIONER “D1”
Respondent

TRIBUNAL: Mr C.G. Chenoweth – Senior Member

DATE:28 March 2014

ORDERS

On finding that the conduct of the practitioner complained of in the application dated 21 May 2013 constitutes unsatisfactory professional conduct the Tribunal orders that:

The Practitioner be publicly reprimanded.
Pursuant to section 433(1) of the Legal Profession Act 2006, the practitioner is to pay the applicant the costs of and incidental to the application at the full Supreme Court scale, and disbursements in full in an amount to be agreed or, failing agreement, as assessed by the registrar of the Tribunal.

………………………………..
Mr C.G Chenoweth – Senior Member

REASONS FOR DECISION

On 22 May 2013, the Council of the Law Society of the Australian Capital Territory ("applicant") filed an application for disciplinary action against the Respondent (referred to in these reasons as "the practitioner") pursuant to section 419 of the Legal Profession Act 2006 ("LP Act").[1]
[1] This decision was previously anonymised and cited as Council of the Law Society if the ACT v Legal Practitioner “D1” [2014] ACAT 17 pursuant to section 423A of the Legal Profession Act 2006. As the appeal period has ended, the practitioner has now been identified in the citation of this decision. The reasons for decision otherwise remain unchanged from the date of publication.
The grounds of complaint were twofold. Firstly, it was alleged that the practitioner had recklessly or intentionally failed to provide a person who was employed by the practitioner in his legal practice with a payment summary statement of her employment in respect of the year ended 30 June 2012. It was alleged that this breached the practitioner's obligation as an employer to provide the payment summary statement upon request or in any event, on or before 14 July 2012 as required by the Australian Taxation Office.
The second ground of complaint was that the practitioner breached rule 39.2 of the Legal Profession (Solicitors) Rules 2007 (“the Rules”), by failing to respond within a reasonable time and in any event within 14 days to requests made by the applicant to the practitioner on 24 October 2012 and 4 March 2013 for comment or information in relation to the complaint made by the complainant.
The applicant sought orders that the practitioner was guilty of unsatisfactory professional conduct or professional misconduct, or such other orders pursuant to section 425 (3) of the LP Act as the tribunal saw fit, and an order that the practitioner pay the applicant's costs on a solicitor/client basis.

Background.

The practitioner conducted a legal practice in an incorporated form. He was the only director. Under section 107 of the LP Act, a legal practitioner director of an incorporated legal practice is required to ensure that (in summary) the affairs of the incorporated legal practice are conducted in the same manner and to the same standards, as an unincorporated practice.
Section 107 of the LP Act is as follows:
107Incorporated legal practice must have legal practitioner director etc
(1)An incorporated legal practice must have at least 1 legal practitioner director.
(2)Each legal practitioner director of an incorporated legal practice is, for this Act only, responsible for the management of the legal services provided in the ACT by the incorporated legal practice.
(3)Each legal practitioner director of an incorporated legal practice must ensure that appropriate management systems are implemented and maintained to enable the provision of legal services by the incorporated legal practice—
(a)in accordance with the professional obligations of Australian legal practitioners and other obligations imposed under this Act; and
NoteThis Act is defined in the dictionary.
(b)so that those obligations of Australian legal practitioners who are officers or employees of the practice are not affected by other officers or employees of the practice.
(4)If it ought reasonably to be apparent to a legal practitioner director of an incorporated legal practice that the provision of legal services by the practice will result in breaches of the professional obligations of Australian legal practitioners or other obligations imposed under this Act, the director must take all reasonable action available to the director to ensure that—
(a)the breaches do not happen; and
(b)appropriate remedial action is taken in relation to breaches that do happen.
(5)This part does not affect the obligations or liabilities of a director of an incorporated legal practice under any other law.
(6)The reference in subsection (1) to a legal practitioner director does not include a reference to a person who is not validly appointed as a director, but this subsection does not affect the meaning of the term legal practitioner director in other provisions of this Act.

The effect of these provisions is that the practitioner is required to conduct the incorporated legal practice as if it was an unincorporated practice. This was not questioned at the hearing.
A complaint was made to the applicant by a legal practitioner who was retained as an employee of the practitioner in early October 2011. That practitioner is referred to in these reasons for decision as “the complainant”. Her complaint included a statutory declaration executed in March 2012. While the day in March was not stated this appears to be an oversight by the person witnessing the statutory declaration. Nothing turns on that. The declaration formed part of an affidavit made by the professional standards director of the applicant, Mr Reis, dated 24 June 2013. That affidavit was admitted as exhibit “A”.
In the declaration, the complainant outlined the details of her obtaining employment with the practitioner. She had known him previously and they had reached an agreement as to the terms of remuneration. In paragraph 5 of her declaration, she sets out that she provided the practitioner with her tax file number and her superannuation fund details, including the bank and account numbers of the fund.
The complainant indicated in paragraph 6 of her declaration that she continued to work for the practitioner's firm until 27 February 2012 when she notified the practitioner by e-mail that she could not continue to work unless she was paid monies owing. The complainant stated in her declaration that she reminded the practitioner about the need to pay tax deducted from her earnings to the Australian Taxation Office ("ATO") and that no payments had been made to her superannuation fund for the December 2011 quarter or the March 2012 quarter.
The complainant stated that on ceasing employment on 27 February 2012, she did not receive payslips or a final group certificate to enable her to file her income tax return with the ATO. She also stated that she prepared the statutory declaration as a result of discussions with an officer of the ATO.
After the complaint was made, there followed the usual correspondence between the applicant and the practitioner, drawing his attention to the complaint and seeking his response.
On 12 April 2012, Mr Reis sent the practitioner a letter drawing his attention to rules 39 (1) and 39 (2) of the Rules and directing him to provide a response to the applicant by 20 April 2012. The practitioner responded by a lengthy letter on 23 April 2012. The first page of that letter includes the following:
I do not propose to respond to the comments made by (the complainant) in paragraphs 1 to 8 of the statutory declaration provided by (her). They are largely uncontested excepting the conclusions therein drawn.
The letter went on to dispute a number of matters in the complainant’s statutory declaration, and maintained that there was no obligation to provide her with a group certificate or payment summary until the month of July 2012. The letter contained complaints about the conduct of the complainant, and asserted that the complaint was an abuse of process by the complainant, as her complaint was in substance a workplace relations and/or civil dispute regarding employee entitlements.
The practitioner's response was sent to the complainant. She responded to the applicant by letter of 6 May 2012, asserting that there was still money owed for her employment and that no superannuation payments had been received by her superannuation fund.
On 16 May 2012, the practitioner sent the applicant cheques made payable to the complainant’s superannuation fund and indicated that there was still a dispute about the complainant's final claim for balances owing to her.
On 27 June 2012, the applicant wrote to the practitioner indicating that the complaint had been considered by the complaints committee of the Law Society and a view formed that no misconduct issues arose from the complaint. That letter said that reasons for the committee's decision would be forwarded in due course.
On 14 August 2012, the professional standards director wrote to the practitioner and to the complainant saying that the complaint had been reconsidered by the complaints committee and was now to be referred to the executive of the Society.
The practitioner responded with a lengthy e-mail on 22 August 2012, protesting that the matter had been reconsidered and disputing whether he had been given an opportunity to make representations on the matter.
The professional standards director responded by an e-mail of 22 August 2012 indicating that the complainant had still not received payslips and the group certificate. The response also provided as follows:
I propose not to answer your questions other than to advise that the basis upon which the committee initially dismissed the complaint was that it was of the view that an amount of only approximately $300 in net wages were still owing. Coupled with your assurances that your liability to (the complainant) would be met by payment, your payment of the missing superannuation levy following the filing of the complaint, your assurances that the PAYG liability had or would also be met on time and your implied assurance that the group certificate would be issued, the committee considered the matter at an end.
It appears, however, that that the wages liability has not been finalised and the payslips and group certificate have not, despite your assurances, been issued.
The applicant then placed the matter in the hands of its solicitors. Mr Phelps on behalf of the applicant wrote to the practitioner on 24 October 2012, asking for certain information about the amounts owing and the obligations to provide superannuation contributions and PAYG tax remittances together with the missing payment summary report. This was followed up by an e-mail of 9 November 2012 to the practitioner. The practitioner responded on 14 November indicating that he had been incapacitated due to ill health. He undertook to provide a response in the next 24 hours.
Mr Phelps sent a further e-mail to the practitioner on 9 January 2013 enquiring as to whether a response would be sent. It appears that an automatically generated response from the practitioner was sent on 9 January indicating that he was out of his office on leave and would not return until mid-February 2013.
On 4 March 2013 Mr Phelps sent a formal letter to the practitioner requiring him to respond to the information requested, drawing his attention to the provisions of the Rules, and warning that a failure to respond may be the subject of an application by the applicant to the tribunal.
As indicated above, proceedings were instituted by the applicant in the tribunal on 22 May 2013. On 12 June 2013, directions relating to the filing and serving of material were made and the matter was set down for hearing on 16 September 2013. On 9 September 2013, a further directions hearing was held and the hearing date was vacated. The General President ordered that the matter be heard on 14 October, following another matter concerning the practitioner. The question of costs thrown away was adjourned until the hearing.
On 12 September 2013 the practitioner sent a letter to the tribunal enclosing a form of PAYG summary (the summary) relating to the complainant for the year ending 30 June 2012. The summary showed the amount of the gross payments the practitioner said had been paid to the complainant, together with the amount of tax said to have been withheld. It gave as the complainant’s tax file number the following: "123456789." The practitioner asked that a copy of the material be served on the applicant by the tribunal. This was done.
On 8 October 2013, the complainant made an affidavit. In this, she said that she received an e-mail with a copy of the summary from the applicant’s solicitor on 19 September 2013. She said that she had never previously received a copy of the summary, that her surname was incorrectly spelt, that her tax file number was incorrect and that she disputed the amount of the gross payments referred to in the summary.
The complainant in her affidavit also recounted discussions with the ATO. She gave details of a conversation with a named officer of the ATO, in which she was told that no monies had been received by the ATO from the practitioner or his business entity on account of the complainant’s tax for the financial year ending 30 June 2012 or any other year.
The information given by the officer of the ATO was confirmed by a further discussion between the complainant and a named officer of the ATO on 3 October 2013.
This affidavit was admitted as exhibit D.

The hearing

At the hearing on 14 October 2013, the applicant was represented by counsel with the applicant’s solicitor. The practitioner was not present, but by prior agreement was on the telephone. In another occupational regulation matter concerning the practitioner heard before me, he indicated that he was not present because he could not afford to come to Canberra for the hearing.
The tribunal considered medical reports dated 25 August 2013 and 7 September 2013 about the practitioner in the other matter. The reports indicated that the practitioner had been suffering a major depressive illness and elaborated on his present condition and the prospects for the future. It is not necessary to refer to the content of the reports in detail in this decision. Although the reports were not placed before the tribunal in any formal way, they were admitted without objection as relevant to the reason for the practitioner’s non-attendance.
The reasons for allowing the practitioner to participate in the hearing by telephone and the difficulties for the proper hearing of the case were referred to in paragraph 47 of my decision in the matter of Council of the Law Society of the ACT v Legal Practitioner “D2” [2014] ACAT 6. It should also be noted that I enquired from the practitioner whether in the view of the content of the medical reports he felt able to participate in the hearing, and he confirmed that he did.
The practitioner sought an adjournment of the hearing on the basis that it should have been referred to mediation because of the substantial factual differences between the parties in terms of the calculation of the amounts owing. He also objected to the proposal to file a further affidavit from the complainant.
The affidavit from the complainant referred to in paragraph 26 above was in response to the provision to the tribunal by the practitioner of the PAYG summary report.
The practitioner also submitted that the tribunal does not have jurisdiction to make a finding about a failure to comply with a taxation obligation. The practitioner alleged that in essence, the complainant was seeking to resolve a workplace relations dispute through a complaint to the applicant regulatory body.
I refused the application to adjourn the matter. The provisions of the LP Act make it clear that conduct which may involve a breach of the taxation obligations of an employer, or which may be categorised as a workplace dispute, may constitute unsatisfactory professional conduct. I determined that the hearing should continue.
Even though the practitioner had not given any notice that he wished to cross-examine the complainant, the applicant arranged for the complainant to be available if required. The practitioner elected not to cross-examine her. I am therefore entitled to rely on her declaration and affidavit evidence as to the truth of the matters asserted. In his submissions, the practitioner sought to reflect on the accuracy of the complainant’s declarations and affidavit. I refused to accept those submissions on the basis that he had not taken the opportunity to cross-examine the complainant and could not now dispute the accuracy of what she said.
While no objection was taken to the introduction of the medical reports referred to earlier, counsel for the applicant properly pointed out that it is not appropriate for a practitioner in a professional conduct case to not make himself available for cross-examination on the allegations. While the practitioner offered to give evidence on oath over the telephone, the difficulties in trying to do this by telephone without having the witness in the room are obvious. As counsel for the applicant noted, during the time that concerned these proceedings, the applicant was involved in extensive legal proceedings on his own account. This has been the subject of other proceedings before this tribunal.
Notwithstanding these proper criticisms of the failure of the practitioner to appear, I allowed him to make submissions in relation to the matters the subject of the complaint.

The law

The definitions of unsatisfactory professional conduct and professional misconduct are set out in sections 386 and 387 of the LP Act.
386What is unsatisfactory professional conduct?
In this Act:
unsatisfactory professional conduct includes conduct of an Australian legal practitioner happening in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner.
NoteSee also s 389 (Conduct capable of being unsatisfactory professional conduct or professional misconduct).

387What is professional misconduct?
(1)   In this Act:
professional misconduct includes—
(a)    unsatisfactory professional conduct of an Australian legal practitioner, if the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence; and
(b)    conduct of an Australian legal practitioner whether happening in connection with the practice of law or happening otherwise than in connection with the practice of law that would, if established, justify a finding that the practitioner is not a fit and proper person to engage in legal practice.

(2) For finding that an Australian legal practitioner is not a fit and proper person to engage in legal practice as mentioned in subsection (1), regard may be had to the suitability matters that would be considered if the practitioner were an applicant for admission to the legal profession under this Act or for the grant or renewal of a local practising certificate.
NoteSee also s 389.

The High Court case of Briginshaw v. Briginshaw (1983) 60 CLR 336, and the professional conduct cases that follow its authority, require me to be comfortably satisfied, having regard to the gravity of the matter, that the complaint has been made out. I note that an allegation of unsatisfactory professional conduct or professional misconduct is a serious matter for any practitioner and may result in a public record of that finding, fines or restrictions and in the most extreme cases an application to the Supreme Court in relation to the standing of the practitioner.

Consideration of the evidence

I am satisfied that a failure to promptly and accurately provide an employee with all the documentation required by Australian taxation legislation and a failure to forward amounts deducted from an employee's salary on account of taxation liabilities within the time required by the legislation, is conduct "happening in connection with the practice of law…" within the meaning of section 386 of the LP Act. If a practitioner employs a person in his or her practice, conduct in relation to the taxation obligations of the employer to the employee satisfies this requirement of the definition. This is to be contrasted with conduct which is of a purely private or personal nature. The fact that the conduct complained of may also contravene other legislation, such as income tax legislation or workplace relations legislation, does not of itself exclude the conduct from the definition of unsatisfactory professional conduct.
I am satisfied that the complainant gave the practitioner, at or about the time she commenced employment, all details including her tax file number, necessary for the practitioner to comply with his obligations. Had she failed to do so at that time, it was incumbent upon the practitioner as her employer to actively seek those details from her. If the necessary details are not provided, it is the employer’s responsibility to obtain the details.
I am satisfied that the statement sent to the tribunal by the practitioner on 12 September 2013 and dated 20 November 2012, had not been supplied to the complainant before it was sent to the tribunal. It was not provided within the time required.
The insertion of the complainant’s tax file number as "123456789" reinforces the view that I have come to, namely, that the practitioner did not know or enquire about the complainant’s tax file number and inserted something just for the sake of completing the field.
Whether or not the statement was an accurate summary of the gross payments made to the complainant may be a matter of dispute between them: what cannot be disputed is that if tax was withheld by the practitioner as asserted in the summary, then on the undisputed evidence of the complainant, I am satisfied that the withheld tax was not paid to the Australian Taxation Office as required.
The practitioner acknowledged that he had failed to provide the certificate within the time required. Any finding of unsatisfactory professional conduct or professional misconduct requires me to be satisfied as to the elements of the offence as alleged by the applicant in its application. The practitioner disputed whether, in view of the medical reports referred to above, his failure amounted to a "reckless or intentional" failure as alleged in the application. It should be noted that these words do not form part of the statutory definitions set out above.
The practitioner disputed whether his conduct could be so classified in an exchange with me. I put to him, "the difficulties in your mind in satisfying yourself about what she should have been paid, meant that you couldn't issue a certificate at all and that is a factor which negates the recklessly or intentionally element of the offence?" The practitioner agreed.[2] He submitted that because of his debilitating health condition his capacity to deal with anything, let alone payment summaries, diminished.[3] He conceded that his conduct in this regard, did fall short of a standard of competence and diligence that a member of the public would expect of a reasonably competent legal practitioner.[4] He also acknowledged that at the time, he was not competent to conduct his own affairs.[5]
[2] Transcript, p. 34 l. 25 – 35
[3] Transcript, p. 35 l. 29 – 31
[4] Transcript, p. 36 l. 7 – 12
[5] Transcript p. 36 l. 18
Having considered the evidence, together with the evidence in the other proceedings before the tribunal, I am not satisfied that the practitioner’s illness was such that his actions were not at least reckless, if not intentional, or that his illness provides an excuse for his conduct. The practitioner was conducting other legal cases at the time. There was no evidence that he sought the assistance of his professional body to engage a manager, or that he sought assistance from some other person who could responsibly conduct his practice at a time when he was so unwell that he should not have exercised the powers of a practitioner holding an unrestricted certificate. I note the content of the medical reports referred to earlier, but there was no effort to produce any more detailed evidence about the effect of the practitioner’s illness on his behaviour at the relevant time, nor were the medical practitioners who prepared the reports made available for cross-examination. Had the practitioner intended to rely on these matters in any formal way, he should have complied with directions and filed witness statements from those medical practitioners so that the applicant was on notice of them before the hearing and could have decided whether to call them for cross-examination.
Having regard to the findings set out in paragraphs 42 to 49 above, I am satisfied that the conduct of the practitioner has fallen 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 and that his conduct therefore constitutes unsatisfactory professional conduct. I note that the applicant also characterised the conduct in this way.[6] I am not satisfied that the conduct is such that it constitutes professional misconduct.
[6] Transcript, p. 41 l. 14 – 18.
I am also satisfied that the practitioner breached rule 39.2 when he failed to provide the response required by the applicant’s solicitor’s letter of 4 March 2013. The Full Court of the Supreme Court has determined that it is unsatisfactory professional conduct for a practitioner to fail to respond to a requirement, when notified of the obligation to do so under the rules.[7] I am satisfied that in the facts of this case there has been unsatisfactory conduct as a result of that failure.
[7] In the matter of DP and the Legal Practitioners Act 1970 [2005] ACTSC 78
The tribunal orders that the practitioner be publicly reprimanded pursuant to section 425(3)(e) of the LP Act. There are no circumstances that warrant a private reprimand.
Pursuant to section 433(1) of the LP Act, the practitioner is to pay the applicant the costs of and incidental to the application at the full Supreme Court scale, and disbursements in full in an amount to be agreed or, failing agreement, as assessed by the registrar of the tribunal.

………………………………..
Mr C.G. Chenoweth – Senior Member

PUBLICATION DETAILS

FILE NUMBER:	OR 13/13
PARTIES, APPLICANT:	Council of the Law Society of the ACT
PARTIES, RESPONDENT:	Legal Practitioner ‘D1’
COUNSEL APPEARING, APPLICANT	Mr Beaumont -
SOLICITORS FOR APPLICANT	Mr Phelps, Phelps Reid Lawyers
TRIBUNAL MEMBERS:	Mr C.G. Chenoweth – Senior Member
DATES OF HEARING:	14 October 2013
PLACE OF HEARING:	Canberra