COUNCIL OF THE LAW SOCIETY OF THE ACT v REES (Occupational Discipline) - [2015] ACAT 94

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

COUNCIL OF THE LAW SOCIETY OF THE ACT v REES (Occupational Discipline) [2015] ACAT 94

OR 35/2015
Catchwords: OCCUPATIONAL DISCIPLINE – legal practitioner – unsatisfactory professional conduct – consent orders – failure to act fairly and with competence and diligence – conflict of interest – failure to provide trust account statement – withdrawal of monies from firm’s trust account

Legislation cited: Legal Profession Regulation 2007 s 57
Legal Profession Act 2006 s 229

Tribunal: Senior Member C Chenoweth (Presiding)
Senior Member M Brennan

Date of Orders:  21 December 2015
Date of publication of orders:        11 April 2016
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL       )          OR 35/2015

BETWEEN:
COUNCIL OF THE LAW SOCIETY OF THE ACT
Applicant

AND:
GERARD REES
Respondent

TRIBUNAL: Senior Member C Chenoweth
Senior Member M Brennan

DATE: 21 December 2016

ORDER

The tribunal has regard to the statement of agreed facts and grounds of complaint filed in this matter, a copy of which is attached to this order.

The tribunal is satisfied that an order in accordance with the agreed terms would be:
(i) within the powers of the Tribunal; and
(ii) appropriate for the Tribunal to make.

The Tribunal orders by consent as follows:

(a)the respondent has been guilty of unsatisfactory professional conduct in relation to the four grounds of compliant particularised in the statement of agreed facts;
(b)the respondent be publicly reprimanded;
(c)the respondent is to pay to the applicant a fine of $2,000;
(d)the respondent is to pay the costs of the applicant calculated on a party/party basis in accordance with the Supreme Court scale in an amount to be agreed between the parties or, failing agreement, to be determined in accordance with the Tribunals procedure.

Senior Member C Chenoweth

AUSTRALIAN CAPITAL TERRITORY ) NO: OR 15/35
CIVIL AND ADMINISTRATIVE TRIBUNAL )

THE COUNCIL OF THE LAW SOCIETY
OF THE AUSTRALIAN CAPITAL TERRITORY
Applicant

GERARD REES
Respondent

STATEMENT OF AGREED FACTS AND GROUNDS OF COMPLAINT

The Respondent was at all material times:
1.1.a local legal practitioner and holder of an unrestricted practising certificate; and
1.2.a principal of a local law firm (firm).

On 29 June 2010, JD (deceased) died leaving a will appointing two of the children, (JC) and her brother, (SD) executors and trustees.
SD instructed the Respondent, a known close friend, to act on his behalf in relation to the estate.
For many years, a serious rift existed in the strained relationship between JC and SD.
On 13 July 2010, Mr Duncan MacLean (MacLean) a local Tamworth lawyer appointed by JC to act as a channel of communication, wrote to the firm confirming instructions for it to act on behalf of JC in addition to SD in relation to the estate.
On 26 July 2010, MacLean was informed by an employed solicitor in the firm (A) (who had prime carriage of the matter under the supervision of the Respondent until (A) left the firm on 27 April 2012) that SD was overseas and he was awaiting instructions.
On 29 September 2010, SD formally confirmed his instructions to the firm to also act on his behalf.
On 2 October 2010, a Notice of intention to apply for probate was published by the firm in the Sydney Morning Herald.
On 29 October 2010, SD advised Madden details of the liabilities of the estate.
On 1 November 2010, Madden emailed a draft Affidavit of Applicant to MacLean.
On 16 November 2010, following the receipt of probate documentation from the firm on 9 November 2010, JC signed the affidavit in support of the probate application and MacLean returned the relevant material to the firm.
On 20 December 2010, SD re-signed the affidavit in support of the probate application which had been delayed because of a misplacement of the original will within the firm’s office.
On 18 January 2011, the probate application was lodged with the Supreme Court of the ACT, which was subsequently requisitioned requiring the Notice of intention to apply for probate to be readvertised and an affidavit of delay to be filed.
On 1 February 2011, the Notice of intention to apply for probate was readvertised by the firm on behalf of the executors.
On 18 March 2011, probate was granted to the executors.
On 15 April 2011, the firm informed MacLean that probate had been granted.
On 12 May 2011, SD telephoned Madden to confirm he wished the firm to continue acting on the administration of the estate and that he and JC would be sending various signed authorities.
There was modest activity on the file for the ensuing two months, with exchanges between Madden, SD and the NAB including a letter from (A) to MacLean advising that he still had instructions from SD.
On 20 July 2011 and 25 July 2011, (A) wrote to SD requesting him to make an appointment to sign documentation for redemption of some of the estate assets.
On 9 August 2011, Madden informed SD of the ongoing concerns expressed by MacLean in relation to the delay in the administration of the estate. SD informed (A) that he had ongoing concerns about asset mismanagement by a bank and a firm of financial advisers and he would, at his own expense, pay for an audit of these institutions. These instructions were conveyed to MacLean by (A) on 19 August 2011 at which time the issue of a misplaced title deed was also raised.
From this time until January 2012, MacLean attempted to ascertain from the firm on a number of occasions the progress in relation to the realisation of the assets and expressed concerns with the ongoing delays in the finalisation of the administration of the estate which were in the main attributable to the lack of instructions in a timely manner from SD.
On 30 January 2012, (A) informed SD of threatened proceedings by MacLean to remove SD as an executor who acknowledged the need on his part to expedite the finalisation of the estate.
Notwithstanding some further attempts to press ahead with the administration of the estate, in the absence of any significant progress, on 27 April 2012 JC through the Canberra agents for MacLean, served the firm with an application to have SD removed as executor.
The firm continued to act for SD in opposing the application to have him removed, as well as act on behalf of both JC and SD in relation to the ongoing administration of the estate.
On 27 April 2012, (A) left the firm, following which the Respondent assumed prime carriage of the matter.
On 11 May 2012, the deceased’s account with his bank was closed and funds deposited to the firm’s trust account.
Through the parties’ respective counsel, consent orders were made in relation to the removal proceedings on 17 May 2012 pursuant to which SD continued to act as co-executor of the estate.
On 29 May 2012, the Respondent informed MacLean of the appointment of the agent to sell the property and enclosed a trust account statement of funds received from various institutions and proposing a distribution to the grandchildren beneficiaries under the will.
On 7 June 2012, MacLean requested the Respondent to provide a trust statement.
On the same day the Respondent forwarded a tax invoice to MacLean in the sum of $3,074.62 in relation to the firm’s costs in connection with the estate to date seeking instructions from JC for the approval to pay the costs from funds held in trust.
That letter was received by MacLean on 13 June 2012.
On 12 June 2012, without authority from JC, the firm transferred funds from the trust account to the general account in payment of the tax invoice.
On 19 July 2012, the Respondent paid the cash legacies to the grandchildren beneficiaries.
On 19 September 2012, an interim distribution was made to the deceased’s three children including the two executors.
On 27 September 2012, a further interim distribution was made to those beneficiaries and a trust statement sent by the Respondent to MacLean.
On 5 October 2012, the application to remove SD as a co-executor was withdrawn after settlement of the proceedings by consent.
On 14 June 2013, the Respondent wrote to the Canberra agents of JC in relation to the assessed costs of the removal proceedings.
On 29 October 2013, MacLean requested the Respondent to provide a trust statement.
On 4 February 2014, MacLean complained to the Respondent about the failure to account to which the Respondent responded on 12 February 2014, by providing MacLean with a trust statement.
On 6 March 2014, MacLean informed the Respondent that JC confirmed her instructions for the sale of the shares with APN Property, Argo Investments and Colonial First State, with a follow up made on 6 May 2014.
On 17 October 2014, MacLean requested the Respondent for a full accounting.
In or about October 2014, the Respondent retired from the firm with the carriage of the file taken over by another lawyer within the firm.
On 6 November 2014, JC requested an interim accounting and a timeframe for completion of administration of the estate.
On 4 December 2014, MacLean requested the firm to provide a trust statement.

GROUNDS OF COMPLAINT

Ground 1: Breach of Rule 1.2: Failure to act fairly and with competence and diligence

Particulars
1.1In the period between October 2012 and June 2013, the Respondent as the solicitor with the prime carriage of the matter carelessly failed to treat his client, JC, fairly and in good faith and attend to the work required with reasonable promptness as reflected in paragraphs 36 and 37 above during which period no work was activated on the matter resulting in undue delay in the administration and finalisation of the estate of the deceased.

Ground 2: Breach of Rule 7.3: Conflict of interest

Particulars

2.1The Respondent, in the course of acting for both executors of the will of the deceased, continued to act for both parties in the circumstances set out in paragraphs 2 to 44 above, when in so doing he acted in a manner which was contrary to the instructions and interests of JC in failing to obtain a grant of probate of the deceased’s will and failing to administer the estate in both instances in a timely manner and, in the absence of like instructions from the other executor, SD, he should have ceased to act for both parties.
2.2The Respondent accepted instructions to act for SD in relation to the Supreme Court proceedings instituted by JC, at the same time continuing to act for both JC and SD in their capacity as executors in relation to the administration of the estate, in the circumstances set out in paragraphs 25 to 42 above.

Ground 3: Breach of Section 229(1)(b)

Particulars

3.1In breach of Section 229(1)(b) of the Act, the Respondent withdrew the sum of $3,074.62 from the firm’s trust account for payment of this amount to the firm’s general account for legal costs in circumstances where the Respondent had not complied with Regulation 62(4), in the circumstances set out in paragraphs 29 to 32 above.

Ground 4: Breach of Regulation 57(6)(b) & (c): Failure to provide Trust Account Statement

Particulars

4.1The Respondent, in breach of his obligations pursuant to Regulation 57(6)(b) of the Legal Profession Regulation 2007 (Regulations) failed to provide the firm’s client, JC, a trust account statement as soon as practicable after a request made on behalf of JC on 7 June 2012 in the circumstances set out in paragraphs 29 to 35 above.
4.2The Respondent, in breach of his obligations pursuant to Regulation 57(6)(b) of the Regulations failed to provide the firm’s client, JC, a trust account statement as soon as practicable after a request made on behalf of JC on 29 October 2013 in the circumstances set out in paragraphs 28 and 39 above.
4.3The Respondent, in breach of his obligations pursuant to Regulation 57(6)(b) of the Regulations failed to provide the firm’s client, JC, a trust account statement as soon as practicable after 30 June 2012, 30 June 2013 and 30 June 2014.
Dated:17 December 2015
Michael Phelps Colin Blain
Solicitor for the Society Solicitor for the Respondent

HEARING DETAILS

FILE NUMBER:	OR 35/2015
PARTIES, APPLICANT:	Council of the Law Society of the ACT
PARTIES, RESPONDENT:	Gerard Rees
COUNSEL APPEARING, APPLICANT	N/A
COUNSEL APPEARING, RESPONDENT	N/A
SOLICITORS FOR APPLICANT	Mr Phelps, Phelps Reid Lawyers
SOLICITORS FOR RESPONDENT	Mr Blain
TRIBUNAL MEMBERS:	Senior Member C Chenoweth Senior Member M Brennan
DATES OF HEARING:	21 December 2015