Council of the Law Society of the Act v Necia Gai Wearne (Occupational Discipline)
[2024] ACAT 58
•01 May 2024
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
COUNCIL OF THE LAW SOCIETY OF THE ACT v NECIA GAI WEARNE (Occupational Discipline) ACAT 58
OR 1/2023
Catchwords: OCCUPATIONAL DISCIPLINE – legal practitioner regulation – withdrawal of trust money for legal costs – cost agreement – breach of s 223 and s 269 of the Legal Profession Act 2006 – characterisation as professional misconduct
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 s 9
Legal Profession Act 2006 ss 223, 229, 269, 276, 386, 387, 419
Legislation Act 2001 s 104
Powers of Attorney Act 2006 ss 31, 34
Subordinate
Legislation cited: Legal Profession Regulation 2007 r 62
Legal Profession (Solicitors) Conduct Rules 2015 rr 4, 5
Cases Cited:Alcan (NT) Alumina Pty Ltdv Commissioner of Territory Revenue [2009] HCA 41
Brereton v Legal Services Commissioner [2010] VSC 378
Briginshaw v Briginshaw [1938] HCA 34
Council of the Law Society of the Australian Capital Territory v Giles [2020] ACTSCFC 1
Jones v Dunkel [1959] HCA 8
Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11
Lincolne v William [2008] TASSC 41
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28
Smilevska v Smilevska [2019] NSWSC 986
Wood v The Legal Ombudsman [2004] VSCA 247
Papers cited: CR Williams, ‘Burdens and Standards in Civil Litigation’ (2003) 25(2) Sydney Law Review 165
Tribunal: Senior Member Prof T Foley
Member W Hawkins
Date of Orders: 01 May 2024
Date of Reasons for Decision: 01 May 2024
Date of Publication: 23 August 2024
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) OR 1/2023
BETWEEN:
COUNCIL OF THE LAW SOCIETY OF THE ACT
Applicant
AND:
NECIA GAI WEARNE
Respondent
TRIBUNAL:Senior Member Prof T Foley
Member W Hawkins
DATE:01 May 2024
ORDER
The Tribunal finds that:
1.Charges 1A, 2, 4, 5 and 6 are made out and the conduct is characterised as professional misconduct.
The Tribunal orders that:
2.The matter is to be listed for directions for a hearing on penalty.
………………………………..
Senior Member Prof T Foley
For and on behalf of the Tribunal
REASONS FOR DECISION
Introduction
1.This is an application by the Council of the Law Society of the ACT (applicant) for disciplinary action dated 17 January 2023 under section 419 of the Legal Profession Act 2006 (LPA) against the respondent. The application charges the respondent with breaches of sections 223(1) and 269(1)(d) of the LPA. The Tribunal has jurisdiction pursuant to section 9 of the ACT Civil and Administrative Tribunal Act 2008 (the ACAT Act).
2.In the reasons below, a reference to ‘ACAT’ or ‘tribunal’ refers to the ACT Civil and Administrative Tribunal generally, whereas ‘Tribunal’ refers to the members who heard the application.
The hearing
3.The matter was heard on 5 and 6 October 2023, and evidence was taken. The applicant was represented by Mr D Moujalli of counsel and the respondent by Mr R Thomas of counsel. The respondent gave evidence. Both parties filed written submissions on breach and characterisation and responded to questions of the Tribunal. The matter was listed for further oral submissions on 22 March 2024, and the parties responded to written questions provided by the Tribunal.
4.At the conclusion of the hearing, the Tribunal reserved its decision and indicated it would provide written reasons. These are those reasons.[1]
Preliminary issue
[1] This decision was previously anonymised 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 delivery to the parties.
5.Both members of the Tribunal made disclosures with respect to contact they may have had with the respondent. The respondent applied for each member to disqualify himself based on those disclosures. The Tribunal provided oral reasons to the effect that a fair-minded lay observer would not reasonably apprehend that the Members might not bring an impartial mind to the resolution of the questions the Tribunal is required to consider in the application for disciplinary action. The respondent’s objection was dismissed.
The legislation
6.The LPA is binding on Australian Legal Practitioners and a failure to comply with the Act can constitute unsatisfactory professional conduct or professional misconduct.
7.Section 386 provides:
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.
8.Section 387 provides:
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.
9.Part 3.1 of the LPA deals with trust money and trust accounts. Relevantly, section 223 in part provides:
Holding, disbursing and accounting for trust money
(1) A law practice must—
(a)hold trust money deposited in a general trust account of the practice exclusively for the person on whose behalf it is received; and
(b)disburse the trust money only in accordance with a direction given by the person.
(2) Subsection (1) applies subject to an order of a court of competent jurisdiction or as authorised by law …
10.Section 229 provides in part:
Dealing with trust money—legal costs and unclaimed money
(1) A law practice may do any of the following, in relation to trust money held in a general trust account or controlled money account of the practice for a person:
(a)exercise a lien, including a general retaining lien, for the amount of legal costs reasonably owing by the person to the practice;
(b)withdraw money for payment to the practice’s account for legal costs owing to the practice if any relevant provision of this Act is complied with …
11.The Legal Profession Regulation 2007 (LP Regulation) is part of the LPA being subordinate legislation.[2]
[2] Legislation Act 2001 section 104
12.LP Regulation 62 provides:
Withdrawing trust money for legal costs—Act, s 229 (1) (b)
(1) This section prescribes, for the Act, section 229 (1) (b) the procedure for the withdrawal of trust money held in a general trust account or controlled money account of a law practice for payment of legal costs owing to the practice by the person for whom the trust money was paid into the account.
(2) The trust money may be withdrawn as set out in subsection (3) or (4).
(3) The law practice may withdraw the trust money—
(a)if—
(i)the money is withdrawn in accordance with a costs agreement that complies with the legislation under which it is made and that authorises the withdrawal; or
(ii)the money is withdrawn in accordance with instructions that have been received by the practice and that authorise the withdrawal; or
(iii)the money is owed to the practice by way of reimbursement of money already paid by the practice on behalf of the person; and
(b)if, before effecting the withdrawal, the practice gives or sends to the person—
(i)a request for payment, referring to the proposed withdrawal; or
(ii)written notice of the proposed withdrawal and when it will occur.
(4) The law practice may withdraw the trust money—
(a)if the practice has given the person a bill relating to the money; and
(b)if—
(i)the person has not objected to withdrawal of the money not later than 7 days after being given the bill; or
(ii)the person has objected not later than 7 days after being given the bill but has not applied for a review of the legal costs under the Act not later than 60 days after being given the bill; or
(iii)the money otherwise becomes legally payable.
(5) Instructions mentioned in subsection (3) (a) (ii)—
(a)if given in writing—must be kept as a permanent record; or
(b)if not given in writing—either before, or not later than 5 working days after, the law practice effects the withdrawal, must be confirmed in writing and a copy kept as a permanent record.
(6) For subsection (3) (a) (iii), money is taken to have been paid by the law practice on behalf of someone if the relevant account of the practice has been debited.
13.In short, the scheme of the LPA, as prescribed in the LP Regulation, provides that funds can be withdrawn from trust for payment of legal costs if made pursuant to either of the two methods allowed under regulation 62:
(a)If there is a compliant costs agreement (CA) authorising the withdrawal, the practitioner must give or send a prior request for payment or give or send a prior written notice of withdrawal (subsection 62(3)), or
(b)If a bill has been provided, a seven-day objection period has elapsed without objection (subsection 62(4)).
14.Section 276 of the LPA provides in part:
Ongoing obligation to disclose etc
(1) A law practice must tell the client in writing of any substantial change to anything included in a disclosure under this division as soon as is reasonably practicable after the practice becomes aware of the change …
15.The Legal Profession (Solicitors) Conduct Rules 2015 (the Rules) impose binding obligations on practitioners pursuant to section 585 of the LPA and provides that a failure to comply with the Rules can constitute unsatisfactory professional conduct or professional misconduct.
16.Rule 4.1 provides that a solicitor must:
4.1.1 act in the best interests of a client in any matter in which the solicitor represents the client;
4.1.2 be honest and courteous in all dealings in the course of legal practice;
4.1.3 deliver legal services competently, diligently and as promptly as reasonably possible;
4.1.4 avoid any compromise to their integrity and professional independence; and
4.1.5 comply with these Rules and the law.
17.Rule 5.1 provides that a solicitor must not engage in conduct, in the course of practice or otherwise, which demonstrates that the solicitor is not a fit and proper person to practise law, or which is likely to a material degree to:
5.1.1 be prejudicial to, or diminish the public confidence in, the administration of justice; or
5.1.2 bring the profession into disrepute.
18.Section 34 of the Powers of Attorney Act 2006 (the POA Act) provides that:
Powers of attorney do not generally give authority to benefit attorneys
A power of attorney does not authorise an attorney to execute an assurance or other document, or do anything else, that would result in a benefit being given to the attorney unless the power of attorney expressly authorises the giving of a benefit of that kind to the attorney.
Breaches
19.The applicant charged the respondent with seven breaches of the LPA but pressed only six. Omitting particulars, the charges as pressed provided:
Charge 1A – withdrawal of funds from trust in breach of section 223 of the LPA
20.The respondent breached section 223(1)(b) of the LPA by withdrawing, or causing or allowing the withdrawal of, funds in the sums of $770, $2,968.50, $4,552.24, and $3,300 from the trust account without authorisation by law for the purposes of section 223(2) of the LPA.
Charge 1B – failing to act in her client’s interests
21.Further, or in the alternative to charge 1A, the respondent failed to act in the best interests of her client by withdrawing, or causing or allowing the withdrawal of, funds in the sums of $770, $2,968.50, $4,552.24, $3,300, from the trust account in breach of rule 4.1.1 and/or her common law duty to treat her client fairly and in good faith.
Charge 2 – misappropriation of funds from trust
22.In respect of each withdrawal of trust money, the respondent:
(a)knew, or should have known, that her client (AC), on whose behalf the trust money was held, had not directed or authorised the withdrawal in any manner prescribed by regulation 62;
(b)knew or should have known that she had not:
(i) provided AC, with a request for payment or notice of withdrawal before effecting the withdrawal as required by regulation 62(3); or
(ii) given [her client], a bill relating to the money and allowed seven days prior to withdrawing the trust money as required by regulation 62(4); and
(iii) in the above premises, knew or should have known that she had no lawful entitlement or authorisation to make the withdrawal.
23.By reason of the matters set out in the above paragraph, in withdrawing the trust money referred to above in circumstances where she was not entitled or authorised to do so, the respondent either:
(a)did so dishonestly with the knowledge and a belief that she should not have withdrawn the funds from the trust account, and therefore misappropriated trust money in breach of the common law; or
(b)regardless of her mistaken knowledge and belief at the time, consciously intended to transfer the respective funds and such conduct is objectively dishonest by the ordinary standards of reasonable, honest people, and therefore misappropriated trust money in breach of the common law.
Charge 3 – journal transfers in breach of regulation 47
24.Not pressed.
Charge 4 – intermixing trust money
25.The respondent mixed trust money payable to Snag Pty Ltd (in liquidation) with other money in breach of section 228 of the Act.
26.Admitted.
Charge 5 – failure to provide updated cost disclosure
27.The respondent failed to provide updated cost disclosure in relation to files 101717 and 101796 in breach of section 276 of the Act.
28.Admitted in part.
Charge 6 - failure to comply with the law
29.In charging fees on file 101717 for the tasks performed as [her client’s] attorney under the enduring power of attorney (EPOA), in circumstances where the EPOA and the POA Act did not authorise the respondent to be remunerated, the respondent:
(a)Failed to comply with the law in breach of rule 4.1.5; and/or
(b)Engaged in conduct which is likely to a material degree to be prejudicial to, or diminish the public confidence in, the administration of justice or bring the profession into disrepute in breach of rule 5.
Alleged conduct
30.There was no agreement as to the facts in the matter but following the hearing the parties filed an agreed tender bundle (ATB) said to contain all relevant documents with respect to the matters at issue. The facts with respect to charges 1A, 1B and 2 are in issue. Charge 3 is not pressed. Charge 4 is admitted. There is some, what we were told is small, factual dispute with respect to charge 5, otherwise it is admitted. There is contention with respect to the facts in charge 6 and it remains at issue.
31.The context of the alleged conduct is important. The respondent’s client and the subsequent complainant was in custody throughout the relevant time, serving a sentence for serious criminal offending. Access to him as a prisoner was available, but subject to the usual constraints and inconveniences. He appears to have been somewhat demanding, he had a significant mental health diagnosis and the respondent had developed what appears to have been an overly familiar relationship with him.[3] This relationship extended to the client appointing her as his enduring power of attorney and making a bequest to her in his will (of which she says she was unaware).[4] All these things were matters an experienced lawyer, as the respondent was, needed to be cautious and cognisant of. Allowing for these circumstances, the client’s requests for assistance were likely to be high, and the respondent needed to balance this with her entitlement to ensure her proper costs were paid for all the work she was required to do.
[3] Transcript of proceedings 5 October 2024, page 41, lines 17-22
[4] Affidavit of Robert Anthony Reis sworn 20 April 2023 exhibit RR1 at [36]
32.She had obtained the client’s instructions to claim his total and permanent disablement benefit from the Construction and Building Unions Superannuation Fund (Cbus) and, as from 23 December 2019, she held the proceeds of some $92,000 from that benefit in trust for him.[5] She acted essentially as his banker with respect to these monies, paying bills and making purchases for him under his instructions. There is some evidence she tried to husband the funds for him and moderate his spending.[6] Nonetheless, some five months after the sum came into trust it was largely dissipated. None of that money came into trust to be held on account of costs, however some of the money was transferred to pay costs which is discussed further below. It was purely and simply the client’s money, and so had that ‘sacred’ quality the Full Court of the ACT Supreme Court described in Council of the Law Society of the Australian Capital Territory v Giles (Giles).[7] Additionally, she gave evidence she knew the LPA strictures with respect to costs being paid from trust monies and was familiar with the tight requirements of regulation 62.
[5] ATB document 13, page 87
[6] Transcript of proceedings 5 October 2023, page 42, lines 29-38
[7] [2020] ACTSCFC 1 at [121]
33.The principal charges (charges 1A, 1B and 2) concern monies drawn from trust in payment of fees for legal services rendered by the respondent to the client. During the relevant period he was either in jail or in and out of jail on various parole orders which were granted, but soon revoked. The respondent did some legal work for him in relation to those parole applications together with various other matters, including redeeming the superannuation benefit. Additionally, in November 2019, he instructed her that he wished to appoint her as his attorney. On 12 November 2019, he signed the EPOA initially drafted by the respondent (but with the client attended upon for explanation and execution by another firm of solicitors) to this effect. In December 2019, the respondent prepared a cost agreement with respect to her legal work which specifically included work done under the EPOA. The client signed this on 23 January 2020.[8]
[8] ATB document 18, page 102
34.In the period between December 2019 and March 2020, the respondent issued invoices for professional fees to the client in relation to matters of general advice totalling $13,162. Between April and May 2020 and June 2020, the respondent issued invoices for professional fees to him in relation to matters with respect to his parole hearings totalling $7,915. In July 2020, the client terminated his association with the respondent and lodged a complaint with the applicant. In August 2020, the respondent resigned as his attorney under the EPOA.
35.Charges 1A, 1B and 2 relate to fees drawn from trust in relation to certain of this work, specifically four invoices in the sums of $770, $2,988.50, $4,552.24, and $3,300.
36.Given the extremely high responsibility placed on practitioners with respect to handling of trust monies, the respondent is, like all other legal practitioners, subject to strict legislative requirements with which she must comply when withdrawing funds from her client’s trust funds to cover legal fees. For these four cost invoices, she is said to be non-compliant with these requirements, and these are the subject of the alleged breaches.
Legislative requirements
37.In summary, the strict legislative requirements are these. Section 223 of the LPA is prohibitory. In effect, prohibiting a practitioner from dispersing trust money other than in accordance with a direction from the person on whose behalf it is held. Section 229 in turn has a permissive effect and, relevantly with respect to legal costs, section 229(1)(b) permits a practitioner to withdraw trust money to pay legal costs provided “any relevant provision of this Act is complied with”. The “relevant provision” that needs to be complied with is regulation 62, which prescribes the procedure for the withdrawal of trust money for payment of legal costs. The procedure is deliberately precise and exacting.
38.Regulation 62, which was the focus of lengthy submissions, provides two methods by which a law practice may withdraw trust money for costs. These are set out in subsections 3 and 4. It is common ground that subsection 4 is not applicable. Subsection 3 allows, in 3(a), a number of methods of compliant withdrawal. In the respondent’s further amended response she indicates she relies on the method set out in subsection 3(a)(ii), namely that “the money is withdrawn in accordance with instructions that have been received by the practice and that authorise the withdrawal”.[9] That is to say, she contends she had instructions from the client which authorised each withdrawal. Given that reliance, the respondent must also show she has complied with one of the two requirements of (b) of subsection 3 before the withdrawal. These requirements are clearly designed to alert the client to what is proposed. The usual method is written notice as per subsection 3(b)(ii). The respondent instead relies on subsection 3(b)(i), which requires the giving or sending of “a request for payment, referring to the proposed withdrawal.” The practitioner says such a request was given, and, as per her further amended response, says it was oral. Finally, subsection 5 has something to say about the client’s instructions given pursuant to subsection 3(a)(ii), namely that if they were given in writing, that writing is to be kept; or if they were not given in writing, they were to be confirmed in writing within five days and kept as a permanent record. The respondent concedes she has not complied with the subsection 5 requirement in that no confirmatory written instructions were obtained or kept.
[9] ATB document 9, page 71 at [34] and page 72 at [49]
39.The relevant provisions of regulation 62 as regards the respondent’s conduct are thus:
Withdrawing trust money for legal costs—Act, s 229 (1) (b)
(1) This section prescribes, for the Act, section 229 (1) (b) the procedure for the withdrawal of trust money held in a general trust account or controlled money account of a law practice for payment of legal costs owing to the practice by the person for whom the trust money was paid into the account.
…
(3) The law practice may withdraw the trust money—
(a)if—
…
(ii)the money is withdrawn in accordance with instructions that have been received by the practice and that authorise the withdrawal;
…
(b)if, before effecting the withdrawal, the practice gives or sends to the person—
(i)a request for payment, referring to the proposed withdrawal;
…
(5) Instructions mentioned in subsection (3) (a) (ii)—
…
(b)if not given in writing—either before, or not later than 5 working days after, the law practice effects the withdrawal, must be confirmed in writing and a copy kept as a permanent record.
40.The narrowing of the alleged manner of compliance with regulation 62 raises a number of issues. Firstly, a factual issue, namely whether there were instructions received authorising the withdrawal (62(3)(a)(ii)), and whether a request for payment, referring to the proposed withdrawal was made (62(3)(b)(i)). The respondent says it was, the applicant disputes this. Secondly, a legal issue, namely whether a request for payment, referring to the proposed withdrawal can be oral (62(3)(b)(i)). The respondent says it can, the applicant disputes this. We examine the evidence and submission with respect to each in turn.
The factual issue: What the respondent says was the practice she followed
41.The full details of the respondent’s actual practice only came to light in large measure in the hearing in cross examination. Her evidence, in chief in the form of her two affidavits, says nothing about these specifics. The applicant says there are also no details in her earlier responses to it in correspondence and pleadings since she was first advised of the complaint.[10] The respondent points out that is not strictly true.
[10] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [4.1]
42.Putting aside this dispute for the moment, in documents in the ATB and in her evidence before the Tribunal, the respondent describes a method which she contends meets the stringent requirements of regulation 62. She says this was her practice:
(a)She attended on the client at a jail visit and she had with her “a draft version of that work that I have done in respect of [the subject invoice]”.[11]
(b)At the visit “we had a conversation about how much it was going to cost, and we agreed on a figure…”.[12]
(c)At a later time, and now by telephone and usually on or about the day the invoice was ‘raised’, she had a further conversation with the client to the effect of “Look, I’ve raised the bill. This is how much it is. Can I pay it?” and “He said yes”.[13]
(d)The respondent was uncertain whether she kept file notes of these two sets of instructions saying, “most of the time I had file notes in some shape or form”,[14] but that “I can’t guarantee in each of my file notes I would have been clear [,] and written, ‘Instructed me to pay invoices’”.[15]
[11] Transcript of proceedings 5 October 2023, page 35, lines 36-7
[12] Transcript of proceedings 5 October 2023, page 35, lines 37-8
[13] Transcript of proceedings 5 October 2023, page 38, lines 19-21 and line 25
[14] Transcript of proceedings 5 October 2023, page 44, lines 12-13
[15] Transcript of proceedings 5 October 2023, page 44, lines 19-20
43.With some differences, this is the pattern she followed for each of the four subject invoices.
44.From her evidence before the Tribunal and the admissions made in her further amended response, it appears she contends the practice she described satisfied regulation 62 in this manner:
(a)She says she satisfied the requirement in subsection 3(b) by observing 3(b)(i), namely that she made “a request for payment, referring to the proposed withdrawal”. The respondent says there was such a request, and the request was oral and was made at the time the invoice was raised.
(b)Once having made the request, she says she satisfied the requirement in subsection 3(a) by observing the method set out in subsection 3(a)(ii), namely that “the money is withdrawn in accordance with instructions that have been received by the practice and that authorise the withdrawal”. That is to say, she contends she had instructions from the client which authorised each withdrawal and these were oral. She says the instructions were given in telephone calls on the day or thereabouts when the invoice was raised.[16] However, there was some assertion that partial instructions were also given at the time of the jail visits, though these could at best have been incomplete as the precise amounts payable for each invoice were not yet fixed.
[16] Transcript of proceedings 5 October 2023, pages 37-8, lines 2-3
(c)She says she did not satisfy the requirement in subsection 5 which necessitated the oral instructions given pursuant to subsection 3(a)(ii) were confirmed in writing by the client within five days and kept. The respondent concedes she never sought or obtained any such confirmatory instructions in writing.[17] However, she contends this step was not required to make the transfer out of trust compliant and that regulation 62(5)(b) cannot operate as a condition subsequent to the validity of an authorisation to withdraw the funds.[18]
[17] ATB document 9, page 77 at [91]
[18] Respondent’s submissions on Tribunal’s seven questions, page 9
Credit questions with respect to the factual issue
The respondent’s veracity
45.Before considering whether the approach she took was in fact regulation 62 compliant, it is necessary to consider the veracity of what she says took place at the two relevant points in time. As the parties agreed, the respondent’s credit is largely determinative of the decision on breach. Her file notes do not offer much, if any, help. For conversations during the jail visits, they are scant or non-existent. There are some documents she took with her to the jail visits that are reproduced in the ATB, but these too are scant and incomplete. In considering her veracity, it is illustrative to review what she said in her cross-examination about one particular jail visit, that of 12 November 2019, where she says two of the subject invoices were discussed.
Invoice 6445
46.We examine firstly her evidence with respect to invoice 6445, which relates to one of the sums the subject of charge 1A and 1B (and charge 2). She said, in her response to the draft application for disciplinary action sent to her through her lawyers of 14 July 2022, that she provided the client with a draft of what was to become invoice 6445 for $770 during that visit on 12 November 2019.[19] It was pointed out to the respondent that the final invoice when it was raised on 31 December 2019 included items of work not yet done.[20] In reply to the assertion that this suggested she had not in fact shown or provided the client with a draft invoice, the respondent said:[21]
[THE PRACTITIONER]: No. The draft invoice had the - I already knew that I was attending Prisoners' Legal Aid. I just didn't know the date, and I already knew, and I had a conversation with [AC] of how long that would take, and I had the - the time and the amount - like, the hour and the amount - and there were a multitude of phone calls that [AC] made, and we had an agreement that he would pay for one of those, because he would ring one, two, three, four times a day. The date of that phone call wasn't there, and the amount was agreed at $770. The dates were put in once I had gone and done that work, and that was when the invoice was finalised. [AC] was well aware the amount was 770 we agreed, and those were the things that I was charging him for.
[19] ATB document 6, page 51
[20] Transcript of proceedings 6 October 2023, page 65, lines 44-6
[21] Transcript of proceedings 6 October 2023, page 66, lines 1-11
47.We did not see that draft invoice, but invoice 6445 as issued has clearly post‑12 November 2019 time cost billings claimed in the invoice including work by a different lawyer in the practice relating to the Cbus payment rather than the EPOA.[22] Additionally, during the 12 November 2019 jail visit, the respondent had the client sign a trust authority to effect the withdrawal of the funds.[23] However, as was put to the respondent in cross examination, the date under his signature, “31 December 2019”, was not the date he signed it, rather it was the date that the respondent had the telephone conversation with [AC]:[24]
MR MOUJALLI: Can you see the date under [AC’s] signature of 31 December 2019?
[THE PRACTITIONER]: That's correct.
MR MOUJALLI: Who wrote that date under [AC’s] signature?
[THE PRACTITIONER]: I wrote that date after I had the telephone call with [AC].
MR MOUJALLI: So, just to be clear about this … this is an authority which [AC] signed on 12 November 2019, is that correct?[THE PRACTITIONER]: That's correct, yes.
[22] ATB document 12, page 83
[23] ATB document 14, page 90
[24] Transcript of proceedings 6 October 2023, page 69, lines 34-47
48.Further, for the phone conversations on the day (31 December 2019) the invoices were raised, file notes which one would reasonably expect would be seen as imperative in the circumstances, even if formulaic, were either scant or non‑existent. In the case of the raising and drawing down of invoice 6445, there was a file note.[25] However, as the respondent conceded,[26] the note makes no mention of instructions being given to transfer $770 in payment of invoice 6445.[27]
Invoice 6446
[25] ATB document 15, page 91
[26] Transcript of proceedings 6 October 2023, page 71, lines 15-18
[27] Transcript of proceedings 6 October 2023, page 73, lines 34-42
49.The position is even starker with respect to invoice 6446, which also relates to one of the sums the subject of charges 1A and 1B. The attendance and conversation with respect to this invoice for $2968.50 also occurred at the jail visit on 12 November 2019. In her cross examination concerning this, the respondent says:[28]
MR MOUJALLI: When did [AC] sign this document?
[THE PRACTITIONER]: 12 November.
MR MOUJALLI: As at 12 November …
[THE PRACTITIONER]: There was no work in the invoice that shows that, though.
MR MOUJALLI: … it will be clear on the transcript if I finish the question. As at 12 November 2019, none of the work for which you charge in invoice 6446 had been done. Is that correct?
[THE PRACTITIONER]: That's correct.
MR MOUJALLI: And, obviously, as at 12 November, this invoice had not been created?[THE PRACTITIONER]: That's correct.
[28] Transcript of proceedings 6 October 2023, page 77, lines 23-42
50.This situation is confirmed from reviewing the schedule to the invoice, where the claimed time costed work begins on 12 December 2019 and continues up to 30 December 2019.[29] There was also a trust account withdrawal authority signed by the client.[30] In her response to the applicant’s draft application for disciplinary action,[31] she had identified this as “a signed authority for the withdrawal of funds from the trust account” provided by the client. In her cross examination she conceded:[32]
MR MOUJALLI: Can you see where it says, ‘[AC] provided a signed authority.’?
[THE PRACTITIONER]: Yes.
MR MOUJALLI: Have I understood your evidence - in fact, I'll put this question, 'the signed authority’ which you were referring to in your letter, is the authority which appears at page 68. Is that correct?
[THE PRACTITIONER]: Yes.
MR MOUJALLI: And have I understood your evidence correctly that when [AC] signed the authority on page 68, it did not contain a date of the transfer, it did not contain the amount of the transfer and it did not contain the invoice number for which the transfer was in payment?
[THE PRACTITIONER]: That's correct.
MR MOUJALLI: You didn't point any of those matters out in your response; correct?[THE PRACTITIONER]: No.
[29] ATB document 16, pages 93-4
[30] ATB document 17, page 97
[31] ATB document 6, page 52
[32] Transcript of proceedings 6 October 2023, page 79, lines 12-32
51.The applicant says it is a significant detriment to the respondent’s credit that the details of what she says occurred on this jail visit (and subsequently what occurred by telephone at the time the invoices were raised) only emerged during her cross-examination. The respondent denies this assertion and says this information was in fact provided to the applicant much earlier during the course of its inquiry. She had in fact disclosed that the instructions were oral in her response of 21 December 2020,[33] 25 February 2021[34] and again on 14 July 2022,[35] though admittedly these responses provide no details as to when and where the instructions were given. In her affidavit of 26 June 2023, she confirms she “acted in this matter upon the express written and, or, oral instructions provided to me by [the client]” but again without details of time or place.[36] In her first two responses, she says nothing at all in this regard. In her further amended response she is now more specific as to time and place, and, while she does not reiterate that the instructions were oral, this is implicit as she now admits non-compliance with regulation 62(5)(b) in failing to have the client’s oral instructions confirmed in writing.[37] Nonetheless there remains troubling aspects about this explanation.
[33] ATB document 2, pages 4-6 at [5]
[34] ATB document 4, pages 16-20 at [1k]
[35] ATB document 6, pages 50-54 at [2]
[36] ATB document 10, pages 79-81 at [7]
[37] Further amended response 20 September 2023 at [34], [49] and [91]
52.It is a matter therefore for the Tribunal to consider as to whether her conduct shows a deliberate lack of candour and frankness with the applicant, or simply displays her misplaced confidence that she had not acted in breach of the LPA at any time.
53.The other credit matter to consider is the manner in which the respondent professes compliance with regulation 62(3)(b)(i) in how she made (the regulation says “gives”) a request for payment. She says that request was oral, and that the section envisages such a request can be oral. There would be difficulty with this if the request was said to have been given at the jail visit of 12 November 2019 for invoices 6445 and 6446. Moreover, as from the time of her further amended response, it is clear she now says the request was given orally by phone on 31 December 2019. In the file note she records that “fees around $2,900”.[38]
[38] Further amended response 20 September 2023 at [49], ATB document 91
54.The respondent’s evidence is that the client was shown or given a draft of each invoice, though the Tribunal has not seen these. What these drafts could have shown is questionable. In the case of invoice 6446, all the work in the claimed scheduled of fees postdates 12 November 2019 being for a period 12 to 30 December 2019.[39] This is virtually the same for invoice 6445, where two of the three items in the schedule postdate 12 November 2019. It is virtually the same for invoice 6474, where there was a jail visit on 23 January 2020, with the last 22 items of the schedule of fees post-dating the visit.[40] Similarly with invoice 6510, where there was a jail visit on 12 March 2020 with the last six items of the schedule of fees post-dating the visit.[41]
[39] ATB document 16, pages 92-6
[40] ATB document 19, pages 105-112
[41] ATB document 21, pages 114-9
55.This pattern raises serious credit issues and doubt that there was compliance with regulation 62(3)(b). The formulation that the respondent relies upon is that she or her law practice has complied with the requirement that “before effecting the withdrawal…[she] gives or sends...a request for payment, referring to the proposed withdrawal” to the client. Her evidence discloses that the request was made on the day the invoices were raised. It couldn’t have been when the client signed the trust authority as “an amount […] hadn’t been entered into [the authority at that time]”.[42] This is not what she disclosed to the applicant at the onset, and this goes directly to her credibility. It is also not what she disclosed in her affidavit of 26 June 2023, nor in her response, amended response or further amended response.
[42] Transcript of proceedings 6 October 2023, page 78, lines 22-3
56.She says she gave the request orally on the same day that she raised the invoices, during a telephone conversation with the client. In the case of invoices 6445 and 6446, this is 31 December 2019. Certainly then, the client could have been told the precise amount claimed because the bill has been drawn, though he has not seen it, nor had time to consider whether he has any issues with what is claimed. Again, her credibility is not assisted by the absence of file notes of these events, contemporaneous or otherwise.
57.Her creditability comes into further question as to compliance with regulation 62(5). Even given her concession that she never sought or obtained any confirmatory written instructions as subsection 5(b) requires, it simply raises the question about whether the oral instructions themselves were ever given in the manner contended by her. Failing to obtain confirmatory written instructions does not render the trust transfer invalid, but it also does not remove the uncertainty about whether the instructions were actually given.
58.There was a similar pattern of alleged attendance at a jail visit as satisfying 62(3)(b) and a phone conversation at the time the invoices were raised as satisfying 62(3)(a), with respect to the two other invoices 6474 and 6510, the subject of charge 1A and 1B. The respondent gave similar explanations which were tested in her cross examination.[43]
Any inference to be drawn from the applicant not calling AC
[43] Transcript of proceedings 6 October 2023, pages 92-7 (invoice 6474) and pages 97-102 (invoice 6510)
59.In considering the respondent’s veracity, it is also relevant to consider that the client who made the complaint was not called to give evidence.
60.The respondent made much about the “available inference” principle known as the ‘Rule’ in Jones v Dunkel[44] with respect to that failure.
[44] [1959] HCA 8
61.AC made a complaint to the Law Society regarding the respondent’s conduct.[45] He could have been subpoenaed but was not called by the applicant.[46]
[45] Affidavit of Robert Anthony Reis sworn 20 April 2023 exhibit RR1, pages 33-7
[46] Transcript of 6 October 2023, page 110, line 11
62.The respondent submitted that, if called, AC could have given evidence as to whether he gave verbal instructions to the respondent as she contends. The respondent says what the Tribunal can draw from his absence is an inference that his evidence would not have assisted the applicant’s case and would not contradict her assertions. Given this and given the higher Briginshaw v Briginshaw (Briginshaw) balance of probability standard[47] the Tribunal must be satisfied to, the Tribunal should be satisfied there are no issues with the respondent’s credit contrary to the position the applicant urges.[48]
[47] Briginshaw v Briginshaw [1938] HCA 34. The seriousness of an allegation, and the gravity of the consequences if the allegation is made out, bear upon whether the allegation is established to the reasonable satisfaction of the decision maker. Also see CR Williams, “Burdens and Standards in Civil Litigation” (2003) 25(2) Sydney Law Review 165 where he concludes “The Briginshaw interpretation of the civil standard gives the court a degree of flexibility in applying the civil standard without requiring the development of intermediate standards between the normal civil standard and the criminal”
[48] Respondent’s submissions dated 3 November 2023, pages 11-14
63.The applicant submitted that the respondent had misconstrued the Rule in Jones v Dunkel.[49] The applicant says the rule does not permit an inference that any uncalled evidence would have been adverse to a party, citing Kuhl v Zurich Financial Services Australia Ltd.[50]
[49] Applicant’s submissions in reply dated 21 November 2023 at [2]
[50] [2011] HCA 11 at [64]
64.The applicant says a better formulation of the rule in Jones v Dunkel is in its application in legal disciplinary proceedings in Wood v The Legal Ombudsman.[51] It is useful to paraphrase Chernov JA’s leading judgment where he cites a number of authorities to the effect that an inference (that the uncalled person’s evidence would not have helped the case of the party that failed to call them) can be drawn and can be taken into account against the party in question in deciding whether to accept any evidence already given. He emphasises that the uncalled evidence would need to have been of more than only marginal value in making that call.[52]
[51] [2004] VSCA 247
[52] [2004] VSCA 247 at [31]-[32]
65.The applicant submitted in this regard that the respondent’s alleged failure to strictly comply with trust account regulations – specifically, her alleged breach of regulation 62(3)(b)(i) in not giving a request for payment and her admitted breach of regulation 62(5)(b) in not obtaining written confirmation of oral instruction – are not matters on which AC’s evidence could have assisted the Tribunal in any way.[53]
[53] Applicant’s submissions in reply dated 21 November 2023 at [2.7]-[2.8]
66.Both parties cite, in support of their argument, Kitto J’s statement in Jones v Dunkel.[54] The respondent cites it to the effect that, if AC had been called, his evidence would not have thrown doubt on the respondent’s credibility, and, as such, there is an available inference we can draw that she is a witness of truth.[55] The applicant cites it to essentially the opposite effect, namely that the absence of AC as a witness cannot be used to make up any deficiency or gap in the evidence. The applicant says any such evidentiary gap is in the respondent’s case, namely the troubling doubt created in the mind of the Tribunal by her failure to fully record relevant events and instructions in file notes and by her failure to get confirmatory written instructions of what she says were oral instructions to release trust money for costs when she knew the strict compliance required. The applicant says the respondent cannot seek to bridge that gap by asking the Tribunal to infer AC’s evidence would have allayed that troubling doubt.
[54] [1959] HCA 8 at [308]
[55] Respondent’s submissions dated 3 November 2023 at [52]
67.The highest inference the Tribunal could draw from AC’s absence is that his evidence may have gone to the question of whether oral instructions were given. We have expressed serious reservations with respect to the respondent's credibility in her evidence on this point. We do not consider AC’s evidence could have assisted us other than marginally in deciding whether to accept her evidence.
The legal issue: can the respondent give or send a request for payment orally?
68.The relevant provision (in addition to having valid instructions) for withdrawing money from trust for the payment of costs is in regulation 62(3)(b).
(b) before effecting the withdrawal, the practice gives or sends to the person—
(i)a request for payment, referring to the proposed withdrawal; or
(ii)written notice of the proposed withdrawal and when it will occur.
69.It is common ground no written notice of the proposed withdrawal was given, so the focus is on “giving or sending a request for payment, referring to the proposed withdrawal”. The applicant says this requires writing. The respondent says she did give such a request, it was oral, and it satisfies regulation 62(3)(b)(i).
70.The applicant can cite no authority for its proposition that writing is required. As such, the determination relies on an analysis of the statutory language used. The applicant says a number of considerations support a construction that requires a request for payment to be made in writing:
(a)The provisions of the LPA and regulations relating to trust money have the primary purpose of protecting the public. Any ambiguity in the legislation should be resolved in a manner more likely to achieve that purpose. A provision dealing with the withdrawal of trust money should allow any apparent non-compliance to be readily identified and corrected. Given the obligation of a law practice, under section 241, to have its trust records examined by an external auditor annually, an interpretation that requires writing in regulation 62(3)(b)(i) better achieves that purpose.
(b)As a comparison, regulation 62(3)(a)(ii) recognizes that instructions can be given in writing or orally. If given orally, regulation 62(5) requires they be confirmed in writing and kept as a permanent record. The applicant says there is no similar recognition in the case of a request for payment in regulation 62(3)(b)(i) – that it can be given in writing or orally. As a consequence, there is deliberately no equivalence to regulation 62(5) requiring oral requests to be confirmed in writing and kept as a permanent record.[56]
[56] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [5.71]
71.The applicant says both legislative facts point to a construction that requires a request for payment to be made in writing. The applicant submitted the Tribunal should find that a request for payment referred to in regulation 62(3)(b)(i) is required to be made in writing.
72.The respondent submitted the applicant’s submission depends upon the Tribunal writing into regulation 62(3)(b)(i) the word “written” after the letter “a”. In order to do that, the Tribunal must first accept the subsection is ambiguous. This would require the Tribunal to conclude that, on its face and having regard to its express words, the meaning of regulation 62(3)(b)(i) cannot be determined by applying the express words of the subsection, as the application of the express words will lead to an absurd result. The respondent says the backwards reasoning urged by the applicant is impermissible citing, inter alia, Alcan (NT) Alumina Pty Ltdv Commissioner of Territory Revenue.[57] The respondent also cites the perennial favorite Project Blue Sky Inc v Australian Broadcasting Authority[58] to the effect that “the process of construction must always begin by examining the context of the provision that is being construed.”[59] The respondent says that context is clear, the words of sub regulation 62(3)(b)(i) are express and clear and the ambiguity that the applicant seeks to find is simply not there.[60]
[57] [2009] HCA 41 at [46]-[47]
[58] [1998] HCA 28
[59] [1998] HCA 28 at [69]
[60] Respondent’s submissions in reply dated 15 December 2023 (A) at [5.1]-[5.74]
73.The respondent says the Tribunal should reject the contention that a request for payment referred to in regulation 62(3)(b)(i) is required to be made in writing.
74.It seems to us after careful consideration of the submissions that the provision in regulation 62(3)(b)(i) permits the request for payment to be given orally and we so find.
Submissions on breach and characterisation
Applicant
75.The applicant submitted that each of charge 1A, 1B, 2, 4, 5 and 6 are made out.
76.As to the withdrawals in charge 1A, the applicant says:
(a)Given that invoice 6445 for $770 is dated 31 December 2019 and that the withdrawal relates to payment of that invoice on that date, that date was the only date on which the respondent could have lawfully received instructions from AC authorising the withdrawal and could have given or sent to him a request for payment referring to the withdrawal.[61] The file note the respondent prepared of her conversation with AC on 31 December 2019 records neither such instructions nor any request for payment. The respondent’s evidence in cross-examination that she did receive instructions orally during the conversation and did give a request for payment should be rejected as implausible.[62]
(b) Given that invoice 6446 for $2968.50 is dated 31 December 2019 and that the withdrawal relates to payment of that invoice on that date, that date was the only date on which the respondent could have lawfully received instructions from AC authorising the withdrawal and could have given or sent to him a request for payment referring to the withdrawal.[63] The file note the respondent prepared of her conversation with AC on 31 December 2019 records neither such instructions nor any request for payment. The respondent’s evidence in her further amended response that she did receive instructions orally during the conversation and did give a request for payment should be rejected as implausible.[64]
(c) Given that invoice 6474 for $4552.24 is dated 6 February 2020 and that the withdrawal relates to payment of that invoice on that date, that date was the only date on which the respondent could have lawfully received instructions from AC authorising the withdrawal and could have given or sent to him a request for payment referring to the withdrawal.[65] There is no file note of any conversation with AC on 6 February 2020 recording any such instructions nor any request for payment. The respondent’s evidence in cross-examination that she did have a conversation with him on that date and received instructions orally during the conversation and gave him a request for payment lacks credibility and should be rejected as implausible.[66]
(d) Given that invoice 6510 for $3300 is dated 17 March 2020 and that the withdrawal relates to payment of that invoice on that date, that date was the only date on which the respondent could have lawfully received instructions from AC authorising the withdrawal and could have given or sent to him a request for payment referring to the withdrawal.[67] There is no file note of any conversation with AC on 17 March 2020 recording any such instructions nor any request for payment. The respondent’s evidence in cross-examination that she did have a conversation with him on that date and received instructions orally during the conversation and gave him a request for payment should be rejected as implausible.[68]
[61] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [5.16]
[62] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [5.23]
[63] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [5.28]
[64] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [5.33]
[65] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [5.38]
[66] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [5.46]
[67] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [5.55]
[68] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [5.59]
77.As to the allegation in charge 1B, that the respondent failed to act in the best interests of her client by making the withdrawals the subject of charge 1A in breach of rule 4.1.1 and her common law duty, the applicant says the rule compels the solicitor to act in AC’s best interests. The applicant says the respondent was compelled to do so, given her interest and that of AC were in competition, where she was seeking payment of the invoices she had generated.[69] The applicant says, given the respondent did not receive AC’s instructions authorising the four withdrawals, he was denied the opportunity of oversight of his money held in trust by her. In denying him that opportunity, she failed to act in his best interests.[70]
[69] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [6.3]
[70] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [6.4]
78.As to the allegation in charge 2, the applicant says the respondent misappropriated trust money in breach of her common law obligations. The applicant says the charge is distinctive from the allegations in charges 1A and 1B in that dishonesty is a necessary mental element. The applicant says, citing Bell J in Brereton v Legal Services Commissioner (Brereton),[71] that what must be established is that the respondent subjectively intended to do the acts said to be objectively dishonest by the ordinary standards of reasonable and honest people. Applying the three steps identified in Brereton,[72] the applicant says the respondent (as regards steps (1) and (2)) knew she was noncompliant with regulation 62 in that she did not receive instructions from AC authorising the withdrawal and did not give or send to him a request for payment referring to the withdrawal, and (as regards step (3)) given the subjective knowledge she had, a reasonable and honest person would consider it dishonest to withdraw trust money in those circumstances.[73]
[71] [2010] VSC 378 at [53]
[72] [2010] VSC 378 at [54]
[73] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [6.8]
79.As to the allegation in charge 4, the applicant says the respondent has admitted the impermissible intermixing of trust funds the subject of the charge[74] and the charge is therefore made out.[75]
[74] Further amended response 20 September 2023 at [96]
[75] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [8.2]
80.As to the allegation in charge 5, the applicant says the respondent failed to provide updated costs disclosures in writing, as required by section 276, given the increases in the two matters the subject of the charge were “substantial” (estimates increased from $8,800 and $2,688 to $13,162 and $7,915 respectively).[76] The applicant says the charge is made out as the respondent admitted she did not strictly comply with the section in that the updates were only provided orally.[77]
[76] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [9.4]-[9.5]
[77] Further amended response 20 September 2023 at [97]
81.As to the allegation in charge 6, the applicant says the EPOA entered into between the respondent and AC signed by the respondent on 12 November 2019 does not contain any provision authorising the respondent to charge for tasks performed as his attorney. The CA she prepared and signed on 14 December 2019 provided for two distinct scopes of work – “work undertaken as your enduring power of attorney” and “general correspondence, telephone calls and visits to you at AMC in relation to your affairs”. The applicant says that work done under the first category is intended to be a list of work performed in her capacity as his attorney for which she was not authorised to charge.[78] As to invoice 6446, issued 31 December 2019, it includes entries (on 13 and 14 December 2019) that relate to work performed by the respondent in her capacity as AC’s attorney.[79] As to invoice 6474, issued 6 February 2020, it includes an entry (on 28 January 2020) that relates to work performed by the respondent in her capacity as AC’s attorney.[80] As to invoice 6510, issued 17 March 2020, it includes entries (on 11 February and 11 March 4, 2020) that relate to work performed by the respondent in her capacity as AC’s attorney.[81] The applicant says the respondent charged for these tasks in circumstances where neither the EPOA nor the POA Act authorised her to be remunerated and in doing so she breached rule 4.1.5 and rule 5.[82]
[78] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [10.7]
[79] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [10.9]
[80] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [10.11]
[81] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [10.13]
[82] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [10.1]
82.The applicant submits that charges 1A, 1B, 2, 4, 5 and 6 globally constitute professional misconduct.[83]
Respondent
[83] Applicant’s submissions on breach and characterisation dated 15 November 2023 at [11.10]
83.The respondent submitted that charge 1A is not made out and identified charge 1B only as an alternative charge to charge 1A. She put in issue the relevance of charge 2. She admitted charge 4 and admitted charge 5 in that she admitted the disclosures she made were oral. She submitted that charge 6 is not made out.
84.As to the withdrawals in charge 1A, the respondent says:
(a)As to invoice 6445 for $770 dated 31 December 2019, verbal instructions were given on 31 December 2019 by phone. These instructions were instructions received within regulation 62(3)(a)(ii). She admits that she failed to comply with regulation 62(5) in that the oral instructions were not confirmed in writing as required. She contends this is not a prerequisite to obtaining authority from the client to withdraw trust funds. She contends the breach of regulation 62(5) does not constitute dishonesty but concedes it constitutes unsatisfactory professional conduct. Regulation 62(3)(b)(i) was satisfied as she gave the client a request for payment and at that time advised him of the proposed withdrawal.[84]
(b)As to invoice 6446 for $2968.50 dated 31 December 2019, compliance occurred in the same manner.[85]
(c)As to invoice 6474 for $4552.24 dated 6 February 2020, compliance occurred in the same manner save that verbal instructions were given by telephone on 6 February 2020.[86]
(d)As to invoice 6510 for $3300 dated 17 March 2020, compliance occurred in the same manner save that verbal instructions were given either on 10 or 12 March 2020 during a jail visit[87] and by telephone on 17 March 2020.[88]
[84] Respondent’s submissions dated 3 November 2023 at [11]-[19]
[85] Respondent’s submissions dated 3 November 2023 at [11]-[19]
[86] Respondent’s submissions dated 3 November 2023 at [11]-[19]
[87] Transcript of proceedings 5 October 2023, page 38, lines 40-42
[88] Respondent’s submissions dated 3 November 2023 at [11]-[19]
85.As to the allegation in charge 1B, the respondent contends the hearing proceeded on the basis that the charge was understood as an alternative to charge 1A.[89] Charge 1B alleges that the withdrawal of the identical trust monies the subject of charge 1A constituted a failure by her to act in the best interests of her client. The respondent contends as between both charges there is a latent duplicity.[90]
[89] Respondent’s submissions dated 3 November 2023 at [20]
[90] Respondent’s submissions dated 3 November 2023 at [25]
86.As to the allegation in charge 2, the respondent contends that the charge she misappropriated trust money in breach of her common law is bad for duplicity. The respondent contends it constitutes an abuse of process. The respondent makes this submission on the basis that both charges allege the same dishonest conduct arising from the same facts.[91]
[91] Respondent’s submissions dated 3 November 2023 at [24]
87.The respondent admits the allegation in charge 4.
88.As to charge 5, the respondent admits non-compliance with section 276 of the LPA.
89.As to charge 6, the respondent contends she did not act on AC’s part as his attorney and did not charge any fees pursuant to his EPOA but rather she acted upon his direct instructions.[92] The respondent moves through a number of positions in this denial:
(a)Her initial position in her responses to the applicant’s investigation was that the EPOA had a charge term which authorised it.[93]
(b)Her next position was that, notwithstanding the EPOA had no authorising provision, she at all times acted under AC’s direct instructions in all the work she did for him and not as his attorney.
(c)Her final position, only expressed to the Tribunal by her counsel during final oral submissions, was that, as per section 31(2) of the POA Act (and given AC retained decision-making capacity throughout), her power in financial matters operates as a general power of attorney. As such, an agent acting in a professional capacity in such circumstances is entitled to charge fees for her services (unless the EPOA expressly proscribes it) by way of a quantum meruit, that is to say the reasonable value of her services.[94]
[92] Respondent’s submissions dated 3 November 2023 at [5]
[93] ATB document 2, letter of 21 December 2020 from respondent to applicant’s solicitors, page 5 and ATB document 4, letter of 25 February 2021 from respondent to applicant’s solicitors, page 18
[94] Citing Lincolne v William [2008] TASSC 41 at [5], presumably the passage “There is no need to construe the power of attorney as containing any such implied term when the attorney has a common law right to be indemnified in respect of expenditure incurred in carrying out his or her role” and similarly Slattery J in Smilevska v Smilevska [2019] NSWSC 986 at [29] “The general law recognises that an agent is entitled to an indemnity from his or her principal for expenses and liabilities properly incurred in carrying out the terms of the agency: Dal Pont, at 8.90.”
90.The respondent refutes the implausibility issue raised by the applicant which goes to her credit. The respondent identifies two assertions which she says is the basis for the assertion of implausibility. First, that she failed to fully record relevant events and instructions given; and second, that she failed to disclose until very late in the applicant’s investigations that AC’s instructions were provided to her in telephone conversations.[95] As to the first failure, the respondent’s submission is that she does not bear the onus of proof to establish that relevant events occurred and instructions were given, that is the applicant’s onus. The applicant has failed in meeting that onus in failing to call AC as a witness. Allowing for that contention, the respondent admits the obligation to fully record relevant events and instructions was hers and she admits the failure. She denies the second failure. It was submitted on her behalf that the implausibility submission made by the applicant was misconceived because she had indeed disclosed the telephone conversations three prior times. The information was provided to the applicant much earlier during the course of its inquiry. She says she disclosed that the instructions were oral in her responses of 21 December 2020, 25 February 2021 and again on 14 July 2022. On 21 December 2020, she advised the applicant’s solicitors “From my recollection AC confirmed by phone on the 31st Dec 2019 that he was happy for the funds to be transferred”.[96] On 24 February 2021, she advised the applicant’s solicitors “On the 31st [December] when instructed to pay the invoice, as per our telephone conversation”. [97] On 14 July 2022, her lawyers advised the applicant’s solicitors “AC signed an authority on 12 November 2019 and final authority was provided by telephone which was given on 31 December 2019”.[98] The respondent says the applicant’s submission as to implausibility rests on an allegation of recent invention which is not supportable given these early admissions. The respondent contends this is simply a too fragile an evidential base for the Tribunal to reject her as a witness of truth.[99]
[95] Respondent’s submissions in reply dated 15 December 2023 at [2]
[96] ATB document 2, pages 4-6 at [5]
[97] ATB document 4, pages 16-20 at [1k]
[98] ATB document 6, pages 50-54 at [2]
[99] Respondent’s submissions in reply dated 15 December 2023, page 2 at [2]
91.The respondent submits that charges 4 and 5, which she admits, constitute unsatisfactory professional conduct.[100]
[100] Respondent’s submissions dated 3 November 2023, page 2 at [6]
92.The respondent made submissions as to admissibility of documents by the applicant and the lack of cross-examination of the respondent on the breaches. We found these unpersuasive and have not considered them further.[101]
Finding as to breach
[101] Respondent’s submissions dated 3 November 2023, page 4 at [14]-[16] and respondent’s submissions in reply dated 15 December 2023, page 3 at [3]
93.As to charge 1A, the questions for determination – as to whether trust money was properly withdrawn in payment for each of the four invoices – are identical, namely:
Whether the money was withdrawn in accordance with instructions received that authorised the withdrawal?
94.We are not satisfied that instructions were received – they were said to be oral, but there are no file notes or other documentary evidence to support the claim.
Whether before effecting the withdrawal the law practice gave a request for payment referring to the proposed withdrawal?
95.We are not satisfied that a request for payment was given – it was said to be oral, but there are no file notes or other documentary evidence to support the claim.
96.The Tribunal finds charge 1 is made out.
97.As to charge 1B, the question for determination is whether the same course of conduct can give rise to multiple charges. The applicant cites Giles[102] to the effect that charging in such manner does not give rise to duplicity. In the original proceedings in that matter,[103] the practitioner was charged with three charges in relation to trust fund dealings. He admitted two charges and denied one which was a charge of common law misappropriation in terms similar to charge 2 here. All charges were found proven. However, the two admitted charges related to different segments of the offending conduct. Charge 1 related to a trust to trust journal transfer and charge 2 related to a withdrawal and breach of section 223(1) of the LPA as here. This is not strictly analogous to the charging in this matter where the precise conduct relating to the withdrawals gives rise to two distinct charges.
[102] [2020] ACTSCFC 1
[103] Council of the Law Society of the ACT v LP 201809 [2019] ACAT 11
98.As such we find that charge 1B should be viewed as an alternative to charge 1A. Given that charge 1A is made out, we accept it would be duplicitous to find against the respondent on charge 1B. It is therefore dismissed.
99.As to charge 2, we do not accept the respondent’s contention that it is bad for duplicity. We accept the applicant's contention that charge 2 is distinctive from charge 1A in that, though it relates to the identical conduct, it requires an additional finding of dishonesty in breach of the common law.
100.As to dishonesty, the applicant rightly contends that consideration of this requires reference to statements of Bell J in Brereton. As Bell J says,[104] where there is an allegation of dishonesty it is not necessary to establish that the person subjectively knew or believed that her actions were dishonest. Instead, what must be established is that the person subjectively intended to do the acts which are said to be objectively dishonest. Drawing from Toohey and Gaudron JJ in Peters v R, Bell J identified[105] three steps that need to be established (and also notes the need to be satisfied to a higher standard of probability as per Briginshaw in applying them[106]). Truncating those principles as applicable here we must:
(a)Identify the intent which is said to render the withdrawals dishonest.
(b)Determine whether the respondent subjectively had that intent.
(c)Determine whether the withdrawals were objectively dishonest according to the standards of reasonable and honest people.
[104] [2010] VSC 378 at [53]
[105] [2010] VSC 378 at [54]
[106] [2010] VSC 378 at [55]
101.As to (a) it is clear, the necessary intent was to withdraw the funds from trust in circumstances where the respondent had not given AC a request for payment and had not received his instructions authorising the withdrawals. As we have found that element is satisfied.
102.As to (b), did she subjectively have that intent? Throughout the applicant’s investigation and throughout proceedings before the Tribunal she did not accept her actions were dishonest. She maintained that position to the end:[107]
MR MOUJALLI: You’re giving dishonest evidence now… aren’t you?
[THE PRACTIONER]: I received the instructions from [AC] on that day to pay the invoice. I spoke to him. I told him how much it was. I told him what I did. He said I could pay the invoice. I paid the invoice.
[107] Transcript of proceedings 6 October 2023, page 96, lines 42-6
103.But the applicant does not need to show the respondent believed her actions were dishonest to establish a finding of dishonesty. The applicant does not need to point to some subterfuge on her part designed to disguise her actions when discovered because she knew they were wrong. Rather, it is sufficient to establish the respondent subjectively had the intention to transfer the trust funds in circumstances where the transfers were tainted with the two regulation 62 defects. The conduct might well be (as Bell J says later in his judgment) a product of “being negligent, incompetent and in reckless disregard of professional responsibilities”,[108] but nonetheless the subjective intention is present. We are therefore satisfied this element is established.
[108] [2010] VSC 378 at [59]
104.As to (c), it is clear that because of the defects in not complying with regulation 62 the withdrawals were objectively dishonest according to the standards of reasonable and honest people and we find this element is established.
105.We are satisfied as to a finding of dishonesty. Charge 2 is made out.
106.As to charge 4, it is admitted and made out.
107.As to charge 5, section 276 of the LPA requires updated cost disclosure to be given in writing. The respondent admits updates were only given orally. Charge 5 is made out.
108.As to charge 6, on or before 12 November 2019 the respondent drafted an EPOA for AC to appoint her as his attorney. On that day, following advice from alternative solicitors, he signed the appointment as did the respondent. Her power as to financial matters came into effect immediately (clause 5); her power in relation to personal care and other matters were exercisable only when AC had impaired decision-making capacity. The EPOA had no provision authorising the respondent to charge for work done pursuant to the power. Section 34 of the POA Act prevents an attorney from doing anything that results in a benefit to her in the absence of such a provision.
109.On or before 14 December 2019, the respondent prepared and signed a costs disclosure and costs agreement for work she had been instructed to act in on AC’s behalf. The CA’s reference is “Re: [AC] – Enduring Power of Attorney work and General Work Matter Number 101717”. The scope of work is delineated into two sections:
(a)Work undertaken as your enduring power of attorney.
(b)General correspondence, telephone calls and visits to you at AMC in relation to your affairs.
110.Under the first section, 5 items are listed:
(a)Including having Westpac return monies fraudulently taken from your account.
(b)Cbus TPD payment.
(c)Ensuring ATO requirements in relation to tax and TPD are dealt with.
(d)Payment of outstanding debts to various parties.
(e)Organising 3rd party lawyer to draft and execute will and EPOA.
111.We accept that all of the listed work can be understood to be work included in the respondent’s work as AC’s attorney.
112.AC signed the CA on 23 January 2020 at the jail, but the agreement has a commencement date of 2 December 2019. As from 24 December 2019, the trust account held by the respondent for him increased from a nil balance to $92,048.45 being the net proceeds of the Cbus TPD.
113.From these funds, costs were withdrawn in payment for certain work done which the applicant alleges was work the respondent performed in her capacity as AC’s attorney and therefore was not entitled to charge. The applicant identifies the following work:
(a)In invoice 6446 dated 31 December 2019:
(i) 13/12/2019 perusal of letter from Cbus and prepare required material and supporting documentation for release $400.
(ii) 13/12/2019 telephone call to accountant to ascertain the following:
(a)Tax implications for TDP payment.
(b)Obtaining last ATO assessment.
(c)Costs for advice re TPD and tax returns $80.
(iii) 14/12/2019 various emails and telephone calls with [AC] in relation to Cbus $800.
(iv) 14/12/2019 emailed Cbus to advise … $400.
(b)In invoice 6474 dated 6 February 2020:
(i) 28/01/2020 paid sister $1400 and Kathleen $1000 as per client instructions $80.
(c)In invoice 6510 dated 17 March 2020:
(i) 11/02/2020 payment of James & O’Brien psychologist INV 29819 made as requested by client $50.
(ii) 11/03/2020 drafted documentation and made payment of Marshall O’Brien’s invoice 29968 $25.
114.The work done and charged for in invoice 6446 can fairly be seen as within the scope of work “undertaken as your enduring power of attorney”, namely items “Cbus TPD payment” and “Ensuring ATO requirements in relation to tax and TPD are dealt with”.
115.The work done and charged for in invoices 6474 and 6510 can fairly be seen as within the scope of work “undertaken as your enduring Power of Attorney”, namely item “Payment of outstanding debts to various parties”.
116.The respondent offers a different explanation. Initially, her explanation to the applicant showed she was acting under the (mis-)apprehension that she could charge for the work:
It was my belief that the EPOA had been written to enable me to charge for my services.[109]
Yes I did review the EPOA, I thought it had a payment provision in it.[110]
[109] ATB document 2, letter of 21 December 2020 from respondent to applicant’s solicitors, page 5 at [3]
[110] ATB document 4, letter of 25 February 2021 from respondent to applicant’s solicitors, page 18 at [2g]
117.When she realised the EPOA did not have an authorising clause (“The respondent conceded that Power of Attorney document did not authorise charges for services provided as the attorney”[111]) her explanation changed. This was to contend that she did not charge for work done as AC’s attorney but on his instructions. This was reiterated in her further amended response[112] and confirmed in submissions, namely, “at all times she acted under AC’s direct instructions and was not acting pursuant to the EPOA”.[113] What she meant by this distinction is captured in answer to questions she was permitted to give orally as evidence in chief:[114]
MR THOMAS: And what did you understand by that distinction?
[THE PRACTIONER]: It meant that if I – if I -it- it meant that – well, in my view, [AC] had capacity, so I was taking instructions from him about what I was to do as his lawyer. I wasn’t making decisions on my own and then informing him.
[111] ATB document 6, letter of 15 July 2022 from respondent’s solicitors to applicant’s solicitors. page 53, charge 9
[112] ATB document 9, page 78 at [98]
[113] Respondent’s submissions dated 3 November 2023, page 2 at [5]
[114] Transcript from 5 October 2023, page 41, lines 33-38
118.Her most recent position was that the power she exercised in financial matters was a general power. As such, she was acting as AC’s agent in her professional capacity and so entitled to charge fees for the reasonable value of her services. She says the invoice items identified were charged in this manner.
119.But the respondent cannot escape from the CA she specifically drew for matter no 101717 “Re: [AC] – Enduring Power of Attorney work and General Work” very soon after the EPOA had become operative in financial matters.[115] There she delineated the scope of her work into two sections, one of which was “work undertaken as your enduring Power of Attorney”. There is a clear intention apparent in the CA to charge for work done as EPOA. She already had accrued a right to charge for payment of fees under the CA. She has no need, or entitlement, to charge by way of a quantum meruit. The fact that she was mistaken in her belief that the EPOA had an authorising provision at the time she drafted the CA affords her no right to a restitutionary remedy to fill the gap. Charging for that work brings her in breach of rules 4.1.5 and 5.1 as alleged in the application for disciplinary action. Charge 6 is made out.
[115] The respondent says in her further amended response re matter 101717 “The file name was General Advice. It did not include “acting as Enduring Power of Attorney”” which suggests the misapprehension she was under. See ATB document 9, page 70 at [17]
Findings as to characterisation
120.In considering professional misconduct when it relates to breaches of the legislative provisions for trust money and trust accounts, it is clear the twin principles of failure to meet standards of competence and diligence. Falling short of the standard of professional conduct observed or approved by the profession are emphatically applicable. Giles takes the characterisation of such conduct to the extent that, even where there is absence of dishonesty, it is “borderline” for a strike off finding.[116] That threshold may not have been reached in this matter, but the respondent’s conduct is certainly conduct on a global basis that amounts to professional misconduct.
[116] [2020] ACTSCFC 1 at [123]
121.The Tribunal finds that:
(a)Charges 1A, 2, 4, 5 and 6 are made out and the conduct is characterised as professional misconduct.
………………………………
Senior Member Prof T Foley
for and on behalf of the Tribunal
Date(s) of hearing:
5, 6 October 2023 and 22 March 2024
Counsel for the Applicant:
Mr D Moujalli
Solicitors for the Applicant:
Thomson Geer Lawyers
Counsel for the Respondent:
Mr R Thomas
Solicitors for the Respondent:
Fitzgerald Naylor Lawyers
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