Council of the Law Society of the Act v Legal Practitioner ‘P4' (Occupational Regulation)
[2014] ACAT 64
•2 October 2014
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
COUNCIL OF THE LAW SOCIETY OF THE ACT v LEGAL PRACTITIONER ‘P4’ (OCCUPATIONAL REGULATION) [2014] ACAT 64
OR 30 of 2013
Catchwords: OCCUPATIONAL REGULATION – Legal Practitioner – duty to former client – nature of duty – settlement agreement made at conclusion of mediation - duty of practitioner to abide by agreement - duty of practitioner when defending proceedings brought by former client to enforce agreement – duty of practitioner to Court when self-represented to disclose his recent debtor’s petition for bankruptcy on application for adjournment – disclosure of reasons for seeking adjournment - whether submissions to court were misleading – duty of disclosure to practitioner acting for plaintiff in same proceedings.
Legislation:Legal Profession Act 2006, ss 386, 387, 419 and 425
Subordinate
Legislation:Legal Profession (Solicitors) Rules 2007, rr 11, 18.1 and 29
Cases:Briginshaw v Briginshaw (1938) 60 CLR 336
Council of the Law Society of the ACT v Legal Practitioner ‘D2’ [2014] ACAT 6
Incorporated Law Institute of New South Wales v Meagher (1909) 9 CLR 655
Legal Services Commissioner v Keddie [2012] NSWADT 106
New South Wales Bar Association v Meakes [2006] NSWCA 340
Prothonotary of the Supreme Court of New South Wales v Nikolaidis [2010] NSWCA 73
Stirling v Legal Services Commissioner [2013] VSCA 374
O’Reilly v Law Society of New South Wales (1988) 24 NSWLR 204
Re Thom (1918) 18 SR (NSW) 70
Texts/Papers: Dal Pont, G E, Riley Solicitors Manual (The Law Society of New South Wales, LexisNexis, 2005)
Tribunal: Mr G. Lunney SC – Senior Member (Presiding)
Ms M-T. Daniel – Member
Mr M. Sexton OAM – Member
Date of Orders: 2 October 2014
Date of Reasons for Decision: 2 October 2014
ACT CIVIL AND ADMINISTRATIVE TRIBUNAL OR 13/30
BETWEEN:
COUNCIL OF THE
LAW SOCIETY OF THE ACT
Applicant
AND:
LEGAL PRACTITIONER ‘P4’
Respondent
TRIBUNAL: Mr G. Lunney SC – Senior Member (Presiding)
Ms M-T. Daniel – Member
Mr M. Sexton OAM – Member
DATE:2 October 2014
ORDER
The Tribunal Orders that:
- The application is listed for hearing of further submissions from the parties on a date to be advised.
………………………………..
Mr G. Lunney SC– Senior Member
For and on behalf of the Tribunal
REASONS FOR DECISION
This is an application for disciplinary action by the Law Society of the ACT brought pursuant to Section 419 of the Legal Profession Act 2006 (Legal Profession Act) in relation to a complaint by the Society against a legal practitioner. The complaint is set out in a document filed with the Tribunal described as ‘Further Amended Application for Disciplinary Action’ (the Application), and dated 14 February 2014.
That Application is set out in similar manner to a pleading, and commences by reciting the factual basis of the complaint. Shortly after the filing of the Application, the practitioner filed a Response to the Application. The Response admitted many of the factual allegations made in the Application.
Section 419 provides that the council of the Law Society may apply to ACAT for disciplinary orders against a practitioner as the result of a complaint that had been made. The matter should be serious enough to warrant a finding by ACAT of either unsatisfactory professional conduct, or professional misconduct.
BACKGROUND
The Application, with editing of identifying material, is reproduced at Appendix 1 to these Reasons for Decision. The respondent’s Response is reproduced at Appendix 2.
Briefly put, the rather extensive background is as follows. A former client of the respondent (former client) brought an action in negligence in October 2005 against the respondent arising out of the respondent’s handling of a defamation action in which the respondent had acted for the former client. The claim was settled with the involvement of the respondent’s professional indemnity insurers in April 2009.
Those proceedings not only related to the claim for negligence, but also included a claim by the client to recover fees that had been paid by the client to the respondent in respect of the allegedly negligent work. The quantum of this aspect of the claim was not met by the professional indemnity insurer and would have to be met by the respondent personally. The deed of settlement related to both aspects of the former client’s claim, and included provisions settling the costs aspect of the client’s claim.
In respect of the costs claim, the deed provided that the respondent would pay the amount of costs as determined by the Deputy Registrar of the Supreme Court.
The issue of the costs came before the Deputy Registrar and a determination was made. The former client sought a review of the decision and this review confirmed the original decision.
That determination was then appealed by the former client to the Master of the Court who dismissed the appeal. The former client then appealed the matter to the Court of Appeal.
The Court of Appeal referred the costs issue to a mediation which proceeded on 31 August 2011. Agreement was reached resulting in a Memorandum of Agreement (mediation agreement) being signed by the client and the respondent. It provided for payment by the respondent of $10,000.00 to the former client and execution of a deed of release by the parties.
An issue arose as to the interpretation of the mediation agreement, which became the subject of the complaint made by the applicant. This will be dealt with in more detail later in these reasons
The client made a complaint alleging non-compliance with the mediation agreement to the Law Society which initially dismissed it. However, the Society reconsidered its decision and commenced some further correspondence with the respondent on 9 July 2012. The respondent wrote to the Law Society on 19 September 2012 setting out his reasons for not making the payment referred to in the mediation agreement.
The client had brought proceedings in the Magistrates Court in June 2012 in order to enforce payment of that sum to him.[1] Those proceedings were defended by the respondent. The claim was listed for hearing on Monday 27 May 2013.
[1] CS No. 436 of 2012
Prior to that date on 19 May 2013, a solicitor who had been acting for the respondent in defending the proceedings informed the former client’s legal representatives that his instructions had been withdrawn.
On 23 May 2013, the respondent informed the former client’s legal representatives that the solicitor was no longer acting for him and that he proposed to seek adjournment of the matter when it was called on for hearing to enable him to obtain representation.
Also on 23 May 2013, the respondent forwarded a debtor’s petition to a solvency accountant with completed documentation proposing the accountant as trustee of the respondent’s bankrupt estate. The respondent had met with the accountant on 14 March 2013 and had been provided with the forms.
On 27 May 2013, the respondent appeared on his own behalf in the Magistrates Court and applied to the presiding Magistrate for adjournment which was opposed by the client’s representative. Adjournment was granted in circumstances which will be dealt with later in more detail.
Also on 27 May 2013, the solvency accountant was appointed as trustee of the respondent’s bankrupt estate.
ORDERS SOUGHT AND GROUNDS OF COMPLAINT
The principal order sought by the applicant is for a declaration that the respondent has been guilty of professional misconduct. In the alternative, a declaration is sought that he has been guilty of unsatisfactory professional conduct. A number of consequential orders referred to in section 425 of the Legal Profession Act are also included and are set out in the Application.
In support of the orders sought, four Grounds of Complaint are relied on as follows:
1. A failure to conduct dealings with a former client honestly and fairly;
2. A failure to act with candour and frankness with the Court;
2A. Deliberately or recklessly misleading the Court; and
3. A failure to act with candour and frankness with a fellow practitioner.
These grounds are referred to in more detail later. However, it can be seen that the grounds can be categorised into two phases. The first phase related to Ground 1. This relates to the respondent’s behaviour over the period commencing with the signing of the mediation agreement and ending at the time of adjournment of the former client’s action on 27 May 2013. In this phase, it is alleged that the respondent breached his duties to his former client.
Grounds 2, 2A and 3 relate to the second phase which is the application for adjournment of 27 May 2013, including some preparatory events prior to it. Those grounds allege breach of duties to the Court and a fellow practitioner when making the application for adjournment.
Each Ground will be dealt with separately.
THE HEARING
The factual basis for the complaints was extensively set out in the Application. The factual material was largely admitted by the respondent. It was mostly the conclusions to be drawn from the facts which were the subject of denial.
The respondent gave evidence having filed and relied on two relatively short affidavits. His evidence in chief was confined to formal matters. He was cross examined.
GROUND OF COMPLAINT 1: Failure to conduct dealings with a former client honestly and fairly
This ground is expressed in the Application as follows.
The Practitioner failed to honour an agreement with the Complainant and, deliberately or recklessly, engaged in conduct to avoid so doing in breach of the Practitioner’s duty to conduct himself honestly and fairly in his dealings with members of the community and, in this case, a former client, in accordance with the same principles of honesty and fairness which are required in relations with the Courts and other lawyers and in a manner that is consistent with the public interest.
This ground is based on the Preface to that section of the Legal Profession (Solicitors) Rules 2007 (Solicitors Rules) which is headed ‘Relations with Third Parties’. The section commences with Rule 29. The Preface reads as follows (underlining has been added).
Relations with Third Parties.
Practitioners should, in the course of their practice, conduct their dealings with other members of the community, and the affairs of their clients which affect the rights of others, according to the same principles of honesty and fairness which are required in relations with the courts and other lawyers and in a manner that is consistent with the public interest.
In the Application, the applicant concedes that the Preface does not of itself impose binding obligations on practitioners, but alleges that it is an accurate statement of the general law ethical duties of practitioners. In Ground 1, the applicant alleges breach of the standards referred to in that preface.
It is also relevant to note the terms of sections 386 and 387 of the Legal Profession Act (underlining added).
386 What is unsatisfactory professional conduct?
In this Act:
unsatisfactory professional conduct includes conduct of an Australian legal practitioner happening in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner.
387 What is professional misconduct?
(1) In this Act:
professional misconduct includes—
(a) unsatisfactory professional conduct of an Australian legal practitioner, if the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence; and
(b) conduct of an Australian legal practitioner whether happening in connection with the practice of law or happening otherwise than in connection with the practice of law that would, if established, justify a finding that the practitioner is not a fit and proper person to engage in legal practice.
(2) For finding that an Australian legal practitioner is not a fit and proper person to engage in legal practice as mentioned in subsection (1), regard may be had to the suitability matters that would be considered if the practitioner were an applicant for admission to the legal profession under this Act or for the grant or renewal of a local practising certificate.
The inclusive definition of unsatisfactory professional conduct refers to a connection with the practice of law. In the Preface, the reference is to conduct in a practitioner’s own practice. Consequently the first part of the meaning of professional misconduct references a connection with the practice of law also. However, the second part, sub-section 1(b), does not require it. The difference in wording between the Preface and the Act does not appear to be of consequence in these proceedings.
The mediation agreement and the obligations arising under it had a direct link to the allegedly negligent work done by the respondent for the former client since it was intended to be a final disposition of the negligence action that that work had given rise to. The proceedings to enforce the mediation agreement commenced by the former client and defended by the respondent were an extension of that connection and thus with the respondent’s practice of the law.
The Tribunal was referred to a decision in a case in this tribunal in which disciplinary orders were sought against a solicitor who was alleged to have acted with impropriety in conducting a case on his own behalf. It was Council of the Law Society of the ACT v Legal Practitioner ‘D2’ [2014] ACAT 6. The tribunal declined to make the orders sought against the practitioner. In that case, the practitioner was involved in a business which had no connection with his practice apart from his participation in both enterprises. No submission was made that there was any relevant similarity between the conditions being considered in the present proceedings and those considered in that case.
In the present proceedings, there is an uncontested connection between the respondent’s practice and the impugned conduct. The Tribunal consequently does not consider that the decision is relevant to the present proceedings.
It was not disputed by the respondent in the course of the proceedings that the Preface provided a sound basis for Ground 1 if the factual allegations were established. The Tribunal accepts that this is the case and that the respondent was under a duty to the former client to act honestly and fairly in complying with his obligations under the mediation agreement.
ISSUES
Having decided that the respondent owed a duty to his former client, the following issues remain:
i)whether there was breach of the respondent’s duty to the former client; and
ii)if breach is established, whether the conduct constituting the breach was deliberate or reckless.
These issues are amplified in paragraph 9A of the Application as follows. This paragraph is denied by the respondent.
Notwithstanding the purported denial of the Practitioner that he was obliged to pay the said $10,000.00 quite separately from the question of the execution of the Deed of Release and Indemnity, in truth:
(a)it was not reasonably arguable that the payment was conditional upon the execution of the said Deed;
In order to analyse these issues, it is desirable to examine the course of events following the mediation, and other evidence relevant to those events.
SEQUENCE OF EVENTS
The mediation agreement is dated 31 August 2011. It is common ground that the $10,000.00 (agreed sum) referred to in the agreement has not been paid.
On 10 October 2011, the former client’s solicitors, Nicholl & Co (JNCo), emailed the respondent’s solicitor, Joe Weller & Associates (JWA), referring to the mediation agreement and requested payment of the agreed sum. They made a claim for outstanding interest calculated according to their interpretation of the agreement. JWA provided a one word response: ‘noted’ on the same day.
JWA provided a more extensive reply on 18 October 2011. This reply asserted that at the mediation the parties agreed to execute a deed to give effect to their intentions, and there had been a conversation in which ‘a representative’ of JNCo undertook to supply that deed which had not been supplied. The Tribunal notes that there is no other evidence of such a conversation. The letter concluded: “Are you suggesting that the parties have given legal effect to what was to be in the deed, without there being an executed deed?”[2]
[2] Exhibit 1, page 36
On 19 October 2011, JNCo replied asserting that the terms of the written agreement were unambiguous, clause 1 required payment of the agreed sum, and that the respondent was in default. JWA responded as follows:
I appreciate that you have your view.
But consider this; you want my client to pay your client money, but your client gives my client nothing that will constitute a release from the subject matter of the dispute.[3]
[3] Exhibit 1, pages 38-39
On 8 December 2011, JNCo sent by facsimile a draft deed which repeated the terms of the mediation agreement. The final paragraph of the covering letter said:
We enclose a deed that documents the terms of the agreement reached at mediation. There can be no argument that your client’s payment of the outstanding sum was dependent on the provision of the deed.[4]
[4] Exhibit 1, page 41
JWA responded by email of 12 December 2011. This raised an assertion of breach of clause 19 of the agreement to mediate made prior to the mediation, being, it was said, a confidentiality clause. No particulars of the allegations of breach were provided in the email. The agreement to mediate was not put into evidence. Until cross examination of the respondent there had been no indication of the nature of the breach alleged. It became apparent in cross examination that the breach alleged was that the former client had breached the confidentiality clause when he complained to the Law Society about the respondent’s behaviour.
The email refers to the draft deed which had been provided and then reads:
I note your advice that the payment by my client of a sum of money was due some time ago, because of the “provision of the deed” to me, today. Putting aside the particular time when the money allegedly became due, I think it is more accurate say what you have provided to me today, is a draft deed, which axiomatically needs the execution of the parties to make it a deed and for it have legal effect.
The handwritten document which the parties executed after the mediation at its clause 5, contemplates that the parties would enter into an agreement by executing such a Deed. That has not happened. And, without such an executed Deed there is no liability.
In all of the circumstances, it is inaccurate to suggest that it is my client who has breached an agreement. And, given the actions of your client in breaking his undertaking, my client is not disposed to form an agreement with your client, by executing the draft Deed.[5]
[5] Exhibit 1, page 47
The meaning of this email is not absolutely clear. The Tribunal understands it to mean that there was no agreement at the mediation except to enter into a later deed which would contain the provisions in the mediation agreement. Since no deed has been entered into the respondent has no liability to the former client. Further there is an unspecified breach of ‘an undertaking’, (possibly of an undertaking of confidentiality in the agreement to mediate) justifying the respondent in refusing firstly, to execute the deed which JNCo sent and secondly, to pay the amount referred to in the mediation agreement. There is no complaint about the terms of the draft deed.
JNCo responded to this email on 22 December 2011. They repeated previous requests for payment in accordance with the terms of the agreement, and added:
In any event, you have not proposed any amendments to the Deed, and your client is refusing to sign the Deed.[6]
[6] Exhibit 1, page 53
JNCo had sought the agreement of JWA to have the matter relisted before Refshauge J who had been a member of the appeal court which had ordered the mediation. There was no response, and no appearance of JWA on the mention date, 21 December 2011.
JWA wrote to JNCo on 14 April 2012 enclosing a copy of the mediation agreement of 31 August 2011. The letter said that the respondent regarded the document as ‘something other than a contract’. Thus implying that whatever it was, the mediation agreement imposed no obligation or liability on the respondent. It went on to allege if it was a contract, the former client had not performed his promises under clause 5 of the mediation agreement, and thus had repudiated the purported contract. The respondent accepted the repudiation and the alleged contract was at an end.
That letter came about 3.5 months after the draft deed was sent to JWA.
Proceedings to enforce the mediation agreement were commenced in the ACT Magistrates Court on 20 June 2012.
A defence was filed by the respondent dated 11 July 2012. This denied that there was an enforceable agreement and asserted that the parties had agreed as to terms to be inserted into a proposed deed. The defence also asserted that the clause by which the parties agreed to execute a deed of release and indemnity had not been performed by the client, and that this non-performance amounted to a repudiation of the alleged agreement which had been accepted by the respondent on 14 April 2012. This defence was later amended.
In its final form of 7 December 2012, the respondent’s defence alleged the following:
a)There was no enforceable agreement. The parties agreed to the terms to be inserted into a Deed.
b)Alternatively, if the mediation agreement was a contract, the former client had repudiated it by not performing the terms of clause 5. The respondent had accepted the repudiation on 14 April 2012.
c)The parties had executed a Deed on 24 April 2009. This was the Deed which settled the proceedings which included the former client’s claim for professional negligence in respect of the previous defamation proceedings and also the former client’s claim for professional costs which he had paid to the respondent in respect of those defamation proceedings.
This Deed contained what might be described as a standard release and indemnity by the former client in consideration of settlement of the proceedings. In the Defence, the respondent relied on the following term of the release and indemnity.
The Releasor will indemnify and hold harmless the Releasee against any Claim related to or connected in any way to the subject matter of the Proceedings however asserted.[7]
The Defence claimed that the former client had no right to sue the respondent because of that indemnity.
CROSS EXAMINATION OF THE RESPONDENT
[7] Exhibit 1, page 5
The respondent filed two affidavits in the Tribunal proceedings. The material in those two affidavits is not directly relevant to the issues raised in Ground 1. He also gave evidence but his evidence in chief was confined to formal matters. It was left to cross examination to unearth some relevant material in relation to Ground 1.
Early in cross examination[8], the respondent was asked questions about the proceedings in which the Court of Appeal referred the dispute about the costs issue to mediation. The respondent was asked questions about his approach to the mediation as follows:[9]
Nevertheless, having heard what the Court of Appeal said, you regarded yourself, didn’t you, as honour bound, having agreed to the mediation to go into that mediation in good faith and in an attempt to resolve the outstanding issue between you and (the former client). Correct? --- Yes [words within brackets added]
Your also regarded your self as honour bound when you signed the memorandum of agreement following the mediation to do what you could to assist in that memorandum of agreement being honoured and performed. Correct? --- Yes
[8] Transcript, 08.04.2014, commencing at page 40
[9] Transcript, 08.04.2014, page 41.1-9
He agreed that it was commonplace in an agreement settling litigation for one or both parties to also seek a deed of release.[10] However, he did not answer the follow up question that other prior agreed terms were not conditional on execution of the deed of release, saying that his expertise was very narrow and confined to taxation matters.
[10] Transcript, 08.04.2014, page 41.22-23
It was suggested to him that on receipt of the draft deed which had been forwarded to his solicitor by JNCo on 8 December 2011, the only proper thing was to indicate it was acceptable, or to suggest amendments. His first answer is “my understanding was that they were to issue us with the executed deed”.[11] However, he is pressed on this answer and it is finally put to him:
...Your earlier answer where you said you understood it would first be executed was simply wrong wasn’t it? --- Well, yes it was.[12]
He then agreed that the only two proper alternatives on receipt of the deed on 8 December 2011 were either to agree to it in its draft form or suggest amendments. But when he was then asked, “But you took neither of those alternatives, did you?”[13] he did not give a straightforward reply. He said: “I can’t recall what – I can’t recall the specifics of what I did at the time. I think I took advice on it.”[14]
When pressed on that answer, he finally agreed that he did neither of those alternatives.
[11] Transcript, 08.04.2014, page 41.14-15
[12] Transcript, 08.04.2014, page 41.28-29
[13] Transcript, 08.04.2014, page 41.37
[14] Transcript, 08.04.2014, page 41.37-38
He was then asked about the assertion regarding breach of confidentiality.[15]
...You say what you meant by that was (the client) had complained to the Law Society. Is that right? --- That was one of the ---
Right. So because he had complained to the Law Society that you weren’t – because he’d complained to the Law Society – and did you understand one aspect of that complaint to be that you weren’t honouring the mediation agreement? Is that right? --- I can’t recall precisely, but that ---
So you honestly thought that that was a legitimate reason for you to resist any obligation to take the proper course of either executing the deed or raising a proper objection to it. Is that right? --- Yes.
In the context of those answers, it is very significant that the allegation of breach of confidentiality given as a reason for not signing the deed has not been the subject of any evidence brought by the respondent in the proceedings.
[15] Transcript, 08.04.2014, page 45.23-34
Immediately after that answer, the cross examination continued.
Is that a serious answer (the respondent)? --- Well the – we also asked him to provide the releases to me, which they weren’t prepared to – my understanding they weren’t prepared to release me from any obligations[16].
The answer to that question is really quite unusual since the respondent has called no evidence of a refusal by the former client to release him from his obligations. In fact, the evidence is directly to the contrary, the draft deed sent on 8 December 2011 provided for settlement of all claims between them.
[16] Transcript, 08.04.2014, page 45.36-38
Shortly after, it was put to the respondent that he refused to sign the deed because his former client had complained to the Law Society.[17] His answer was: “That’s not the sole reason, no”.[18] He was then asked what other reason, and his answer was that there were many reasons. “There were very cogent reasons”.[19]
[17] Transcript, 08.04.2014, page 46.2-4
[18] Transcript, 08.04.2014, page 46.4
[19] Transcript, 08.04.2014, page 46.15-16
No such cogent reasons were communicated to the client’s solicitors, and no cogent reasons have been advanced in these proceedings. A situation eventually acknowledged by the respondent as follows:[20]
You would have made sure that those cogent reasons found their way in a letter or at least an email from (JWA) to (JNCo), wouldn’t you? --- Well, not necessarily.
Not necessarily? --- No.
[20] Transcript, 08.04.2014, page 46.20-24
The respondent was asked about the letter of 12 December 2011 which stated that he was not disposed to execute the draft deed which had been sent by the former client’s solicitors. The questions and answers follow.
Would you agree with me that in sum Mr Weller is saying that, “you (former client) have breached your confidentiality obligations” --- Yes.
Point 1. Point 2, “There are no obligations until the deed is executed”? --- Mm.
And Point 3 “Given that you, (former client), have breached your confidentiality obligations, (the respondent) is not disposed to execute a deed”? --- Yes that’s fair.
Do you put that forward as an honourable way to conduct yourself, (the respondent)? ---- In the context of dealing with this client, that was the view that I had formed following taking advice from my legal advisers, yes.[21]
[21] Transcript, 08.04.2014, page 47.13-23
He was pressed about the allegation that had been made in the letter from JWA that the former client had refused to execute the draft deed and this constituted a repudiation of the contract. The cross examination included the following;[22]
It’s just a nonsense to suggest, isn’t it, that (the former client) has repudiated his obligation to execute the deed, isn’t it? --- He wouldn’t – my understanding is that he would not execute the deed.
Where did you get that understanding from (the respondent)? --- Well, that was just an impression that I formed. That was consistent with the way (the former client) had acted when it took 18 months to get the previous deed done.
The second answer exposes the absence of any evidence that the former client refused to execute a deed and the respondent’s awareness of that circumstance. These answers support an inference that he had no viable evidentiary support for his opposition to the former client’s claims and that he was well aware of that.
[22] Transcript, 08.04.2014, page 50.24-30
The respondent when cross examined said that he believed that he had a very strong case and it was one which he believed he should win.[23] The Tribunal is unable to accept this evidence. The respondent had been unable in the affidavits which he filed, his examination in chief, and then in cross examination, to refer to any evidence which would establish that he had justification for firstly resisting paying the agreed sum, or to defend the former client’s proceedings.
CONSIDERATION
[23] Transcript, 08.04.2014, page 64.33-34
The Court of Appeal proposed mediation as a possible solution to a dispute regarding costs which was devouring time, money and the resources of the Court. Prior to making a direction for mediation under the Rules, Mr Weller, acting for the respondent in the proceedings, was asked by the members of the Court to take instructions from the respondent about entering into a mediation at the earliest possible opportunity. The respondent agreed to do so.
The mediation agreement which followed the mediation was not an outcome which had been imposed on the respondent in any way. It was the outcome of a process in which the parties to the mediation reached agreement themselves with the facilitation of the mediator.
In the course of cross examination the respondent agreed that he entered into the mediation in a genuine effort to reach a settlement. He also agreed that when he signed the mediation agreement he was honour bound to do what he could to assist in the memorandum of agreement being honoured and performed.
When the solicitors for the former client wrote to the respondent’s solicitor on 10 October 2011, they were met on 18 October 2011 with a rebuff on the basis that the mediation agreement was to execute a deed. It is the Tribunal’s view that no reasonable reading of the mediation agreement indicates that it was intended to be an agreement to enter into a later agreement. The dispute related to the amount of money to be repaid to the former client. The mediation agreement quantified this and provided for a period for payment. Reference to a deed was to a deed of release and that reference was ancillary to the settlement of the dispute relating to costs.
After some further correspondence, JNCo wrote to JWA on 8 December 2011. They sent a draft deed, to be met by the assertion that the deed sent had not been executed and, consequently, not only that there was no liability, but that the former client was in breach of an undertaking to maintain confidentiality of a pre-mediation agreement. This, it was asserted, amounted to justification for the respondent to refuse to execute the draft deed, expressed as the respondent “not being disposed to” form an agreement with the former client by executing the draft deed”.[24]
[24] Exhibit 1, page 47
It was not until three and a half months later that there was any mention by the respondent of repudiation. The Tribunal regards the assertion of repudiation by refusal or failure to execute as fanciful.
Other than relying on the correspondence, the respondent has not sought during the hearing, by affidavit, in evidence in chief or in re-examination, to explain why he did not execute the draft deed at that time. His answers to cross examination on this subject show a shallow understanding of the factual and legal basis for the claims he made and the issues which arose.
It must have been clear to the respondent as early as JNCo’s letter of 10 October 2011 that they were putting a different interpretation on the mediation agreement to the respondent’s. They said that the obligation was a clear one: an obligation to pay a sum of money; and ancillary execution of mutual releases. The solution to that difference of opinion was a simple one: pay the money and execute a deed. That could have been done simultaneously in the manner of a property settlement. However, a minor formality was promoted by the respondent to being an insuperable barrier and he refused to cooperate.
Even if one assumes that the respondent was correct in asserting that the mediation agreement was an agreement to execute a deed containing the terms of the mediation agreement, he received a draft deed on 8 December 2011 which contained the terms of the mediation agreement. He agreed, in cross examination, that the two appropriate responses on receipt of the deed were either to propose amendments or execute it. This was effectively pointed out by JNCo in their email of 22 December 2011.[25] The respondent has never suggested that any part of the draft deed did not reflect the agreement reached at the mediation. However, he did not execute it. The Tribunal concludes, particularly in the absence of provision of any valid reason for not executing the deed, that his motive at that time was to postpone or avoid his obligation to make the payment provided for in the mediation agreement. That motive had found expression in the response to JNCo’s email of 10 October 2011[26], and then a refusal to execute the deed sent on 8 December 2011[27] and pay the sum owing.
[25] Exhibit 1, page 53
[26] Exhibit 1, page 34
[27] Exhibit 1, page 41
The conduct of the respondent to avoid, without justification, honouring his obligations under the mediation agreement commenced no later than the receipt of the draft deed. The former client was obliged to commence proceedings in an attempt to recover what he was rightfully entitled to. Those proceedings were defended without foundation for doing so, and the obstruction has continued unabated. The proceedings commenced by the former client almost ran their full course only to fail on the day listed for hearing about two and a half years after the mediation agreement was made. This would have resulted in considerable consequent waste of time and money on the part of the former client. He now seems unlikely to obtain any benefit largely due to the delays created by the respondent.
The Tribunal takes the view that the former client’s claim was indefensible. There is no evidence to the contrary. No attempt was made during the hearing to justify the allegation in the Magistrates Court defence that the release and indemnity contained in the 24 April 2009 Deed rendered the mediation agreement unenforceable. It is an unusual argument that a release and indemnity prevents the enforcement of the agreement of which it forms a part. The absence of supporting material or argument for the indemnity allegation is an indication of the hollowness not only of that part of the defence, but the other allegations of the defence as well. The respondent engaged in a course of delaying conduct which succeeded in him avoiding his obligations under the mediation agreement until 27 May 2013. The Tribunal considers that this was done in breach of the duty that he had to his former client.
The Tribunal finds Ground 1 made out.
GROUND OF COMPLAINT 2: Failure to act with candour and frankness with the court
Ground 2 is expressed as follows.
The Practitioner, in his dealings with the Magistrates Court, acted with a lack of candour and frankness in:
(a) failing to disclose to the Court the steps he had taken on 23 May 2013 to initiate a voluntary bankruptcy or the other matters pleaded in paragraph 13 above; and,
(b) representing to the Court at the hearing on 27 May 2013 that the basis for his application for an adjournment was that he was no longer represented by Mr Weller, and that he needed to obtain alternative legal representation, when in truth, the real basis for the application by the Practitioner was that in the event the adjournment were granted, he expected that he would be likely to be able to frustrate the proceedings by reason of the matters pleaded in paragraph 13 above.
Paragraph 13 of the Application refers to the forwarding on 23 May 2013 of the debtor’s petition to the solvency practitioner Mr Hundy, with completed documentation for his appointment as trustee of the respondent’s bankrupt estate. This paragraph was admitted by the respondent.
The respondent’s duty to the Court is summarised in the preface to that section of the Solicitors Rules headed Practitioners’ Duties to the Court and which commences with Rule 11. The preface reads:
PRACTITIONERS' DUTIES TO THE COURT
Practitioners, in all their dealings with the courts, whether those dealings involve the obtaining and presentation of evidence, the preparation and filing of documents, instructing an advocate or appearing as an advocate, should act with competence, honesty and candour. Practitioners should be frank in their responses and disclosures to the Court, and diligent in their observance of undertakings which they give to the Court or their opponents.
In Chapter 20 of Riley Solicitors Manual[28] the reference to honesty and candour in the Rules referred to above is explained as follows:
[20,000.5] Honesty and candour
.....the notion of honesty is critical because the administration of justice according to law would not be possible if its agents — namely lawyers — had no duty to act honestly. Likewise, candour to the court represents not only an aspect of honesty, but the role of the lawyer in assisting the court in reaching a just decision upon the evidence that is admissible for this purpose....
Honesty and candour must permeate all dealings with the court, whether in open court or in the proceedings leading up to the hearing. The relevant duty has important implications for the type of statements that can be made, and the evidence that can be presented, to the court.
[28] Dal Pont, G E, Riley Solicitors Manual (The Law Society of New South Wales,
LexisNexis, 2005)
Sub-paragraph (a) of Ground 2 does not assert that the respondent directly misled the court. Rather it asserts that as a result of failure to provide relevant information known only to the respondent, an incorrect belief or impression was created. The creation of a false impression by incomplete disclosure was referred to by Chief Justice Sir William Cullen in - SMN.RBLAJ.22050.ANT1-RRe Thom (1918) 18 SR (NSW) 70 at 74–5;
It is perhaps easy by casuistical reasoning to reconcile one’s mind to a statement that is in fact misleading by considering that the deponent is not under any obligation to make a complete disclosure. By this means a practitioner may be led into presenting a statement of fact which, although it may not be capable of being pronounced directly untrue in one particular or another, still presents a body of information that is misleading, and conceals from the mind of the tribunal the true state of facts which the deponent is professing to place before it. For that reason it is proper on such an occasion as this to express condemnation of any such casuistical paltering with the exact truth of the case.
SEQUENCE OF EVENTS
The respondent withdrew his instructions from the solicitor, Mr Joe Weller of JWA, on or prior to 5 May 2013. That is the date of the Notice of Intention to Apply for Leave to Withdraw which was addressed to the respondent at an address in Mount Fairy NSW.
On 19 May 2013, Mr Weller, sent an email to the solicitors acting for the former client in the following terms:[29]
My instructions have been withdrawn.
Please see annexed.
[29] Exhibit 1, page 124
Two completed court forms were attached to the email. The first was a Notice of party acting in person which was signed by the respondent. It was dated 17 May 2013. It was addressed personally to the former client rather than to the solicitors on the record who were acting for him: JNCo. It was shown as having been filed by the respondent personally.
The second court form was an Application in proceedings and gave notice that on a date which was not nominated, Mr Weller would apply for leave to be deleted from the record as the solicitor for the respondent. Although the court form requires grounds for the application to be given, and documents are referred to, no actual grounds are set out.
It is not clear whether the solicitor’s application was ever pursued. When the matter was called on for hearing on 27 May 2013, the former solicitor did not appear, and the respondent acted for himself.
On 23 May 2013, two significant events took place. Firstly, the respondent sent an email to the client’s solicitors.[30] It was timed as having been sent at 4:32pm. He referred to the proceedings which were listed for hearing in the Magistrates Court on 27 May 2013, and the email then read:
...
As you may be aware, Mr Weller is no longer acting for me in this matter.I am seeking your consent to adjourn the matter until 11 June 2013, so that I can attempt to obtain representation.
I appreciate it is “late in the day” however, I would be prepared to mention the matter on your behalf and consent to any costs thrown away due to the adjournment.
[30] Exhibit 1, page 125
Secondly, at 4:35pm he sent another email.[31] This one to the solvency practitioner, Stephen Hundy, who was acting for him in relation to bankruptcy advice. He attached a completed debtor’s petition which was dated 23 May 2013, and the email read:
Attached is my Debtor’s Petition. I do not have some tax records and will provide these as soon as practicable.
Could you please advise whether (sic) my bankruptcy starts. Is it today or at a later date?
He then set out contact details.
[31] Exhibit 1, page 126A
Then on 27 May 2013, the respondent applied for adjournment of the hearing scheduled for that day. That application was opposed by counsel appearing for the former client. The ground advanced by the respondent was that he and his legal representation had ‘parted ways’, and he was no longer represented. He did not say that he had withdrawn his instructions from his solicitor, although that was the sense in which the magistrate took it.
The respondent made no mention of his application for bankruptcy or insolvency in the application. In the Magistrates Court proceedings he said that he wished to obtain a new practitioner to represent him, so that he could ‘ensure proper representation’.[32]
[32] Transcript (MC matter: CS 12/00436), 27.05.2013, page 2.20-21
When the respondent was asked by the presiding magistrate on 27 May 2013, (T6 27/05/13) when it was that he took his retainer away, he said:
It would be a couple of weeks ago, I think your Honour. I don’t have the specifics of it.[33]
[33] Transcript (MC matter: CS 12/00436), 27.05.2013, page 2.20-21
The respondent was asked by the magistrate about his parting with Mr Weller, and in the following exchange confirms that he had withdrawn his instructions, but without using those words.
Her Honour: But apparently you had a lawyer and you disagreed with their advice, as I understand what you’re saying.
(The respondent): No, no, no. I’d rather not go into the reasons. What I say to the court is that I had legal representation and I now no longer have that and I have been seeking further representation.[34]
[34] Transcript (MC matter: CS 12/00436), 27.05.2013, page 3.18-23
Not having given any explanation to the magistrate during the application, nor in the affidavits he filed in these Tribunal proceedings, he was given a further opportunity in cross examination to confirm that he had withdrawn his instructions from Mr Weller and explain his reasons for doing so:
… You instructed Mr Weller that you were withdrawing your instructions to him? --- Formally yes.
Right. Would you agree with me that you have not in any affidavit set out any reasons why you gave those instructions? That’s true isn’t it? --- That’s true.
You did not give the Law Society any reasons for withdrawing those instructions? That’s right, isn’t it? --- That’s right.
You did not give the magistrate at the hearing on 27 May 2013 any reasons? --- That’s right.
---- for withdrawing those instructions? Is that correct? --- That’s correct.[35]
[35] Transcript, 08.04.2014, page 53.37-45 and page 54.1-5
In spite of the obvious opportunity to say what the reasons were for withdrawing his instructions, the respondent did not do so, and the cross examiner moved on. No reasons were provided in re-examination.
The issues which are raised by the applicant in these proceedings are:
·Was failure to disclose his application for bankruptcy a breach of his duty to the court?
·Was the basis for seeking adjournment of the proceedings brought by the former client an attempt to delay a possible judgment in the proceedings and frustrate those proceedings after being declared bankrupt?
Sub-paragraph (a) of Ground of Complaint 2
In the respondent’s Response to the Application dated 15 February 2014 (Response), he admits that he did not disclose to the Court that he had taken steps on 23 May 2013 to initiate a voluntary bankruptcy and that he had forwarded to Mr Hundy a debtor’s petition and completed documentation for the appointment of Mr Hundy as trustee of his bankrupt estate. [36]
[36] Paras 15(a) and 13, Response
In his Response to the allegations of paragraph 14B of the Application, the respondent justifies not disclosing his bankruptcy application on the basis that no matter what the outcome of the application for adjournment, or of the proceedings, the former client would receive no money from the respondent’s ‘meagre estate’. (Appendices 1 and 2).
Although the ultimate practical outcome of the proceedings following the bankruptcy was likely to be that the former client would receive no payment, that circumstance was of less significance than the effect that adjournment combined with bankruptcy would have on the course of the proceedings. Disclosure of the debtor’s petition thus was relevant to consideration of whether an adjournment should be granted. The magistrate was entitled to be fully informed about the circumstances of the request for adjournment. That is because bankruptcy after adjournment would result in staying of the proceedings if not completed. Also, there could be some advantage to the former client in obtaining a judgment on 27 May 2013. This advantage was referred to by Mr Nicholl in his affidavit of 13 February 2014 and he was later cross examined on his evidence.[37]
[37] Transcript, 08.04.2014, page 29
Not referring to the application for bankruptcy permitted the magistrate to assume that there would be no change in the course of the litigation and the status and entitlements of the parties if the case were adjourned to a later date. In particular, that there would be no change in the former client’s entitlement to a judgment and the fruits of it if one were obtained.
Mr Hundy said that his practice was to tell clients that bankruptcy would begin between 24 and 48 hours of the petition being filed by email.[38] Timing of the bankruptcy was something of importance to the respondent who mentions it in his email to Mr Hundy of 23 May 2013. He had a further conversation with Mr Hundy on 24 May 2013. It is the view of the Tribunal that the subject of timing would have been discussed and that Mr Hundy told the respondent then, if he had not before, that bankruptcy would begin between 24 and 48 hours of submission by email. However, the timing of the bankruptcy was not of immediate importance. Of importance was the fact of his having filed the petition and the attendant possible consequences for the future of the litigation should the adjournment sought be granted. In considering factors relating to the magistrate’s discretion to grant an adjournment the recent submission of a debtor’s petition was clearly a relevant consideration.
[38] Transcript, 08.04.2014, page 22.40-41
Having regard to the principles referred to above and the incorrect impression created by failing to disclose his application for bankruptcy, it is the view of the Tribunal that it was a breach of the respondent’s duty to the Court not to disclose the true situation.
The Tribunal finds that sub-paragraph (a) is made out.
Sub-paragraph (b) of Ground of Complaint 2
This ground alleges that the respondent incorrectly represented to the court that the reason for his seeking an adjournment was that he had withdrawn his instructions from his solicitor whereas the ‘real basis’ for seeking an adjournment was so that a judgment was immediately avoided and his bankruptcy would be likely to frustrate the former client’s proceedings. The factual background and allegations of this subparagraph are set out with more particularity in paragraphs 14B(a) to (c) and (e) of the Application.
The respondent does not admit the applicant’s allegation of ‘the real’ basis for the application for adjournment. The applicant’s allegation consequently would have to be inferred from surrounding circumstances if the applicant is to succeed in relation to this part of the Ground 2 and the Tribunal is being asked to do so.
The Tribunal has previously referred to the notice of intention to withdraw filed by the respondent’s former solicitor.
Mr Weller in his email of 19 May 2013 to JNCo said that his instructions had been withdrawn.[39]
[39] Exhibit 1, page 124
This topic is referred to briefly by the respondent in his affidavit of 14 January 2014.[40] In this he does not refer to withdrawing his instruction, nor to any reasons for doing so. He simply says that he received a notice of intention of ceasing to act from Mr Weller.
[40] Exhibit A
There are a number of cases in which the desirability of legal practitioners giving evidence in disciplinary proceedings is expressed. The NSW Court of Appeal referred to this in New South Wales Bar Association v Meakes[41]
70 In my opinion, the Tribunal also erred in declining to criticise the respondent’s decision not to give sworn evidence at the hearing. It is true that in professional disciplinary proceedings the onus of proving misconduct lies with the party bringing the charges and, it should be noted, a practitioner is not required to give evidence. However, as this Court observed in Coe v NSW Bar Association [2000] NSWCA 13, there is an expectation that legal practitioners will mount the witness box to provide some explanation as to their conduct, rather than simply relying upon evidence from the Bar table. In Coe, Meagher JA (at [21]), with the agreement of Priestley JA, repeated with approval the following observations made by the Tribunal in that case and which are apposite to the present case:
“In the circumstances where a prima facie [case] against a legal practitioner has been presented and where the practitioner wishes the Tribunal to accept an explanation as to how the conduct came about it is inappropriate and irregular for the legal practitioner to attempt to do so through submission from the Bar table. If he wishes the Tribunal to accept some explanation as to how the conduct came to take place then in our view he has an obligation to meet the situation by explanation on oath.”
71 In this case there were many questions left open which only the respondent could answer. …..
[41] [2006] NSWCA 340 at [70]
This passage was quoted with approval by the Victorian Court of Appeal in Stirling v Legal Services Commissioner.[42]
[42] [2013] VSCA 374 at [117]
The Administrative Decisions Tribunal of NSW put it slightly differently in Legal Services Commissioner v Keddie[43]
The disciplinary function of the Tribunal in the Legal Services Division requires the co-operation of the parties to effectively operate. In a different context, as referred to above, the Supreme Court has, from time-to-time, emphasised the obligations of practitioners to assist the Tribunal by the giving of evidence and in every sense, participating in the proceedings. The obligation to assist the Tribunal is not only limited to the giving of evidence and providing appropriate explanations for the conduct complained of but exists at the most basic level of complying with directions made by the Tribunal designed to bring about a speedy and efficient conclusion to proceedings.
[43] [2012] NSWADT 106 at [100]
In Riley Solicitors Manual, the following possible consequences of a failure to give an explanation for particular behaviour are referred to.
[34,150.15] Opportunity to be heard and giving (sworn) evidence
Once before the tribunal (or court), the lawyer (and other parties to the hearing) must be afforded an appropriate opportunity of being heard and to lead evidence in relation to charges. While this does not mean that the lawyer is required to give (sworn) evidence, there is an expectation that lawyers will mount the witness box to provide some explanation as to their conduct, rather than simply relying upon evidence from the Bar table. If the lawyer elects not to give evidence in the disciplinary proceeding, the failure to provide an exculpatory statement or explanation means that inferences from proved facts can be drawn more safely because the lawyer has failed to give any explanation of matters peculiarly within his or her knowledge, and it is more difficult to assess any alleged contrition or reformation in the lawyer.
This statement relating to the consequences of not giving an explanation where one could be forthcoming is referred to in the NSW Court of Appeal in Prothonotary of the Supreme Court of New South Wales v Nikolaidis[44] where the Court said at paragraph 25 as follows.
25 In circumstances where the respondent chooses not to come forward to assist by giving evidence in the disciplinary proceeding, the failure to provide an exculpatory statement or explanation means that inferences from proved facts can be drawn more safely because the defendant has failed to give any explanation of matters peculiarly within his knowledge
[44] [2010] NSWCA 73
In the present circumstances, the respondent has filed affidavits and given evidence. His evidence in chief was confined to formal matters, and no evidence was given regarding his reasons for withdrawing his instructions in cross examination or at any other time. No explanatory material was included in his affidavits. The Tribunal has referred above to his answers in cross examination to probing by counsel for the applicant regarding an explanation for his withdrawal of instructions.
The inference that the applicant is relying on in Ground 2(b) is one which if drawn by the Tribunal could potentially have serious consequences for the respondent against the background of the orders sought by the applicant.
The standard of proof applicable in these proceedings remains on the balance of probabilities, however, in disciplinary (and other) matters the potential consequences for the respondent must be taken into account in determining whether a complaint has been made out.
This principle has found expression Briginshaw v Briginshaw.[45] At page 350 Rich J said:
In a serious matter like a charge of adultery the satisfaction of a just and prudent mind cannot be produced by slender and exiguous proofs or circumstances pointing with a wavering finger to an affirmative conclusion. The nature of the allegation requires as a matter of common sense and worldly wisdom the careful weighing of testimony, the close examination of facts proved as a basis of inference and a comfortable satisfaction that the tribunal has reached both a correct and just conclusion. But to say this is not to lay it down as a matter of law that such complete and absolute certainty must be reached as is ordinarily described in a criminal charge as "satisfaction beyond reasonable doubt.
[45] (1938) 60 CLR 336
Dixon J later said at page 368: “It means that the nature of the issue necessarily affects the process by which reasonable satisfaction is attained.”
In O’Reilly v Law Society of New South Wales[46], Kirby P said that a ‘high degree of satisfaction’ was required. See also Clarke JA in this at page 220.
[46] (1988) 24 NSWLR 204 at 208
The evidence establishes the following:
a) The respondent had actively avoided meeting his obligations
under the mediation agreement both prior to and after the commencement of enforcement proceedings by the former client until the time of the adjournment application.b)He had defended the enforcement action brought by the former client on untenable grounds.
c)Adjournment of the proceedings would postpone judgment and there was at least a real prospect that the respondent would be made bankrupt prior to an adjourned hearing.[47]
[47] Para 14B(b) in the Application and response to it
d)The amount of costs involved ($3,000.00) were disproportionate to the amount of the claim ($10,000.00 plus interest).
e)The respondent’s response to Paragraph 14B(e) of the Application in the Response he filed was significant. Paragraph 14B(e) reads as follows.
(e)the matters pleaded in paragraph 13 above were accordingly material facts for the assessment by the Magistrate of the merits and demerits of the application for an adjournment, especially given, as was the case, that the Practitioner had advanced no reason or explanation for the withdrawal of his instructions to his former solicitor, Mr Joe Weller, and that there appeared to be no practical reason for the withdrawal of those instructions other than so as to provide a reason to seek an adjournment;...
i)The facts referred to in paragraph 13 had been admitted, and they set
out the steps taken by the respondent completing and sending the debtor’s petition to Mr Hundy.ii)The Response dealt with subparagraph (e) as follows:
- Forwarding a debtor’s petition to Mr Hundy and nominating him as trustee in bankruptcy was said not to be material to the magistrate, since no bankruptcy order had been made at the time of the adjournment application.
- “Admitted that the Respondent did not share with the Court his dealings with his solicitor other than the fact that the solicitor was no longer retained. It was not relevant to the Court’s exercise of its discretion.”
- “The Applicant may see no practical reason for the withdrawal of instructions, but, it is not privy to the dealings between solicitor and his client.”
iii)The Response does not provide any reason for withdrawal of instructions, even in the presence of the further allegation in paragraph 14B(e) that instructions were withdrawn in order ‘to provide a reason to seek an adjournment’. Asserting in the Response that provision of reasons is not relevant to the enquiry of the magistrate is not to give a reason for the respondent’s withdrawal of instructions from his solicitor. Irrelevance was not asserted by the respondent when responding to the question of the magistrate referred to above, who clearly thought reasons for withdrawal were relevant. The respondent said that he would rather not go into the reasons.
iv)Further, the Response does not directly deny the allegation that an excuse for adjournment was created by the withdrawal of instructions. These are not pleadings, however, to deal with only part of the allegations of a significant area is curious and tends to highlight the absence of any explanation for withdrawal of instructions.
f)At the time of withdrawal of instructions, Mr Weller had acted for the respondent for a significant period of time, was owed a significant sum in respect of fees, later offered his services on a speculative basis to the trustee in bankruptcy by email of 7 June 2013, and was described by the respondent in cross examination as being ‘a close friend’.[48] The same solicitor acts for him in these proceedings.
g)The respondent was insolvent and unable to pay his debts and faced a judgment for a liquidated sum which included a claim for interest.
h)The unexplained withdrawal of instructions happened only days before the listed hearing date creating little time for retaining alternate representation and thus increasing the likelihood of adjournment.
i)There was no independent evidence of any reason for the respondent having withdrawn his instructions.
[48] Transcript, 08.04.2014, page 39.30
The evidence referred to raises the inference alleged by the applicant. Doubts raised about the basis of the withdrawal of instructions could be dispelled by a satisfactory explanation for taking that action. Absent those doubts, the strength of the inference alleged could reduce or fall away. The respondent has not provided that explanation and whatever the reasons, they remain ‘peculiarly within his knowledge’. The strength of the evidence referred to and the respondent’s unwillingness to provide support for his stated reason for adjournment result in the Tribunal having a comfortable degree of satisfaction in drawing the inference suggested by the applicant
The Tribunal finds Ground 2(b) made out.
GROUND OF COMPLAINT 2A: Deliberately or recklessly misleading the Court
This ground is in two parts and reads as follows.
The Practitioner, during the course of his appearance before the Magistrates Court on 27 May 2013, when making submissions in support of his application that the matter be adjourned for a period of in the order of two weeks in breach of his general law duty and rule 18.1 of the Legal Profession (Solicitors) Rules 2007, deliberately, or alternatively recklessly, misled the Court in that he:
(a)represented to the Court that he did not think that there would be any prejudice to the Plaintiff in the granting of the adjournment when he knew and believed, by reason of the matters pleaded in paragraph 15(d) above, that there would be or would be likely to be, significant prejudice to the Plaintiff; and,
(b)submitted to the Court that his offer to pay costs thrown away would cure any prejudice to the Plaintiff resulting from the granting of the adjournment which he sought, when he knew and believed that any such costs order would be, or would be likely to be, of little if any, value to the Plaintiff by reason of the matters pleaded in paragraphs 13A and 14B(a)-(b) above (namely, in summary, the Practitioner’s belief and advice that he was insolvent and at least at (sic) likely to be made bankrupt.
Paragraph 15(d) which was denied is effectively a repetition of the allegations of Ground 2A. The Tribunal takes the view that the words in sub-paragraph (a), “by reason of the matters pleaded in paragraph 15(d) above”, are surplusage, and do not add to the meaning of it.
Rule 18.1 of the Solicitors Rules deals with a practitioner making a misleading statement to a court. It reads as follows.
18. Frankness in court
18.1 A practitioner must not knowingly make a misleading statement to a court on any matter.
The notion of honesty and candour previously referred to in relation to Ground 2 necessarily involves a duty not to mislead the court, as referred to in Rule 18.1. This aspect of the duty is explained in Incorporated Law Institute of New South Wales v Meagher, per Isaacs J[49]:
The errors to which human tribunals are inevitably exposed, even when aided by all the ability, all the candour, and all the loyalty of those who assist them, whether as advocates, solicitors, or witnesses, are proverbially great. But, if added to the imperfections inherent in our nature, there be deliberate misleading, or reckless laxity of attention to necessary principles of honesty on the part of those the Courts trust to prepare the essential materials for doing justice, these tribunals are likely to become mere instruments of oppression, and the creator of greater evils than those they are appointed to cure.
Sub-paragraph (a) of Ground 2A
[49] (1909) 9 CLR 655 at 681
The circumstances of these submissions have been previously referred to. The following was submitted by the respondent as part of his support for his application for adjournment in the Magistrates Court proceedings.[50]
… I did offer that we would pay any costs thrown away for today in my email, and I don’t think there would be any prejudice to the client, because on the issues as well is whether or not this is estopped by a deed that we signed, myself and – signed a deed in, I think it was – it was three or four years ago.
[50] Transcript(MC matter: CS 12/00436), 27.05.2013, page 3.29-33
The Tribunal concludes that the respondent made the submission to the court that there would be no prejudice to the former client arising from adjournment, knowing the following:
a)He had submitted a debtor’s petition to his solvency accountant for transmission.
b)He had been told that it was likely to come into effect within 24 to 48 hours of submission.
c)If the proceedings were adjourned, the possibility of judgment being entered was postponed.
d)Bankruptcy may intervene prior to any adjourned date.
e)Upon bankruptcy the proceedings would be stayed subject to leave with the likely result of frustration of the proceedings that had been brought against him.
The prejudice to the former client can be inferred from the above matters. The submission was therefore incorrect and would have misled the Court about the circumstances and consequences of adjournment.
The respondent has not in his affidavits, evidence in chief or evidence in reply sought to justify the making of this submission. The Tribunal infers that knowing the above matters, the respondent deliberately put this submission.
The submission regarding lack of prejudice was put to the Court in order to, amongst other submissions, persuade the Court to grant an adjournment. The statement was incorrect to the knowledge of the respondent. It was put deliberately and was a failure by the respondent to observe his duty to the Court not to mislead it.
Sub-paragraph (b) of Ground 2A
This relates to the respondent’s submission that his offer to pay costs thrown away would cure any prejudice to the former client arising from an adjournment. The following exchange took place in cross examination.[51]
[51] Transcript, 08.04.2014, page 61.30-42; page 62.1-2, 9-12 and 41-44
What you were submitting was that because you had offered to pay costs thrown away, there would be no prejudice to (the former client). Correct? --- That’s right.
But, (the respondent), don’t you see that as a positively misleading submission, given that you know that you had sent a debtor’s petition containing a statement of affairs showing hopeless insolvency to your insolvency practitioner? – No.
Not at all? --- No.
You don’t think it might have been material to the magistrate, in determining the value of your offer to pay costs thrown away, to know that you regarded yourself as hopelessly insolvent? – No
…
You don’t think it would have been material to know that you had filled out a debtor’s petition and sent it to Mr Hundy? --- No.
…
(The respondent), any reasonable person, in assessing the value of an offer to pay costs thrown away, would want to know if there was any reason why you might not be able to pay those costs thrown away, wouldn’t they? --- I don’t know.
…
Well, the fact that you regarded yourself as hopelessly insolvent, the fact that you had submitted a debtor’s petition to Mr Hundy, the fact that as you understood it, Mr Hundy was going to submit that ITSA --- ? --- At some stage.
--- the fact that your evidence was that you expected that that would lead to your bankruptcy, are all reasons why you might not be able to pay the costs thrown away, aren’t they (the respondent)? --- Me personally, yes.
The Tribunal does not accept the respondent’s denials of the above simple propositions. The last two answers establish that he was aware that his financial position was such that bankrupt or not bankrupt, he was unlikely to be able to pay costs thrown away in accordance with his offer in the email referred to and as submitted to the Court. In the opinion of the Tribunal, that state of knowledge made it imperative that he inform the Court that the offer was not as simple as it appeared to be. Failing to reveal his state of financial affairs and his application for bankruptcy resulted in the Court being misinformed in dealing with his positive offer to meet costs thrown away. The way in which he put the offer assumed that he would be able to, and would, meet the costs which were agreed to.
At the conclusion of cross examination, the respondent was asked some questions on this topic in re-examination. The respondent said that his wife was prepared to pay the costs thrown away in order to obtain an adjournment because he did not have representation.
It was alleged in paragraph 14B(d) of the Application that an order for costs thrown away made on adjournment would be likely to be of little, if any, value to the former client by virtue of the respondent’s insolvency and impending bankruptcy. This issue was, therefore, a live one from the outset with ample warning to the respondent of the potential of this issue. In spite of that, there was no evidence from either the respondent or his wife on this topic, and no mention of an offer by his wife to pay the costs until raised in re-examination. The Tribunal does not accept this evidence.
When the respondent applied for an adjournment he would have been aware that the court was more likely to grant one if it was confident that costs had been agreed at an amount regarded as being reasonable by the former client and would be paid by the agreement of the respondent. No attempt was made by the respondent to justify the making of the submission. The Tribunal, therefore, infers that the submission was put deliberately in order to enhance the chances of the adjournment being granted. It was clearly incorrect for the respondent to submit that there would be no prejudice to the former client arising from an adjournment if an order for costs thrown away was made. That was because it was unlikely that the respondent would be able to actually pay those costs due to either insolvency or bankruptcy or a combination of the two. Making such a positive and incorrect submission inevitably mislead the court which would have assumed that the order when made would be met. The Tribunal, therefore, concludes that the respondent failed in his duty of honesty and candour to the court and breached Rule 18.1 when he made the submission.
The Tribunal therefore concludes that Ground 2A is made out.
GROUND OF COMPLAINT 3: Failure to act with candour and frankness with a fellow practitioner
Ground 3 is expressed as follows.
The Practitioner, in his dealings with the solicitors for the Plaintiff between 23 May and 27 May 2013 as pleaded in paragraphs 12 to 16 above, acted with a lack of candour and frankness in breach of his duty to a fellow Practitioner to act with candour and frankness by:(a)failing to disclose to the solicitors for the Plaintiff the steps he had taken on 23 May 2013 to initiate a voluntary bankruptcy or the other matters pleaded in paragraph 13 above; and,
(b)representing to the solicitors for the Plaintiff both in his advice referred to in paragraph 13 above on 23 May 2013 and also at the Court on 27May 2013 that the basis for his application for an adjournment was that he was no longer represented by Mr Weller, and that he needed to obtain alternative legal representation, when in truth, the real basis for the application by the Practitioner was that in the event the adjournment were granted, he expected that he would be likely to be able to frustrate the proceedings by reason of the matters pleaded in paragraph 13 above.
A practitioner’s duty to fellow practitioners is set out in the Preface to the Solicitors Rules under the heading “RELATIONS WITH OTHER PRACTITIONERS”
as follows.
In all of their dealings with other practitioners, practitioners should act with honesty, fairness and courtesy, and adhere faithfully to their undertakings, in order to transact lawfully and competently the business which they undertake for their clients in a manner that is consistent with the public interest.
Sub-paragraph (b) of Ground 3 appears to contain an error. The first reference to paragraph 13 (of the Application) bears more meaning if it is read as a reference to paragraph 12. It is a reference to an email that was sent by the respondent to JNCo advising that Mr Weller was no longer acting for him and that he proposed to seek an adjournment on Monday 27 May 2013 to enable him to obtain representation.
The reasoning previously considered in relation to Ground 2(a) is applicable in relation to the respondent’s communication with JNCo regarding the circumstances attending his moving the Court for an adjournment. The requirement for honesty in dealing with a fellow respondent is clear. JNCo were asked to give their consent to an adjournment. Information regarding his sending a debtors petition to an insolvency accountant with a view to lodging it was a most relevant matter for a respondent who would be seeking instructions from his client as to whether to consent to the adjournment proposed.
In the event, the application was opposed by the former client, however, had his solicitor been aware of the insolvency and the application for bankruptcy, counsel appearing would have had a further ground for opposition to the application. Furthermore, it is highly likely that counsel would have been instructed to mount a more energetic argument in opposition which could have involved applying for a direction that the respondent give sworn evidence in support of his application and be cross examined on it.
Withholding the information about his insolvency and debtor’s petition resulted in the former client’s solicitor who was instructing counsel having a mistaken view of the circumstances and consequences of the application by the respondent resulting in the former client’s interests being significantly compromised.
Similarly, the reasoning previously referred to relating to Ground 2(b) is applicable to the communication that he made to JNCo of the reason that he was seeking an adjournment. This also resulted in significant compromise of JNCo’s client’s interests.
The Tribunal finds that Ground 3 is made out.
The Tribunal has not characterised the breaches which have been found in terms of the orders sought in the Application. It would be appropriate to hear submissions as to what orders should be made as a consequence of our findings, and whether orders should be made globally, or whether characterisation of all or groups of the Grounds should be made. Submissions should also be made in respect of penalty, if any. It is the view of the Tribunal that this is an appropriate case for submissions in relation to both matters to be made at some time after the parties have had time to consider these Reasons for Decision. It would be appropriate also at that time to consider any submissions in relation to costs.
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Mr G. Lunney SC– Senior Member
For and on behalf of the Tribunal
Appendix 1
Appendix 2
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