Council Of the Law Society Of the Act v LP 12 (David Chen) (No 2) (Occupational Discipline) - [2019] ACAT 121

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

COUNCIL OF THE LAW SOCIETY OF THE ACT v LP 12 (David Chen) (No 2) (Occupational Discipline) [2019] ACAT 121

OR 12/2016
Catchwords: OCCUPATIONAL DISCIPLINE – legal practitioner – lack of insight – lack of remorse – public reprimand – dishonesty – whether a practitioner is a fit and proper person to remain on the roll – categorisation of conduct

Legislation cited: Legal Profession Act 2006 s 413

Cases cited:Council of the Law Society of the ACT v Bandarage [2019] ACTSCFC 1
Health Care Complaints Commission v Litchfield (1997) 41 NSWLR 630
The Council of the Law Society of the ACT v Davey [2019] ACTSCFC 2
The Council of the Law Society of the Australian Capital Territory v LP 12 [2018] ACTCA 60
The Prothonotary of the Supreme Court of NSW v Dimitrious [2015] NSWCA 258

Tribunal:Senior Member G Lunney SC
Member R Vassarotti

Date of Orders:  24 December 2019
Date of Reasons for Decision:      24 December 2019
AUSTRALIAN CAPITAL TERRITORY          )
CIVIL & ADMINISTRATIVE TRIBUNAL     )          OR 12/2016

BETWEEN:
COUNCIL OF THE LAW SOCIETY OF THE ACT
Applicant

AND:
LP 12
Respondent

TRIBUNAL:Senior Member G Lunney SC
Member R Vassarotti

DATE:24 December 2019

ORDER

The Tribunal orders that:

The practitioner is publicly reprimanded.
The practitioner is ordered to pay compensation of $10,000 to the complainant for loss of the overpayment of costs, loss of use of those funds, and loss of his time in pursuing his complaint. That amount should be paid to the complainant within 28 days of the date of this decision.
The practitioner is ordered to undertake suitable and locally available courses of education in legal professional ethics and practise; and trust accounting procedures within thirteen months following the date of this decision.
Within 21 days of the date of this decision the parties are to file draft consent orders specifying details of the educational courses the respondent agrees to undertake.
If the parties are unable to agree, each party is to file suggested orders for the Tribunal’s consideration within 28 days of this decision.

The Tribunal notes that a costs order has already been made.

………………………………..

Senior Member G Lunney SC
For and on behalf of the Tribunal

REASONS FOR DECISION

In earlier proceedings against the respondent legal practitioner, (the respondent), the presently constituted Tribunal found that two allegations of misconduct brought by the Council of the Law Society of the ACT, (the applicant or the Council) had been established.[1] The two charges related to disbursement of trust funds held for the client into the firm’s office account as payment of costs. The respondent had previously provided the direction for this disbursement. It was found that the payment exceeded the amount authorised by the client, and that the respondent caused the firm to misappropriate the excess from the client. The reasons for this decision were published as Council of the Law Society of the ACT v LP 12 [2019] ACAT 68.
[1] This decision was previously anonymised and cited as Council of The Law Society of The Act v LP 12 (No 2) (Occupational Discipline) [2019] ACAT 121 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 matter was then subject to a further hearing to decide on the characterisation of the conduct and determine the appropriate penalty. This decision relates to those proceedings.

The hearing

The hearing was held on 27 September 2019. Both the applicant and the respondent were represented by counsel.
At the hearing, the applicant tendered a formal affidavit by an officer of the Council which annexed documentation relating to a previous complaint made to the Law Society regarding the respondent. This complaint was dealt with summarily by the Council pursuant to section 413 of the Legal Profession Act 2006. It also set out a history of these proceedings which were commenced by application in this tribunal on 20 July 2016 and have proceeded more or less continuously since that time.
The respondent tendered an affidavit sworn by himself, which had some witness statements annexed to it. Also tendered in the course of the hearing were some financial records of a church congregation of which he is a member. The applicant called no other evidence, and the deponent was not required for cross examination. The respondent was called and after some brief evidence was cross examined. Two of his character witnesses were called and cross examined. The decision was reserved.
The Tribunal will now briefly examine the submissions made by the parties.

Submissions of the applicant

The applicant submitted that there should be one finding in respect of the two breaches, and that was a finding of professional misconduct. It submitted that the Tribunal’s finding of dishonesty was pivotal in the making of that submission.
The applicant then submitted that the appropriate sanction was removal from the roll. It submitted that the appropriate principles had recently been stated by the Full Court of the ACT in Council of the Law Society of the ACT v Bandarage [2019] ACTSCFC 1 (Bandarage) and in The Council of the Law Society of the ACT v Davey [2019] ACTSCFC 2 (Davey).
In oral submissions counsel stated his basic submission as follows:
…the proposition is that a person who has dishonestly misappropriated trust funds and does not show proper insight or considerable remorse for that conduct is prima facie unfit to remain upon the roll.[2]
He went on to say:
Now, what has occurred here is that in truth, up until this morning when [the respondent] entered the notional witness box, he had been maintaining both on his oath and in his submissions, which he is responsible for, indeed I’m reminded that the signature on them is his. He had been maintaining in the face and in the teeth of the tribunal’s judgment that this was an honest and careless mistake … that is the antithesis of insight and therefore the antithesis of remorse.[3]
He went on to point out that in cross examination the respondent had said that the words “honest and careless mistake” which he had used in his affidavit were “a poor choice of words” and it was only in cross examination that he accepted that what he had done was dishonest and deliberate.
[2] Transcript of proceedings 27 September 2019 page 30, lines 10-14
[3] Transcript of proceedings 27 September 2019 page 30, lines 24-30
Counsel pointed out that in cross examination Ms McMinn, a character witness for the respondent, had answered the following question as follows:
All right. But when you say he expressed his view, did he express the view to you that in his view, this was an honest and careless mistake on his part?‑‑‑I’m trying to think back to the time he spoke to me. He may have expressed that, yes.[4]
[4] Transcript of proceedings 27 September 2019 page 22
Counsel then referred to the character witness, Mr Allan Anforth, saying that when the respondent spoke to him about it, he referred to it as some sort of trust account mismanagement that “arose from communication failure within the office and he told [Mr Anforth] a little bit about it.”[5]
[5] Transcript of proceedings 27 September 2019 page 25, lines 45ff
He submitted that this evidence from the witnesses was consistent with the denial of the reality of the conduct and the lack of insight contained in the affidavit right up to the time of the hearing. He further pointed out that it was only in cross examination that the respondent accepted that what he had done was dishonest and deliberate.
Counsel noted that the Full Court of the Supreme Court in The Council of the Law Society of the Australian Capital Territory v LP 12 [2018] ACTCA 60 had referred to the respondent’s unduly confrontational and aggressive approach to the proceedings. He submitted that the respondent’s collateral attempts to frustrate and delay the proceedings did not assist any contention that he was fit and proper to continue to practise. Furthermore, as to remediation, although there had been $3,000 paid to the complainant shortly after the complaint was first made, there was no evidence that the balance of $2,096.78 had been repaid notwithstanding the tribunal finding.
Counsel also referred to the prior disciplinary findings that the respondent had failed to obtain instructions in negotiating party/party costs, failed to provide an additional costs disclosure, and charged an amount in excess of that permitted by the costs agreement.[6] He noted that the respondent referred to the findings as allegations in his affidavit and purported to respond to them by repeating the submissions that he had made to the Law Society, unsuccessfully, at the time. Counsel said the following:
As well as being misconceived, this demonstrates a lack of insight into or contrition for that conduct as well. Especially given that this prior conduct also concerned, among other things, charging more in costs than was agreed, this absence of insight is of further concern.
[6] Applicant’s submissions in reply at [32]
The respondent had attached statements by character referees to his affidavit, and two of them were called and gave evidence. Counsel made submissions relating to the relevance of their evidence, and the weight that should be given to that evidence. He handed up extracts from Riley’s Solicitors Manual in support of his submissions.

Submissions of the respondent

Counsel for the respondent agreed that the Tribunal should make a single finding in relation to characterisation. He put forward a number of considerations which he submitted might lead the Tribunal to a finding of unsatisfactory professional conduct, but did not dwell on the suggestion.
In relation to sanction he submitted that the respondent is a fit and proper person to remain on the roll and set out in summary form the principles referred to by the Full Court in Bandarage. A condensed summary of the factors relied on by counsel follows.[7]
[7] Respondent’s submissions at [9]
(a)This was isolated conduct occurring approximately eight years ago.
(b)The respondent has accepted Tribunal’s findings and is remorseful and contrite.
(c)$3,000.00 has been returned, and the respondent is willing to return the balance plus interest.
(d)The respondent has learned from the experience.
(e)The amount involved is relatively small, and the conduct is at the lower end of an objective scale of seriousness and is not a most serious case.
(f)The content of the conduct is important. The conduct arose in the context of a costs dispute with the complainant.
(g)The costs charges were neither excessive or unfair, and consequently there was no overcharging.
(h)There is no evidence of damage to confidence in him; of his clients; fellow practitioners; the judiciary; or damage to public confidence in the legal profession.
(i)The absence of any interlocutory action by the applicant indicates that the applicant regards him as being fit to practise.
(j)The respondent did not attempt to frustrate and delay the proceedings. He exercised his right to test the evidence against him. There were multiple causes for delays that occurred in the proceedings. His decision not to give evidence in the liability proceedings was based on legal advice and should not be held against him.
(k)There was no evidence that the respondent ever denied: disbursement of the trust funds in question; that there was an agreement to limit costs to $42,000.00; or that there was a deliberate act which would be regarded by reasonable and honest people as dishonest.
In the written submissions, counsel noted that the respondent in his affidavit accepted that his conduct was impermissible and constituted a breach of the Legal Profession Act 2006, but described his state of mind at the time as being an honest and careless mistake. The Tribunal notes that in response to a question from senior counsel at the hearing to explain what he meant by ‘honest and careless mistake’, the respondent distanced himself from the description, describing it as a “poor choice of words”.
The respondent submitted that the previous disciplinary matter arose more than ten years ago and did not relate to a trust account. The respondent accepted the decision of the Council to reprimand him. Because of its age and unrelated nature it does not affect the respondent’s present fitness to practise in any way.

Submissions of the applicant in reply

The applicant filed submissions in reply which took issue with much of the respondent’s submissions. In particular, detailed submissions were made refuting paragraph [9] of the respondent’s submissions. These issues will be dealt with as necessary in the following section.

Consideration

The Tribunal agrees that there should be one decision of categorisation of conduct. There was one course of conduct which was the subject of the offences alleged and it took place over a relatively short period of time. The applicant submits that there is only one outcome and that is a finding of professional misconduct. The respondent suggests that the door is open for a finding of unsatisfactory professional conduct. The Tribunal notes the statements of Meagher JA in The Prothonotary of the Supreme Court of NSW v Dimitrious [2015] NSWCA 258 relating to the sanctity of trust funds, and the need for scrupulous honesty by practitioners in their management of trust funds. There was a finding by the Tribunal of dishonesty and in the circumstances, the Tribunal agrees with the applicant that the finding of professional misconduct should be made.
The Tribunal has already referred to the applicant’s primary submission in relation to penalty, that is, that the Tribunal should recommend that the respondent is not a fit and proper person to remain on the roll of practitioners in the Territory. The applicant refers to number of authorities in support of that submission and makes a powerful case based on principles and considerations referred to by the ACT Full Court of the Supreme Court in the cases of Bandarage and Davey.
There has been discussion of insight into gravity of the offence as an indicator of likelihood of recurrence. It is the view of the Tribunal that the respondent’s insight into the nature of the Tribunal’s findings as disclosed in the evidence elucidated in the penalty hearing is quite limited. In his affidavit filed in these proceedings, he makes the assertion that the conduct was the result of an honest and careless mistake. It was repeated in the written submissions settled by his counsel dated 25 September 2019 for the hearing listed for 27 September 2019.
In his affidavit at paragraph 27, he says:
27. To the extent to which I have committed any wrong doing, it was an honest and careless mistake on my part and there was no intention whatsoever on my part to charge [the complainant] more than what was agreed.
In paragraph 28, he repeats the phrase:
28. …. I have suffered emotionally, financially and reputationally, as a result of this honest mistake. I have learned a huge lesson from it.
In examination in chief he was asked by senior counsel the following questions:
In your words, can you tell the Tribunal your understanding of what the Tribunal has found?‑‑‑The Tribunal has found me to have withdraw - knowingly withdraw funds from the trust account, and exceeding the authorisation from the client.
…
If you direct your attention please to paragraph 27 [of his affidavit]?‑‑‑Yes.
Could you just explain to the Tribunal what you meant when you used the words ‘honest and careless mistake’?‑‑‑It is really a poor choice of words, and that choice of words are on my part. I don’t know what possessed me to say what I said there, and at the time when I did. And it certainly does not convey my sentiments about it. As I said, I understand and have understood the effect of the decision of the Tribunal, since it was handed down. And I acknowledge that, and I’m very sorry for what has happened.[8]
[8] Transcript of proceedings 27 September 2019, page 14 lines 14-36
In cross examination the respondent was asked when he came to the conclusion that a reference to an honest and careless mistake were a poor choice of words. After some uncertainty he said that it was “shortly after the decision was handed down”. When it was pointed out to him that the phrase was used well after the decision was handed down, he indicated that it was before he swore the affidavit which was prepared in a rush and he was “just guided by whatever was advised to me, and so I signed it”.
Then the following exchange took place in cross examination:
But you accept, don’t you, that you are the deponent of this affidavit. It’s your sworn evidence, you accept that?‑‑‑Absolutely. Yes, I do.
And you’re responsible, aren’t you, for what it says?‑‑‑I am.
Well then how do you explain to this Tribunal the fact that this affidavit that you’ve sworn to contains words which you think are a poor choice of words?‑‑‑Well, I don’t know. I just have no explanation.
Well, [the respondent], can I ask you this. Do you accept the Tribunal’s findings that reasonable and honest people would regard what you did as dishonest?‑‑‑I do.
Right. And may the Tribunal take it that you do not contend that this was an honest and careless mistake?‑‑‑Can I just
May the Tribunal take it that you therefore do not today say that this was an honest and careless mistake?‑‑‑That’s correct.[9]
[9] Transcript of proceedings 27 September 2019, page 16 lines 4-20
He was then shown the submissions that were filed and dated 25 September 2019 which showed that they were settled by senior and junior counsel and signed on behalf of the respondent’s firm who were on the record as acting for him. His attention was directed to paragraph 18 of the document which reads as follows:
18. The Respondent’s affidavit sworn on 3 September, 2019 does not directly reject the Tribunal’s findings at [paragraph [45] of the Decision]. In that affidavit, the Respondent accepts that his conduct was impermissible and constituted a breach of the Act but he is describing his state of mind at the time, namely that it was an honest and careless mistake for which he is contrite and remorseful. These notions are not mutually inconsistent and put in other words, the respondent did not intend to breach the Act but is very sorry and regretful that he did. This submission is consistent with the facts: that the transaction was entirely transparent and properly and correctly accounted for in the client’s tax invoice and trust account ledger which were provided to the client voluntarily by the Respondent at the conclusion of the matter, consistent with the Respondent’s usual practice. Conversely, these actions are inconsistent with a dishonest intent to misappropriate trust funds.
The following exchange in cross examination occurred:
There are those words again, aren’t they, [the respondent] - ‘honest and careless mistake’?‑‑‑Yes.
Do you agree with that?‑‑‑Yes.
Did you not notice that when you read these submissions, with an eye to ensuring that the mistake in your affidavit wasn’t repeated?‑‑‑I - I don’t know. I mean, I think I - I point out when I noticed it Maybe I - some, you know, I can’t tell the state of mind at the time when I read this. I can’t remember this. I’ve gone through quite a lot of stress, and so I just simply can’t tell you exactly the state of mind at the time when I made this.
Another poor choice of words, [the applicant]?‑‑‑That’s, no, it’s not a poor choice of words. Certainly the affidavit that I’ve sworn, the words that I used in the affidavit was a poor choice of words. And as I said, I mean, I don’t know what possessed me to say that, and certainly it was - there’s not - there’s never really my sentiment, and how I understood the - did the Tribunal’s decision was about.
To you accept, as you sit here today, that what you did was dishonest?‑‑‑We can say that, the Tribunal has so found.
I understand what the Tribunal has found. Do you accept that finding of the Tribunal?‑‑‑Yes.[10]
[10] Transcript of proceedings 27 September 2019, page 17 lines 19-42

The Tribunal finds that the above material calls into question the extent and quality of the respondent’s insight into the Tribunal’s liability findings and their relationship to his conduct and the offences found established.
Also relevant to the issue of his understanding and insight, is his attitude to his previous disciplinary episode and treatment of it in his affidavit at paragraphs [37] to [40]. He makes no admission of wrongdoing in spite of the Council’s findings and determination under section 413 of the Legal Profession Act 2006 and invites the Tribunal to make up its own mind about the matter by referring it to a long exculpatory letter written by the respondent to the Professional Standards Director on 7 April 2011 in defence of his conduct. In an early part of the letter, referring to the complainant he says:
It’s preposterous that she would think that she would receive the full amount of $60,000.00 in her hand. How could she possibly expect to receive $60,000.00 when her entire case settled for $60,000.00.
In the Tribunal’s view, at the time of writing the letter, the respondent lacked the insight to identify that the question that he poses was the question at the heart of the Council’s investigation and the issue that could be decided against him. That he would refer the Tribunal in paragraph 37 of his affidavit to “read his response” indicates that his lack of insight continues at least up to 3 September 2019.
The respondent attached a number of character references to his affidavit and two of the authors were called to give evidence and were provided with information about the proceedings brought by the applicant.
One of the witnesses who was called was the Reverend Lynda McMinn, the Rector of an Anglican Parish in the ACT. In her statement she said that the respondent was currently elected as a Peoples’ Warden of the Parish and had served in that role for several years. A copy of her statement, which the Tribunal infers from the opening questions of the respondent’s counsel, was written by her and sent to the respondent’s solicitors. The letter was attached with other character references to his affidavit and was not marked as a separate exhibit.
Ms McMinn described the findings of dishonesty of the Tribunal as an anomaly, after counsel established that she had read the liability decision and was familiar with its findings.
Could you tell the Tribunal what you understand those findings to have been?‑‑‑Um, the findings speak of a deliberate act of dishonesty, in relation to funds.
Thank you. Now, having read that, what do you say to the Tribunal about [the respondent’s] character as you know it?‑‑‑I’ve found that - the wording of a deliberate act of dishonesty to be a complete anomaly to the person that I know, and I can only speak of the person that I know. I found it very hard to relate to [the respondent], who is a warden of the parish, I’ve known him for four and a half years since I came to this parish - and a person of, yes, complete honesty, integrity and truthfulness in all his dealings within the parish. He was elected the warden year after year, because the people of this parish trust him in all of those areas.[11]
[11] Transcript of proceedings 27 September 2019, page 20 line 39ff
Ms McMinn was cross examined. Her answers in cross examination, particularly the concessions she made, fortified the Tribunal’s impression that her evidence was objective and reliable.
The Tribunal has already referred to the Full Court of the Supreme Court’s decision in Bandarage. This contains a convenient gathering of the principles to be applied in consideration of whether a practitioner is a fit and proper person to remain on the roll of practitioners. Based on those principles, the applicant submits that the Tribunal should recommend removal.
The applicant has a wide corporate knowledge and experience and is vested with quite extensive disciplinary powers under Chapter 4, ‘Complaints and Discipline’ of the Legal Profession Act 2006. The Tribunal considers that significant weight should therefore be given to the submissions of the Council in considering an appropriate penalty.
However, there are three principles expressed consecutively in Bandarage which the Tribunal considers particularly significant in the circumstances of this case. They are taken from the judgment at paragraphs 147 to 149.
147. A finding of professional misconduct does not, of itself, demand an order removing a practitioner’s name from the roll: A Solicitor v Council of Law Society (NSW) (2004) 216 CLR 253 at [21]; Powrie at [87].
148. Removal from the roll is reserved for the most serious cases of wrong conduct, where the character and conduct of the practitioner is assessed to be inconsistent with the privileges of further practice; suspension may be adequate in those cases where a legal practitioner has fallen below proper standards, but not to the extent that would indicate that the practitioner lacks the necessary attributes of a person entrusted with the responsibilities of legal practice: Barristers’ Board v Darveniza [2000] QCA 253.
149. In general, removal is appropriate only where the underlying reason for disqualification is permanent, or at least of indefinite duration: Cummins at [25]–[27]; Parente at [33]. In Parente at [34], Basten and Meagher JJA indicated that, where a practitioner has manifested a serious character flaw that would justify removal, it is for the practitioner to affirmatively satisfy the court that the unfitness was, or is, of limited duration.
Seriousness of an offence is a difficult concept where dishonesty has been found to be a component of the conduct. In Health Care Complaints Commission v Litchfield (1997) 41 NSWLR 630, 638, the Court, Gleeson CJ, Meagher JA and Handley JA said as follows in relation to a Tribunal statement that two complaints were ‘relatively minor matters’:
The gravity of professional misconduct is not to be measured by reference to the worst cases, but to the extent to which it departs from the proper standards. If this is not done there is a risk that the conduct of the delinquents in a profession will indirectly establish the standards applied by the Tribunal
In spite of that statement, there must be some comparative assessment of the conduct to be made by a disciplinary tribunal in consideration of penalty. Such a comparative statement is made very frequently in submissions and has been made by counsel for the respondent in this case. It is a concept referred to by the Full Court in paragraph 148 quoted above. In this case, the conduct was a ‘one off’ occurrence. It did not involve a large sum of money. In the opinion of the Tribunal it was not the result of planning or pre-conception. While acknowledging its finding of dishonesty, the Tribunal takes the view that the factors mentioned are ameliorating factors when considering his suitability to practise.
Counsel for the respondent also emphasises the evidence of the continued holding of an unrestricted practising certificate since the conduct in 2011 and his participation as a partner in the day to day affairs of a busy local firm including the handling of trust funds in a busy area of practice of the same type as when the conduct occurred.
The evidence also indicates that the respondent is a valued member of a Church community with the burdens and responsibilities of taking a leading role in the business and voluntary activities of the Church community. In addition to that he has undertaken other voluntary community activities outside the Church.
The Tribunal notes his counsel’s submissions that he is willing to undertake appropriate courses of education and to make (rather belatedly) restitution.
Having regard to those matters, the Tribunal takes the view that it is unlikely that the conduct will be repeated. His continued entitlement to practise will be reviewed by his professional association on at least an annual basis should the Tribunal’s assessment prove wrong. The Tribunal is satisfied that the public interest can be adequately protected by the orders that will be made.
The Tribunal has already made a consent order for payment of costs by the respondent. The proceedings have been long and protracted and the Tribunal assumes that the total costs will be a heavy burden for the respondent. The Tribunal does not therefore consider that a further financial penalty is appropriate.
Orders:
(a)The practitioner is publicly reprimanded.
(b)The practitioner is ordered to pay compensation of $10,000 to the complainant for loss of the overpayment of costs, loss of use of those funds, and loss of his time in pursuing his complaint. That amount should be paid to the complainant within 28 days of the date of this decision.
(c)The practitioner is ordered to undertake suitable and locally available courses of education in legal professional ethics and practise; and trust accounting procedures within thirteen months following the date of this decision.
(d)Within 21 days of the date of this decision the parties are to file draft consent orders specifying details of the educational courses the respondent agrees to undertake.
(e)If the parties are unable to agree, each party is to file suggested orders for the Tribunal’s consideration within 28 days of this decision.
………………………………..

Senior Member G Lunney SC
For and on behalf of the Tribunal

HEARING DETAILS

FILE NUMBER:	OR 12/2016
PARTIES, APPLICANT:	Council of the Law Society of the ACT
PARTIES, RESPONDENT:	LP 12
COUNSEL APPEARING, APPLICANT	Mr Beaumont
COUNSEL APPEARING, RESPONDENT	Mr Erskine
SOLICITORS FOR APPLICANT	McInnes Wilson Lawyers
SOLICITORS FOR RESPONDENT	Capital Lawyers
TRIBUNAL MEMBERS:	Senior Member G Lunney SC Member R Vassarotti
DATES OF HEARING:	27 September 2019